-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H8odlT4u2B5u1Eql4kwNpz3PHYXOs1o+WGAxyPOlU+WMGgsMH3xl6uG4bORZyFR1 KwpOuBsc+m/b3vjfFRNd4A== 0000950134-96-004309.txt : 19960816 0000950134-96-004309.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950134-96-004309 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAGING NETWORK INC CENTRAL INDEX KEY: 0000878324 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 042740516 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19494 FILM NUMBER: 96613153 BUSINESS ADDRESS: STREET 1: 4965 PRESTON PARK BLVD STE 600 CITY: PLANO STATE: TX ZIP: 75093 BUSINESS PHONE: 2149854100 MAIL ADDRESS: STREET 1: 4965 PRESTON PARK BLVD STREET 2: SUITE 600 CITY: PLANO STATE: TX ZIP: 75093 10-Q 1 FORM 10-Q QUARTER END JUNE 30, 1996 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to . --------------- ----------------- Commission File No. 0-19494 PAGING NETWORK, INC. (Exact name of the registrant as specified in charter) DELAWARE 04-2740516 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 4965 PRESTON PARK BOULEVARD, SUITE 600 PLANO, TEXAS 75093 (Address of principal executive offices) (214) 985-4100 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title Shares Outstanding as of July 31, 1996 ---------------------------- -------------------------------------- Common Stock, $.01 par value 102,534,887 The Company's Common Stock is publicly traded under the symbol "PAGE" through the National Association of Securities Dealers Automated Quotation National Market System. 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Index to Financial Statements
Page ---- Paging Network, Inc. Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 (Unaudited)........................ 3 Paging Network, Inc. Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited).. 4 Paging Network, Inc. Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995 (Unaudited)............ 5 Paging Network, Inc. Notes to Consolidated Financial Statements........... 6
2 3 PAGING NETWORK, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share information) (Unaudited)
ASSETS June 30, 1996 December 31, 1995 -------------- ----------------- Current assets: Cash and cash equivalents........................... $ 34,333 $ 198,182 Accounts receivable, less allowance for doubtful accounts............................. 43,716 41,335 Inventories......................................... 32,264 14,084 Prepaid expenses.................................... 7,452 5,495 ---------- ---------- Total current assets.............................. 117,765 259,096 Property, equipment and leasehold improvements, at cost............................................. 993,283 841,022 Less accumulated depreciation....................... (272,129) (225,413) ---------- ---------- Net property, equipment and leasehold improvements.......................... 721,154 615,609 Other non-current assets: PCS licenses........................................ 197,272 197,272 Other licenses, net................................. 54,351 48,625 Other intangible assets, net........................ 61,852 67,438 Other non-current assets, net....................... 65,628 40,298 ---------- ---------- Total other non-current assets.................... 379,103 353,633 ---------- ---------- $1,218,022 $1,228,338 ========== ========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable.................................... $ 42,901 $ 69,776 Accrued expenses.................................... 67,847 69,091 Customer deposits................................... 20,991 20,255 ---------- ---------- Total current liabilities......................... 131,739 159,122 Long-term obligations................................. 1,195,516 1,150,000 Commitments and contingencies......................... - - Stockholders' deficit: Common Stock: $.01 par, 250,000,000 shares authorized, 102,534,887 and 102,245,807 shares issued and outstanding in 1996 and 1995, respectively...................................... 1,025 1,022 Paid-in capital..................................... 123,887 121,701 Accumulated deficit................................. (234,145) (203,507) ---------- ---------- Total stockholders' deficit....................... (109,233) (80,784) ---------- ---------- $1,218,022 $1,228,338 ========== ==========
See accompanying notes 3 4 PAGING NETWORK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ----------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Services, rent and maintenance revenues....... $167,036 $124,178 $325,811 $240,310 Product sales................................. 32,143 28,783 59,741 54,756 -------- -------- -------- -------- Total revenues.............................. 199,179 152,961 385,552 295,066 Cost of products sold......................... (27,124) (23,700) (50,476) (44,346) -------- -------- -------- -------- 172,055 129,261 335,076 250,720 Operating expenses: Services, rent and maintenance.............. 35,910 25,246 69,561 48,727 Selling..................................... 20,570 16,718 39,081 31,938 General and administrative.................. 53,071 41,265 102,867 81,240 Depreciation and amortization............... 51,517 35,333 96,855 67,420 -------- -------- -------- -------- Total operating expenses.................. 161,068 118,562 308,364 229,325 -------- -------- -------- -------- Operating income.............................. 10,987 10,699 26,712 21,395 Other income (expense): Interest expense............................ (30,038) (26,868) (59,888) (44,385) Interest income............................. 519 - 2,538 - -------- -------- -------- -------- Total other income (expense).............. (29,519) (26,868) (57,350) (44,385) -------- -------- -------- -------- Net loss...................................... $(18,532) $(16,169) $(30,638) $(22,990) ======== ======== ======== ======== Net loss per share............................ $ (0.18) $ (0.16) $ (0.30) $ (0.23) ======== ======== ======== ========
See accompanying notes 4 5 PAGING NETWORK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Six Months Ended June 30, ------------------------- 1996 1995 ---------- ---------- Operating activities: Net loss....................................................... $ (30,638) $ (22,990) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization.............................. 96,855 67,420 Provision for doubtful accounts............................ 5,817 5,176 Debt issuance costs........................................ (3,432) (13,531) Write off of debt issuance costs........................... - 6,641 Amortization of debt issuance costs........................ 2,573 1,978 Changes in operating assets and liabilities: Accounts receivable........................................ (8,198) (5,774) Inventories................................................ (18,180) (2,433) Prepaid expenses........................................... (1,957) (216) Accounts payable........................................... (26,875) (6,414) Accrued expenses........................................... (1,244) 3,865 Customer deposits.......................................... 736 1,186 ---------- ---------- Net cash provided by operating activities........................ 15,457 34,908 ---------- ---------- Investing activities: Capital expenditures........................................... (191,340) (120,400) Payments for licenses.......................................... (7,683) (157,600) Payments for business acquisitions and investments............. (5,276) (62,772) Restricted cash invested in money market instruments........... (19,200) - Other.......................................................... (3,464) (3,610) ---------- ---------- Net cash used in investing activities............................ (226,963) (344,382) ---------- ---------- Financing activities: Borrowings under credit agreements............................. 45,516 556,850 Repayments of long-term obligations............................ - (250,000) Proceeds from exercise of Common Stock options................. 2,149 1,749 Other.......................................................... (8) (776) ---------- ---------- Net cash provided by financing activities........................ 47,657 307,823 ---------- ---------- Net decrease in cash and cash equivalents........................ (163,849) (1,651) Cash and cash equivalents at beginning of period................. 198,182 2,451 ---------- ---------- Cash and cash equivalents at end of period....................... $ 34,333 $ 800 ========== ==========
See accompanying notes 5 6 PAGING NETWORK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 (Unaudited) 1. THE COMPANY Paging Network, Inc. (the Company) is a provider of paging and wireless messaging services. The Company provides paging services in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, and Canada, including local paging service in virtually all of the largest 100 markets (in population) in the United States. The consolidated financial statements include the accounts of all of its wholly and majority owned subsidiaries. All intercompany transactions have been eliminated. 2. UNAUDITED INTERIM FINANCIAL STATEMENTS The interim consolidated financial information contained herein is unaudited but, in the opinion of management, includes all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The balance sheet at December 31, 1995, has been derived from the audited financial statements at that date. Results of operations for the periods presented herein are not necessarily indicative of results of operations for the entire year. These financial statements and related notes should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. Certain 1995 amounts have been reclassified to conform with the 1996 presentation. 3. STATEMENT OF CASH FLOWS INFORMATION Cash and cash equivalents include highly liquid debt instruments with an original maturity of three months or less and investments in money market instruments. Cash payments made for interest during the six months ended June 30, 1996 and 1995 were approximately $59.4 million and $32.0 million, respectively. There were no significant federal or state income taxes paid or refunded for the six months ended June 30, 1996 and 1995. 4. LONG-TERM OBLIGATIONS On June 5, 1996, the Company amended its credit agreement with its group of lenders (the Credit Agreement). The Credit Agreement provides for a $1.0 billion revolving loan. Under the Credit Agreement, the Company is able to borrow, provided it meets certain financial covenants, the lesser of $1.0 billion or an amount based upon a calculation which is reduced by total outstanding indebtedness for borrowed monies (as defined) and outstanding letters of credit. The amount available for borrowing is equal to a specified multiple of annualized earnings before interest, income taxes, depreciation and amortization based on the most recent three calendar months. As of June 30, 1996, the Company had $274.3 million of borrowings outstanding under its Credit Agreement and had approximately $504.5 million available for additional borrowings. The Credit Agreement expires on December 31, 2004. The maximum borrowings which may 6 7 be outstanding under the revolving loan begin reducing on June 30, 2001. In addition, the Company has $500.0 million available for potential future offerings of public debt securities under shelf registration statements filed with the Securities and Exchange Commission in 1995 and 1993. On June 5, 1996, the Company's wholly-owned Canadian subsidiary, Paging Network of Canada Inc. (PageNet Canada), along with its majority-owned Canadian subsidiary, Madison Telecommunications Holdings, Inc. (MadTel Holdings), established new credit facilities in Canada. The credit facilities are denominated in Canadian dollars. The amounts reported herein are the U.S. dollar equivalents as of June 30, 1996. The credit agreements provide for borrowings in the amounts of $40.3 million and $25.7 million, respectively. The Company is a guarantor of both credit agreements to the extent of the cash collateral deposited with the lender. Madison Venture Corp., the minority interest shareholder in MadTel Holdings, is an additional guarantor of the MadTel Holdings credit agreement. Other non-current assets include $19.2 million of cash deposited with the lender to collateralize such borrowings. Under the credit agreements, PageNet Canada and MadTel Holdings are able to borrow $20.2 million and $16.5 million, respectively, provided these borrowings are collateralized. The remaining amounts are available for borrowing provided they are either collateralized or certain financial covenants are met by the borrowers. As of June 30, 1996, PageNet Canada had $11.0 million and MadTel Holdings had $10.2 million of borrowings outstanding under the credit facilities. The maximum borrowings which may be outstanding under the credit facilities begin reducing on June 30, 1999. Both credit agreements expire on June 30, 2003. 5. INCOME TAX PROVISION No provision or benefit for income taxes has been made for the six months ended June 30, 1996 and 1995 as the deferred benefit from operating losses was offset by the increase in the valuation allowance. 6. COMMON STOCK AND NET LOSS PER SHARE Net loss per share amounts are computed based on the weighted average number of common shares outstanding. The number of shares used to compute per share amounts for the six months ended June 30, 1996 and 1995 were 102.4 and 101.7 million, respectively. The Company has 275.0 million authorized shares, of which 250.0 million are Common Stock and 25.0 million are preferred stock. As of June 30, 1996 there were no preferred shares issued or outstanding. Effective September 15, 1995, the Company effected a two-for-one stock split recorded in the form of a 100.0% stock dividend paid September 29, 1995. Share and per share amounts for 1995 periods presented have been restated to reflect the stock split. On May 23, 1996, the Company's stockholders approved an employee stock purchase plan of up to 2.0 million shares of the Company's Common Stock, which the Company intends to implement on January 1, 1997. 7. ACQUISITIONS During 1995, the Company acquired certain paging assets of Comtech, Inc. - Paging Division; SNET Paging, Inc. and its wholly owned subsidiary, TNI Associates, Inc.; two subsidiaries of PageAmerica Group, Inc.; Page Florida; International Paging Corp.; and Celpage, Inc. - Atlanta Branch, including various frequencies and approximately 343,000 pagers in service. The cost of these purchases aggregated approximately $123.6 million, subject to increase or decrease based on post-closing events of certain acquisitions. 7 8 The following represents the unaudited pro forma results of operations as if the above acquisitions had occurred as of January 1, 1995, after giving effect to certain adjustments, including amortization of intangibles resulting from the allocation of the purchase price and interest expense on acquisition debt.
Six Months Ended June 30, 1995 --------------------- (In thousands, except per share information) Total revenues $ 311,591 Net revenues 264,085 Operating income 17,127 Net loss (31,041) Net loss per share (0.31)
The pro forma results given above are not necessarily indicative of what actually would have occurred if the acquisitions had been in effect during the periods presented, and are not intended to be a projection of future results or trends. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The statements contained in this filing which are not historical facts, such as future capital expenditures, future borrowings, international investments expectations, and introduction of new products are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. Among the factors that could cause actual future results to differ materially are competitive pressures, growth rates, new market opportunities, supplier constraints, market conditions, timing and techniques used in marketing by third-party distributors, and acceptance of the Company's services in the marketplace. RESULTS OF OPERATIONS Throughout this section the Company makes reference to earnings before interest, income taxes, depreciation and amortization (EBITDA). EBITDA is a key performance measure used in the paging industry and is one of the financial measures by which the Company's covenants are calculated under the agreements governing its debt obligations. EBITDA is not a measure defined in generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance in accordance with generally accepted accounting principles. The following table presents certain items in the Consolidated Statements of Operations as a percentage of revenues from services, rent and maintenance plus product sales less the cost of products sold (Net Revenues) for the three and six months ended June 30, 1996 and 1995, respectively.
Three Months Ended Six Months Ended June 30, June 30, -------------------- ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Net Revenues .............................. 100.0% 100.0% 100.0% 100.0% Operating expenses: Services, rent and maintenance ......... 20.9 19.6 20.7 19.4 Selling ................................ 12.0 12.9 11.7 12.8 General and administrative ............. 30.8 31.9 30.7 32.4 Depreciation and amortization .......... 29.9 27.3 28.9 26.9 ----- ----- ----- ----- Operating income .......................... 6.4 8.3 8.0 8.5 Net loss .................................. (10.8) (12.5) (9.1) ( 9.2) EBITDA .................................... 36.3 35.6 36.9 35.4 EBITDA for domestic operations ............ 37.5 35.6 37.6 35.4
Net Revenues for the three- and six-month periods ended June 30, 1996 increased 33.1% and 33.6%, respectively, over the comparable periods ended June 30, 1995. Revenues from services, rent and maintenance, which the Company considers its primary business, increased 34.5% to $167.0 million for the three months ended June 30, 1996 compared to $124.2 million for the three months ended June 30, 1995. Services, rent and maintenance revenues for the six months ended June 30, 1996 increased 35.6% to $325.8 million, compared to $240.3 million for the six months ended June 30, 1995. These increases were primarily due to continued growth in the number of pagers in 9 10 service with subscribers of the Company. The number of pagers in service with subscribers at June 30, 1996 was 7,881,764 compared to 5,415,269 pagers in service with subscribers at June 30, 1995, an increase of 45.5%. Contributing to the growth in the number of pagers in service with subscribers is the Company's expanding local and national third-party reseller customer base, which includes the impact of the Company's National Accounts Division. The Company's National Accounts Division represents a new distribution strategy which gives the Company an opportunity to reach into broader markets, including consumers, by partnering with large companies that are regional or national in scope and have large client bases. In addition, the Company's National Accounts Division includes customer relationships with national resellers, where it sells pagers to major third parties and provides paging service at reduced rates. The resellers, in turn, lease or resell the pagers to their own subscribers and resell the Company's paging service under marketing agreements. As the Company increases reliance on distribution of pagers and paging services through resellers and marketing affiliates, the Company may experience increased variability in quarterly results relating to the net addition of pagers. Product sales, less cost of products sold, remained relatively flat for the three month periods ended June 30, 1996 and 1995 ($5.0 million and $5.1 million, respectively) and for the six month periods ended June 30, 1996 and 1995 ($9.3 million and $10.4 million, respectively). Services, rent and maintenance expenses increased 42.2% to $35.9 million (20.9% of Net Revenues) for the three months ended June 30, 1996, compared to $25.2 million (19.6% of Net Revenues) for the three months ended June 30, 1995. Services, rent and maintenance expenses increased 42.8% to $69.6 million (20.7% of Net Revenues) for the six months ended June 30, 1996, compared to $48.7 million (19.4% of Net Revenues) for the six months ended June 30, 1995. These increases in services, rent and maintenance expenses and the increases as a percentage of Net Revenues were a result of growth in the number of pagers in service with subscribers of the Company, expenses associated with an increase in transmitter sites in order to ensure reliable transmission of enhanced messaging services, and expansion of the nationwide transmission networks. For the three months ended June 30, 1996, selling expenses increased 23.0% to $20.6 million (12.0% of Net Revenues) from $16.7 million (12.9% of Net Revenues) for the three months ended June 30, 1995. Selling expenses increased 22.4% to $39.1 million (11.7% of Net Revenues) for the six months ended June 30, 1996, compared to $31.9 million (12.8% of Net Revenues) for the six months ended June 30, 1995. These increases resulted from the addition of sales personnel to support continued growth in both Net Revenues and the number of pagers in service with subscribers. The decline in selling expenses as a percentage of Net Revenues for the three and six months ended June 30, 1996 was primarily attributable to the expansion of local and national third-party resellers, for which the Company incurred less selling costs on units placed in service through this channel than through the direct channel. In addition, since sales commissions are paid at the time a new unit is placed in service and not in subsequent months when the unit continues to generate revenue, the Company's continued growth in the number of pagers in service results in the decline in selling expenses as a percentage of the Net Revenues. General and administrative expenses increased 28.6% to $53.1 million (30.8% of Net Revenues) for the second quarter of 1996, compared to $41.3 million (31.9% of Net Revenues) for the corresponding period of 1995. General and administrative expenses increased 26.6% to $102.9 million (30.7% of Net Revenues) for the six months ended June 30, 1996, compared to $81.2 million (32.4% of Net Revenues) for the six months ended June 30, 1995. The increases in general and administrative expenses occurred to support the growth in the number of pagers in service with subscribers of the Company. The decline in general and administrative expenses as a percentage of Net Revenues was primarily attributable to the improved revenue performance of operations opened in 1992 through 1994. Historically, domestic start-up operations have typically required three to four years to achieve results similar to the Company's more mature operations. Depreciation and amortization expenses increased for the second quarter of 1996 as compared to the corresponding period in the prior year by 45.8% from $35.3 million (27.3% of Net Revenues) to $51.5 million (29.9% of Net Revenues). Depreciation and amortization expenses increased 43.7% to $96.9 million (28.9% of Net Revenues) for the first six months of 1996 compared to $67.4 million (26.9% of Net Revenues) for the first six months of 1995. 10 11 The increases in depreciation and amortization expenses were primarily attributable to the increase in the number of pagers owned by the Company and leased to subscribers; the increase in other paging equipment, primarily in the number of transmitters, to support the increase in the number of units in service with subscribers; and the acquisitions discussed in Note 7 to the consolidated financial statements. Operating income increased from $10.7 million for the three months ended June 30, 1995, to $11.0 million for the three months ended June 30, 1996. Operating income increased from $21.4 million for the six months ended June 30, 1995, to $26.7 million for the six months ended June 30, 1996. As a result of the above factors, EBITDA increased 35.8% to $62.5 million (36.3 % of Net Revenues) for the second quarter of 1996 compared to $46.0 million (35.6% of Net Revenues) for the corresponding period in 1995. For the six months ended June 30, 1996, EBITDA increased 39.1% to $123.6 million (36.9% of Net Revenues) compared to $88.8 million (35.4% of Net Revenues) for the corresponding period in 1995. EBITDA and the percent of Net Revenues were negatively impacted by the start-up operations in the Company's international operations. Domestically, EBITDA increased 40.3% to $64.6 million (37.5% of Net Revenues) for the second quarter of 1996. For the six months ended June 30, 1996, domestic EBITDA increased 41.8% to $125.9 million (37.6% of Net Revenues). Interest expense increased $3.2 million and $15.5 million, respectively, from the three and six month periods ended June 30, 1995, to the corresponding periods in 1996, due to a higher average level of indebtedness outstanding in 1996. The average level of indebtedness outstanding during the three and six months ended June 30, 1996 was approximately $1.2 billion compared to approximately $770.6 million and approximately $721.5 million, respectively, outstanding during the three and six months ended June 30, 1995. Interest income for the three and six month periods ended June 30, 1996 was $0.5 million and $2.5 million, respectively. The interest income was a result of investing the net proceeds of the 10.125% Senior Subordinated Notes (10.125% Notes) issued in July 1995. LIQUIDITY AND CAPITAL RESOURCES The Company's operations and expansion into new markets and product lines require substantial capital investment for the development and installation of wireless communications systems and for the procurement of pagers and paging equipment. Capital expenditures were $191.3 million for the six months ended June 30, 1996 and $120.4 million for the same period in 1995 (excluding payments for licenses and acquisitions). For the first six months of 1996, capital expenditures were funded from the remaining net proceeds of the 10.125% Notes, net cash provided by operating activities ($15.5 million), and borrowings. For the first six months of 1995, capital expenditures were funded by net cash provided by operating activities ($34.9 million) and borrowings. Inventories increased from $14.1 million at December 31, 1995 to $32.3 million at June 30, 1996, largely due to purchases to support the Company's expanding third-party reseller and marketing affiliate distribution channels. The Company's National Accounts Division has opened a state-of-the-art distribution facility in the Dallas area. The fully automated center will allow the Company to enhance the distribution for its national accounts, resellers, and marketing affiliates. During April 1996, the Company concluded its participation in an auction conducted by the Federal Communications Commission (FCC) of 900 MHz specialized mobile radio major trading area based licenses. At the auction, the Company was awarded the rights to 126 blocks of frequencies in 49 United States markets for a total purchase price of $45.6 million, all of which had been paid on or before July 8, 1996. Incumbent users currently hold certain frequencies for which the Company is negotiating to secure exclusive use. The Company currently estimates that payments to obtain certain of these frequencies may aggregate in excess of $100.0 million. Although not currently estimable, these expenditures may increase further if additional frequencies, which are deemed to yield strategic 11 12 benefits in major markets, can be obtained at prices consistent with historical frequency acquisitions made by the Company. As a result of an FCC auction in 1994, the Company was awarded three nationwide narrowband personal communications services (PCS) frequencies for a total purchase price of $197.0 million. The Company intends to employ these PCS frequencies to build a two-way network over which it can deploy new products such as its new voice messaging service, VoiceNow(R). The VoiceNow service will allow a pocket-sized receiving device to store digitized voice messages for replay at the subscriber's convenience. The Company has begun testing of VoiceNow. Once technological and marketing tests are complete, the Company intends to begin commercial deployment throughout the country. Based on the current schedule from the Company's vendors, the Company anticipates its product launch could begin as early as the fourth quarter of 1996. Also in 1996, the Company intends to begin technological testing of other services that a two-way network makes possible. The Company currently estimates that the capital expenditures to build the two-way network, exclusive of the costs of acquiring other frequencies and of VoiceNow subscriber devices, may total approximately $200.0 million over 1996 and 1997. Through its subsidiary, Paging Network of Canada Inc., the Company began offering paging services in Canada in April 1996. The Company is considering other opportunities for international expansion. Paging market penetration in many international markets is relatively low, and many such markets have only a small number of existing paging providers. The Company believes that in these markets its strategy of low cost, high quality service is likely to be successful. The Company may structure its operations in other countries in a variety of ways, both to comply with local laws and to limit the financial risk of new ventures in other countries. The Company's goal is to create a portfolio of international operations. The Company expects to invest approximately $100.0 million in this endeavor during the next two years. Additional investments will depend on such factors as growth rates, new market opportunities and execution of financing plans that maximize value for the Company's stockholders. It is anticipated that in 1996, net cash provided by operating activities will be insufficient to completely fund capital expenditures (including the costs to build the two-way network, but excluding frequency purchases) and international opportunities, which are expected to exceed $500.0 million. A portion of these expenditures will be funded with existing cash and cash equivalents and additional borrowings. These funds will be used to finance the development of a new nationwide digital transmission network for the Company's new VoiceNow service and the Company's ongoing paging operations, including greater market share of existing markets and expansion of the Company's operations into new markets, including international opportunities. The Company currently estimates 1996 incremental borrowings may aggregate in excess of $250.0 million. As of June 30, 1996, the Company had approximately $504.5 million available for additional borrowings under its Credit Agreement. In addition, the Company has $500.0 million available for potential future offerings of public debt securities under shelf registration statements filed with the Securities and Exchange Commission in 1995 and 1993. 12 13 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is involved in various lawsuits arising in the normal course of business. In management's opinion, the ultimate outcome of these lawsuits will not have a material adverse effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On May 23, 1996, the Company held its Annual Meeting of Stockholders. At this meeting, Mr. Glenn W. Marschel was elected as a Class II Director for a three year term to expire in 1999 (90,509,436 voting for and 2,188,230 withholding authority). Also, Mr. Carl D. Thoma was elected as a Class II Director for a three year term to expire in 1999 (90,555,791 voting for and 2,141,875 withholding authority). The stockholders also approved the adoption of the Paging Network, Inc. Employee Stock Purchase Plan (90,471,827 voting for, 1,757,557 voting against and 468,282 abstaining or not voting). As of the record date there were 102,450,127 shares of common stock issued and outstanding and entitled for vote. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits The exhibits listed on the accompanying index to exhibits are filed as part of this quarterly report. (b) Reports on Form 8-K None. 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Paging Network, Inc. Date: August 7, 1996 /s/ Glenn W. Marschel ----------------------------------------------- Glenn W. Marschel President and Chief Executive Officer (Principal Executive Officer) Date: August 7, 1996 /s/ Kenneth W. Sanders ----------------------------------------------- Kenneth W. Sanders Senior Vice President- Finance, Treasurer, Chief Financial Officer and Assistant Secretary (Principal Financial Officer and Principal Accounting Officer) 14 15 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 4.1 Articles Sixth, Seventh, Eighth, Twelfth, and Thirteenth of the Restated Certificate of Incorporation of the Registrant, as amended (1) 4.2 Articles II, III, and VII and Section 1 of Article VIII of the Registrant's By-laws, as amended (1) 4.3 Form of Indenture (2) 4.4 Article V, Sections I, VI, and VII of the Registrant's By-laws, as amended (4) 10.1 1982 Incentive Stock Option Plan, as amended and restated (1) 10.2 Form of Stock Option Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan (1) 10.3 Form of Management Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan (1) 10.4 Form of Vesting Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan (1) 10.5 1991 Stock Option Plan (1) 10.6 Form of Stock Option Agreement executed by recipients of options granted under the 1991 Stock Option Plan (1) 10.7 Form of Indemnification Agreement executed by recipients of options granted under the 1991 Stock Option Plan (1) 10.8 Form of First Amendment to Vesting Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan (1) 10.9 Form of First Amendment to Management Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan (1) 10.10 1992 Stock Option Plan for Directors (3) 10.11 Amended and Restated Credit Agreement dated as of May 2, 1995 among the Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas), Inc., The First National Bank of Boston, and certain other lenders (4) 10.12 Amendment No. 1 dated as of December 12, 1995 to the Amended and Restated Credit Agreement dated as of May 2, 1995 among the Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas), Inc., The First National Bank of Boston, and certain other lenders (5) 15 16 EXHIBIT NO. DESCRIPTION 10.13 Employment Agreement dated as of December 1, 1995 among the Registrant and Glenn W. Marschel (5) 10.14 Second Amended and Restated Credit Agreement dated as of June 5, 1996, among the Registrant, NationsBank of Texas, N.A., Toronto Dominion (Texas), Inc., The First National Bank of Boston, Chase Securities Inc, and certain other lenders (6) 10.15 Loan Agreement dated as of June 5, 1996 among Paging Network of Canada Inc., The Toronto-Dominion Bank, and such other financial institutions as become banks (6) 10.16 Loan Agreement dated as of June 5, 1996 among Madison Telecommunications Holdings, Inc., The Toronto-Dominion Bank, and such other financial institutions as become banks (6) 12 Ratio of Earnings to Fixed Charges for the three and six months ended June 30, 1996 and 1995 (6) 27 Financial Data Schedule (6) (1) Previously filed as an exhibit to Registration Statement No. 33-42253 on Form S-1 and incorporated herein by reference. (2) Previously filed as an exhibit to Registration Statement No. 33-46803 on Form S-1 and incorporated herein by reference. (3) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991. (4) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1995. (5) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995. (6) Filed herewith. 16 EX-10.14 2 2ND AMENDED & RESTATED CREDIT AGREEMENT 1 EXHIBIT 10.14 $1,000,000,000 SECOND AMENDED AND RESTATED CREDIT AGREEMENT AMONG PAGING NETWORK, INC. CERTAIN OF THE SUBSIDIARIES OF PAGING NETWORK, INC. NATIONSBANK OF TEXAS, N.A. as Documentation Agent TORONTO DOMINION (TEXAS), INC. as Administrative Agent and THE FIRST NATIONAL BANK OF BOSTON and CHASE SECURITIES INC as Co-Syndication Agents BANK OF AMERICA, ILLINOIS BARCLAYS BANK PLC CIBC, INC. COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE CORESTATES BANK, N.A. CREDIT LYONNAIS NEW YORK BRANCH DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES FIRST STATE BANK OF TEXAS, N.A. FLEET NATIONAL BANK MELLON BANK, N.A. PNC BANK, NATIONAL ASSOCIATION ROYAL BANK OF CANADA as Co-Agents and as Lenders AND BANK OF MONTREAL FIRST UNION NATIONAL BANK OF NORTH CAROLINA MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION THE MITSUBISHI TRUST AND BANKING CORPORATION, CHICAGO BRANCH SOCIETE GENERALE as Lead Managers and as Lenders DATED AS OF JUNE 5,1996 2 $1,000,000,000 SECOND AMENDED AND RESTATED CREDIT AGREEMENT PAGING NETWORK, INC. CERTAIN OF THE SUBSIDIARIES OF PAGING NETWORK, INC. TABLE OF CONTENTS ARTICLE I DEFINITIONS AND FINANCIAL TERMS 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2. Financial Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Article II THE REDUCING REVOLVING CREDIT FACILITY 2.1. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.2. Advances, Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.3. Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.4. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.5. Interest - Base Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.6. Interest - LIBOR Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.7. Post-Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.8. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.9. Method of Calculating Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.10. Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.11. Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.12. Voluntary Principal Payments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 22 2.13. Mandatory Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 2.14. Voluntary Reduction or Reduction of the Commitment to Zero . . . . . . . . . . . . . . . . . 24 2.15. Mandatory Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2.16. Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2.17. Proration of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2.18. Collateral and Collateral Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 2.19. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.20. Formation of New Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE III LETTERS OF CREDIT 3.1. Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.2. Letters of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.3. Reimbursement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.4. Lenders' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.5. NationsBank's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3 ARTICLE IV CONDITIONS PRECEDENT 4.1. Conditions Precedent to the Closing Date and the Making of the Initial Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 4.2. Conditions Precedent to All Advances and the Issuance of each Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ARTICLE V CHANGE IN CIRCUMSTANCES; YIELD PROTECTION 5.1. Increased Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 5.2. LIBOR Deposits Unavailable, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 5.3. Changes in Law Rendering LIBOR Advances Unlawful . . . . . . . . . . . . . . . . . . . . . . 36 5.4. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 5.5. Discretion of Lenders as to Manner of Funding . . . . . . . . . . . . . . . . . . . . . . . 37 5.6. Eurocurrency Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE VI REPRESENTATIONS AND WARRANTIES 6.1. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 6.2. Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 6.3. No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 6.4. Financial Statements; Material Adverse Change; Solvency . . . . . . . . . . . . . . . . . . 38 6.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6.6. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6.7. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6.8. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 6.9. Compliance with Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . 39 6.10. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6.11. Consents and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6.12. Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6.13. Licenses, Permits. Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6.14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6.15. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6.16. Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6.17. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 6.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 6.19. Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.20. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.21. Valid Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.22. Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.23. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 6.24. Patents, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4 ARTICLE VII GENERAL COVENANTS 7.1. Access and Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.2. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.3. Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.4. Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.5. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 7.6. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 7.7. Existence and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 7.8. Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . . 46 7.9. Payment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 7.10. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 7.11. Perfection of Security Interests, Expenses and Reimbursement . . . . . . . . . . . . . . . . 48 7.12. The Notification Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 ARTICLE VIII INFORMATION COVENANTS 8.1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 8.2. Copies of Other Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 8.3. Notice of Litigation, Default and Other Matters . . . . . . . . . . . . . . . . . . . . . . 51 8.4. ERISA Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 ARTICLE IX NEGATIVE COVENANTS 9.1. Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 9.2. Liquidation, Disposition, Merger and New Subsidiaries . . . . . . . . . . . . . . . . . . . 53 9.3. Total Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 9.4. Senior Debt to Annualized Operating Cash Flow . . . . . . . . . . . . . . . . . . . . . . . 54 9.5. Pro Forma Debt Service Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 9.6. Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 9.7. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 9.8. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 9.9. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 9.10. Paging Entities' and Subsidiaries' Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 58 9.11. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 9.12. Loans, Advances, Investments and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 58 9.13. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 9.14. Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 9.15. Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 9.16. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 9.17. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 9.18. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 9.19. Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
5 9.20. Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 9.21. Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 ARTICLE X EVENTS OF DEFAULT 10.1. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 10.2. Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 10.3. Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 10.4. Debtor Relief Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 10.5. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 10.6. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 10.7. Loan Documents; Collateral; Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . 63 10.8. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 10.9. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 10.10. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 10.11. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 10.12. Pledged Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 10.13. RICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 ARTICLE XI RELATIONSHIP AMONG LENDERS 11.1. Agreement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 11.2. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 11.3. Benefits of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 ARTICLE XII GENERAL 12.1. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 12.2. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 12.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 12.4. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 12.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 12.6. Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 12.7. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 12.8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 12.9. Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 12.10. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 12.11. Dissemination of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 12.12. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 12.13. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 12.14. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 12.15. Substitution of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 12.16. Rate Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 12.17. Determination by the Lenders Conclusive and Binding . . . . . . . . . . . . . . . . . . . . 81
6 12.18. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 12.19. Exception to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 12.20. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 12.21. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 12.22. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 12.23. Survival of Representations and Warranties, etc . . . . . . . . . . . . . . . . . . . . . . 82 12.24. Appointment of Notification Agent, Joint and Several Obligations; Senior Obligations of PageNet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 12.25. Amendment, Restatement, Extension, Renewal and Increase . . . . . . . . . . . . . . . . . . 83
7 TABLE OF SCHEDULES AND EXHIBITS SCHEDULES Schedule 1.1 Existing Letters of Credit Schedule 6.5 Litigation Schedule 6.6 Liens Schedule 6.12 Real Estate Owned Schedule 6.21 Subsidiaries and Capital Stock Schedule 6.23 Material FCC Licenses Schedule 9.9 Existing Indebtedness EXHIBITS Exhibit A Form of Application for Letter of Credit Exhibit B Form of Assignment and Acceptance Agreement Exhibit C Form of Revolving Loan Note Exhibit D Form of Notice of Assignment Exhibit E Form of Compliance Certificate
8 $1,000,000,000 PAGING NETWORK, INC. CERTAIN OF THE SUBSIDIARIES OF PAGING NETWORK, INC. SECOND AMENDED AND RESTATED CREDIT AGREEMENT THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 5, 1996, is entered into among PAGING NETWORK, INC., a Delaware corporation ("PageNet"), the Companies (this and other capitalized terms not otherwise defined shall have the respective meanings set forth in Article I hereof), the Lenders, NATIONSBANK OF TEXAS, N.A., a national banking association (herein in its individual capacity, together with its Affiliates, successors and assigns, sometimes called "NationsBank"), as Documentation Agent, TORONTO DOMINION (TEXAS), INC., a Georgia corporation (herein in its individual capacity, together with its successors and assigns, sometimes called "Toronto Dominion"), as Administrative Agent, THE FIRST NATIONAL BANK OF BOSTON and CHASE SECURITIES INC, as Co-Syndication Agents; and BANK OF AMERICA, ILLINOIS, BARCLAYS BANK PLC, CIBC, INC., COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE, CORESTATES BANK, N.A., CREDIT LYONNAIS NEW YORK BRANCH, DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, FIRST INTERSTATE BANK OF TEXAS, N.A., FLEET NATIONAL BANK, MELLON BANK, N.A., PNC BANK, NATIONAL ASSOCIATION, ROYAL BANK OF CANADA, as Co-Agents and as Lenders; and BANK OF MONTREAL, FIRST UNION NATIONAL BANK OF NORTH CAROLINA, MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION, THE MITSUBISHI TRUST AND BANKING CORPORATION, CHICAGO BRANCH, SOCIETE GENERALE, as Lead Managers and as Lenders. WHEREAS, PageNet, the Companies and the Original Lenders entered into that certain Amended and Restated Credit Agreement, dated as of May 2, 1995 (as amended through the date hereof, the "Original Credit Agreement"); WHEREAS, the Paging Entities have requested that the Original Credit Agreement be amended and restated to provide for a $1,000,000,000 credit facility to the Companies from the Lenders, guaranteed by PageNet, the proceeds of which will be used in part to refinance certain indebtedness owed by certain of the Companies to the Original Lenders and for other purposes permitted hereunder, and the Lenders have agreed to amend and restate the Original Credit Agreement to make such loans pursuant to the terms and conditions of this Agreement; WHEREAS, the Paging Entities have requested the Lenders to extend credit to the Companies to refinance the Companies' existing credit facilities and the Lenders and the Managing Agents are willing to enter into this Second Amended and Restated Credit Agreement. NOW, THEREFORE, in consideration of the undertakings set forth herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 9 ARTICLE I DEFINITIONS AND FINANCIAL TERMS 1.1. Definitions. In addition to the terms defined in the Preamble, the Recitals and elsewhere in this Agreement, the following terms shall have the meanings indicated for purposes of this Agreement (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Administrative Agent" means Toronto Dominion in its capacity as administrative agent for the Lenders pursuant to Article XI hereof, and any successor Administrative Agent appointed pursuant to Article XI hereof. "Advance" means an advance made by a Lender to the Companies pursuant to Article II hereof. "Affected Lender" has the meaning assigned thereto in Section 12.15 hereof. "Affiliate" of any Person means (i) any director (or Person holding the equivalent position) or officer (or Person holding the equivalent position) of such Person or of any Affiliate of such Person, and (ii) any other Person which, directly or indirectly, controls or is controlled by or under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be (a) "controlled by" any other Person if such other Person possesses, directly or indirectly, power (i) to vote 10% or more of the securities having ordinary voting power, or if not having ordinary voting power, having at the time voting power, for the election of directors of such Person; or (ii) to direct or cause the direction of management and policies of such Person whether by contract or otherwise; or (b) "controlled by" or "under common control with" such other Person if such other Person is a member of the immediate family of such Person or is the executor, administrator or other personal representative of such Person. "Agents" means, collectively, the Administrative Agent and the Documentation Agent. "Agreement" means this Second Amended and Restated Credit Agreement, as it may be amended or modified and in effect from time to time. "Annualized Operating Cash Flow" means the product of Operating Cash Flow for the most recently ended fiscal quarter multiplied by four. "Applicable Environmental Laws" means Applicable Laws pertaining to health or the environment, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and 2 10 Reauthorization Act of 1986 (as amended from time to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as amended from time to time, "RCRA"), the Texas Water Code, and the Texas Solid Waste Disposal Act. "Applicable Law" means (i) in respect of any Person, all provisions of constitutions, statutes, rules, regulations and orders of governmental bodies or regulatory agencies applicable to such Person, and all orders and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a party and (ii) in respect of contracts made or performed in the State of Texas, "Applicable Law" shall also mean the laws of the United States of America, including, without limiting the foregoing, 12 USC Sections 85 and 86, as amended to the date hereof and as the same may be amended at any time and from time to time hereafter, and any other statute of the United States of America now or at any time hereafter prescribing the maximum rates of interest on loans and extensions of credit, and the laws of the State of Texas, including, without limitation, Articles 5069-1.04 and 5069-1.07(a), Title 79, Revised Civil Statutes of Texas, 1925, as amended ("Art.1.04"), and any other statute of the State of Texas now or at any time hereafter prescribing maximum rates of interest on loans and extensions of credit, provided however, that pursuant to Article 5069-15.10(b), Title 79, Revised Civil Statutes of Texas, 1925, as amended, the Companies and the Lenders agree that the provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as amended, shall not apply to the Revolving Loan hereunder. "Applicable Margin" means, (a) with respect to Base Rate Advances, 1.000% per annum and (b) with respect to LIBOR Advances, 2.000% per annum, provided that, if there exists no Event of Default, then the Applicable Margin will be the following per annum percentages applicable in the following situations:
Base Rate LIBOR Applicability Percentage Percentage ------------- ---------- ---------- (i) If the Total 1.000% 2.000% Leverage Ratio is greater than or equal to 6.00 to 1.00 (ii) If the Total 0.750% 1.750% Leverage Ratio is less than 6.00 to 1.00 but is greater than or equal to 5.00 to 1.00
3 11 (iii) If the Total 0.500% 1.500% Leverage Ratio is less than 5.00 to 1.00 but is greater than or equal to 4.00 to 1.00 (iv) If the Total 0.125% 1.125% Leverage Ratio is less than 4.00 to 1.00 but is greater than or equal to 3.00 to 1.00 (v) If the Total 0.000% 0.625% Leverage Ratio is less than 3.00 to 1.00
The Applicable Margin payable by the Companies on Advances made under the Revolving Loan shall be subject to reduction or increase, as applicable and as set forth in the table above, on a quarterly basis according to the performance of the Paging Entities as tested by the Total Leverage Ratio. Except as set forth in the last sentence hereof, any such increase or reduction in the Applicable Margin provided for herein shall be effective three Business Days after receipt by Administrative Agent of the applicable financial statements and corresponding Compliance Certificate. If financial statements and Compliance Certificate of the Paging Entities setting forth the Total Leverage Ratio are not received by the Administrative Agent by the date required pursuant to Sections 8.1(a) or 8.1(b) hereof, the Applicable Margin for Advances made under the Revolving Loan shall be determined as if the Total Leverage Ratio exceeds 6.00 to 1.00 until such time as such financial statements and Compliance Certificate are received. For the final quarter of any fiscal year of the Companies, the Companies may provide the unaudited financial statements of the Paging Entities, subject only to year-end adjustments, for the purpose of adjusting the Applicable Margin. "Application" means an application for a Letter of Credit in the form of Exhibit A hereto, as the same may be amended, modified, substituted or replaced from time to time. "Art. 1.04" has the meaning ascribed thereto in the definition of Applicable Law. "Assignment and Acceptance Agreement" means any agreement substantially in the form of Exhibit B hereto, pursuant to which any Lender assigns any interest in its rights and obligations hereunder (including the Obligations) in accordance with the terms and provisions of Section 12.10 hereof. "Authorized Officer" means the President of the Notification Agent, Senior Vice President - Finance and Administration of the Notification Agent, Senior Vice President Operations of the Notification Agent, Vice President - Finance of the Notification Agent or the Controller of the Notification Agent. 4 12 "Base Rate" means, at any time, a rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the lesser of (a) the Highest Lawful Rate and (b) the sum of the Applicable Margin plus the higher of (i) the rate of interest of the Administrative Agent from time to time as its reference rate in effect at such time for the determination of interest rates for loans of varying maturities in Dollars to U.S. Persons, changing when and as such reference rate changes (such rate may not be the lowest rate offered by the Administrative Agent), and (ii) the Federal Funds Effective Rate in effect at such time plus.50%. Each change in the interest rate on any Base Rate Advance shall take effect on the effective date of any change in the Base Rate. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including, without limitation, the inability or failure of the Administrative Agent to obtain sufficient bids or publications in accordance with the terms hereof, the Base Rate shall be a rate per annum equal to the lesser of (A) the Highest Lawful Rate and (B) the sum of the Applicable Margin plus the rate of interest of the Administrative Agent from time to time as its reference rate in effect at such time for the determination of interest rates for loans of varying maturities in Dollars to U.S. Persons, changing when and as such reference rate changes (such rate may not be the lowest rate offered the Administrative Agent), until the circumstances giving rise to such inability no longer exist. The Administrative Agent shall furnish the Notification Agent with its calculation for any period in which the Base Rate is not determined by reference to the rate of interest set forth in clause (i) above, demonstrating that use of another rate to calculate the Base Rate is appropriate, which demonstration shall be conclusive absent manifest error. "Base Rate Advance" means any borrowing which bears interest at a rate determined with reference to the Base Rate. "Business Day" means any day (other than Saturday) on which banks are open for business in New York, New York, Boston, Massachusetts and Dallas, Texas and, with respect to LIBOR Advances, on which dealings in foreign currencies and exchange may be carried on by the Lenders in the London interbank eurodollar market. "Capital Expenditures" means the aggregate amount of all purchases or acquisitions of items considered to be capital items under GAAP, and in any event shall include the aggregate amount of items leased or acquired under Capitalized Leases at the cost of the item, and the acquisition of realty, tools, equipment, and fixed assets, and any deferred costs associated with any of the foregoing (excluding deferred lease payments under Capitalized Leases). Capital Expenditures are reduced by the net book value of pagers sold, which had been reflected in prior periods' Capital Expenditures and recorded as equipment on the balance sheet. "Capitalized Lease" of a Person means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person, prepared in accordance with GAAP. 5 13 "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person, prepared in accordance with GAAP. "Capital Stock" means, as to any Person, the equity interests in such Person, including, without limitation, the shares of each class of capital stock of any Person that is a corporation and each class of partnership interests (including without limitation, general, limited and preference units) in any Person that is a partnership. "Cash Equivalents" means Investments in (i) certificates of deposit and other interest bearing deposits or accounts with U.S. and Canadian commercial banks having a combined capital and surplus of at least $100,000,000, which mature within one year from the date of Investment, (ii) deposits with U.S. and Canadian commercial banks, which deposits are fully insured by the Federal Deposit Insurance Corporation and mature within one year from the date of Investment, (iii) obligations issued or unconditionally guaranteed by the U.S. government, or issued by an agency thereof and backed by the full faith and credit of the United States of America, which obligations mature within one year from the date of Investment, (iv) direct obligations issued by any State of the United States of America or political subdivision thereof, which mature within one year from the date of Investment and have the highest rating obtainable from Standard & Poor's Ratings Group, a Division of McGraw-Hill, Inc. or Moody's Investors Service, Inc. on the date of Investment, or (v) commercial paper (other than commercial paper issued by or on behalf of any Paging Entity) which has the highest rating obtainable from Standard & Poor's Ratings Group, a Division of McGraw-Hill, Inc. or Moody's Investors Service, Inc. on the date of Investment. "Change of Control" shall be deemed to have occurred (a) if such event has occurred under any definition or provision (or similar definition or provision) in any documentation relating to any Subordinated Indebtedness, or (b) in the event that either (i) any Person or any Persons acting together which would constitute a "group" (a "Group") for purposes of Section 13(d) of the Securities Exchange Act Of 1934, as amended (the "Exchange Act"), or any successor provision thereto, together with any Affiliates or Related Persons thereof, shall beneficially own (as defined in Rule 13d-3 of the Exchange Act or any successor provision thereto) at least 50% of the aggregate voting power of all classes of Voting Stock of PageNet; or (ii) any Company shall be less than 100% owned and controlled (directly or indirectly) by PageNet; or (iii) any Person or Group, together with any Affiliates or Related Persons thereof, shall succeed in having sufficient of its or their nominees elected to the Board of Directors of PageNet such that such nominees, when added to any existing director remaining on the Board of Directors of PageNet after such election who is an Affiliate or Related Person of such Group, shall constitute a majority of the Board of Directors of PageNet; provided, however, that clause (iii) above shall not apply to any Person or Group, or Affiliates or Related Persons thereof, who shall have succeeded on or prior to the Closing Date in electing directors who constitute a majority of the Board of Directors of PageNet. "Chase" means Chase Securities Inc, a Delaware corporation. 6 14 "Closing Date" means the date of this Agreement. "Co-Agents" means Bank of America, Illinois, Barclays Bank PLC, CIBC, INC., Compagnie Financiere de CIC et de L'Union Europeenne, CoreStates Bank, N.A., Credit Lyonnais New York Branch, Dresdner Bank AG, New York and Grand Cayman Branches, First Interstate Bank of Texas, N.A., Fleet National Bank, Mellon Bank, N.A., PNC Bank, National Association, Royal Bank of Canada, as Co-Agents and as Lenders. "Co-Syndication Agents" means The First National Bank of Boston and Chase, as Co-Syndication Agents. "Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "Collateral" means all Property on or in which a Lien is granted to the Documentation Agent, for the benefit of the Managing Agents and the Lenders, pursuant to this Agreement or any of the Security Documents or any other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. "Commitment" means, with respect to the Revolving Loan, $1,000,000,000 (which such amount includes the $25,000,000 Letter of Credit Commitment), or such reduced amount as may be determined pursuant to Section 2.14 or Section 2.15 hereof. "Communications Act" means, collectively, the Communications Act of 1934, as amended, and the rules and regulations promulgated thereunder, as from time to time in effect. "Company" and "Companies" means Paging Network Finance Corp., Paging Network Equipment Company, Inc., Paging Network of Alaska, Inc., Paging Network of America, Inc., Paging Network of Arizona, Inc., Paging Network of Atlanta, Inc., Paging Network of Colorado, Inc., Paging Network of Dallas/ Fort Worth, Inc., Paging Network of Florida, Inc., Paging Network of Hartford/Springfield, Inc., Paging Network of Hawaii, Inc., Paging Network of Illinois, Inc., Paging Network of Kansas City, Inc., Paging Network of Las Vegas, Inc., Paging Network of Los Angeles, Inc., Paging Network of Louisiana, Inc., Paging Network of Massachusetts, Inc., Paging Network of Michigan, Inc., Paging Network of Minnesota, Inc., Paging Network of New Jersey, Inc., Paging Network of New Mexico, Inc., Paging Network of New York, Inc., Paging Network of North Carolina, Inc., Paging Network of Northern California, Inc., Paging Network of Ohio, Inc., Paging Network of Oklahoma, Inc., Paging Network of Omaha, Inc., Paging Network of Oregon, Inc., Paging Network of Orlando, Inc., Paging Network of Philadelphia, Inc., Paging Network of San Antonio, Inc., Paging Network of San Francisco, Inc., Paging Network Services, Inc., Paging Network of Tennessee, Inc., Paging Network of Utah, Inc., Paging Network of Virginia, Inc. (Delaware Corp.), Paging Network of Virginia, Inc. (Virginia Corp.), Paging Network of Washington, Inc., Paging Network of Westchester, Inc., Paging Network of West Texas, Inc., Paging Network - Atlantic Region, Inc., Paging Network - Central Region, Inc., Paging Network - Northeastern Region, Inc., Paging Network - Northwestern Region, Inc., Paging Network - Southern Region, Inc., Paging Network - Southeastern Region, Inc., Paging Network - Southwestern Region, Inc., 7 15 Paging Network Satellite Company, Inc., and any other wholly-owned direct or indirect Restricted Subsidiary of PageNet that becomes a party to this Agreement in accordance with the terms of Section 2.20 hereof and Section 9.12(e) hereof "Compliance Certificate" means a compliance certificate in the form of Exhibit E hereto. "Controlled Group" means, as to any Person on any date of determination, all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) which are under common control with such Person and which, together with such Person, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code; provided, however, that the Paging Entities shall be deemed to be members of the Companies' Controlled Group, and Paging Entities and any other entities (whether incorporated or not incorporated) which are under common control with the Paging Entities and which, together with the Paging Entities are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code, shall be deemed to be members of the Companies' Controlled Group on and after the Closing Date. "Default" means an Event of Default and/or any of the events specified in Article X hereof, regardless of whether there shall have occurred any passage of time or giving of notice that would be necessary in order to constitute such event an Event of Default. "Documentation Agent" means NationsBank in its capacity as documentation agent and collateral agent for the Lenders pursuant to Article XI hereof and not in its individual capacity as a Lender, and any successor Documentation Agent appointed pursuant to Article XI hereof. "Dollar(s)" and the sign "$" means lawful money of the United States of America. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulation promulgated thereunder. "ERISA Event" means, with respect to the Paging Entities and each member of their Controlled Group, (a) a Reportable Event (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under regulations issued under Section 4043 of ERISA), (b) the withdrawal of any such Person or any member of its Controlled Group from a Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate under Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e) the failure to make required contributions which could result in the imposition of a lien under Section 412 of the Code or Section 302 of ERISA, or (f) any other event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or the imposition of any liability under Title IV of ERISA other than PBGC premiums due but not delinquent under Section 4007 of ERISA. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D. 8 16 "Eurocurrency Reserve Percentage" means, with respect to an Interest Period, the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under Regulation D for determining the actual reserve requirement incurred by any Lender (including, without limitation, any emergency, supplemental or other marginal reserve requirement) with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. "Event of Default" means any of the events described in Article X hereof, provided that any requirement for notice or lapse of time has been satisfied. "FCC" means the Federal Communications Commission or any other regulatory body which succeeds to the functions of the Federal Communications Commission. "Federal Funds Effective Rate" means, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of Dallas, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fee Letters" means each of those certain letters from the Companies to the Managing Agents (or any combination thereof), or to any of the other Lenders (or any combination thereof), setting forth fees to be paid in connection with the Revolving Loan and this Agreement, as each such fee letter may be amended, substituted, restated, extended, renewed or increased. "GAAP" means generally accepted accounting principles as in effect on December 31, 1995 in the United States, which shall include the official interpretations thereof by the Financial Accounting Standards Board, applied on a basis consistent with that used in preparation of the financial statements of the Paging Entities for the year ended December 31, 1995. The requisite that such principles be applied on a consistent basis shall mean that the accounting principles observed in a current period are comparable in all material respects to those applied in a preceding period. "Guarantors" means PageNet and any other Person executing a Guaranty of the Obligations of the Companies to the Lenders. "Guaranty" of a Person means any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor or such other Person against loss, including, without limitation, any comfort letter, 9 17 operating agreement or take-or-pay contract and shall include without limitation, the contingent liability of such Person in connection with any application for a letter of credit. "Highest Lawful Rate" means at the particular time in question the maximum rate of interest which, under Applicable Law, any Lender is then permitted to charge on the Obligations. If the maximum rate of interest which, under Applicable Law, any Lender is permitted to charge on the Obligations shall change after the date hereof, the Highest Lawful Rate shall be automatically increased or decreased, as the case may be, from time to time as of the effective time of each change in the Highest Lawful Rate without notice to the Notification Agent or any Company. For purposes of determining the Highest Lawful Rate under Applicable Law, the applicable rate ceiling shall be (i) the indicated rate ceiling described in and computed in accordance with the provisions of Section (a)(1) of Art. 1.04; or (ii) provided notice is given as required in Section (h)(1) of Art. 1.04, either the annualized ceiling or quarterly ceiling computed pursuant to Section (d) of Art. 1.04; provided, however, that at any time the indicated rate ceiling, the annualized ceiling or the quarterly ceiling, as applicable, shall be less than 18% per annum or more than 24% per annum, the provisions of Sections (b) (1) and (2) of Art. 1.04 shall control for purposes of such determination, as applicable. "Indebtedness" of a Person means such Person's (a) obligations for borrowed money, and obligations to reimburse drawings under letters of credit, (b) obligations representing the deferred purchase price of services or property other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade, (c) obligations, whether or not assumed, secured by Liens (other than Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens and other similar Liens, arising in the ordinary course of business which secure payment of obligations not more than 60 days past due) or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, or other similar instruments, (e) Capitalized Lease Obligations, and (f) obligations pursuant to any Guaranty, except for obligations of PageNet pursuant to Guaranties of its Restricted Subsidiaries' Indebtedness or obligations (but only to the extent duplicative) and obligations pursuant to performance bonds and surety bonds. "Indemnified Matters" has the meaning ascribed thereto in Section 7.10 hereof. "Indemnitees" has the meaning ascribed thereto in Section 7.10 hereof. "Institutional Affiliate" means the holding company of any Lender, or any wholly-owned direct or indirect subsidiary or branch of such holding company or principal office of such Lender. "Interbank Rate" means, with respect to a LIBOR Advance for the relevant Interest Period, the average of the rates of interest per annum (rounded upwards, if necessary, to the next 1/100 of 1%), as determined by the Administrative Agent, at which Dollar deposits in immediately available funds are offered by each Managing Agent two Business Days prior to the beginning of such Interest Period to major banks in the London interbank eurodollar market as 10 18 at or about 11:00 a.m., London time, for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount equal to the amount of such Managing Agent's portion of the LIBOR Advance to be outstanding during such Interest Period. "Interest Hedge Agreement" means any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, Dollar-denominated or cross- currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, as the same may be amended or modified and in effect from time to time, and any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing. "Interest Period" means, with respect to any LIBOR Advance, a period of one, two, three or six months (or nine or twelve months if each Lender deems such Interest Period to be available), commencing on a Business Day selected by the Notification Agent pursuant to Section 2.3 hereof. Such Interest Period shall end on the day in the appropriate succeeding calendar month which corresponds numerically to the beginning day of such Interest Period, provided, however, that if there is no such numerically corresponding day in such appropriate succeeding month, such Interest Period shall end on the last Business Day of such succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if the next succeeding Business Day falls in a new month, such Interest Period shall end on the immediately preceding Business Day. "Investment" of a Person means any loan, advance, extension of credit (excluding accounts receivable arising in the ordinary course of business on terms customary in the trade), deposit account or contribution of capital by such Person to any other Person or any investment in, or purchase or other acquisition of, the stock, notes, debentures or other securities of any other Person made by such Person. "Lead Managers" means Bank of Montreal, First Union National Bank of North Carolina, Mercantile Bank of St. Louis National Association, The Mitsubishi Trust and Banking Corporation, Chicago Branch, Societe Generale, as Lead Managers and as Lenders. "Lenders" means the institutions and entities not constituting a Paging Entity listed on the signature pages of this Agreement and their respective successors and assigns in accordance with Section 12.8 of this Agreement, including, without limitation, the Administrative Agent, the Documentation Agent, the Co-Syndication Agents, the Managing Agents, the Co-Agents and the Lead Managers. "Letters of Credit" means irrevocable standby letters of credit issued by NationsBank and set forth on Schedule 1.01 hereto, or issued subsequent to the Closing Date pursuant to Section 3.1 hereof, in form satisfactory to NationsBank, and any amendments, modifications, substitutions, extensions, renewals, or replacements thereof. 11 19 "Letter of Credit Commitment" means $25,000,000, provided that, the Letter of Credit Commitment may not at any time exceed the amount of the Commitment in effect from time to time. "LIBOR Advance" means any borrowing which bears interest at the LIBO Rate. "LIBO Rate" means a rate per annum equal to the lesser of the (a) Highest Lawful Rate and (b) the sum of the Interbank Rate plus the Applicable Margin. "Lien" means any security interest, mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement, lessor's interest under a Capitalized Lease or analogous instrument, in, of or on any Person's assets or properties in favor of any other Person. "Loan Documents" means this Agreement, the Notes, the Applications, the Letters of Credit, any Assignment and Acceptance Agreement, the Security Documents, documents relating to or evidencing the Collateral, all Fee Letters, any Interest Hedge Agreement executed by any Paging Entity and any Lender or any Institutional Affiliate, any other fee letter executed by any Paging Entity in favor of any Lender or Institutional Affiliate, any certificates delivered by any Paging Entity, any Restricted Subsidiary or any Guarantor or other Person on behalf of any Paging Entity from time to time, and any other documents, instruments and agreements executed or delivered from time to time in connection herewith or therewith, and any and all amendments, restatements, modifications, substitutions and extensions of any thereof. "Majority Lenders" means the Lenders in the aggregate obligated hereunder to make Advances under the Revolving Loan aggregating at least 66-2/3% of the Commitment, or if the Commitment shall have been reduced to zero pursuant to this Agreement, Lenders in the aggregate holding Total Outstandings evidencing at least 66-2/3% of the aggregate outstanding principal amount of the aggregate Total Outstandings. For purposes of this definition, each Lender shall be deemed to hold an amount equal to its Revolving Loan Specified Percentage of all outstanding Letters of Credit. "Management Fee" means any fee paid or payable by any Paging Entity to any Person that is not an employee or officer of such Paging Entity to compensate such Person for the management services provided by such Person to any Paging Entity (specifically excluding directors fees payable to members of the Board of Directors of PageNet for sitting on the Board). "Managing Agents" means Toronto Dominion, NationsBank, The First National Bank of Boston and Chemical Bank, each in its capacity as one of the managing agents under this Agreement and not in its individual capacity as a Lender, and their respective successors. "Material Adverse Effect" means any act or circumstance or event that (a) causes a Default or Event of Default, (b) otherwise could reasonably be expected to (i) be material and adverse to the continued operation of Paging Entities taken as a whole, or (ii) reduce any fiscal year's net income or increase any fiscal year's net loss of the Paging Entities by the greater of 12 20 (A) 15% of Operating Cash Flow for the most recently completed fiscal year and (B) $25,000,000 or (c) in any manner whatsoever does or could reasonably be expected to materially and adversely affect the validity or enforceability of any of the Loan Documents. "Maturity Date" means the earlier of December 31, 2004, or any earlier date the Revolving Loan becomes due and payable (whether by acceleration, repayment, prepayment, scheduled reduction, installment payment, reduction of the Commitment to zero or otherwise). "Maximum Amount" means the maximum amount of interest which, under Applicable Law, any Lender is permitted to charge on the Obligations. "Multiemployer Plan" means, as to any Person, at any time, a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to which such Person or any member of its Controlled Group is making, or is obligated to make, contributions or has made, or been obligated to make, contributions. "NationsBank" has the meaning set forth in the Preamble. "Net Asset Sales Proceeds" means the gross proceeds received by any Paging Entity in connection with or as a result of any disposition, transfer or other conveyance of any Property of any Paging Entity, minus the sum of (a) reasonable out-of-pocket costs and expenses incurred by any such Paging Entity in connection with such disposition payable to Persons not constituting an Affiliate of any Paging Entity plus (b) taxes estimated by an officer of PageNet and approved by two Authorized Officers to be paid or payable by such Paging Entity as a direct result of such disposition, taking into account all net operating losses and other tax benefits available to the Paging Entities, if any, provided, however, that if, after the payment of all taxes with respect to such disposition, (x) the amount of estimated taxes, if any, exceeded the tax amount actually paid in cash in respect of such disposition or (y) the amount reserved, if any, exceeded the actual associated liabilities in respect of such disposition, the aggregate amount of such excess shall be immediately payable, pursuant to the terms of this Agreement, as Net Asset Sale Proceeds. "Non-Affected Lender" has the meaning assigned thereto in Section 12.15 hereof. "Notes" means the Companies' Revolving Loan Notes, with appropriate insertions, and any amendments, modifications, substitutions, extensions, renewals or replacements thereof. "Notice of Assignment" has the meaning set forth in Section 12.10(b) hereof. "Notification Agent" means Paging Network Finance Corp., a Delaware corporation, or other Paging Entity designated by each of the Companies to be the Notification Agent upon notice to the Managing Agents and the Lenders in accordance with the terms of Section 12.2 hereof. "Obligations" means, as of any date of determination, (a) all obligations of any nature (whether matured or unmatured, fixed or contingent) of the Paging Entities to the Lenders and/or 13 21 any Institutional Affiliates under the Loan Documents, as they may be amended, increased, substituted or replaced from time to time (including, without limitation, unpaid principal of, and accrued and unpaid interest on, the Notes (including post-petition interest, whether or not it constitutes an allowed claim), all outstanding reimbursement obligations of the Paging Entities in respect of Letters of Credit, all contingent obligations of the Paging Entities under all Letters of Credit, all accrued and unpaid fees, and all other obligations (including but not limited to those under Sections 5.4, 7.10 and 12.3 hereof) of the Paging Entities to the Agents and the Lenders, or any of them, arising under the Loan Documents), (b) all obligations of any nature of the Paging Entities or any of them to any Lender or Institutional Affiliate in connection with any Interest Hedge Agreement, and (c) all obligations of the Paging Entities or any of them for losses, damages, expenses or any other liabilities of any kind that any Lender may suffer by reason of a breach by any Paging Entity of any obligation, covenant, or undertaking with respect to any Loan Document. "Operating Cash Flow" means, for any period of determination, the Paging Entities' consolidated pre-tax net income or loss, plus depreciation expense, amortization expense, Total Interest Expense, extraordinary loss and losses and non-cash charges, if any, minus extraordinary income and gains and non-cash income, if any. "Original Credit Agreement" has the meaning ascribed thereto in the Preamble hereof. "Original Lenders" means NationsBank of Texas, N.A., The Toronto-Dominion Bank, The First National Bank of Boston, Bank of Hawaii, Barclays Bank PLC, CIBC,Inc., Compagnie Financiere de CIC et de L'Union Europeenne, CoreStates Bank, N.A., Mellon Bank, N.A., PNC Bank, National Association, Royal Bank of Canada, ABN AMRO Bank N.V., Bank of America, Illinois, Credit Lyonnais New York Branch, Dresdner Bank AG, New York and Grand Cayman Branches, First Interstate Bank of Texas, N.A., First Union National Bank of North Carolina, Natwest Bank N.A., Shawmut Bank Connecticut, N.A., Societe Generale, The Bank of California, N.A., Bank of Ireland - Grand Cayman Branch, Bank of Montreal, Banque Paribas, Banque Francaise du Commerce Exterieur, The Daiwa Bank, Limited, First Hawaiian Bank, The First National Bank of Maryland, The Fuji Bank, Limited, Hibernia National Bank, Morgan Guaranty Trust Company of New York, The Long-Term Credit Bank of Japan, Limited, New York Branch, The Mitsubishi Trust and Banking Corporation, Chicago Branch, National Bank of Canada, Society National Bank, The Sumitomo Bank, Ltd. (Houston Agency), Crescent\Mach I Partners, L.P., Senior Debt Portfolio, Massachusetts Mutual Life Insurance Co., Merrill Lynch Senior Floating Rate Fund, Inc., Merrill Lynch Prime Rate Portfolio, Falcon 94, Limited, Pearl Street, L.P. and CHL High Yield Loan Portfolio. "PageNet" means Paging Network, Inc., a Delaware corporation. "Paging Entities" means PageNet, the Companies, any Subsidiary of PageNet or any Company, any Guarantor, and any other Person obligated under any Loan Document from time to time, but specifically excluding all Unrestricted Subsidiaries. "Participant" has the meaning set forth in Section 12.9(a) hereof. 14 22 "Payment Date" means as to any Base Rate Advance, fees and any mandatory Commitment reduction pursuant to Section 2.15 hereof, each Quarterly Date, and as to any LIBOR Advance, the last Business Day of each Interest Period with respect thereto and, if such Interest Period is in excess of three months, each three month anniversary date thereafter occurring during each such Interest Period; provided that, after the Maturity Date, "Payment Date" means the earlier of each Quarterly Date or demand by the Administrative Agent or the Documentation Agent. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means any corporation or division thereof, natural person, firm, joint venture, limited liability company, partnership, trust, unincorporated organization, enterprise, entity, tribunal, government or any department or agency of any government. "Plan" means an employee pension benefit plan as defined in Section 3(2) of ERISA (including a Multiemployer Plan) that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is maintained for the employees of the Paging Entities or any member of their Controlled Group. "Pledge Agreement" has the meaning set forth in Section 2.18(a) of this Agreement. "Pledged Stock" means stock pledged by PageNet and the Companies from time to time under the Pledge Agreements, or pledged by any Person from time to time, constituting Collateral and securing any portion of the Obligations. "Preferred Stock" means preferred stock to be issued by PageNet on terms and conditions and subject to documentation reasonably acceptable to the Majority Lenders. "Pro Forma Debt Service" means, with respect to the Paging Entities, for any period, the sum of (a) Total Interest Expense excluding amortization of debt issuance costs, and (b) required principal payments on Indebtedness and mandatory redemptions on Preferred Stock, provided that, the Paging Entities and the Lenders agree to use the weighted average of the applicable interest rates in effect on such date of determination for all Indebtedness subject to a floating rate. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person. "Purchaser" has the meaning set forth in Section 12.10(a) hereof. "Quarterly Date" means the last Business Day of each March, June, September and December, beginning with the first such date after the Closing Date and ending on the date the Commitment has been reduced to zero and the Total Outstandings and all Obligations have been paid in full. 15 23 "RCCC" has the meaning set forth in Section 6.11 hereof. "RCCS" has the meaning set forth in Section 6.11 hereof. "Refinancing Advance" means an Advance that is used to pay the principal amount of an existing Advance at the end of its Interest Period and which, after giving effect to such application, does not result in an increase in the aggregate amount of outstanding Advances. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System (or any successor thereto), as in effect from time to time or any successor thereto. "Related Person" of any Person means, without limitation, any other Person owning (a) 5% or more of the outstanding common stock of such Person or (b) 5% or more of the Voting Stock of such Person. "Reportable Event" has the meaning set forth in Title IV of ERISA. "Restricted Payments" has the meaning set forth in Section 9.8 hereof. "Restricted Subsidiary" means each Subsidiary of PageNet and the Companies that is not an Unrestricted Subsidiary. "Revolver Outstandings" means the sum of (a) the aggregate outstanding Advances under the Revolving Loan, plus (b) all accrued and unpaid interest on the aggregate outstanding Advances under the Revolving Loan, plus (c) the aggregate face amount of all outstanding Letters of Credit, plus (d) (without duplication) all outstanding reimbursement obligations of the Paging Entities in respect of all Letters of Credit, and all accrued and unpaid interest thereon. "Revolving Loan" means that certain revolving credit loan described in Section 2.1 hereof. "Revolving Loan Notes" means those certain promissory notes evidencing Advances under the Revolving Loan, executed by the Companies payable to each Lender obligated to make Advances under the Revolving Loan, as such notes may be amended, extended, replaced, modified, substituted or renewed from time to time. "Revolving Loan Specified Percentage" means, as to any Lender, the percentage indicated beside its name on the signature pages hereof as its Revolving Loan Specified Percentage, or as adjusted or specified in any Assignment and Acceptance Agreement, or any amendment to this Agreement. "SEC" means the Securities and Exchange Commission or any regulatory body that succeeds to the functions of the Securities and Exchange Commission. 16 24 "Security Documents" means the Pledge Agreement, guaranties executed by the Guarantors, security agreements executed by the Paging Entities, confirmation agreements, UCC-1 and UCC-3 financing statements and any other documents executed or delivered in connection therewith, and any other documents and instruments executed or delivered by any Person from time to time securing the Obligations, as any and all such documents and instruments listed above may be amended, restated, extended, substituted or replaced from time to time. " Senior Debt" means the Paging Entities' aggregate outstanding amount of total Indebtedness outstanding from time to time, except amounts outstanding with respect to Subordinated Indebtedness. "Solvent" means, with respect to any Person, that on such date (a) the fair value of the Property of such Person is greater than the total amount of liabilities, including without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (d) such Person is not engaged or about to engage in a business for which the remaining assets of the Person are unreasonably small in relation to the business. "Special Counsel" means Donohoe, Jameson & Carroll, P.C., or such other law firm designated by the Documentation Agent. "Subordinated Indebtedness" means (a) those certain 10.125% Senior Subordinated Notes due August 1, 2007 of PageNet, in an aggregate principal amount of $400,000,000, (b) the unsecured public debt of PageNet issued from time to time which is subordinated to the Obligations as permitted under Section 9.9(d) hereof, (c) those certain 8.875% Senior Subordinated Notes due February 1, 2006 of PageNet, in an aggregate principal amount of $300,000,000, (d) those certain 11.75% Senior Subordinated Notes due May 15, 2002 of PageNet, in an aggregate principal amount of $200,000,000, and (e) other debt securities from time to time issued in accordance with the terms of Section 9.9(d) hereof. "Subsidiary" means any Person, more than 50% of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by PageNet or by one or more of its Subsidiaries or by PageNet and one or more of its Subsidiaries, or any voluntary association, joint stock company, voting trust or similar organization which is so owned or controlled. "Substantial Portion" means, with respect to the Property of the Paging Entities, Property, the income from which produces more than 10% of the Paging Entities' Operating Cash Flow, as would be shown in the most recent consolidated financial statements of the Paging Entities furnished to the Lenders in accordance with Section 8.1 hereof. 17 25 "Super-Majority Lenders" means the Lenders in the aggregate having at least 90% of the Commitment or, if the Commitment shall have been terminated pursuant to this Agreement, holding Total Outstandings evidencing at least 90% of the aggregate outstanding principal amount of the Total Outstandings. For purposes of this definition, each Lender shall be deemed to hold an amount equal to its Revolving Loan Specified Percentage of all outstanding Letters of Credit. "Toronto Dominion" has the meaning set forth in the Preamble. "Total Debt" means the Paging Entities' aggregate outstanding amount of total Indebtedness from time to time. "Total Interest Expense" means, for the Paging Entities on a consolidated basis (without duplication), for any period of determination, the aggregate amount of the sum of (a) interest expense on Total Debt of the Paging Entities during such period as determined in accordance with GAAP, plus (b) cash dividends or other cash payments on Preferred Stock of PageNet during such period as determined in accordance with GAAP, plus (c) amortized costs and expenses of the Paging Entities in connection with interest rate caps or swaps or other interest rate protection arrangements during such period plus (d) fees paid by the Paging Entities in accordance with the provisions of Sections 2.8(a) and 3.2 of this Agreement during such period to the extent not already included in interest expense. "Total Leverage Ratio" means the ratio, for the most recent fiscal quarter during the period of determination, of (a) Total Debt as of the end of such period, to (b) Annualized Operating Cash Flow for such period. "Total Outstandings" means the sum of (a) the Revolver Outstandings, plus (b) (without duplication) all other unpaid Obligations owing to any Agent or any Lender. "Transferee" has the meaning set forth in Section 12.11 hereof. "Unrestricted Subsidiaries" means Paging Network Canadian Holdings, Inc., Paging Network of Canada Inc., Paging Network International, Inc., Paging Network International N.V., PageNet de Argentina, S.A., Paging Network (UK), Limited, and (a) after prior written notice to each Managing Agent and the Lenders, any Subsidiary (other than any Subsidiary that is a Company) acquired or invested in by PageNet after the Closing Date in accordance with the terms of Section 9.12(f) hereof and designated as an Unrestricted Subsidiary in such notice, and (b) any Subsidiary of PageNet designated by PageNet as an Unrestricted Subsidiary with the prior written consent of each Lender. "Voting Stock" of any Person means Capital Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. 18 26 1.2. Financial Terms. Unless otherwise defined or the context otherwise requires, all financial and accounting terms shall be defined under GAAP. ARTICLE II THE REDUCING REVOLVING CREDIT FACILITY Subject to the terms and conditions of this Agreement, each Lender, severally but not jointly, agrees: 2.1. Advances. Each Lender severally agrees, subject to the terms and conditions hereinafter set forth, to make Advances under the Revolving Loan to the Companies from the Closing Date until the Maturity Date in an aggregate outstanding amount not to exceed, at any time outstanding such Lender's Revolving Loan Specified Percentage of the Commitment. Each Advance under the Revolving Loan shall be either a Base Rate Advance or a LIBOR Advance, as specified in the related notice of conversion or request for Advance, as applicable; provided that, after the occurrence and during the continuance of any Event of Default, LIBOR Advances shall not be available to the Companies. Subject to Sections 2.2 and 2.3 and the other terms and conditions of this Agreement, the Companies may convert a Base Rate Advance made under the Revolving Loan to a LIBOR Advance at any time after the Closing Date. All Advances made under this Section 2.1 shall be made in accordance with Sections 2.2 and 2.3 below. Subject to Section 4.1 and Section 4.2 hereof, the Companies may borrow, repay, and reborrow Advances under the Revolving Loan in accordance with this Agreement. Notwithstanding anything herein to the contrary, at no time shall the Advances outstanding under the Revolving Loan, together with all outstanding Letters of Credit issued pursuant to Article III hereof exceed in the aggregate an amount equal to the Commitment. 2.2. Advances, Generally. Base Rate Advances and LIBOR Advances are available under the Revolving Loan, as selected by the Notification Agent in accordance with the terms of Section 2.3 below. Base Rate Advances and LIBOR Advances may be outstanding at the same time, but no more than 12 LIBOR Advances may be outstanding under the Revolving Loan at any time. As to any LIBOR Advances, each Lender may, if it so elects, fulfill its commitment by causing a foreign branch or Affiliate to make such Advance, provided that in such event such Advance shall be deemed for the purposes of this Agreement to have been made by such Lender and the obligation of the Companies to repay such Advance shall nevertheless be to such Lender and shall be deemed held by the Lender, to the extent of such Advance, for the account of such branch or Affiliate. 2.3. Borrowing Procedures. (a) The Notification Agent on behalf of the Companies shall give the Administrative Agent at least (i) three Business Days prior telephonic notice (prior to 10:00 a.m., Dallas time, for any day to be counted as a Business Day) (promptly confined by telecopy) of each Advance which is to be a LIBOR Advance, or (ii) one Business Day prior telephonic notice (prior to 10:00 a.m. Dallas time, for any day to be counted as a Business Day) (promptly confirmed by 19 27 telecopy) of each Advance which is to be a Base Rate Advance, each specifying (A) the borrowing date (which day shall be a Business Day), (B) the amount and type of Advance, (C) whether such Advance is an Advance made under the Revolving Loan or a Refinancing Advance made under the Revolving Loan, and (D) if such Advance is to be a LIBOR Advance, the initial Interest Period for such Advance, and the Administrative Agent shall promptly advise each Lender thereof. Each Base Rate Advance shall be in a minimum aggregate amount of $500,000 or an integral multiple of $250,000. Each LIBOR Advance shall be in a minimum amount of $10,000,000 or a greater integral multiple of $100,000. No Advance shall have an Interest Period which extends beyond the Maturity Date. (b) Not later than 12:00 p.m., New York time, on the date of a proposed borrowing of any Advance, each Lender shall provide the Administrative Agent at its principal office in New York with immediately available funds covering such Lender's Revolving Loan Specified Percentage of any borrowing that is not a Refinancing Advance and the Administrative Agent shall pay over such funds to the Notification Agent upon the Administrative Agent's receipt of the documents required under Article IV hereof with respect to such Advance. (c) If at least three Business Days prior to the end of an Interest Period for an outstanding LIBOR Advance, the Notification Agent fails to select a new loan option, then, subject to Section 2.13 hereof, such LIBOR Advance shall be converted to a Base Rate Advance on and after the last day of such Interest Period until paid or until the effective date of any new loan option with respect thereto selected by the Notification Agent in accordance with the terms of this Agreement. If at the end of an Interest Period for an outstanding LIBOR Advance an Event of Default has occurred and is continuing, then each such LIBOR Advance shall be converted to a Base Rate Advance for LIBOR Advances under the Revolving Loan, on and after the last day of such Interest Period until paid or until the effective date of any new loan option with respect thereto selected by the Notification Agent in accordance with the terms of this Agreement. So long as there exists no Event of Default or Default at such time, an outstanding Base Rate Advance may be converted to a LIBOR Advance at any time subject to the notice provisions of Section 2.3(a) hereof. The Notification Agent shall select Interest Periods with respect to LIBOR Advances so that it is not necessary to pay a LIBOR Advance prior to the last day of the applicable Interest Period in order to make a mandatory principal payment required to be made pursuant to Section 2.13 hereof. If any Interest Period includes a Payment Date in respect of any mandatory Commitment reduction pursuant to Section 2.15 hereof or repayment or prepayment pursuant to Section 2.12 and Section 2.13 hereof, (i) the principal amount of the Advances to be repaid on such date shall have an Interest Period ending on such date (and the Companies shall pay all costs associated therewith in accordance with the terms of Section 5.4 hereof), and (ii) the remainder of any of the Advances shall have an Interest Period as shall have been selected by the Notification Agent pursuant to Section 2.3(a) above. 2.4. Notes. The Revolving Loan shall be evidenced by Notes in the form of Exhibit C hereto, each of which shall be dated the date hereof and made payable to the order of each Lender making any portion of the Revolving Loan. All Advances made by the Lenders to the Companies pursuant to this Agreement and all payments of principal shall be evidenced by each Lender in its records, or, at such Lender's option, on the schedule attached to its respective 20 28 Notes, which records or schedule shall be rebuttable presumptive evidence of the subject matter thereof. 2.5. Interest - Base Rate Advances. The unpaid principal amount of the Base Rate Advances shall bear interest prior to maturity at a rate per annum equal to the Base Rate. Interest on Base Rate Advances prior to maturity shall be payable on each Payment Date commencing on the first such date to occur after the Closing Date and continuing until the Total Outstandings and Obligations have been paid in full and the Commitment has been reduced to zero. 2.6. Interest - LIBOR Advances. The unpaid principal amount of the LIBOR Advances shall bear interest prior to maturity at a rate per annum equal to the LIBO Rate in effect for each Interest Period as determined for such Interest Period. Interest on LIBOR Advances prior to maturity shall be payable on each Payment Date commencing on the first such date to occur after the Closing Date and continuing until the Total Outstandings and Obligations have been paid in full and the Commitment has been reduced to zero. 2.7. Post-Default Interest. Subject to Section 12.16 hereof, after the occurrence and during the existence of an Event of Default, the Total Outstandings shall accrue interest, and the Companies shall pay to the Lenders interest on such amounts until the date of payment in full of Total Outstandings, at a rate per annum which is equal to the lesser of the (a) Highest Lawful Rate or (b) the greater of (i) 2% plus the rates otherwise applicable to the Total Outstandings, or (ii) 3% plus the Base Rate from time to time in effect, provided that, after the Maturity Date the interest rate shall never be less than the lesser of the Highest Lawful Rate and 3% in excess of the Base Rate in effect at maturity. Interest under this Section 2.7 shall be payable on the earlier of each Payment Date and demand by the Lenders. Interest after the Maturity Date shall be payable on demand. 2.8. Fees. (a) Subject to Section 12.16 hereof, the Companies agree to pay to the Administrative Agent on behalf of the Lenders, in accordance with their Revolving Loan Specified Percentages, a commitment fee of 0.375% per annum on the daily average of the unused amount of the Commitment during the period commencing on the Closing Date and ending on the Maturity Date, provided that, on such Quarterly Date as the Total Leverage Ratio is less than 4.50 to 1.00, the commitment fee shall be reduced to 0.250% per annum. The commitment fee shall be due and payable as it accrues on each Payment Date during the term of this Agreement, commencing on the first such date to occur after the Closing Date and ending on the Maturity Date. All accrued and unpaid fees shall be due and payable on the Maturity Date. Subject to Section 12.16 hereof, once paid, all such fees shall be non-refundable. (b) Subject to Section 12.16 hereof, the Companies shall pay such fees to the Managing Agents and the Lenders as are set forth in the Fee Letters. 21 29 2.9. Method of Calculating Interest and Fees. Interest on Base Rate Advances shall be computed for actual days elapsed on the basis of a year consisting of 365, or when appropriate 366, days. Interest on LIBOR Advances, any and all fees hereunder and the Federal Funds Effective Rate owed by any Lender, subject to Section 12.16 hereof, shall be computed for actual days elapsed on the basis of a year consisting of 360 days and paid for actual days elapsed. 2.10. Interest Recapture. If at any time the applicable rate of interest under this Agreement on any portion of the Obligations (the "Designated Rate") exceeds the Highest Lawful Rate, the rate of interest on any Advance shall be limited to the Highest Lawful Rate, but any subsequent reductions in the Designated Rate shall not reduce the rate of interest thereon below the Highest Lawful Rate until the total amount of interest paid and accrued thereon equals the amount of interest which would have accrued thereon if the Designated Rate had at all times been in effect. In the event that at maturity (stated or by acceleration or otherwise), or at final payment of the Obligations, the total amount of interest paid and accrued is less than the amount of interest which would have accrued if the Designated Rate had at all times been in effect, then, at such time and to the extent permitted by law, the Companies shall pay to the Lenders an amount equal to the difference between (i) the lesser of the amount of interest which would have accrued if the Designated Rate had at au times been in effect and the amount of interest which would have accrued if the Highest Lawful Rate had at all times been in effect, and (ii) the amount of interest actually paid on the Obligations. 2.11. Place of Payment. All payments hereunder (including payments with respect to the Notes, but subject to the provisions of Article III hereof) shall be made without set-off or counterclaim and shall be made in immediately available funds by the Notification Agent on behalf of the Companies to the Administrative Agent, and, prior to an Event of Default and except as otherwise specifically provided in this Agreement, for the account of the Lenders ratably in accordance with each Lender's Revolving Loan Specified Percentage. All such payments shall be made to the Administrative Agent, prior to 12:00 p.m., New York time, at its offices or at such other place as may be designated by the Administrative Agent to the Notification Agent in writing. The Administrative Agent shall promptly remit in immediately available funds to each Lender its share of all such payments received by the Administrative Agent for the account of such Lender. Any payment received after 2:00 p.m., New York time, shall be deemed received on the next Business Day. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a date other than a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall be included in the computation of payment of interest or any fees. The Companies hereby authorize the Administrative Agent to credit the proceeds of each Advance to the depository account of the Notification Agent as specified by the Notification Agent in writing from time to time. 2.12. Voluntary Principal Payments and Prepayments. The Companies may from time to time pay all outstanding Base Rate Advances, or, in a minimum aggregate amount of $500,000 or any integral multiple thereof, any portion of the outstanding Base Rate Advances, upon same day notice by 10:00 a.m., Dallas time (telephonic notice to be followed by written 22 30 confirmation) to the Administrative Agent (and the Administrative Agent shall promptly advise each Lender thereof) without penalty or premium. Subject to Section 5.4 hereof, the Companies may from time to time pay all outstanding LIBOR Advances, or, in a minimum aggregate amount of $500,000, or a greater integral multiple of $100,000, any portion of the outstanding LIBOR Advances, upon two Business Days notice by 10:00 a.m., Dallas time (telephonic notice to be followed by written confirmation), to the Administrative Agent (and the Administrative Agent shall promptly advise each Lender thereof), but in no event shall the Companies pay any portion of any LIBOR Advance which would result in such remaining outstanding LIBOR Advance being more than zero and less than $10,000,000 in the aggregate. Unless otherwise designated by the Notification Agent, all voluntary payments and prepayments shall be applied first to Base Rate Advances outstanding under the Revolving Loan and then LIBOR Advances outstanding under the Revolving Loan. Any amounts prepaid on the Revolving Loan under this Section 2.12 shall reduce the Advances outstanding under the Revolving Loan and, subject to compliance with all terms and provisions of this Agreement (including without limitation, Article IV hereof) may be reborrowed. 2.13. Mandatory Principal Payments. (a) The Revolving Loan and Other Obligations. Subject to Section 5.4 hereof, on any date that the aggregate outstanding Advances under the Revolving Loan, together with the face amounts of all Letters of Credit issued pursuant to Article III hereof, exceed the Commitment (as reduced by any event described in Sections 2.14 or 2.15 hereof), the Companies shall immediately make a mandatory principal payment and pay or prepay the Revolving Loan Notes in the amount necessary to reduce the aggregate outstandings Advances under the Revolving Loan to an amount equal to or less than the Commitment as so reduced, provided that, except as required pursuant to Section 2.13(b) and Section 2.13(c) below, no prepayment of an Advance or any portion of the Revolving Loan shall be made other than on the last day of an Interest Period therefor, and accrued commitment fees, all other fees, interest and amounts owed under Section 5.4 hereof shall be due and payable concurrently therewith. Notwithstanding any other provision in this Agreement or in the other Loan Documents, the Commitment shall be reduced to zero on the Maturity Date and all. Total Outstandings and other outstanding Obligations hereunder shall be due and payable in full on the Maturity Date. (b) Sale of Properties. If any Paging Entity sells or disposes of any Property or assets (except sales and dispositions permitted in accordance with the terms of Section 9.14(a), (b) and (c) hereof), then, to the extent the Net Asset Sale Proceeds of all such sales in the aggregate over the term of this Agreement exceed $5,000,000, the Companies shall, on the closing date of such sale, make a mandatory prepayment on the Notes in an amount equal to 100% of the Net Asset Sale Proceeds in excess of such amount from such disposition. All mandatory prepayments shall be applied to Base Rate Advances outstanding under the Revolving Loan and then LIBOR Advances outstanding under the Revolving Loan. (c) Change of Control. Not less than 20 Business Days prior to the consummation of any transaction that would cause a Change in Control, the Notification Agent shall notify (a "Change in Control Notice") the Agents and each Lender of such expected transaction, including 23 31 within such Change in Control Notice the expected closing date of such transaction. Unless an earlier date is otherwise agreed upon between the Companies, the Agents and the Lenders, the Companies shall repay on the date of the closing of the transaction, all of the Obligations (whereupon the Commitment shall be terminated), and shall comply with the provisions of Section 3.3(b) hereof with respect to outstanding Letters of Credit. (d) Mandatory Payments and Prepayments, Generally. No payment or prepayment under Sections 2.13(b) and (c) shall relieve or defer the obligation of the Companies to repay the Obligations as a result of the mandatory commitment reduction set forth in Section 2.15 hereof 2.14. Voluntary Reduction or Reduction of the Commitment to Zero. Subject to the provisions of Section 2.15 hereof, the Companies may from time to time, prior to the Maturity Date, upon at least three Business Days' prior written notice received by the Agents (and the Administrative Agent shall promptly advise each Lender thereof) permanently reduce the amount of the Commitment (such reduction to be made among the Lenders according to their Revolving Loan Specified Percentage of the Commitment). Any such reduction shall be in an amount of $5,000,000 or an integral multiple thereof. No such voluntary reduction will relieve the Companies of their obligations under Section 2.15 hereof, provided however that, each voluntary reduction in the Commitment made in accordance with the terms of this Section 2.14 will reduce each quarterly reduction in the Commitment required by Section 2.15(a) below on a pro rata basis. The Companies may at any time on like notice from the Notification Agent permanently and irrevocably reduce the Commitment to zero upon payment in full of the outstanding Notes and other Obligations of the Companies hereunder. 2.15. Mandatory Reduction of Commitment. (a) Scheduled Commitment Reductions. Commencing June 30, 2001, the aggregate Commitment shall be automatically and permanently reduced (without regard to any previous reductions or terminations thereof pursuant to Section 2.14 or other provisions of this Section 2.15, provided however, that any voluntary reduction in the Commitment made in accordance with the terms of Section 2.14 above will reduce the mandatory reductions in the Commitment required by this Section 2.15(a) pro rata over the remaining dates of reduction) by an amount equal to the amount set forth below opposite each such Payment Date set forth below (such reduction to be applied pro rata among the Lenders according to their respective Revolving Loan Specified Percentage of the Commitment) until the Commitment is zero, provided that the Commitment shall be reduced to zero on the Maturity Date:
Payment Date Amount of Reduction ------------ ------------------- June 30, 2001 $ 50,000,000.00 September 30, 2001 s 50,000,000.00 December 31, 2001 $ 50,000,000.00
24 32 March 31, 2002 $ 50,000,000.00 June 30, 2002 $ 50,000,000.00 September 30, 2002 $ 50,000,000.00 December 31, 2002 $ 50,000,000.00 March 31, 2003 $ 62,500,000.00 June 30, 2003 $ 62,500,000.00 September 30, 2003 $ 62,500,000.00 December 31, 2003 $ 62,500,000.00 March 31, 2004 $100,000,000.00 June 30, 2004 $100,000,000.00 September 30, 2004 $100,000,000.00 December 31, 2004 $100,000,000.00 - the Commitment shall be zero.
(b) Change of Control. Not less than 20 Business Days prior to the consummation of any transaction that would cause a Change in Control, the Notification Agent shall notify (a "Change in Control Notice") the Agents and each Lender of such expected transaction, including within such Change in Control Notice the expected closing date of such transaction. Unless an earlier date is otherwise agreed upon between the Companies, the Agents and the Lenders, the aggregate Commitment shall be reduced to zero simultaneously with the closing of such transaction and the Companies shall repay at such time all of the Obligations and shall comply with the provisions of Section 3.3(b) hereof with respect to outstanding Letters of Credit. 2.16. Offset. In addition to and not in limitation of all rights of offset that any Lender or other holder of any part of the Obligation may have under Applicable Law, each Lender or other holder of any part of the Obligation shall, upon the occurrence and during the existence of any Event of Default described in Article X hereof (or Default under Section 10.4 hereof) and with the consent of the Managing Agents, have the right to appropriate and apply to the payment of such Obligations any and all balances, credits, deposits, accounts or moneys of the Paging Entities then or thereafter with such Lender or other holder. 2.17. Proration of Payments. If any Lender or other holder of any part of the Obligation shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise) on account of any part of the Obligation in excess of its ratable share (as determined in accordance with Section 12.14 hereof) of payments and other recoveries obtained by all Lenders or other holders on account of the Obligations then held by them, such Lender or other holder shall purchase from the other Lenders or holders such participation in the Obligations held by them as shall be necessary to cause such purchasing Lender or other holder to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing holder, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. The Paging Entities agree that any Lender so purchasing a participation from the other Lenders under Section 12.9 hereof or this Section 2.17 may exercise all its rights of payment, including the right of set-off, 25 33 with respect to such participation as fully as if such Lender were the direct creditor of the Paging Entities in the amount of such participation. 2.18. Collateral and Collateral Call. (a) Collateral. Payment of the Obligations is secured on a pari-passu basis by (a) a first perfected security interest in all of the capital stock of the Companies and each of their Restricted Subsidiaries, whether now existing or hereafter acquired, pursuant to that certain Amended and Restated Pledge Agreement, dated as of the date hereof, between PageNet, the Companies and the Documentation Agent (as the same may be further amended or modified from time to time, herein called the "Pledge Agreement"), (b) a first perfected security interest in all of the tangible and intangible assets of PageNet, the Companies and the Restricted Subsidiaries, whether now existing or hereafter acquired, including, without limitation, the accounts, equipment, inventory and general intangibles of PageNet, the Companies and the Restricted Subsidiaries of the Companies, provided that real Property (both leasehold and fee owned), motor vehicles, fixtures, intellectual property that does not constitute tradenames and trademarks, deposit accounts, other bank accounts and chattel paper of PageNet and the Companies shall not, on the Closing Date, be included in Collateral, and (c) a Guaranty of the Obligations by PageNet, each Company and each Restricted Subsidiary of the Companies, whether now existing or hereafter acquired. PageNet and the Companies agree that they will execute and deliver, or cause to be executed and delivered, such documents as the Documentation Agent may from time to time request to create and perfect a first Lien for the benefit of the Agents and the Lenders in the Collateral. (b) Collateral Call. PageNet and the Companies agree, and agree to cause any other Person owning any interest in any Company or any Restricted Subsidiary now or hereafter from time to time to immediately pledge such interest to secure the Obligation, pursuant to a pledge agreement substantially in the form of the Pledge Agreement. PageNet and the Companies agree to, and agree to cause the Restricted Subsidiaries from time to time to, grant the Documentation Agent on behalf of the Agents and the Lenders from time to time at the request of the Agents, or the Agents at the request of the Majority Lenders, a Lien on any of the Property of PageNet and/or any Company or any Restricted Subsidiary not already constituting Collateral. In that regard, PageNet and the Companies shall, and shall cause the Restricted Subsidiaries to, use best efforts to assist the Documentation Agent and the Lenders in creating and perfecting a first Lien, for the benefit of Documentation Agent on behalf of the Agents and the Lenders securing the Obligation in any such Property of PageNet, the Companies and their Restricted Subsidiaries, including, without limitation, providing the Documentation Agent with title commitments, appraisals, surveys (with flood plain certification), mortgagee title insurance, evidence of insurance including flood hazard insurance, environmental audits, UCC-11 searches, Tax and Lien searches, recorded real estate documents, intellectual property documentation and registration and other similar types of documents, consents, authorizations, licenses instruments and agreements relating to all Property of PageNet, the Companies and the Restricted Subsidiaries as reasonably requested by the Documentation Agent from time to time. 26 34 2.19. Taxes. (a) Any and all payments by PageNet and/or the Companies hereunder shall be made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges and withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Agent and the Documentation Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Administrative Agent or the Documentation Agent (as the case may be) is organized or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If any Company shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent or the Documentation Agent, (x) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.19) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (y) the Companies shall make such deductions and (z) the Companies shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with Applicable Law. (b) In addition, the Companies agree to pay any and all stamp and documentary taxes and any and all other excise and property taxes, charges and similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "Other Taxes"). (c) The Paging Entities will indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.19) paid by such Lender or the Administrative Agent or the Documentation Agent (as the case may be) and all liabilities (including penalties, additions to tax, interest and reasonable expenses) arising therefrom or with respect thereto whether or not such Taxes or Other Taxes were correctly or legally asserted, other than penalties, additions to tax, interest and expenses arising as a result of gross negligence on the part of such Lender or the Administrative Agent or the Documentation Agent, provided, however, that the Paging Entities shall have no obligation to indemnify such Lender or the Administrative Agent unless and until such Lender or the Administrative Agent shall have delivered to the Notification Agent a certificate setting forth in reasonable detail the basis of the Paging Entities' obligation to indemnify such Lender or the Administrative Agent pursuant to this Section 2.19. This indemnification shall be made within 30 days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Notification Agent on behalf of the Companies will furnish to the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof. If no Taxes are payable in respect of any payment hereunder, the Notification Agent on behalf of the Companies will furnish to the Administrative 27 35 Agent a certificate from each appropriate taxing authority, or an opinion of counsel acceptable to the Administrative Agent, in either case stating that such payment is exempt from or not subject to Taxes, provided, however, that such certificate or opinion need only be given if: (i) the Companies make any payment from any account located outside the United States, or (ii) the payment is made by a payor that is not a United States Person. For purposes of this Section 2.19 the terms "United States" and "United States Person" shall have the meanings set forth in Section 7701 of the Code. (e) Without prejudice to the survival of any other agreement of the Paging Entities hereunder, the agreements and obligations of the Paging Entities contained in this Section 2.19 shall survive the payment in full of the Obligations and the termination of this Agreement. (f) Any Lender claiming any additional amounts payable pursuant to this Section 2.19 shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its lending office, if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts which may thereafter accrue and would not, in the sole judgment of such Lender, be otherwise disadvantageous to such Lender. (g) Each Lender (and the Administrative Agent and the Documentation Agent with respect to payments to the Administrative Agent and the Documentation Agent for their own account) agrees that (i) it will take all reasonable actions by all usual means to maintain all exemptions, if any, available to it from United States withholding taxes (whether available by treaty, existing administrative waiver, by virtue of the location of any Lender's lending office) and (ii) otherwise cooperate with the Companies to minimize amounts payable by the Companies under this Section 2.19; provided, however, the Lenders and the Administrative Agent and the Documentation Agent shall not be obligated by reason of this Section 2.19(g) to contest the payment of any Taxes or Other Taxes or to disclose any information regarding its tax affairs or tax computations or reorder its tax or other affairs or tax or other planning. (h) If any Lender that has claimed any additional amounts payable pursuant to this Section 2.19 shall, subsequent to the date thereof recover all or any portion of such amount in the form of a refund, rebate or other tax benefit, then such Lender shall refund to the Notification Agent any such amount claimed hereunder and subsequently recovered. 2.20. Formation of New Companies. PageNet and each Company agree that upon the formation or acquisition of any new Restricted Subsidiary of PageNet, to (a) immediately pledge 100% of the Capital Stock of such new Restricted Subsidiary of PageNet to the Documentation Agent on behalf of the Lenders to secure the Obligations, and (b) immediately cause such new Restricted Subsidiary of PageNet to (i) become a party to this Agreement as a "Company" and become a party to all other Loan Documents pursuant to documentation deemed appropriate by the Documentation Agent and the Managing Agents, and (ii) grant a security interest and Lien on all assets and Properties of such new Restricted Subsidiary to secure the Obligations pursuant to documentation deemed appropriate by the Documentation Agent and the Managing Agents. 28 36 ARTICLE III LETTERS OF CREDIT 3.1. Issuance of Letters of Credit. The Notification Agent shall give the Administrative Agent and NationsBank not less than three Business Days prior written notice of a request for the issuance of a Letter of Credit, and the Administrative Agent shall promptly notify each Lender of such request. Upon receipt of the Notification Agent's properly completed and duly executed Applications and subject to the terms of such Applications and to the terms of this Agreement, NationsBank agrees to issue Letters of Credit on behalf of the Companies in an aggregate face amount not in excess of the Letter of Credit Commitment at any one time outstanding. No Letter of Credit shall have a maturity extending beyond the earliest of (a) the Maturity Date, or (b) one year from the date of its issuance, or (c) such earlier date as may be required to enable the Companies to satisfy their repayment obligations under Section 2.13 hereof. Subject to such maturity limitations and so long as no Default or Event of Default has occurred and is continuing or would result from the renewal of a Letter of Credit, the Letters of Credit may be renewed by NationsBank in its discretion. The Lenders shall participate ratably in any liability under the Letters of Credit and in any unpaid reimbursement obligations of the Companies with respect to any Letter of Credit in their Revolving Loan Specified Percentage. The amount of the Letters of Credit issued and outstanding and the unpaid reimbursement obligations of the Companies for such Letters of Credit shall reduce the amount of Commitment available, so that at no time shall outstanding Advances under the Revolving Loan in the aggregate exceed the Commitment, and at no time shall the sum of all Advances by any Lender made under the Revolving Loan, plus its ratable share of amounts available to be drawn under the Letters of Credit and the unpaid reimbursement obligations of the Companies in respect of such Letters of Credit exceed its Revolving Loan Specified Percentage of the Commitment. 3.2. Letters of Credit Fee. In consideration for the issuance of each Letter of Credit, the Companies shall pay to the Administrative Agent for the account of NationsBank and the Lenders, in accordance with their Revolving Loan Specified Percentages, a letter of credit fee in an amount equal to a percentage per annum of the face amount of such Letter of Credit equal to the Applicable Margin for LIBOR Advances under the Revolving Loan in effect on the date of issuance. The letter of credit fee shall accrue from the date of issuance of each Letter of Credit and shall be payable in arrears on each Payment Date and on the date of termination of such Letter of Credit, and upon NationsBank's or Administrative Agent's demand pursuant to Section 3.3 hereof. 3.3. Reimbursement Obligations. (a) The Companies hereby agree to reimburse NationsBank, immediately upon demand by NationsBank or the Administrative Agent, and in immediately available funds, for any payment or disbursement made by NationsBank under any Letter of Credit. Payment shall be made by the Companies with interest on the amount so paid or disbursed by NationsBank from and including the date payment is made under any Letter of Credit to and including the date of 29 37 payment, at the Base Rate in effect from time to time plus three percent per annum; provided, however, that if the Companies would be permitted under the terms of Section 2.1, Section 2.2, Section 2.3 and Section 4.2 to borrow Advances in amounts at least equal to their reimbursement obligation for a drawing under any Letter of Credit, a Base Rate Advance by each Lender, in an amount equal to such Lender's Revolving Loan Specified Percentage, shall automatically be deemed made on the date of any such payment or disbursement made by NationsBank in the amount of such obligation and subject to the terms of this Agreement. (b) The Companies hereby also agree to pay to NationsBank, immediately upon demand by NationsBank or the Administrative Agent and in immediately available funds, as security for their reimbursement obligations in respect of the Letters of Credit under Section 3.3(a) hereof and any other amounts payable hereunder and under the Notes, an amount equal to the aggregate amount available to be drawn under Letters of Credit then outstanding, irrespective of whether the Letters of Credit have been drawn upon, at the occurrence of any of the following events: (i) upon an Event of Default, and (ii) upon a Change of Control. Any such payments shall be deposited in a separate account designated "PageNet Special Account" or such other designation as NationsBank shall elect. All such amounts deposited with NationsBank shall be and shall remain funds of the Companies on deposit with NationsBank and may be invested by NationsBank as NationsBank shall determine. Such amounts may not be used by NationsBank to pay the drawings under the Letters of Credit; however, such amounts may be used by NationsBank as reimbursement for Letter of Credit drawings which NationsBank has paid. If any amounts in the PageNet Special Account shall have been deposited upon the occurrence of an Event of Default only and such Event of Default shall have been subsequently cured or waived and no other Event of Default exists, the Companies shall be relieved of their obligations under this Section 3.3(b) until either of the two events specified in subsections 3.3(b)(i) or (ii) shall occur again. During the existence of an Event of Default but after the expiry of any Letter of Credit that was not drawn upon, the Notification Agent may direct the Administrative Agent to use any cash collateral for any such expired Letter of Credit, if any, to reduce the amount of Total Outstandings. Any amounts remaining in the PageNet Special Account, after the date of the expiry of all Letters of Credit and after all Obligations have been paid in full, shall be repaid to the Notification Agent promptly after such expiry and such payment in full. (c) The obligations of the Companies under this Section 3.3 will continue until all Letters of Credit have expired and all reimbursement obligations with respect thereto have been paid in full by the Companies and until all other Obligations shall have been paid in full. (d) The Companies shall be obligated to reimburse NationsBank upon demand for all amounts paid under the Letters of Credit as set forth in Section 3.3(a) hereof; provided, however, if the Companies for any reason fail to reimburse NationsBank in full upon demand, whether by borrowing Advances to pay such reimbursement obligations or otherwise, the Lenders shall reimburse NationsBank in accordance with each Lender's Revolving Loan Specified Percentage for amounts due and unpaid from the Companies as set forth in Section 3.4 hereof; provided, however, that no such reimbursement made by the Lenders shall discharge the Companies' obligations to reimburse NationsBank. 30 38 (e) PageNet and the Companies shall indemnify and hold NationsBank or any Lender, its officers, directors, representatives and employees harmless from loss for any claim, demand or liability which may be asserted against NationsBank or such indemnified party in connection with actions taken under the Letters of Credit or in connection therewith (INCLUDING LOSSES RESULTING FROM THE NEGLIGENCE OF NATIONSBANK OR SUCH INDEMNIFIED PARTY), and shall pay NationsBank for reasonable fees of attorneys (who may be employees of NationsBank) and legal costs paid or incurred by NationsBank in connection with any matter related to the Letters of Credit, except for losses and liabilities incurred as a direct result of the gross negligence or wilful misconduct of NationsBank or such indemnified party. If the Companies and/or PageNet for any reason fail to indemnify or pay NationsBank or such indemnified party as set forth herein in full, the Lenders shall indemnify and pay NationsBank upon demand, in accordance with each Lender's Revolving Loan Specified Percentage of such amounts due and unpaid from the Companies. The provisions of this Section 3.3(e) shall survive the termination of this Agreement. 3.4. Lenders' Obligations. Each Lender severally agrees, unconditionally and irrevocably to reimburse NationsBank (to the extent NationsBank is not otherwise reimbursed by the Companies in accordance with Section 3.3(a) hereof) on demand for such Lender's Revolving Loan Specified Percentage of each draw paid by NationsBank under any Letter of Credit. All amounts payable by any Lender under this subsection shall include interest thereon at the Federal Funds Effective Rate, from the date of demand to the date of reimbursement by such Lender. No Lender shall be liable for the performance or nonperformance of the obligations of any other Lender under this Section. To the extent NationsBank receives reimbursement from the Companies for any draw under any Letter of Credit, or interest thereon, with respect to which any Lender shall have previously reimbursed NationsBank, NationsBank shall be obligated to promptly refund to any such Lender such duplicate amount received by NationsBank. The obligations of the Lenders under this Section shall continue after the Maturity Date and shall survive termination of any or all of the Loan Documents. 3.5. NationsBank's Obligations. (a) NationsBank makes no representation or warranty, and assumes no responsibility with respect to the validity, legality, sufficiency or enforceability of any Application or any document relative thereto or to the collectibility thereunder. NationsBank assumes no responsibility for the financial condition of the Paging Entities or for the performance of any obligation of the Companies or any other Paging Entity. NationsBank may use its discretion with respect to exercising or refraining from exercising any rights, or taking or refraining from taking any action which may be vested in it or which it may be entitled to take or assert with respect to any Letter of Credit or any Application. (b) Except as set forth in subsection (c) below, NationsBank shall be under no liability to any Lender, with respect to anything NationsBank may do or refrain from doing in the exercise of its judgment, the sole liability and responsibility of NationsBank being to handle each Lender's share on as favorable a basis as NationsBank handles its own share and to promptly remit to each Lender its share of any sums received by NationsBank under any Application. 31 39 NationsBank shall have no duties or responsibilities except those expressly set forth herein and those duties and liabilities shall be subject to the limitations and qualifications set forth herein. (c) Neither NationsBank nor any of its directors, officers, or employees shall be liable for any action taken or omitted (whether or not such action taken or omitted is expressly set forth herein) under or in connection herewith or any other instrument or document in connection herewith, except for gross negligence or willful misconduct, and, notwithstanding Section 3.4 above, no Lender waives its right to institute legal action against NationsBank for wrongful payment of any Letter of Credit due to NationsBank's gross negligence or willful misconduct. NationsBank shall incur no liability to any Lender, any Company or any other Paging Entity in acting upon any notice, document, order, consent, certificate, warrant or other instrument reasonably believed by NationsBank to be genuine or authentic and to be signed by the proper party. ARTICLE IV CONDITIONS PRECEDENT 4.1. Conditions Precedent to the Closing Date and the Making of the Initial Advances. The obligation of each Lender to make its initial Advance hereunder and of NationsBank to issue any Letter of Credit, is subject to the satisfaction of the following conditions precedent, in addition to the applicable conditions precedent set forth in Section 4.2 below: (a) Payment of Principal, Interest and Fees. The Paging Entities shall concurrently herewith have (i) refinanced in full principal, interest and fees outstanding under the Original Credit Agreement with the proceeds of the Revolving Loan made hereunder, (ii) terminated the Original Credit Agreement and all related documentation except as provided in Section 12.25 hereof, and (ii) paid all fees as set forth in Section 2.8(b) hereof and the Fee Letters. The "Commitment" as defined in the Original Credit Agreement shall have been permanently and irrevocably reduced to zero. Each of the Original Lenders by execution and delivery of this Agreement consents to the execution of this Agreement prior to the termination of the Original Credit Agreement. (b) Documents. Each Paging Entity shall have delivered to each of the Lenders: (i) Resolutions, Etc. A copy, duly certified on or about the date of the initial Advances by the secretary or assistant secretary of each Paging Entity, as appropriate, of (A) the resolutions of each Paging Entity's Board of Directors authorizing the borrowings hereunder and each Paging Entity's Board of Directors authorizing the execution and delivery of this Agreement, the Notes, the Security Documents, the other Loan Documents and the Applications, as applicable, (B) all documents evidencing other necessary corporate action and (C) all approvals or consents, if any, with respect to this Agreement, the Notes, the Security Documents, the other Loan Documents and the Applications. 32 40 (ii) Notes. The duly executed Notes. (iii) Loan Documents. Duly executed Loan Documents (including amendments to Security Documents and all other related documentation) together with all Collateral that is perfected by possession (original stock certificates constituting Collateral being delivered to the Documentation Agent only); including the shares of all stock pledged by the Paging Entities together with stock powers duly executed in blank. (iv) Incumbency. A certificate dated on or about the date of the initial Advance of its secretary or assistant secretary certifying the names of the officers of the Paging Entities authorized to sign this Agreement, the Notes, the Applications, the Security Documents, the other Loan Documents and all other documents or certificates to be delivered thereunder, as appropriate, together with the true, signatures of such officers. (v) Opinion. An opinion of Bingham, Dana & Gould, counsel to the Paging Entities, dated on or about the Closing Date to the effect that (i) the Paging Entities are corporations duly organized, validly existing and in good standing under the laws of the states of their respective incorporation and, to the best of its knowledge and belief, are duly qualified as foreign corporations authorized to do business in each state where, because of the nature of their respective activities or properties, such qualification is required; (ii) each of the Paging Entities has full power to execute and deliver this Agreement, the Notes, the Security Documents, the other Loan Documents and the Applications, and to perform its obligations under this Agreement, the Notes, the Security Documents, the other Loan Documents and the Applications, as applicable; (iii) such actions have been duly authorized by all necessary corporate action, and are not in conflict with any provision of law or of the charter or by-laws of the Paging Entities, nor in conflict with any agreement binding upon the Paging Entities or any of their Property of which such counsel has knowledge; (iv) each of the Paging Entities has received all necessary approvals of such governmental agencies (other than the FCC) which have jurisdiction over the Paging Entities with respect to this Agreement, the Notes, the Security Documents, the other Loan Documents, the Applications and all documents required to be furnished herewith or therewith, as applicable; (v) this Agreement, the Security Documents, the other Loan Documents and the Notes are, and the Applications when executed and delivered will be, the legal and binding obligations of the Paging Entities, as applicable, enforceable in accordance with their respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally); and (vi) to the best of its knowledge, no litigation or governmental proceedings are pending or threatened against any of the Paging Entities, the results of which might have a Material Adverse Effect, except as set forth in Schedule 6.5 to this Agreement. (vi) Opinion of FCC Counsel. An opinion of Reed, Smith, Shaw & McClay, special counsel for FCC matters to the Paging Entities, dated on or about the Closing Date, in form and substance acceptable to the Agents and the Lenders. 33 41 (vii) Certificates. A duly executed and complete Compliance Certificate. (viii) No Default Certificate. A duly executed certificate of the Paging Entities certifying as to the fact that there exists no Default or Event of Default. (ix) UCC Searches. Duly completed UCC searches in each jurisdiction in which each of the Paging Entities is operating or has any tangible Property, satisfactory in form and substance to the Lenders. (x) Articles, By-Laws, Certificates. Copies of the articles of organization for the Paging Entity certified by the Secretary of State of the jurisdiction of each of the Paging Entities' organization, and a copy of the By-Laws of each Paging Entity, certified by an officer of each Paging Entity acceptable to the Agents as true, complete and accurate, and a certificate of good standing and a certificate of existence for each Paging Entity in each jurisdiction in which each Paging Entity is operating. (xi) Insurance. Copies of insurance binders or certificates (including flood insurance) in form and substance satisfactory to the Agents covering the assets of each Paging Entity, naming the Documentation Agent and the Administrative Agent as Agents for the Lenders, as their interests may appear, as loss payee or additional insured on such policies, where appropriate. (xii) Other. Such other documents as any Agent or any Lender, or their respective counsel, may have reasonably requested. (c) Texas Opinion. Fach of the Lender shall have received an opinion of Donohoe, Jameson & Carroll, P.C. in form acceptable to the Managing Agents and the Lenders. 4.2. Conditions Precedent to All Advances and the Issuance of each Letter of Credit. The obligation of each Lender to make any Advance to, including its initial Advance, or for NationsBank to issue any Letter of Credit for the account of, the Companies is subject to the satisfaction of each of the following conditions precedent: (a) Default. Before and after giving effect to any such Advance or Letter of Credit, no Default or Event of Default shall have occurred and be continuing; (b) Representations and Warranties. (i) Before and after giving effect to any such Advance or Letters of Credit, the representations and warranties in Article VI hereof shall be true and correct as though made on the date of such Advance or on the date of issuance of such Letter of Credit, except as any representation or warranty is modified in accordance with the provisions of Section 12.23 of this Agreement, and (ii) no event or circumstance has occurred and is continuing which could reasonably be expected to have a Material Adverse Effect; (c) Certification. Each request for an Advance pursuant to Section 2.3 hereof or for the issuance of a Letter of Credit pursuant to Section 3.1 hereof shall constitute a representation 34 42 and warranty by each Company that the conditions contained in Sections 4.2(a) and (b) hereof have been satisfied; and (d) Applications. In the case of each Letter of Credit, the Company requesting the Letter of Credit shall have delivered to NationsBank a duly executed and complete Application acceptable to NationsBank. ARTICLE V CHANGE IN CIRCUMSTANCES; YIELD PROTECTION 5.1. Increased Cost. If as a result of any existing law, rule, regulation or guideline regarding capital adequacy or of the adoption of any law, rule, regulation, guideline, treaty or directive after the Closing Date, or any change therein, or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank, court or governmental authority, agency or instrumentality: (a) the basis of taxation of payments to any Lender in respect of the Advances or the Letters of Credit or other amounts payable hereunder (other than taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office) is changed; (b) any reserve, special deposit, special assessment or similar requirements against assets of, deposits with or for the account of, or credit extended by, any Lender are imposed, modified or deemed applicable; or (c) any other condition affecting this Agreement, the Advances, the Revolving Loan or the Letters of Credit is imposed on any Lender or the interbank eurodollar market; and, in any of the foregoing circumstances, such Lender determines that, by reason thereof, the cost to such Lender of making or maintaining its share of the Commitment hereunder or making or continuing any Revolving Loan or any of the Advances or issuing or participating in the Letters of Credit is increased, or the amount of any sum receivable by such Lender hereunder in respect of any of the Advances, the Revolving Loan or the Letters of Credit or other amounts payable hereunder is reduced (including, without limitation, any reduction in the rate of return on capital to an amount below that which it could have achieved but for any of the foregoing); then, the Companies shall pay to any such affected Lender upon demand (which demand shall be accompanied by a statement setting forth the basis for the calculation thereof but only to the extent not theretofore provided to the Companies) such additional amount or amounts as will compensate such Lender for such additional cost or reduction (provided such amount has not been compensated for in the calculation of the Eurocurrency Reserve Percentage). For 35 43 purposes of this Article V, the definition of "Lender" shall be deemed to include any holding company of any Lender. Determinations by such Lender for purposes of this Section of the additional amounts required to compensate such Lender in respect of the foregoing shall be conclusive, absent manifest error; it being understood, however, that all such determinations shall be done in a reasonable manner and in good faith. In determining any additional amounts due from the Companies under this Section 5.1, each Lender shall act reasonably and in good faith and will, to the extent that the increased costs or reductions in amounts received or receivable relate to such Lender's loans generally and are not specifically attributable to the Revolving Loan hereunder, use averaging and attribution methods which are reasonable and equitable and which cover all loans similar to the Revolving Loan made by such Lender whether or not the loan documentation for such other loans permits such Lender to receive increased costs of the type described in this Section 5.1. 5.2. LIBOR Deposits Unavailable, Etc. If the Companies have any LIBOR Advances outstanding, or have notified the Administrative Agent of their intention to borrow LIBOR Advances as provided herein, then in the event that prior to any Interest Period any Lender shall have determined (which determination shall be conclusive and binding on the parties hereto) that deposits of the necessary amount for the relevant Interest Period are not available to such Lender in the interbank eurodollar market or that the Interbank Rate does not accurately reflect the cost of making or maintaining a LIBOR Advance for such Lender, the affected Lender shall promptly give notice of such determination to the Notification Agent, the Agents and the other Lenders, and any notice of new LIBOR Advances previously given by the Notification Agent and not yet borrowed shall be deemed a notice to make a Base Rate Advance, to the extent of the affected Lender's Revolving Loan Specified Percentage of the proposed LIBOR Advance. 5.3. Changes in Law Rendering LIBOR Advances Unlawful. If at any time due to any new law, treaty or regulation, or any interpretation thereof by any governmental or other regulatory authority charged with the administration thereof, or for any other reason arising subsequent to the date hereof, it shall become unlawful for any Lender to fund any LIBOR Advance which it is committed to make hereunder, the obligation of such Lender to provide LIBOR Advances shall, upon the happening of such event, forthwith be suspended for the duration of such illegality. If any such change shall make it unlawful for any Lender to continue LIBOR Advances previously made by it hereunder, such Lender shall, upon the happening of such event, notify the Agents, the Notification Agent and the other Lenders thereof in writing stating the reasons therefor, and the Companies shall, on the earlier of (a) the last day of the then current Interest Period or (b) if required by such law, regulation or interpretation, on such date as shall be specified in such notice, either convert such unlawful Advances to Base Rate Advances or prepay all such LIBOR Advances, without any penalty whatsoever (except as provided in Section 5.4), to such Lender in full. Thereafter no LIBOR Advance shall be available from any such Lender until such Lender notifies the Notification Agent and the Agents that LIBOR Advances are once again available from such Lender. 5.4. Indemnity. In addition to Section 5.1 hereof, the Paging Entities will indemnify each Lender against any loss or expense which such Lender may sustain (a) as a consequence of any failure by any Company to make any payment when due of any amount due hereunder 36 44 in connection with a LIBOR Advance, (b) due to any failure of any Company to borrow on a date specified therefor in any notice given by the Notification Agent in accordance with Section 2.3 hereof or deemed notice given pursuant to Section 2.3(c) hereof for any reason (including failure by the Companies to satisfy any condition precedent to borrowing), or (c) (i) due to any payment or prepayment of any LIBOR Advance on a date other than the last day of the Interest Period for such Advance or (ii) due to any change in any designated Interest Period as a result of the operation of Section 2.3(c)(i), provided, however, that the indemnity provided under this Section 5.4 will exclude indemnity for unaccrued loss of profit on the LIBOR Advances. The provisions of this Section 5.4 shall survive the termination of this Agreement. 5.5. Discretion of Lenders as to Manner of Funding. Notwithstanding any provision of this Agreement to the contrary, any Lender shall be entitled to fund and maintain its funding of all or any part of its portion of any LIBOR Advances in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained its portion of each LIBOR Advance during the Interest Period for such Advance through the purchase of deposits having a maturity corresponding to the last day of such Interest Period and bearing an interest rate equal to the Interbank Rate for such Interest Period (whether or not such Lender shall have granted any participations in its portion of such Advance). 5.6. Eurocurrency Reserves. If any Lender shall be required under Regulation D to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, then (a) such Lender shall, within 60 days after the end of any Interest Period with to any LIBOR Advance during which such Lender was so required to maintain reserves, deliver to the Notification Agent and the Administrative Agent a certificate stating (i) that such Lender was required to maintain reserves and as a result such Lender incurred additional costs in connection with making LIBOR Advances and (ii) in reasonable detail, such Lender's computations of the amount of additional interest payable by the Companies, pursuant to the provisions of Section 5.6(b), and (b) the Companies shall, promptly upon receipt of any such certificate, pay to the Administrative Agent, for the account of such Lender, additional interest on the unpaid principal amount of each LIBOR Advance of such Lender made to it outstanding during the Interest Period with respect to which the above-referenced certificate was delivered to the Notification Agent at a rate per annum equal to the difference obtained by subtracting (x) the Interbank Rate for such Interest Period from (y) the rate obtained by dividing such Interbank Rate by a percentage equal to 100% minus the Eurocurrency Reserve Percentage of such Lender for such Interest Period. The amount of interest payable by the Companies to any Lender as stated in any certificate delivered to the Notification Agent and the Administrative Agent pursuant to the provisions of this Section 5.6 shall be conclusive and binding for all purposes, absent manifest error. The provisions of this Section 5.6 shall survive the termination of this Agreement. 37 45 ARTICLE VI REPRESENTATIONS AND WARRANTIES To induce the Lenders to make the Revolving Loan and to induce NationsBank to issue, and the Lenders to participate in, the Letters of Credit, PageNet and each of the Companies represents and warrants, as to itself, that: 6.1. Corporate Existence. Each of the Paging Entities is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and is duly qualified and in good standing as a foreign corporation authorized to do business in each state where, because of the nature of its respective activities or properties, such qualification is required. Each of the Paging Entities has the corporate power and authority to own its Properties and to carry on its businesses as now being and hereafter proposed to be conducted. 6.2. Authorization and Validity. Each of the Paging Entities has the corporate power and is duly authorized to execute and deliver this Agreement, the Notes, the Applications, the Security Documents and the other Loan Documents, as applicable, and is and will continue to be duly authorized to borrow monies hereunder and to perform its obligations under this Agreement, the Notes, the Applications, the Security Documents and the other Loan Documents. The Loan Documents constitute legal, valid and binding obligations of each of the Paging Entities, as applicable, enforceable against each of them in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally and except that the availability of the remedy of specific performance or injunctive relief in equity is subject to the discretion of the court before which any proceeding therefor may be brought. 6.3. No Conflicts. The execution, delivery and performance by each of the Paging Entities of this Agreement, the Notes, the Applications, the Security Documents and the other Loan Documents, and the performance by each of them of their obligations under this Agreement, the Notes, the Applications, the Security Documents and the other Loan Documents, do not and will not (a) conflict with, or result in a default or the imposition of any Lien under, any provision of (i) any Applicable Law, (ii) the charter or by-laws of any of the Paging Entities, or (iii) any license, consent, indenture, agreement or instrument binding upon any of the Paging Entities or any of their Properties, or (b) require any consent or approval not already obtained. 6.4. Financial Statements: Material Adverse Change: Solvency. PageNet's audited consolidated financial statements as at December 31, 1995, copies of which have been furnished to each Lender, have been prepared in conformity with GAAP applied on a basis consistent with that of the preceding fiscal year, and present fairly the financial condition of the Paging Entities on a consolidated basis as at such date, and the results of their operations for the year then ended, and since such date nothing has occurred that has caused or could reasonably be expected to cause a Material Adverse Effect. On the Closing Date after giving effect to the Advances made on such date, PageNet and its Subsidiaries, on a consolidated basis, are Solvent. 38 46 6.5. Litigation. No litigation or governmental proceedings are pending, and to the best knowledge of the senior officers of any of the Paging Entities after having made due inquiry, no litigation or governmental proceedings are threatened, against any of the Paging Entities, the results of which might reasonably be expected to have a Material Adverse Effect, except those referred to in Schedule 6.5 hereto. Other than any liability incident to such litigation or proceedings or provided for or disclosed in the financial statements referred to in Section 6.4, no Paging Entity has any material contingent liability. 6.6. Ownership of Properties. Except as set forth on Schedule 6.6 hereto, each of the Paging Entities has good title, free of all Liens, other than (a) Liens securing the Obligations, (b) Liens for current taxes not delinquent and (c) Liens permitted pursuant to Section 9.11 (d) hereof, to all of the material Properties and assets reflected in the financial statements as owned by them. 6.7. Subsidiaries. On the Closing Date, PageNet and the Companies have no Subsidiaries except as listed on Schedule 6.21 hereto. PageNet and the Companies own the percentage of each of their respective Subsidiaries as set forth in Schedule 6.21. 6.8. Purpose. The proceeds of the Revolving Loan and the Letters of Credit will be used by the Companies only (a) to refinance and restate the existing loan facility of the Companies to certain of the Lenders, (b) for Capital Expenditures permitted under Section 9.7 hereof, (c) working capital of the Companies for paging and communications businesses that are incidental and related to its existing business, (d) to fund acquisitions and Investments that are permitted under Section 9.12 hereof, (e) for Restricted Payments to the extent permitted by Section 9.8 hereof, (f) for acquisition and construction of a corporate headquarters for the Companies in Texas (in an amount not to exceed in the aggregate $50,000,000), so long as the Lenders receive a first lien deed of trust on such property, together with title insurance and flood insurance, survey, appraisal and environmental audit, each in form and substance satisfactory to the Managing Agents, and (g) for general corporate purposes, including the payment of costs and expenses incurred in connection with the negotiation of this Agreement and the other Loan Documents. 6.9. Compliance with Regulations G, T, U and X. No Paging Entity is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying any margin stock within the meaning of Regulations G, T, U and X of the Board of Governors of the Federal Reserve System, and no part of the proceeds of the Revolving Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. No assets of the Paging Entities is margin stock, and none of the Pledged Stock is margin stock. None of the Paging Entities, nor any agent acting on their behalf, has taken or will knowingly take any action which might cause this Agreement or any other Loan Document to violate any regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect. 39 47 6.10. Compliance. Each of the Paging Entities is in material compliance with all Applicable Law and statutes and governmental rules and regulations applicable to it or any of them, including, without limitation (a) applicable rules and regulations of the FCC and the political subdivisions, governments and governmental agencies having jurisdiction over the activities of it or any of them; and (b) applicable rules and regulations of the SEC insofar as such rules and regulations apply to it or any of them. None of the Paging Entities has received notice to the effect that its respective operations are not in material compliance with any of the requirements of Applicable Law or Applicable Environmental Law. 6.11. Consents and Authorizations. Except as disclosed on Schedule 6.23 hereto, no order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents, except for those that each of the Paging Entities has obtained or made. Each of the Paging Entities has received all permits, licenses, consents, qualifications and authorizations necessary to the lawful acquisition of radio common carrier systems ("RCCS") and to the lawful operation of radio common carrier companies ("RCCC"). No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, necessary for the operation of the business of any of the Paging Entities, is the subject of any pending or, to the best of such Paging Entity's knowledge, threatened challenge or revocation. 6.12. Real Estate. On the Closing Date, none of the Paging Entities has any interest in real estate (including without limitation as lessee) except as described in the attached Schedule 6.12. 6.13. Licenses, Permits. Etc. Each of the Paging Entities possesses adequate assets, permits (including without limitation those required under Applicable Law and Applicable Environmental Law), licenses, authorizations, or approvals to conduct its respective business as heretofore conducted by it. No permits (including without limitation those required under Applicable Law and Applicable Environmental Law), licenses, authorizations, or approvals to conduct the business of any Substantial Portion of the Paging Entities is the subject of any pending, or to the best of such Paging Entity's knowledge, threatened challenge or revocation. 6.14. Taxes. Each of the Paging Entities has filed all tax returns that are required to be filed by it, and has paid or provided adequate reserves for the payment of all taxes and assessments payable by it that have become due, except such taxes, if any, as are being diligently contested in good faith and as to which adequate reserves have been set aside in the opinion of the Paging Entities' management. Each of the Paging Entities has paid, or has provided adequate reserves in the opinion of the Paging Entities' management for the payment of, all taxes and assessments applicable for all prior fiscal years and for the current fiscal year to the date of its most recent financial statements. No tax Liens have been filed against any of the Paging Entities or any of their respective Properties. 40 48 6.15. Accuracy of Information. Neither this Agreement nor any other document, certificate or statement which has been furnished to any Lender by or on behalf of any Paging Entity in connection herewith contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statement contained herein and therein not materially misleading at the time it was furnished. There is no fact known to any Paging Entity and not known to the public generally that could materially adversely affect the assets or business of the Paging Entities, taken as a whole, or in the future could (so far as such Paging Entity can now foresee) have a Material Adverse Effect, which has not been set forth in this Agreement or in the documents, certificates and statements furnished to the Lenders by or on behalf of the Paging Entity prior to the date hereof in connection with the transactions contemplated hereby. 6.16. Subordinated Indebtedness. The Obligations constitute senior indebtedness which is entitled to the benefits of the subordination provisions of all of the outstanding Subordinated Indebtedness. 6.17. ERISA Compliance. None of the Paging Entities nor its Controlled Group maintains or contributes to any Plan other than those disclosed to the Lenders in writing. Each such Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and any other applicable Federal or state law, rule or regulation. With respect to the Plan of each of the Paging Entities and each member of its Controlled Group (other than a Multiemployer Plan), all reports required under ERISA or any other Applicable Law to be filed with any governmental authority, the failure of which to file could reasonably result in liability of each of the Paging Entities or any member of its Controlled Group in excess of $100,000, have been duly filed. All such reports are true and correct in all material respects as of the date given. No such Plan of any Paging Entity or any member of its Controlled Group has been terminated nor has any accumulated funding deficiency (as defined in Section 412(a) of the Code) been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested. None of the Paging Entities or any member of its Controlled Group has failed to make any contribution or pay any amount due or owing as required by Section 412 of the Code or Section 302 of ERISA or the terms of any such Plan prior to the due date under Section 412 of the Code and Section 302 of ERISA. There has been no ERISA Event or any event requiring disclosure under Section 4041(c)(3)(C), 4068(f), 4063(a) or 4043(b) of ERISA with respect to any Plan or trust of the Paging Entities or any member of their Controlled Group since the effective date of ERISA. The value of the assets of each Plan (other than a Multiemployer Plan) of each Paging Entity and each member of its Controlled Group equaled or exceeded the present value of the benefit liabilities, as defined in Title IV of ERISA, of each such Plan as of the most recent valuation date using Plan actuarial assumptions at such date. There are no pending or, to the best of such Paging Entity's knowledge, threatened claims, lawsuits or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against, and no Paging Entity nor any member of its Controlled Group has knowledge of any threatened litigation or claims against, (i) the assets of any Plan or trust or against any fiduciary of a Plan with respect to the operation of such Plan, or (ii) the assets of any employee welfare benefit plan within the meaning of Section 3(l) or ERISA, or against any fiduciary thereof with respect to the operation 41 49 of any such plan. None of the Paging Entities nor any member of their Controlled Group has engaged in any prohibited transactions, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan. None of the Paging Entities nor any member of their Controlled Group has withdrawn from any Multiemployer Plan, nor has incurred or reasonably expects to incur (A) any liability under Title IV of ERISA (other than premiums due under Section 4007 of ERISA to the PBGC), (B) any withdrawal liability (and no event has occurred which with the giving of notice under Section 4219 of ERISA would result in such liability) under Section 4201 of ERISA as a result of a complete or partial withdrawal (within the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C) any liability under Section 4062 of ERISA to the PBGC or to a trustee appointed under Section 4042 of ERISA. None of the Paging Entities nor any member of their Controlled Group, or any organization to which a Paging Entity or any member of its Controlled Group is a successor or parent corporation within the meaning of ERISA Section 4069(b), has engaged in a transaction within the meaning of ERISA Section 4069. None of the Paging Entities or any member of their Controlled Group maintains or has established any welfare benefit plan within the meaning of Section 3(l) of ERISA which provides for continuing benefits or coverage for any participant or any beneficiary of any participant after such participant's termination of employment except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and the regulations thereunder, or under applicable state insurance laws. Each of the Paging Entities and each member of their Controlled Group which maintains a welfare benefit plan within the meaning of Section 3(l) of ERISA has complied in all material respects with any applicable notice and continuation requirements of COBRA and the regulations thereunder. 6.18. Environmental Matters. None of the Paging Entities has any actual knowledge or reason to believe that any substance deemed hazardous by any Applicable Environmental Law has been installed on any real property now owned by any Paging Entity. Each of the Paging Entities is not in violation of or subject to any existing, pending or, to the best of such Person's knowledge, threatened investigation or inquiry by any governmental authority or to any material remedial obligations under any Applicable Environmental Laws, and this representation and warranty would continue to be true and correct following disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances, if any, pertaining to any real property of such Paging Entity. None of the Paging Entities has obtained or are required to obtain any permits, licenses or similar authorizations to construct, occupy, operate or use any buildings, improvements, fixtures, and equipment forming a part of any real property of such Paging Entity by reason of any Applicable Environmental Laws. The Paging Entities undertook, at the time of acquisition of any real property, reasonable inquiry into the previous ownership and uses of such real property consistent with good commercial or customary practice. Each of the Paging Entities has taken all reasonable steps to determine, and none of the Paging Entities has any actual knowledge or reason to believe, after reasonable investigation, that any hazardous substances or solid wastes have been disposed of or otherwise released on or to the real property of the Paging Entities, within the meaning of the Applicable Environmental Laws. 42 50 6.19. Absence of Default. The Paging Entities are in compliance in all respects with all of the provisions of their articles of incorporation, and the Paging Entities are in compliance in all material respects with all of the provisions of their by-laws, and no event has occurred or failed to occur, which has not been remedied or waived, the occurrence or non-occurrence of which constitutes, (i) a Default or an Event of Default or (ii) a default by the Paging Entities under any material indenture, agreement or other instrument, or any documentation relating to any Indebtedness, including any Subordinated Indebtedness, or any judgment, decree or order to which any Paging Entity is a party or by which it or any of its material Properties is bound. 6.20. Investment Company Act. No Paging Entity is an "investment company" within the meaning of, and no Paging Entity is otherwise required to register under the provisions of, the Investment Company Act of 1940, as amended. Neither the entering into or performance by any Paging Entity of this Agreement nor the issuance of the Notes violates any provision of such act or requires any consent, approval, or authorization of, or registration with, the Securities and Exchange Commission or any other governmental or public body of authority pursuant to any provisions of such act. 6.21. Valid Issuance of Securities. All Pledged Stock has been duly authorized and validly issued, and is fully paid and nonassessable. The capital stock described on Schedule 6.21 hereto on the Closing Date constitutes all the issued and outstanding capital stock of (a) PageNet and the Subsidiaries of PageNet, (b) the Subsidiaries of the Companies and (c) the Subsidiaries of another Subsidiary. No Person has any options to purchase any Pledged Stock or conversion rights with respect to, or any subscription rights, calls, commitments or claims of any character for, or any repurchase or redemption options relating to, the Pledged Stock. The Pledged Stock, when issued or sold, was either (i) registered or qualified under applicable federal or state securities laws, or (ii) exempt therefrom. 6.22. Certain Fees. No broker's, finder's or other fee or commission will be payable by any Paging Entity (other than to the Lenders hereunder) with respect to the making of a commitment to make the Revolving Loan hereunder. Each Paging Entity agrees to indemnify and hold harmless the Administrative Agent, the Documentation Agent and each Lender from and against any claims, demand, liability, proceedings, costs or expenses asserted with respect to or arising in connection with any such fees or commissions. The provisions of this Section 6.22 shall survive any termination of this Agreement. 6.23. Compliance. Attached as Schedule 6.23 hereto is a complete list of all material FCC licenses of each Paging Entity as of the Closing Date. All such licenses, and all other consents, permits and authorizations of the Paging Entities constitute all that are necessary, appropriate or advisable for each of the Paging Entities to operate its business and own its properties, and are in full force and effect. No event has occurred which permits (or with the passage of time would permit) the revocation or termination of any such license, consent, permit or authorization, or which could result in the imposition of any restriction thereon of such a nature that could have a Material Adverse Effect. 43 51 6.24. Patents, Etc. Each of the Paging Entities has obtained all patents, trademarks, service-marks, trade names, copyrights, licenses and other rights, free from burdensome restrictions, that are necessary for the operation of its business as presently conducted and as proposed to be conducted. Nothing has come to the attention of any Paging Entity to the effect that (i) any process, method, part or other material presently contemplated to be employed by such Paging Entity may infringe any patent, trademark, service-mark, trade name, copyright, license or other right owned by any other Person, or (ii) there is pending or overtly threatened any claim or litigation against or affecting such Paging Entity contesting its right to sell or use any such process, method, part or other material. ARTICLE VII GENERAL COVENANTS From the date of this Agreement and thereafter until the Commitment has been finally and irrevocably reduced to zero and the Notes and all other Obligations hereunder are paid in full and the Letters of Credit have been terminated, PageNet and each Company agree that: 7.1. Access and Inspection. PageNet and each Company shall, and shall cause each other Paging Entity to, promptly permit representatives of the Agents or any Lender from time to time to (a) visit and inspect the properties of each Paging Entity as often as the Agents or any Lender shall deem desirable upon reasonable notice under the circumstances, (b) inspect and make extracts from and copies of each Paging Entity's books and records, and (c) discuss with each Paging Entity's directors, officers, employees and auditors its business, assets, liabilities, financial positions, results of operations and business prospects. 7.2. Insurance. PageNet and each Company shall maintain, and shall cause each other Paging Entity to maintain, insurance to such extent and against such hazards and liabilities as is commonly maintained by companies similarly situated or as the Majority Lenders may reasonably request from time to time. Each insurance policy shall provide for at least 30 days' prior notice to the Administrative Agent and the Documentation Agent of any proposed termination or cancellation of such policy, whether on account of default or otherwise. 7.3. Repair. PageNet and each Company shall maintain, preserve, and keep their, and shall cause each other Paging Entity to maintain, preserve and keep its, Properties in good repair, working order and condition, and from time to time make, and cause each of the Paging Entities to make, all appropriate repairs, renewals, replacements, additions, betterments and improvements thereto so that at all times the performance standards and capabilities of each RCCC and RCCS owned or operated by it, and any of them, shall be fully preserved and maintained. 7.4. Taxes and Claims. PageNet and each Company shall, and shall cause each other Paging Entity to, pay and discharge all taxes, assessments and governmental charges or levies imposed upon it or its income or properties prior to the date on which penalties attach thereto, 44 52 and all lawful material claims for labor, materials and supplies which, if unpaid, might become a Lien upon any of its Properties; except that no such tax, assessment, charge, levy or claim need be paid which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on the appropriate books, but only so long as no Lien shall attach with respect thereto and no foreclosure, distraint, sale or similar proceedings shall have been commenced. PageNet and each Company shall, and shall cause each other Paging Entity to, timely file all information returns required by federal, state or local tax authorities. 7.5. Compliance. (a) PageNet and each Company shall comply, and shall cause each other Paging Entity to comply, in all material respects, with all Applicable Laws, all Applicable Environmental Laws and all statutes and governmental rules and regulations applicable to it, or any of them, including without limitation: (i) applicable rules and regulations of the FCC and other governmental agencies, and any government, political subdivision or other entity having jurisdiction over each RCCC; (ii) applicable rules and regulations of the SEC insofar as such rules and regulations apply to it or any of them; and (iii) applicable provisions of ERISA insofar as such Act applies to it or any of them. PageNet and each Company shall not, and shall not permit any other Paging Entity to, permit any condition to exist in connection with any Plan which would constitute grounds for the PBGC to institute proceedings to have such Plan terminated or a trustee appointed to administer such Plan; and not engage in, or permit to exist or occur, or permit any Paging Entity to engage in, or permit to exist or occur, any other condition, event or transaction with respect to any such Plan which would result in the incurrence by such Paging Entity of any material liability, fine or penalty. (b) PageNet and each Company shall maintain, and shall cause each other Paging Entity to maintain, in full force and effect, existence in each jurisdiction in which it is operating as of the Closing Date and its respective licenses and permits granted by the FCC and other governmental entities as may be necessary for such Paging Entity and each RCCC to conduct their business without material adverse change, and cause the FCC's and other governmental entities' approvals of each of the Paging Entities' ownerships in each RCCC to remain in full force and effect; and give prompt written notice thereof to each of the Agents and the Lenders after obtaining knowledge of: (i) the receipt by the FCC or any other governmental agency, or any government, political subdivision or other entity, of any protest or complaint which would be materially threatening to the maintenance of any of the licenses or permits of each Paging Entity, or (ii) the report by the FCC or any other governmental agency, or any government, political subdivision or other entity of any notice, correspondence, hearing, proceeding or order regarding or affecting the Paging Entity which would be materially threatening to the operation of each RCCC. (c) The use which each Paging Entity intends to make of any real property owned by it will not result in the disposal or other release of any hazardous substance or solid waste on or to such real property, and neither PageNet nor any Company shall cause, permit or suffer to exist, nor shall they permit any other Paging Entity to cause, permit or suffer to exist the 45 53 disposal or other release of any hazardous substance or solid waste on or to such real property. As used herein, the terms "hazardous substance" and "release" as used in this Section shall have the meanings specified in CERCLA (as defined in the definition of Applicable Environmental Laws), and the terms "solid waste" and "disposal" shall have the meanings specified in RCRA (as defined in the definition of Applicable Environmental Laws); provided, however, that if CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment; and provided further, to the extent that any other law applicable to any Paging Entity or any of their Properties establishes a meaning for "hazardous substance," "release," "solid waste," or "disposal" which is broader than that specified in either CERCLA or RCRA, such broader meaning shall apply. 7.6. Purpose. Each Company will, and will cause each other Paging Entity to, use the proceeds of the Revolving Loan and the Letters of Credit only (a) to refinance and restate the existing loan facility of the Companies to certain of the Lenders, (b) for Capital Expenditures permitted under Section 9.7 hereof, (c) working capital of the Companies for paging and communications businesses that are incidental and related to its existing business, (d) to fund acquisitions and investments that are permitted under Section 9.12 hereof, (e) for Restricted Payments to the extent permitted by Section 9.8 hereof, (f) for acquisition and construction of a corporate headquarters for the Companies on a tract of real property in Collin County, Texas (in an amount not to exceed in the aggregate $50,000,000), so long as the Lenders receive a first lien deed of trust on such property, together with title insurance and flood insurance, survey, appraisal and environmental audit, each in form and substance satisfactory to the Managing Agents, and (g) for general corporate purposes, including the payment of costs and expenses incurred in connection with the negotiation of this Agreement and the other Loan Documents. No Company will, nor will it permit any other Paging Entity to, use any of the proceeds of the Revolving Loan or the Letters of Credit to purchase or carry any margin stock as defined in Regulation U of the Board of Governors of the Federal Reserve System. 7.7. Existence and Business. PageNet and each Company shall, and shall cause each other Paging Entity to (a) subject to Section 9.2 hereof, maintain its corporate existence and qualification to do business in each jurisdiction in which the nature of its business requires it to be so qualified, and (b) engage substantially in the operation of paging systems and communications businesses that are incidental and related to its existing business. 7.8. Accounting Methods and Financial Records. PageNet and each Company shall, and shall cause each other Paging Entity to, maintain a system of accounting established and administered in accordance with GAAP, keep adequate records and books of account in which complete entries will be made and all transactions reflected in accordance with GAAP, and keep accurate and complete records of its respective assets. PageNet and each Company shall, and shall cause each other Paging Entity, to maintain a fiscal year ending on December 31. 7.9. Payment of Indebtedness. Subject to the terms and provisions of this Agreement, PageNet and each Company shall, and shall cause each other Paging Entity to, pay its Indebtedness when and as the same becomes due and perform all obligations required by any 46 54 instruments or documents related to any such Indebtedness, except for amounts (other than the Obligations) duly and diligently disputed in good faith. 7.10. INDEMNITY. (A) PAGENET AND EACH COMPANY AGREE, AND SHALL CAUSE EACH OTHER PAGING ENTITY, TO DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE AGENT AND DOCUMENTATION AGENT, EACH LENDER, EACH OF THEIR RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND CONSULTANTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR OTHERWISE) ARISING FROM OR CONNECTED WITH (I) THE PAST, PRESENT OR FUTURE OPERATIONS OF ANY PAGING ENTITY, OR ANY OF THEIR PREDECESSORS IN INTEREST, (II) THE FAILURE OF ANY PAGING ENTITY TO PERFORM ANY OBLIGATION HEREUNDER REGARDING ASBESTOS OR APPLICABLE ENVIRONMENTAL LAWS, (III) ANY VIOLATION OF ANY APPLICABLE ENVIRONMENTAL LAW IN EFFECT, (IV) ANY ACT, OMISSION, EVENT OR CIRCUMSTANCE EXISTING OR OCCURRING (INCLUDING WITHOUT LIMITATION THE PRESENCE ON SUCH REAL PROPERTY OR RELEASE FROM SUCH REAL PROPERTY OF HAZARDOUS SUBSTANCES OR SOLID WASTES DISPOSED OF OR OTHERWISE RELEASED), RESULTING FROM OR IN CONNECTION WITH THE OWNERSHIP OF THE REAL PROPERTY, REGARDLESS OF WHETHER THE ACT, OMISSION, EVENT OR CIRCUMSTANCE CONSTITUTED A VIOLATION OF ANY APPLICABLE ENVIRONMENTAL LAW AT THE TIME OF ITS EXISTENCE OR OCCURRENCE, OR WHETHER THE ACT, OMISSION, EVENT OR CIRCUMSTANCE IS CAUSED BY OR RELATES TO THE NEGLIGENCE OF ANY INDEMNITEE) OR (V) IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION RELATING OR ATTENDANT THERETO, THE MAKING OF ANY PARTICIPATIONS IN THE REVOLVING LOAN AND THE MANAGEMENT OF THE REVOLVING LOAN, INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY NEGLIGENCE OF THE ADMINISTRATIVE AGENT, DOCUMENTATION AGENT OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE ADMINISTRATIVE AGENT AND DOCUMENTATION AGENT OR ANY LENDER AND NOT THE PAGING ENTITIES), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE REVOLVING LOAN HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING AS TO ANY INDEMNITEE ANY CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, AND EXCLUDING MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT (COLLECTIVELY, "INDEMNIFIED MATTERS"); PROVIDED HOWEVER, THAT SO LONG AS NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE 47 55 CONTINUING, THERE SHALL BE NO SETTLEMENT BY THE INDEMNITEES OR ANY OF THEM WITH RESPECT TO ANY INDEMNIFIED MATTER WITHOUT PRIOR CONSULTATION WITH THE PAGING ENTITY. (B) IN ADDITION, EACH PAGING ENTITY SHALL PERIODICALLY, UPON REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL EXPENSES (INCLUDING THE COST OF ANY INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER. IF FOR ANY REASON THE FOREGOING INDEMNIFICATION IS UNAVAILABLE TO ANY INDEMNITEE OR INSUFFICIENT TO HOLD ANY INDEMNITEE HARMLESS WITH RESPECT TO INDEMNIFIED MATTERS, THEN EACH PAGING ENTITY SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH INDEMNITEE AS A RESULT OF SUCH LOSS, CLAIM, DAMAGE OR LIABILITY IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT NOT ONLY THE RELATIVE BENEFITS RECEIVED BY SUCH PAGING ENTITY AND ITS STOCKHOLDERS ON THE ONE HAND AND SUCH INDEMNITEE ON THE OTHER HAND BUT ALSO THE RELATIVE FAULT OF SUCH PAGING ENTITY AND SUCH INDEMNITEE, AS WELL AS ANY OTHER RELEVANT EQUITABLE CONSIDERATIONS. (C) THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH EACH PAGING ENTITY MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF EACH PAGING ENTITY, THE ADMINISTRATIVE AGENT AND DOCUMENTATION AGENT, THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS. 7.11. Perfection of Security Interests, Expenses and Reimbursement. At such time as the Majority Lenders in their sole discretion deem it appropriate for any reason, PageNet and each Company shall, and shall cause each other Paging Entity to, immediately assist the Documentation Agent or any Managing Agent in perfecting the security interests or Liens of the Lenders in the assets of each Paging Entity located in any state in the United States of America, and shall pay all costs and expenses incurred by any Managing Agent or due and owing to any state or regulatory agency in the United States of America (or shall reimburse any Managing Agent therefor) in connection therewith as permitted by Applicable Law. The Managing Agents and the Lenders hereby expressly reserve the right to file any UCC-1, UCC-3 or other financing statement at any time, and PageNet and each Company covenant and agree, and agree to cause each other Paging Entity to covenant and agree, to pay all such amounts due and owing in connection with any such filings as permitted by Applicable Law. 7.12. The Notification Agent. PageNet and each Company agree that it will cause (a) the Notification Agent to remain a 100% wholly-owned Restricted Subsidiary of PageNet, without assets or liabilities, except related to the receipt and transfer of Advances made hereunder and payments made by the Companies on the Obligations and (b) the Notification Agent to not conduct any business, incur trade payables, suffer to exist any Indebtedness, Liens or otherwise participate in any transaction, except as is necessary to perform the Notification Agent's functions under the terms of this Agreement and the other Loan Documents. 48 56 ARTICLE VIII INFORMATION COVENANTS From the Closing Date and thereafter until the Commitment has been finally and irrevocably reduced to zero, the Letters of Credit have been terminated and the Notes and all other Obligations have been paid in full, PageNet and each Company agree that they will: 8.1. Financial Statements. Furnish to each of the Lenders: (a) Within 90 days after each fiscal year end of PageNet, (i) a copy of the Form 10-K of PageNet and the audited consolidated annual financial statements, of PageNet and its Subsidiaries as at the end of such fiscal year, certified and opined upon by independent certified public accountants acceptable to the Lenders, which opinion shall state that the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows in conformity with GAAP and shall be unqualified as to going concern and scope of audit, and (ii) a copy of the unaudited consolidating financial statements of the Paging Entities as at the end of such fiscal year, prepared in conformity with GAAP, provided that, in the event that 15% or more of the cash flow of PageNet is attributable to Unrestricted Subsidiaries, then the audited consolidated financial statements required to be delivered pursuant to (a)(i) above shall be delivered for PageNet and its Restricted Subsidiaries; (b) within 45 days after each quarter of each fiscal year of PageNet, a copy of the Form 10-Q of PageNet or its unaudited quarterly financial statements prepared on a consolidated basis, and including as supplementary information consolidating financial statements, prepared in conformity with GAAP; (c) together with the financial statements furnished by PageNet under the preceding clauses (a) and (b), a Compliance Certificate detailing that no Default or Event of Default has occurred and is continuing (or, if a Default or Event of Default exists, detailing such Default or Event of Default), and compliance with the financial tests set forth in Article IX hereof (including a comparison of budgeted and actual Capital Expenditures and budgeted and actual pagers in service); (d) on the twentieth day of each month, a comparison of budgeted and actual revenues and Operating Cash Flow for the preceding month; (e) within twenty days after the execution and delivery of any document pursuant to which any Paging Entity obtains an interest in any facility which houses a paging terminal, a description of such interest in such detail as the Lenders may request; (f) not earlier than 15 days after the Closing Date and not later than 60 days after the Closing Date, provide the Agents and each Lender with a copy of a post Closing Date UCC Lien search in each jurisdiction in which any Paging Entity is operating, in form and substance satisfactory to Majority Lenders; 49 57 (g) within 20 days after PageNet has completed and finalized each year's consolidated budget (summarized by the Companies and any other Restricted Subsidiaries, and by region) (but in no event later than 60 days after PageNet's fiscal year end prior to such year), provide the Agents and each Lender with a copy of such budget; and (h) from time to time, such other information as any of the Agents or any of the Lenders may reasonably request. 8.2. Copies of Other Reports and Notices. Furnish to each of the Lenders: (a) Promptly upon their becoming available, a copy of (i) all material reports or letters submitted to any Paging Entity by accountants in connection with any annual, interim or special audit, including without limitation any report prepared in connection with the annual audit referred to in Section 8.1 hereof, and any other comment letter submitted to management in connection with any such audit, (ii) each financial statement, report, notice or proxy statement sent by each Paging Entity to stockholders generally, (iii) each regular or periodic report and any registration statement (other than statements on Form S-8) or prospectus (or material written communication in respect of any thereof) filed by any Paging Entity with any securities exchange, with the SEC or any successor agency, and (iv) all press releases concerning material financial aspects of any Paging Entity; (b) Promptly upon becoming aware that (i) the holder(s) of any note(s) or other evidence of Indebtedness or other security of any Paging Entity in excess of $1,000,000 in the aggregate has given notice or taken any action with respect to a breach, failure to perform, claimed default or event of default thereunder, (ii) any party to any Capitalized Lease Obligation has given notice or taken any action with respect to a breach, failure to perform, claimed default or event of default thereunder, (iii) any occurrence or non-occurrence of any event which constitutes or which with the passage of time or giving of notice or both could constitute a material breach by any Paging Entity under any material agreement or instrument other than this Agreement to which any Paging Entity is a party or by which any of their properties may be bound, or (iv) any event, circumstance or condition which could have a Material Adverse Effect, a written notice specifying the details thereof (or the nature of any claimed default or event of default) and what action is being taken or is proposed to be taken with respect thereto; (c) Promptly upon receipt thereof, information with respect to and copies of any notices received from the FCC or any other federal, state or local regulatory agencies or any tribunal relating to any order, ruling, law, information or policy that relates to a material breach of or noncompliance with the Communications Act, or might result in the payment of money by any Paging Entity in an amount of $500,000 or more in the aggregate, or otherwise have a Material Adverse Effect, or result in the loss or suspension of any material license or consent; provided, however, no information shall be required to be delivered hereunder if, in the opinion of counsel to such Paging Entity, there is no reasonable possibility of an adverse determination with respect to such notice; 50 58 (d) Promptly upon receipt from any governmental agency, or any government, political subdivision or other entity, any material notice, correspondence, hearing, proceeding or order regarding or affecting any Paging Entity, or any of their Properties or businesses; and (e) From time to time and promptly upon each request, such data, certificates, reports, statements, opinions of counsel, documents or further information regarding the assets, business, liabilities, financial position, projections, results of operations or business prospects of any Paging Entity, as the Administrative Agent, Documentation Agent or any Lender may reasonably request. 8.3. Notice of Litigation, Default and Other Matters. Furnish to each of the Lenders prompt notice of the following events after any Paging Entity has knowledge or notice thereof: (a) The commencement of all material proceedings and investigations by or before the FCC or any other governmental body, and all actions and proceedings in any court or before any arbitrator involving claims for damages (including punitive damages) in excess of $2,000,000 in the aggregate (after deducting the amount with respect to which any Paging Entity is insured and as to which the insurance company has acknowledged coverage), against or in any other way relating directly to any Paging Entity, or any of their Properties or businesses; (b) Promptly upon the happening of any condition or event which constitutes a Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action is being taken or is proposed to be taken with respect thereto; and (c) Any material adverse change with respect to the business, assets, liabilities, financial position, results of operations or prospective business of any Paging Entity, on a consolidated basis, other than changes in the ordinary course of business which have not had and are not likely to have a Material Adverse Effect. 8.4. ERISA Reporting Requirements. Furnish to each of the Lenders: (a) Promptly and in any event (i) within 30 days after any Paging Entity or any member of its Controlled Group knows or has reason to know that any ERISA Event described in clause (a) of the definition of ERISA Event or any event described in Section 4063(a) of ERISA with respect to any Plan of such Paging Entity or any member of its Controlled Group has occurred, and (ii) within 10 days after such Paging Entity or any member of its Controlled Group knows or has reason to know that any other ERISA Event with respect to any Plan of such Paging Entity or any member of its Controlled Group has occurred or a request for a minimum funding waiver under Section 412 of the Code with respect to any Plan of any Paging Entity or any member of its Controlled Group, a written notice describing such event and describing what action is being taken or is proposed to be taken with respect thereto, together with a copy of any notice of event that is given to the PBGC; (b) Promptly and in any event within two Business Days after receipt thereof by any Paging Entity or any member of its Controlled Group from the PBGC, copies of each notice 51 59 received by such Paging Entity or any member of its Controlled Group of the PBGC's intention to terminate any Plan or to have a trustee appointed to administer any Plan; (c) Promptly and in any event within 30 days after the filing thereof by any Paging Entity or any member of its Controlled Group with the United States Department of Labor, the Internal Revenue Service or the PBGC, copies of each annual and other report (including Schedule B thereto) with respect to each Plan; (d) Promptly and in any event within 30 days after receipt thereof, a copy of any notice, determination letter, ruling or opinion any Paging Entity or any member of its Controlled Group receives from the PBGC, the United States Department of Labor or the Internal Revenue Service with respect to any Plan; (e) Promptly, and in any event within 10 Business Days after receipt thereof, a copy of any correspondence any Paging Entity or any member of its Controlled Group receives from the Plan Sponsor (as defined by Section 4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability pursuant to Section 4219 or 4202 of ERISA, and a statement from the chief financial officer of any Paging Entity or such member of its Controlled Group setting forth details as to the events giving rise to such potential withdrawal liability and the action which such Paging Entity or such member of its Controlled Group is taking or proposes to take with respect thereto; (f) Notification within 30 days of any material increases in the benefits of any existing Plan which is not a Multiemployer Plan, or the establishment of any new Plans, or the commencement of contributions to any Plan to which any Paging Entity or any member of its Controlled Group was not previously contributing; (g) Notification within three Business Days after any Paging Entity or any member of its Controlled Group knows or has reason to know that such Paging Entity or any such member of its Controlled Group has or intends to file a notice of intent to terminate any Plan under a distress termination within the meaning of Section 4041(c) of ERISA and a copy of such notice; and (h) Promptly after receipt of written notice of commencement thereof, notice of all actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting a Paging Entity or any member of its Controlled Group with respect to any Plan, except those which, in the aggregate, if adversely determined could not have a Material Adverse Effect. 52 60 ARTICLE IX NEGATIVE COVENANTS From the date of this Agreement and thereafter until the Commitment has been finally and irrevocably reduced to zero, the Letters of Credit have been terminated, the Notes and all other Obligations hereunder are paid in full, PageNet and each Company agree that they will: 9.1. Subordinated Indebtedness. Not, and will not permit any Paging Entity to, amend or change (or take any action or fail to take any action the result of which is an effective amendment or change) or accept any waiver or consent with respect to, any indenture or any other document or instrument that would result in (a) a change in any principal, interest, fees, or other amounts payable under any Subordinated Indebtedness (including without limitation a waiver or action that results in the waiver of any payment default under any Subordinated Indebtedness), (b) a change in any date fixed for any payment of principal, interest, fees, or other amounts payable under any Subordinated Indebtedness (including, without limitation, as a result of any redemption), (c) a change in any percentage of holders of any of the Subordinated Indebtedness required under the terms of any indenture, respectively, to take (or refrain from taking) any action, (d) a change in any financial covenant in any indenture, (e) a change in any remedy or right of the holders of any of the Subordinated Indebtedness or any of the subordination provisions, (f) a change in the definition of "Change of Control" or similar definition in any indenture for any Subordinated Indebtedness, (g) a change in any covenant, term or provision in any indenture for any Subordinated Indebtedness, which would result in such term or provision being more restrictive than the terms of this Agreement and the other Loan Documents, (h) a change in the definition of "Senior Debt" or any similar term, or (i) a change in any term or provision of any document or instrument related to any Subordinated Indebtedness, or other document or instrument in connection therewith that could have, in any material respect, an adverse effect on the interests of the Lenders. 9.2. Liquidation, Disposition, Merger and New Subsidiaries. Not, and will not permit any other Paging Entity to, at any time: (a) liquidate or dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up, or sell, lease, abandon, transfer or otherwise dispose of all or any part of its assets, properties or business, other than (i) as permitted under Section 9.14 hereof, and (ii) so long as there shall exist no Default or Event of Default prior to or after giving effect to a proposed transaction, any Paging Entity (other than PageNet and the Notification Agent) may transfer, sell, or lease all or any part of its assets, Properties or business to another direct or indirect wholly-owned Paging Entity (other than the Notification Agent), and, so long as there are no assets remaining in any such Company, thereafter wind up or dissolve itself; (b) enter into any merger or consolidation, provided that, so long as a Paging Entity notifies the Lenders and so long as there exists no Default or Event of Default and none shall be caused thereby, (i) any Company or wholly-owned direct or indirect Restricted Subsidiary of a Paging Entity (whether newly acquired pursuant to Section 9.12 hereof or previously 53 61 existing, but excluding the Notification Agent) may merge or consolidate into any other Company or wholly-owned direct or indirect Restricted Subsidiary of a Paging Entity, and (ii) any acquisition consummated in accordance with the terms of Section 9.12 hereof may be accomplished by a merger so long as the surviving entity is a Restricted Subsidiary that is a Company; or (c) create or acquire any Subsidiary, except as permitted by Section 9.12 hereof. 9.3. Total Leverage Ratio. At any time during the term of this Agreement, not permit the Total Leverage Ratio for the most recent fiscal quarter to be greater than (a) 6.50 to 1.00, for the period beginning on the Closing Date and ending on June 30, 2000, and (b) 5.50 to 1.00 for the period beginning on July 1, 2000 and continuing thereafter until the Obligations have been paid in full and the Commitment has been terminated. For purposes of this Section 9.3, the definition of "Operating Cash Flow" used herein shall (a) exclude from Operating Cash Flow any such amounts or charges attributable to Properties of any Paging Entity sold during such period as if such sale occurred on the first day of such period and (b) include in Operating Cash Flow any such amounts or charges attributable to Properties of any Paging Entity purchased during such period as if such purchase occurred on the first day of such period. 9.4. Senior Debt to Annualized Operating Cash Flow. At any time during the term of this Agreement, not permit the ratio of (a) Senior Debt as of the last day of the period for which Annualized Operating Cash Flow is being determined to (b) Annualized Operating Cash Flow for the fiscal quarters during the specified time periods below to be greater than the ratio set forth below opposite such time period: Period Ratio ------ ----- Closing Date through December 31, 1996 4.50 to 1.00 January 1, 1997 through December 31, 1997 4.00 to 1.00 January 1, 1998 through December 31, 1998 3.50 to 1.00 January 1, 1999 through December 31, 1999 3.00 to 1.00 January 1, 2000 and thereafter 2.50 to 1.00 For purposes of this Section 9.4, the definition of "Annualized Operating Cash Flow" used herein shall (a) exclude from Annualized Operating Cash Flow any such amounts or charges attributable to Properties of any Paging Entity sold during such period as if such sale occurred on the first day of such period and (b) include in Annualized Operating Cash Flow any such amounts or charges attributable to Properties of any Paging Entity purchased during such period as if such purchase occurred on the first day of such period. 9.5. Pro Forma Debt Service Ratio. At any time during the term of this Agreement, not permit the ratio of (a) Annualized Operating Cash Flow on such date of determination to (b) Pro Forma Debt Service for the succeeding 12 months beginning on the date following the date of determination to be less than or equal to 1.50 to 1.00. 54 62 9.6. Interest Coverage. At any time during the term of this Agreement, not permit the ratio of (a) Operating Cash Flow for the most recently completed fiscal quarter during any of the time periods set forth below to (b) Total Interest Expense for such period, to be less than the amount set forth below opposite such time period: Period Ratio ------ ----- Closing Date through December 31, 1997 1.50 to 1.00 January 1, 1998 and thereafter 2.00 to 1.00 For purposes of this Section 9.6, the definition of "Operating Cash Flow" used herein shall (a) exclude from Operating Cash Flow any such amounts or charges attributable to Properties of any Paging Entity sold during such period as if such sale occurred on the first day of such period and (b) include in Operating Cash Flow any such amounts or charges attributable to Properties of any Paging Entity purchased during such period as if such purchase occurred on the first day of such period. 9.7. Capital Expenditures. At any time during the term of this Agreement, not permit Capital Expenditures (excluding acquisitions and investments made by any Paging Entity in accordance with the terms of Section 9.12(e) and Section 9.12(f) hereof) for any fiscal year set forth below to be more than the following amounts set forth opposite each such fiscal year below: Period Amounts ------ ------- 1996 $500,000,000 1997 $700,000,000 1998 $600,000,000 1999 and $650,000,000 Each Fiscal Year Thereafter provided however, that if no Default or Event of Default exists or would result therefrom, the Paging Entities may use during the fiscal year 1996 only, any amounts actually received by the Companies from the issuance by PageNet of $400,000,000 Senior Subordinated Notes in July of 1995, and any such Capital Expenditures made from such source shall not be included in any calculation of compliance with the preceding provisions of this Section; and provided further that, beginning in 1997, the Paging Entities shall be entitled to make additional Capital Expenditures in the following fiscal year only and not on a cumulative basis, in an amount equal in the aggregate to the lesser of (a) 15% of the amount permitted to be expended for the preceding fiscal year (which for fiscal year 1997 only, shall include any amounts actually received by the Companies from the issuance by PageNet of $400,000,000 Senior Subordinated Notes in July of 1995) or (b) the amount permitted to be expended which was not used for such fiscal year. 55 63 9.8. Restricted Payments. Not, and will not permit any other Paging Entity to, purchase any shares of its respective stock, redeem any shares of stock, declare or pay any dividends on any shares of stock (other than stock dividends), make any distributions to pay, or pay, principal, interest or fees on any Indebtedness (except the Obligations), including without limitation, management fees, or any other kinds of distributions, or set aside any funds for any such purpose (each of the foregoing actions being herein called a "Restricted Payment"); provided, however, that (a) any Restricted Subsidiary may declare and pay dividends or make distributions (i) on the Capital Stock held by PageNet in such Restricted Subsidiary or in order to make scheduled payments of principal and accrued interest on "Debt" (as defined in the documentation relating to the Subordinated Indebtedness) owed by the Restricted Subsidiary to PageNet or (ii) to a Company or to a wholly-owned Restricted Subsidiary of a Company; and (b) so long as PageNet can certify that there exists no Default or Event of Default and none shall result from the Restricted Payment and shall have delivered to the Agents a certificate, substantially in the form of Exhibit E hereto, of the chief financial officer or the corporate controller of PageNet demonstrating compliance with the financial ratios set out in such certificate after giving effect thereto, PageNet may (i) purchase or redeem shares of its common Capital Stock in an aggregate amount not exceeding $5,000,000 during the term of this Agreement, (ii) redeem those certain Senior Subordinated Notes due May 15, 2002, of PageNet, in an aggregate principal amount of $200,000,000, issued pursuant to that certain Indenture, between PageNet and Shawmut Bank, N.A., as Trustee, dated as of May 15, 1992, as amended, (iii) make payments of accrued interest on its Subordinated Indebtedness permitted under Section 9.9 hereof and (iv) make dividend payments on any of its Preferred Stock. 9.9. Indebtedness. Not, and will not permit any other Paging Entity to, permit to exist any Indebtedness of any Paging Entity except: (a) each Paging Entity may permit to exist the Revolving Loan and other Obligations owing under the Loan Documents; (b) the Companies may incur Indebtedness related to the Letters of Credit and any reimbursement obligations with respect thereto (and PageNet may Guaranty such Obligations); (c) each Paging Entity may permit to exist Indebtedness existing on the Closing Date as set forth on Schedule 9.9 hereto (and not any increase thereof), except that the Notification Agent may not incur any Debt; (d) so long as (i) no Default or Event of Default shall exist or result therefrom and (ii) PageNet shall have delivered to the Agents a Compliance Certificate of the Chief Financial Officer, Vice President-Finance or the corporate controller of PageNet demonstrating compliance with the financial ratios set out in such certificate after giving effect thereto, Indebtedness of PageNet only constituting unsecured public notes, provided that such public notes (A) have a maturity date at least one year after the scheduled Maturity Date, (B) are unsecured, (C) have terms and conditions substantially similar to any existing Subordinated Indebtedness of a Paging Entity or have terms and conditions otherwise acceptable to Managing Agents and Majority Lenders (provided that subordination terms must also comply with (E) below), as evidenced by 56 64 their prior written approval thereof, and are subject to documentation reasonably acceptable to the Majority Lenders and Managing Agents, but in any event such terms shall not be more stringent than the terms of the Loan Documents, (D) provide for an agent acting on behalf of the public note holders with the power to take any action at the direction of 51% of such note holders and (E) are subordinated to the Obligations, on terms and conditions no less advantageous to the Lenders than the subordination terms and provisions of the 8.875% Senior Subordinated Notes of PageNet due February 1, 2006 in the aggregate principal amount of $300,000,000 issued pursuant to the Indenture dated as of January 15, 1994; (e) Guaranties by PageNet of Indebtedness of wholly-owned Restricted Subsidiaries (which such indebtedness the Restricted Subsidiaries must be permitted to incur by the terms of this Agreement); (f) PageNet may permit to exist the Subordinated Indebtedness of PageNet outstanding on the Closing Date; (g) so long as no Default or Event of Default shall exist or result therefrom and PageNet shall have delivered to the Agents a Compliance Certificate of the chief financial officer or the corporate controller of PageNet demonstrating compliance with the financial ratios set out in such certificate after giving effect thereto, PageNet may incur and permit to exist Indebtedness in the form of Capital Leases in an amount in the aggregate over the term of this Agreement not to exceed $35,000,000; (h) Companies may permit to exist inter-company indebtedness permitted by Section 9.12(a) hereof, provided that the Notification Agent may not incur any such inter-company indebtedness; (i) so long as there exists no Default or Event of Default and none shall result therefrom and so long as the Paging Entities are otherwise in compliance with Section 9.7 hereof, Indebtedness (with an amortization schedule of not greater than five years) not to exceed $75,000,000 in the aggregate throughout the term of this Agreement, incurred by the Companies in connection with purchases of frequencies licensed by the FCC and the assets of the Person from which such frequencies are purchased; (j) so long as no Default or Event of Default shall exist or result therefrom, the Companies may incur Indebtedness of an amount not in excess of $50,000,000 for the purpose of repaying Advances made hereunder, the proceeds of which were used for the acquisition and construction of a corporate headquarters for the Companies in Texas, so long as the terms and provisions of the documentation relating to such Indebtedness are satisfactory to the Managing Agents in their sole discretion; and (k) so long as no Default or Event of Default shall exist or result therefrom, limited Guarantees by PageNet as permitted by Section 9.12(f) hereof. 57 65 9.10. Paging Entities' and Subsidiaries' Stock. Not permit any Paging Entity to purchase or otherwise acquire any shares of the capital stock of any Paging Entity; and not take any action, or permit any other Paging Entity to take any action, which will result in a decrease in any Paging Entity's 100% direct or indirect ownership interest in any Restricted Subsidiary, whether or now existing or hereafter acquired. 9.11. Liens. Not create or permit to exist, and will not permit any other Paging Entity to create or permit to exist (or covenant or agree, or permit any other Paging Entity to covenant or agree, with any Person other than the Lenders that any Paging Entity shall not create or permit to exist), any Lien with respect to any assets now owned or hereafter acquired by such Paging Entity except, so long as no Default or Event of Default shall result therefrom: (a) Liens for current taxes not delinquent or for taxes being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been made in accordance with GAAP; (b) Liens as listed on Schedule 6.6 hereto (limited to the Property subject to such Lien on the Closing Date, such amount secured by such Lien not to be increased); (c) Liens made for the benefit of the Agents and the Lenders to secure the Obligations; (d) Liens imposed by law, such as landlord's Liens, carriers', warehousemen's, materialmen's and mechanics' Liens and other similar Liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due, or are being diligently contested in good faith and by appropriate proceedings; (e) Liens on Property acquired in connection with an acquisition permitted by Section 9.12(e) hereof, provided that such Liens are either released within 60 days after such acquisition or secured Indebtedness aggregating less than $5,000,000 outstanding at any one time; and (f) Liens to secure Indebtedness described in Section 9.9(i) and (j) hereof, but solely on the assets acquired with the proceeds of such Indebtedness. 9.12. Loans, Advances, Investments and Guaranties. Not, and will not permit any other Paging Entity to make Investments in, or acquisitions of all or substantially all of the assets of, any Person or any operating unit or division of any Person, or become or be a guarantor or surety of, or otherwise become or be responsible in any manner with respect to any undertaking of, another, except: (a) loans and advances made between wholly-owned Paging Entities (except the Notification Agent); (b) existing Investments by PageNet and the Companies in existing Unrestricted Subsidiaries and Restricted Subsidiaries as described on Schedule 6.21; 58 66 (c) so long as there exists no Default or Event of Default and none shall result therefrom, purchases exclusively by a Paging Entity of frequencies licensed by the FCC and the assets of the Person from which such frequencies are purchased as Capital Expenditures, so long as the Paging Entities are in compliance with Section 9.7 hereof and such frequencies and assets are pledged as Collateral for the Obligations hereunder; (d) so long as there exists no Default or Event of Default and none shall result therefrom, purchases by any Paging Entity of inventory of another Person in the ordinary course of business; (e) so long as there exists no Default or Event of Default and none shall result therefrom, purchases by any Paging Entity of Capital Stock or assets of any Person or Persons for an aggregate purchase price not to exceed $15,000,000 (except for closing adjustments) throughout the term of this Agreement unless otherwise agreed to in writing by the Majority Lenders; provided however, that, in each case the Lenders shall have received written notice at least 30 days prior to the date of such purchase and at least 10 Business Days prior to the date of such purchase a Compliance Certificate setting forth the covenant calculations described therein both prior to and after giving effect to the proposed purchase, such acquisition shall be pursuant to documentation reasonably acceptable to the Majority Lenders, such Capital Stock, assets, property or business shall relate to a Person involved in the operation of wireless messaging and related communications systems, the Companies and PageNet shall have complied in all respects with Section 2.20 hereof, and the Lenders shall have each received copies of all documents, instruments, opinions and other information relating to the seller and assets or Capital Stock to be acquired as any Lender may reasonably request; (f) so long as there exists no Default or Event of Default both before and after giving effect to such Investment and limited Guaranty, Investments and limited Guarantees by PageNet in Unrestricted Subsidiaries or Investments in Restricted Subsidiaries or other strategic communications ventures of any type not otherwise prohibited under the terms of this Agreement, in a maximum aggregate amount of $250,000,000 throughout the term of this Agreement; provided, however, that PageNet shall not be entitled to invest or guarantee more than $200,000,000 in the aggregate throughout the term of this Agreement for all Investments and Guarantees in Unrestricted Subsidiaries over the term of this Agreement; (g) for the purpose of making advances to its employees for relocation and corporate travel expenses, the aggregate amount outstanding for the Paging Entities of which at any time shall not exceed $750,000 without the prior written consent of each of the Lenders; (h) Guaranties by PageNet of the Obligations; and (i) Investments in Cash Equivalents. 9.13. Leases. Not enter into or permit to exist, and will not permit any other Paging Entity to enter into or permit to exist, any arrangement for the leasing by it as lessee of any real or personal property (or any interest therein) which provides for the amortization of rent such 59 67 that there is a substantial balloon payment at the end of the term of any such lease arrangement or pursuant to which rental payments thereunder deviate significantly from standard market practices. 9.14. Sale of Assets. Not, and will not permit any other Paging Entity to lease, sell or otherwise dispose of its Property, to any other Person, except for (a) sales of pagers and product in the ordinary course of business, (b) sales in connection with the replacement of obsolete equipment in the ordinary course of business, (c) so long as no Default or Event of Default exists at such time and none results from such sale, sales of other assets not to exceed in the aggregate $30,000,000 over the term of this Agreement, (d) so long as no Default or Event of Default exists at such time and none results from such transfer, transfers of assets between the Companies, and (e) so long as no Default or Event of Default exists at such time and none results from such sale, sales consented to by each Lender. Notwithstanding anything to the contrary herein, PageNet and the Companies will not, and will not permit any other Paging Entity to, sell or otherwise dispose of any notes receivable or accounts receivable, with or without recourse, provided that nothing in this Section 9.14 shall prohibit the Paging Entities from settling disputes relating to receivables in the ordinary course of its business. 9.15. Management Fee. Not pay to any Person, and will not permit any other Paging Entity to pay to any Person, any Management Fee. 9.16. Conduct of Business. Not, and will not permit any other Paging Entity to, engage in any type of business except the businesses in which it is currently engaged, and communications businesses incidental and related thereto. 9.17. Transactions with Affiliates. Not, and will not permit any other Paging Entity to, enter into any transaction (including, without limitation, the purchase or sale of any property or service, but other than any transactions between Paging Entities) with, or make any payment or transfer to, any Affiliate except, to the extent there exists no Default or Event of Default and none shall result therefrom, in the ordinary course of business and pursuant to the reasonable requirements of a Paging Entity's business and upon fair and reasonable terms no less favorable to such Paging Entity than such Paging Entity would obtain in a comparable arms-length transaction. 9.18. Compliance with ERISA. Not, and will not permit any other Paging Entity to, directly or indirectly, or permit any member of its Controlled Group to directly or indirectly, (a) terminate any Plan so as to result in any material (in the opinion of the Majority Lenders) liability to any Paging Entity or any member of its Controlled Group, (b) permit to exist any ERISA Event, or any other event or condition which presents the risk of a material (in the opinion of the Majority Lenders) liability of any Paging Entity or any member of its Controlled Group, (c) make a complete or partial withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any material (in the opinion of the Majority Lenders) liability to a Paging Entity or any member of its Controlled Group, (d) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder (except in the ordinary course of business consistent with past practice) which could result in any 60 68 material (in the opinion of the Majority Lenders) liability to a Paging Entity or any member of its Controlled Group, or (e) permit the present value of all benefit liabilities, as defined in Title IV of ERISA, under each Plan of a Paging Entity or any member of its Controlled Group (using the actuarial assumptions utilized by the PBGC upon termination of a plan) to materially (in the opinion of the Majority Lenders) exceed the fair market value of Plan assets allocable to such benefits all determined as of the most recent valuation date for each such Plan. 9.19. Amendment and Waiver. Not, and will not permit any other Paging Entity to, enter into any material amendment of any material term or provision of its articles of incorporation or by-laws. In addition, PageNet and each Company agree not to, nor shall they permit any other Paging Entity to, enter into any material amendment of, or agree to or accept any material waiver of any of the provisions of, any material license, agreement or consent necessary, in the aggregate, for the operation of any Substantial Portion of its business unless (a) such agreement is not adverse to the interests of the Lenders, (b) the Majority Lenders consent to such amendment and (c) the Lenders are provided with 10 days' written notice prior to the execution or effectiveness of the proposed amendment or waiver. 9.20. Capital Stock. Not, and will not permit any other Paging Entity to, make or permit any issuance, transfer, assignment, distribution, mortgage, pledge or gift of any shares of Pledged Stock, except in accordance with the provisions of Section 9.2 hereof. PageNet shall not issue any Capital Stock which is preferred stock, except the Preferred Stock. 9.21. Sale and Leaseback. Not, and will not permit any other Paging Entity to, enter into any arrangement whereby it sells or transfers any of its assets, and thereafter rents or leases such assets (or other assets used for substantially the same purposes). ARTICLE X EVENTS OF DEFAULT If one or more of the following events of default occur: 10.1. Payment. Default by any Paging Entity in the payment of principal of any Note, or in the payment of any reimbursement obligation with respect to any Letter of Credit when due, or default, and the continuance thereof for five days, in the payment of interest on any Note when due, or in the payment of any fee hereunder or any other portion of the Obligation; or any Guarantor shall fail to pay any amount under any Guaranty of all or any portion of the Obligations; 10.2. Other Covenants. Default by any Paging Entity in the performance or observance of any covenant or agreement set forth in Article IX hereof, or in Sections 8.3 (a) and (b) hereof; 10.3. Other Indebtedness. Failure of any Paging Entity to make any payment when due, or within any applicable grace period, in respect of any of its (a) Indebtedness (other than the 61 69 Obligations) or (b) debt constituting trade debt that is more than 120 days past due (excluding any such trade debt such Paging Entity disputes in good faith), in each case in excess, in the aggregate, of $1,000,000; or the default by any Paging Entity in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Indebtedness to cause (i) such Indebtedness to become due prior to its stated maturity or (ii) to require such Paging Entity or Paging Entities to purchase such Indebtedness from such holder or holders; or any such Indebtedness of any Paging Entity shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the stated maturity thereof; 10.4. Debtor Relief Actions. (a) Any petition or application for the appointment of a trustee, receiver, or liquidator of any Paging Entity, or of any substantial part of the assets of any Paging Entity, shall be filed, or any proceedings under bankruptcy, reorganization, moratorium, or similar laws, or principles of equity affecting the enforcement of creditors' rights generally, whether now or hereafter in effect, shall be commenced, against any Paging Entity and any such petition or application shall be consented to by such Paging Entity, or continue unstayed or undismissed and in effect for a period of 30 consecutive days; or there shall be entered a decree or order by a court having jurisdiction in the premises constituting an order for relief in respect of any Paging Entity under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable Federal or state bankruptcy law or other similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official of any Paging Entity, or of any substantial part of their respective properties, or ordering the winding-up or liquidation of the affairs of any Paging Entity; (b) Any Paging Entity shall file a petition, answer or consent seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable Federal or state bankruptcy law or other similar law, or any Paging Entity shall consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment or taking of possession of a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of any Paging Entity or of any substantial part of their respective Properties, or any Paging Entity shall fail generally to pay its debts as they become due, or any Paging Entity shall take any action in furtherance of any such action; or (c) Any Substantial Portion of the Property of any Paging Entity shall be subject to attachment, levy or replenishment, unless such attachment, levy or replenishment shall be stayed, or bonded in an amount substantially equal to the fair market value of such Property and only for so long as such stay or bond exists; 10.5. ERISA. With respect to any Plan of the Paging Entities or any member of their Controlled Group: (i) any Paging Entity, any such member, or any other party-in-interest or disqualified person shall engage in transactions which in the aggregate would reasonably result in a direct or indirect liability to the Paging Entities or any member of their Controlled Group 62 70 in excess of $250,000 under Section 409 or 502 of ERISA or Section 4975 of the Code; (ii) the Paging Entities or any member of their Controlled Group shall incur any accumulated funding deficiency, as defined in Section 412 of the Code, in the aggregate in excess of $250,000, or request a funding waiver from the Internal Revenue Service for contributions in the aggregate in excess of $250,000; (iii) the Paging Entities or any member of their Controlled Group shall incur any withdrawal liability in the aggregate in excess of $250,000 as a result of a complete or partial withdrawal within the meaning of Section 4203 or 4205 of ERISA; (iv) the Paging Entities or any member of their Controlled Group shall fail to make a required contribution by the due date under Section 412 of the Code or Section 302 of ERISA which would result in the imposition of a lien under Section 412 of the Code or Section 302 of ERISA; (v) the Paging Entities or any member of their Controlled Group or any Plan sponsor shall notify the PBGC of an intent to terminate, or the PBGC shall institute proceedings to terminate, or the PBGC shall institute proceedings to terminate, any Plan; (vi) a Reportable Event shall occur with respect to a Plan, and within 15 days after the reporting of such Reportable Event to the Administrative Agent and Documentation Agent, the Administrative Agent shall have notified the Notification Agent in writing that the Majority Lenders have made a determination that, on the basis of such Reportable Event, there are reasonable grounds for the termination of such Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan and as a result thereof an Event of Default shall have occurred hereunder; (vii) a trustee shall be appointed by a court of competent jurisdiction to administer any Plan or the assets thereof; (viii) the benefits of any Plan shall be increased, or the Paging Entities or any member of their Controlled Group shall begin to maintain, or begin to contribute to, any Plan, without the prior written consent of the Majority Lenders; or (ix) any ERISA Event with respect to a Plan shall have occurred, and 30 days thereafter (A) such ERISA Event, other than such event described in clause (vi) of the definition of ERISA Event herein, (if correctable) shall not have been corrected and (B) the then present value of such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed the then current value of assets accumulated in such Plan; provided, however, that the events listed in subsections (v) through (ix) shall constitute Events of Default only if, as of the date thereof or any subsequent date, the maximum amount of liability that the Paging Entities or any member of their Controlled Group could incur in the aggregate under Section 4062, 4063, 4064, 4219 or 4023 of ERISA or any other provision of law with respect to all such Plans, computed by the actuary of the Plan taking into account any applicable rules and regulations of the PBGC at such time, and based on the actuarial assumptions used by the Plan, resulting from or otherwise associated with such event exceeds $250,000; 10.6. Agreements. Default by any Paging Entity in the performance of any of the Paging Entities' agreements set forth herein or in any of the Notes, the Applications, the Security Documents or the other Loan Documents (and not constituting an Event of Default under any other subsection of this Article X) and continuance of such default for 30 days after the earlier of (a) notice thereof to the Notification Agent from the Documentation Agent or any Under or (b) actual knowledge thereof by any officer of any Paging Entity; 10.7. Loan Documents; Collateral; Subordinated Indebtedness. Any provision of any Loan Document shall for any reason cease to be valid and binding on or enforceable against any 63 71 party to it (other than the Agents and the Lenders) in all material respects, or any such party shall so state or claim in writing; or any Paging Entity or any Person shall disavow any obligations under any Loan Document; or any Security Document shall for any reason fail to create a valid and perfected first priority security interest in any collateral purported to be covered thereby (except as specifically permitted by the terms of this Agreement and the other Loan Documents); or any indenture, note or other agreement evidencing or governing the Subordinated Indebtedness shall fail to remain in full force or effect; or there shall occur any event under the terms of any indenture, note or other documentation relating to Subordinated Indebtedness that has the effect of causing such Subordinated Indebtedness to be (or to be required to be) prepaid, redeemed, purchased or defeased, or to cause an offer to purchase or defease such Subordinated Indebtedness by any Paging Entity to be required to be made; or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Security Document or other Loan Document, or any indenture, note or other agreement evidencing or governing the Obligations or the Subordinated Indebtedness; or any Person shall contest, challenge, disavow its obligations thereunder or breach the subordination provisions of the Subordinated Indebtedness, or all or any material portion of the Collateral or the Loan Documents shall be the subject of any proceeding instituted by any Person other than a Lender (except in connection with any Lender's exercise of any remedies under the Loan Documents); or there shall exist any litigation or threatened litigation with respect to all or any material portion of the Collateral or the Loan Documents; or any Person shall challenge in any manner whatsoever or disavow the validity or enforceability of all or any portion of the Loan Documents or the Collateral; 10.8. Representations and Warranties. Any representation or warranty made by any Paging Entity, as applicable, herein or in any of the Security Documents or other Loan Documents, is untrue in any material respect, or any schedule, statement, report, notice or writing furnished by any Paging Entity to any of the Agents or the Lenders is untrue in any material respect on the date as of which the facts set forth are stated or certified; 10.9. Litigation. 120 days after notice is given to the Notification Agent by the Documentation Agent that, in the reasonable opinion of the Super-Majority Lenders after receiving advice from independent counsel, any litigation or governmental proceeding which has been instituted against any Paging Entity could reasonably be expected to have a Material Adverse Effect; 10.10. Licenses. Any Paging Entity shall fail to comply in any respect with the Communications Act, or any rule or regulation promulgated by the FCC, and such failure could reasonably be expected to cause a Material Adverse Effect, or notice is given to the Notification Agent by the Documentation Agent that, in the opinion of the Majority Lenders, any license of any Paging Entity which has expired or shall expire without having been renewed or shall be canceled, unpaired or jeopardized and shall not have been substituted for in a manner satisfactory to the Majority Lenders could reasonably be expected to have a Material Adverse Effect, or any material license for any RCCC or RCCCs in the aggregate affecting a Substantial Portion of the Property of the Paging Entities have not been renewed prior to 20 days before its expiration or has been terminated or transferred; 64 72 10.11. Judgments. A final judgment or judgments shall be entered by any court against any Paging Entity for the payment of money which exceeds $1,000,000 in the aggregate, or a warrant of attachment or execution or similar process shall be issued or levied against Property of the Paging Entities which, together with all other such Property of the Paging Entities subject to other such process, exceeds in value $1,000,000 in the aggregate, and if such judgment or award is not insured (by an insurance company which has acknowledged coverage) or, within 30 days after the entry, issue or levy thereof, such judgment, warrant or process shall not have been paid or discharged or stayed pending appeal, or if, after the expiration of any such stay, such judgment, warrant or process shall not have been paid or discharged; 10.12. Pledged Stock. All of the issued and outstanding Capital Stock of the Companies shall not be owned directly or indirectly by PageNet; or all of the issued and outstanding Capital Stock of the Restricted Subsidiaries shall not be owned by the Paging Entities; or 10.13. RICO. Any civil action, suit or proceeding shall be commenced against any Paging Entity under any federal or state racketeering statute (including, without limitation, the Racketeer Influenced and Corrupt Organization Act of 1970 ("RICO")) and such suit shall be adversely determined by a court of applicable jurisdiction and forfeiture shall commence against assets in the aggregate having fair market value of $5,000,000 or more, or any criminal action or proceeding shall be commenced against any Paging Entity under any federal or state racketeering statute (including, without limitation, RICO); then, if any such event shall be continuing, LIBOR Advances shall not be available to the Companies, and the Documentation Agent, upon request of the Majority Lenders, shall declare (i) the Commitment to be fifty and irrevocably reduced to zero with the Lenders thereafter having no obligation to make any Advance under the Revolving Loan, and/or (ii) all Obligations to be due and payable, whereupon the Commitment shall immediately, finally and irrevocably be reduced to zero, and all outstanding Notes and all other Obligations shall become immediately due and payable, all without notice of any kind, and without presentment, demand, or protest all of which is expressly waived by the Paging Entities, (except that if an event described in Section 10.4 hereof occurs, the Commitment shall be automatically, immediately finally and irrevocably reduced to zero and the outstanding Notes and all other Obligations shall become automatically due and payable without declaration or notice of any kind, and without presentment, demand, or protest all of which is expressly waived by the Paging Entities). The Documentation Agent, upon the request of NationsBank, may also demand and the Paging Entities shall pay to NationsBank, immediately upon demand and hi immediately available funds, the amount equal to the aggregate amount of the Letters of Credit then outstanding, irrespective of whether such Letters of Credit have been drawn upon, all as set forth and in accordance with the terms of provisions of Article III hereof. The Documentation Agent shall promptly advise the Notification Agent of any such declaration or demand but failure to do so shall not impair the effect of such declaration or demand. The Administrative Agent, the Documentation Agent and the Lenders may exercise all of the post-default rights granted to them under the Loan Documents or under applicable law. The rights and remedies of the Administrative Agent, the Documentation Agent and the Lenders hereunder shall be cumulative, and not exclusive. 65 73 ARTICLE XI RELATIONSHIP AMONG LENDERS 11.1. Agreement Among Lenders. The Lenders agree among themselves that: (a) Administrative Agent and Documentation Agent. NationsBank is hereby appointed as documentation agent hereunder and as collateral agent under each Security Document, and each of the Lenders irrevocably authorizes the Documentation Agent to act as the documentation agent and collateral agent of such Lender, including without limitation, the authority to execute in accordance with the terms of this Agreement on behalf of the Lenders all Loan Documents executed as amendments in connection with this Agreement. The Documentation Agent agrees to act as such upon the express conditions contained in this Article XI and in the Security Documents. Toronto Dominion is hereby appointed as Administrative Agent hereunder, and each of the Lenders irrevocably authorizes the Administrative Agent to act as the administrative agent of such Lender. The Administrative Agent agrees to act as such upon the express conditions contained in this Article XI. None of the Agents shall have a fiduciary relationship in respect of any Lender by reason of this Agreement. All provisions set forth in this Article XI with respect to the rights, duties and powers of the Agents under the Security Documents shall remain in full force and effect so long as the obligation of the Lenders to make Advances under the Revolving Loan is outstanding or any Obligations are owing to the Lenders or any obligations owing to the Lenders or any Lender under or in connection with any Interest Hedge Agreement shall remain outstanding and unpaid notwithstanding the termination of this Agreement. Each Lender hereby authorizes, consents to, and directs the Companies and the Notification Agent to deal with the Agents as the true and lawful agents of such Lender to the extent set forth herein. Each Lender hereby appoints the Administrative Agent and Documentation Agent as its nominee in its name and on its behalf, to act as nominee for and on behalf of all Lenders under the Loan Documents, to take such action as may be requested by Majority Lenders (or, where this Agreement or the other Loan Documents require, the SuperMajority Lenders or all the Lenders, as the case may be), provided that, unless and until the Administrative Agent and Documentation Agent shall have received such requests, the Administrative Agent or Documentation Agent may take such administrative action, or refrain from taking such administrative action, as it may deem advisable and in the best interests of the Lenders. (b) Replacement of Managing Agents. Should any Managing Agent or any successor Managing Agent ever cease to be a Lender hereunder, or should any Managing Agent or any successor Managing Agent ever resign as Managing Agent, or should any Managing Agent or any successor Managing Agent ever be removed with or without cause by the Majority Lenders, then the Lender appointed by the Majority Lenders (and, so long as there exists no Event of Default at such time, such replacement shall be reasonably acceptable to the Notification Agent) shall forthwith become such Managing Agent, as applicable, and the Paging Entities and the Lenders shall execute such documents as any Lender may reasonably request to reflect such change. Any resignation or removal of any Managing Agent or any successor Managing Agent shall become effective upon the appointment by the Majority Lenders of a successor Managing 66 74 Agent; provided, however, that if the Lenders fail for any reason to appoint a successor within 60 days after such removal or resignation, the Managing Agent or any successor Managing Agent (as the case may be) shall thereafter have no obligation to act as Managing Agent, as applicable, hereunder. The provisions of this Article XI shall continue to inure to the benefit of any Managing Agent that is no longer acting in such capacity, and shall survive the termination of this Agreement and the extinguishment of any such Agent's Revolving Loan Specified Percentage of the Commitment. (c) Expenses. Each Lender (including the Agents in their capacity as a Lender) shall pay its pro rata share, based on its Revolving Loan Specified Percentage of any costs, expenses and disbursements paid or incurred by the Administrative Agent and/or Documentation Agent (including in-house legal counsel costs) in connection with any of the Loan Documents to the Administrative Agent or the Documentation Agent if the Companies are obligated to pay such amounts and fail to pay such Agent (excluding, however, any facility fees owed by the Companies to any Managing Agent). Any amount so paid by the Lenders to the Administrative Agent or the Documentation Agent shall be returned by the Administrative Agent or the Documentation Agent, as applicable, pro rata to each paying Lender to the extent later paid by the Companies or any other Person on the Companies' behalf to the Administrative Agent or the Documentation Agent. (d) Delegation of Duties. The Administrative Agent and Documentation Agent may execute any of their duties hereunder by or through officers, directors, employees, attorneys or agents, and shall be entitled to (and shall be protected in relying upon) advice of counsel concerning all matters pertaining to their duties hereunder. (e) Reliance by Administrative Agent and Documentation Agent. The Administrative Agent and Documentation Agent and its officers, directors, employees, attorneys and agents shall be entitled to rely and shall be fully protected in relying on any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype message, statement, order, or other document or conversation believed by it or them to be genuine and correct and to have been signed or made by the proper Person and, with respect to legal matters, upon opinions and advice of counsel selected by the Administrative Agent or the Documentation Agent. The Administrative Agent and Documentation Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof. (f) Limitation of Administrative Agent's and Documentation Agent's Liability. (i) No Agent shall have any duties or responsibilities except those expressly set forth in this Agreement and those duties, and liabilities shall be subject to the limitations and qualifications set forth in this Article XI. The duties of each Agent shall be mechanical and administrative in nature. Neither the Administrative Agent nor the Documentation Agent nor any of their officers, directors, employees, attorneys or agents shall be liable for any action taken or omitted to be taken by it or them hereunder in good faith and reasonably believed by it or them to be within the discretion or power conferred to it or them by the Loan Documents or be responsible for the consequences 67 75 of any error of judgment, except for its or their own gross negligence or wilful misconduct. Except as aforesaid, the Administrative Agent and Documentation Agent shall be under no duty to enforce any rights with respect to any of the Advances, the Revolving Loan, or any security therefor. The Administrative Agent and Documentation Agent shall not be compelled to do any act hereunder or to take any action towards the execution or enforcement of the powers hereby created or to prosecute or defend any suit in respect hereof, unless indemnified to its satisfaction against loss, cost, liability and expense. The Administrative Agent and Documentation Agent shall not be responsible in any manner to any Lender for the effectiveness, enforceability, genuineness, validity or due execution of any of the Loan Documents, or for any representation, warranty, document, certificate, report or statement made herein or furnished in connection with any Loan Documents, or be under any obligation to any Lender to ascertain or to inquire as to the performance or observation of any of the terms, covenants or conditions of any Loan Documents on the part of the Paging Entities. To the extent not reimbursed by the Companies, each Lender hereby severally (and not jointly) indemnifies and holds harmless the Administrative Agent and the Documentation Agent, pro rata according to its Revolving Loan Specified Percentage, from and against any and all liabilities, obligations, losses (other than credit losses and facility fees), damages, penalties, actions, judgments, suits, costs, expenses and/or disbursements of any kind or nature whatsoever which may be imposed on, asserted against, or incurred by the Administrative Agent and Documentation Agent in any way with respect to any Loan Documents or any action taken or omitted by the Administrative Agent and Documentation Agent under the Loan Documents (including any negligent action of the Administrative Agent and Documentation Agent), except to the extent the same result from gross negligence or wilful misconduct by the Administrative Agent and Documentation Agent. The provisions of this Section 11.1(f) shall survive the termination of this Agreement. (ii) Unless the Notification Agent or a Lender, as the case may be, notifies the Administrative Agent prior to the date on which it is scheduled to make payment to the Administrative Agent of (a) in the case of a Lender, the proceeds of an Advance, or (b) in the case of the Notification Agent, a payment of principal, interest or fees to the Administrative Agent for the account of the Lenders, that it does not intend to make such payment, the Administrative Agent may assume that such payment has been made. The Administrative Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient, in reliance on such assumption. If such Lender or the Companies, as the case may be, has not in fact made such payment to the Administrative Agent, the recipient of such payment shall, on demand by the Administrative Agent, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to (a) in the case of payment by a Lender, the Federal Funds Effective Rate for three Business Days, and thereafter, at the rate set forth in clause (a)(i) of the defined term "Base Rate", or (b) in the case of payment by the Companies, the interest rate applicable to the relevant Advance. The failure of any Lender to make the Advance to be made by it as part of 68 76 any borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such borrowing, but no Lender shall be responsible for any such failure of any other Lender. (g) Co-Syndication Agents; Co-Agents; Lead Managers. None of the Lenders identified on the facing page or signature pages of this Agreement as a "co-agent" or "lead manager" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders so identified as a "co-syndication agent", "co-agent" or "lead manager" shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. (h) Liability Among Lenders. No Lender shall incur any liability (other than the sharing of expenses and other matters specifically set forth herein and in the other Loan Documents) to any other Lender, except for acts or omissions in bad faith. (i) Rights as Lender. With respect to its commitment hereunder, the portion of the Revolving Loan made by it and Note issued to it, each of the Administrative Agent and Documentation Agent shall have the same rights and obligations as a Lender and may exercise the same as though it were not the Administrative Agent or Documentation Agent, as the case may be, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Administrative Agent and Documentation Agent in their individual capacity. The Administrative Agent, the Documentation Agent or any Lender may accept deposits from, act as trustee under indentures of, and generally engage in any kind of business with, the Paging Entities and any of its Affiliates, and any Person who may do business with or own securities of the Paging Entities or any of its Affiliates, all as if the Administrative Agent and Documentation Agent were not the Administrative Agent and Documentation Agent hereunder and without any duty to account therefor to the Lenders. 11.2. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent and Documentation Agent or any other Lender and based upon the financial statements referred to in Sections 8.1 and 6.4 hereof, and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or the Documentation Agent or any other Lender and based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. The Agents shall not be required to keep informed as to the performance or observance by the Paging Entities of this Agreement or any other document referred to or provided for herein or to inspect the Properties or books of the Paging Entities. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agents hereunder, the Agents shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the 69 77 affairs, financial condition or business of any of the Paging Entities (or any of its related companies) which may come into any of the Agents' possession. 11.3. Benefits of Article. None of the provisions of this Article shall inure to the benefit of any Person other than Lenders; consequently, no Person other than a Lender shall be entitled to rely upon, or to raise as a defense, in any manner whatsoever, the failure of the Administrative Agent or the Documentation Agent or any Lender to comply with such provisions. ARTICLE XII GENERAL 12.1. Waivers. The rights and remedies of the Lenders under this Agreement and the other Loan Documents shall be cumulative and not exclusive of any rights or remedies which they would otherwise have. No failure or delay by the Administrative Agent, the Documentation Agent or any Lender in exercising any right shall operate as a waiver of such right. The Lenders expressly reserve the right to require strict compliance with the terms of this Agreement in connection with any funding of a request for a Advance. In the event that any Lender decides to fund an Advance at a time when the Paging Entities are not in strict compliance with the terms of this Agreement, such decision by such Lender shall not be deemed to constitute an undertaking by such Lender to fund any further requests for Advances or preclude the Lenders from exercising any rights available under the Loan Documents or at law or equity. Any waiver or indulgence granted by the Lenders shall not constitute a modification of this Agreement, except to the extent expressly provided in such waiver or indulgence, or constitute a course of dealing by the Lenders at variance with the terms of the Agreement such as to require further notice by the Lenders of the Lenders' intent to require strict adherence to the terms of the Agreement in the future. Any such actions shall not in any way affect the ability of the Administrative Agent, the Documentation Agent or the Lenders, in their discretion, to exercise any rights available to them under this Agreement or under any other agreement, whether or not the Administrative Agent, the Documentation Agent or any of the Lenders are a party thereto, relating to the Paging Entities. 12.2. Notice. Except as otherwise provided herein, any notice hereunder to any Company or any other Paging Entity shall be directed to the Notification Agent. Any notice to the Notification Agent, any Agent or any Lender shall be in writing and may be, and shall be deemed, given, if mailed, three Business Days after the date when sent by registered or certified mail postage prepaid, or if by telecopy, when confirmed as transmitted to such Person (with a certified copy mailed to such Person), charges prepaid, addressed to (a) the Notification Agent as set forth below, (b) such Agent as set forth below or (c) such Lender at its address set forth on the signature pages hereto, or at such other address as the Notification Agent, such Agent or such Lender may, by written notice, designate as its address for purposes of notice hereunder. Notwithstanding the foregoing, each Agent in its sole discretion may receive, accept and act upon telephonic or other instructions of the Notification Agent for making Advances to any 70 78 account designated to the Managing Agents by the Notification Agent in writing. The Paging Entities hereby agree to indemnify and hold each Agent harmless from any loss or expense which may arise or be created by the acceptance of telephonic or other instructions for making Advances to any account designated to the Managing Agents by the Notification Agent in writing, excluding any loss or expense that arises as the result of the gross negligence or willful misconduct of such Agent, as finally judicially determined by a court of competent jurisdiction. Copies of any notice sent to the Notification Agent shall be sent to the Notification Agent's attorney at the address stated below, provided that the failure by any of the Agents or the Lenders to provide copies of notice to the Notification Agent's attorney shall not constitute lack of notice or insufficient notice to the Notification Agent. The provisions of this Section 12.2 shall survive the termination of this Agreement. Documentation Agent or NationsBank: 901 Main Street 64th Floor Dallas, Texas 75202 Attention: Mr. Anthony M. Cacheria Vice President Telephone: (214) 508-0157 Telecopy: (214) 508-9390 With a copy to: Donohoe, Jameson & Carroll, P.C. 3400 Renaissance Tower 1201 Elm Street Dallas, Texas 75270 Attention: Melissa Ruman Stewart, Esq. Telephone: (214) 698-3814 Telecopy: (214) 744-0231 Administrative Agent or Toronto Dominion: Toronto Dominion (Texas), Inc. 909 Fannin, Suite 1700 Houston, Texas 77010 Attention: Ms. Sophia D. Sgarbi Telephone: (713) 653-8235 Telecopy: (713) 951-9921 71 79 With a copy to: The Toronto-Dominion Bank 31 West 52nd Street New York, New York 10019-6101 Attention: Mr. Brian O'Reilly, Managing Director Communications Finance Telephone: (212) 468-0729 Telecopy: (212) 262-1928 Other Managing Agents: First National Bank of Boston 100 Federal Street, 01-08-08 Boston, Massachusetts 02110 Attention: Mr. Shepard D. Rainie Director Telephone: (617) 434-7037 Telecopy: (617) 434-3401 Chemical Bank 2200 Ross Avenue 3rd Floor, Corporate Division Dallas, Texas 75201 Attention: J. Kevin Kelty Senior Vice President Telephone: (214) 965-4020 Telecopy: (214) 965-2990 Notification Agent: 4965 Preston Park Boulevard, Suite 500 Plano, Texas 75093 Attention: Mr. Kenneth W. Sanders Senior Vice President - Finance Telephone: (214) 985-4100 Telecopy: (214) 985-6551 72 80 With a copy to: Bingham, Dana & Gould 150 Federal Street Boston, Massachusetts 02110 Attention: Roger D. Feldman, Esq. Telephone: (617) 951-8414 Telecopy: (617) 951-8736 12.3. Expenses. Subject to Section 12.16 hereof, (a) Without limiting their indemnity or payment obligations under Section 7.10 hereof and other provisions of the Loan Documents, the Companies agree to pay on demand (i) all reasonable costs and expenses of the Documentation Agent in connection with the preparation, negotiation, and administration of any Loan Documents, including without limitation the reasonable fees and out-of-pocket expenses of Special Counsel, (ii) all reasonable costs and expenses (including reasonable attorneys' fees and expenses) of the Managing Agents in connection with administration (including, without limitation, the cost of performing post Closing Date UCC-11 searches), interpretation, modification, amendment, waiver, or release of any Loan Documents, (iii) all reasonable costs and expenses (including reasonable attorneys' fees and expenses) of the Managing Agents and their Institutional Affiliates in connection with or related to the syndication of this credit facility, (iv) all reasonable costs and expenses (including reasonable attorneys' fees and expenses) of the Managing Agents in connection with any restructuring, refinancing, work-out, or collection of any portion of the Obligations or the enforcement of any Loan Documents, and after the occurrence of an Event of Default, all reasonable costs and expenses (including reasonable attorneys' fees and expenses) of each Lender in connection with any restructuring, refinancing, work-out, or collection of any portion of the Obligations or the enforcement of any Loan Documents. (b) The obligations of the Companies under this Section 12.3 shall survive the execution of this Agreement and/or the extinguishment of the Commitment, repayment of the Obligation and termination of the Agreement. 12.4. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 12.5. Counterparts. This Agreement may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument. 73 81 12.6. Investment. Each Lender represents and warrants that (a) it is acquiring any Note to be issued to it hereunder for its own account as a result of making or investing in a loan in the ordinary course of its commercial banking or investment business and not with a view to the public distribution or sale thereof, but subject, nevertheless, to any legal or administrative requirement that the disposition of such Lender's property at all times be within its control, and (b) in good faith it has not and will not rely upon any margin stock (as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System) as collateral in the making and maintaining of the Revolving Loan. 12.7. Confidentiality. Each Lender agrees to hold any confidential information which it has received and may receive from the Paging Entities pursuant to this Agreement which the Paging Entities have marked "Confidential" and is not otherwise publicly available, in confidence, except for disclosure (a) to other Lenders, (b) to legal counsel, accountants, and other professional advisors to that Lender, (c) to regulatory officials, (d) in connection with or in response to compliance with any law, order, rule, regulation, policy, investigation, or legal process, (e) in connection with any legal proceeding to which that Lender is a party, and (f) permitted by Section 12.11 hereof. Each Lender agrees to endeavor to notify the Notification Agent of any dissemination of confidential information under this Section 12.7 by such Lender (unless prohibited by Applicable Law) in connection with any criminal process or pursuant to any subpoena or discovery request in connection with a court proceeding, however, failure of any Lender to so notify the Notification Agent shall not be deemed a breach of this Agreement and shall not relieve the Paging Entities from any of their obligations hereunder. 12.8. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Companies and the Lenders and their respective successors and assigns, except that (a) none of the Paging Entities shall have the right to assign its rights under the Loan Documents, and (b) any assignment by any Lender must be made pursuant to an Assignment and Acceptance Agreement and in compliance with Section 12.10 hereof. Notwithstanding clause (b) of this Section, any Lender may at any time, without the consent of the Notification Agent, assign or pledge all or any portion of its rights under the Loan Documents to a Federal Reserve Bank; provided, however, that no such assignment shall release the transferor Lender from its obligations hereunder. The Agents may treat the payee of any Note as the owner thereof for all purposes hereof unless and until the payee complies with Section 12.10 hereof in the case of an assignment and, in the case of any other transfer, a written notice of transfer is filed with the Agents. Any assignee or transferee of a Note or any other part of the Obligation of the Paging Entities agrees by acceptance thereof to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the holder of any Note or any other part of the Obligations of the Companies, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor or for any other part of the Obligations of the Companies. 74 82 12.9. Participation. (a) Permitted Participants: Effect. Any Lender may, in the ordinary course of its investment business or commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other financial institutions ("Participants") participating pro rata interests in any portion of the Revolving Loan owing to such Lender, any Note held by such Lender or any commitment to make any Advance under the Revolving Loan of such Lender, provided that, in no event shall any participation be sold in an amount less than $10,000,000, unless such participation is for the entire remaining amount of any such Lender's commitment to make any Advance under the Revolving Loan. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any Note or other part of the Obligations for all purposes under the Loan Documents, and the Companies and the Agents shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. (b) Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents and any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain such sole right of approval, provided, that such participation agreement may provide that such Lender will not agree to any amendment, modification or waiver with respect to the Revolving Loan or Letter of Credit in which such Participant has an interest which forgives principal or reimbursement obligations or interest or fees or reduces the interest rate payable with respect to the Revolving Loan or Letter of Credit, postpones any date fixed for any regularly-scheduled payment of principal or reimbursement obligations of, or interest or fees on, any Advances under the Revolving Loan or Letter of Credit, releases any guarantor of any portion of the Revolving Loan or Letter of Credit, or releases any Collateral, if any, securing any portion of the Revolving Loan or Letter of Credit, other than as specifically permitted by the terms of this Agreement and as otherwise permitted to be accomplished by an amendment, waiver or consent of the Majority Lenders. (c) Benefit of Offset and Indemnities. The Paging Entities agree that each Participant shall be deemed to have the right of offset provided in Section 2.16 hereof in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of offset provided in Section 2.16 hereof with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of offset provided in Section 2.16 hereof, agrees to share with each Lender, any amount received pursuant to the exercise of its right of offset, in accordance with Section 2.17 hereof as if each Participant was a Lender. The Paging Entities also agree that each Participant shall be entitled to the benefits of 75 83 Article V and Sections 7.10 and 12.3 hereof with respect to its participation in the commitments to make Advances under the Revolving Loan outstanding from time to time; provided, that no Participant shall be entitled to receive any greater amount pursuant to such Sections than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred-by such transferor Lender to such Participant had no such transfer occurred. The provisions of this Section 12.9 shall survive the termination of this Agreement. 12.10. Assignments. (a) Permitted Assignments. Any Lender may, with the prior written consent of each Agent (requested not later than five Business Days prior to the date of the proposed assignment) and only in the ordinary course of its investment business or commercial banking business in accordance with applicable law and pursuant to an Assignment and Acceptance Agreement, at any time assign to one or more banks or other financial institutions ("Purchasers") all or any pro rata part of its rights and obligations under the Loan Documents, provided that each Lender and its Institutional Affiliates that do not assign the entire amount of their rights and obligations under the Loan Documents shall hold at least $10,000,000 in the aggregate of the commitment to make Advances under the Revolving Loan (unless any Lender and its Institutional Affiliates has a commitment to make Advances under the Revolving Loan which are less than $10,000,000 in the aggregate on the day after the Closing Date in which case such Lender and its Institutional Affiliates shall hold such amount). Assignments with respect to any interest under any of the Loan Documents shall be in minimum amounts of $10,000,000, unless (i) such assignments are for the entire remaining amount of the sum of any such Lender's and such Lender's Institutional Affiliates commitment to make Advances under the Revolving Loan, or (ii) such assignments are to an existing Lender. Unless an Event of Default has occurred and is continuing, the consent of the Notification Agent shall be required prior to an assignment becoming effective with respect to a Purchaser (not constituting a Lender or an Institutional Affiliate) purchasing any interest under any of the Loan Documents. Such consent shall be substantially in the form attached to Exhibit D hereto and shall not be unreasonably withheld. (b) Effect: Closing Date. With respect to assignments of any interest under any of the Loan Documents other than the Applications and the Letters of Credit, upon (i) delivery to the Agents of a notice of assignment, substantially in the form of Exhibit D hereto (a "Notice of Assignment"), together with a copy of the Assignment and Acceptance Agreement, any consents required by Section 12. 10(a), and (ii) payment of a $3,500 fee to the Administrative Agent for processing such assignment, such assignment shall become effective on the effective date specified in such Notice of Assignment. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Companies, the Lenders or the Agents shall be required 76 84 to release the transferor Lender with respect to the percentage of the commitment to make Advances under the Revolving Loan assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.10(b), the transferor Lender, the Agents and the Companies shall make appropriate arrangements so that replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their Revolving Loan Specified Percentages of the Commitment, as adjusted pursuant to such assignment. 12.11. Dissemination of Information. The Companies and each other Paging Entity authorize each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law or otherwise (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Paging Entities; provided that each Transferee agrees to be bound by Section 12.7 of this Agreement. 12.12. Tax Treatment. If any interest in any Loan Document is held as of the Closing Date or is transferred to any Lender or Transferee: (a) that is not incorporated or organized under the laws of the United States of America or a state thereof any such Lender and Transferee shall: (i) in the case of a Lender or a Transferee that is a "bank" under Section 881(c)(3)(A) of the Code: (A) on or before the date it becomes a party to this Agreement (or, in the case of a Participant, on or before the date such Participant becomes a Participant hereunder) and on or before the date, if any, such Lender (or Transferee) changes its applicable lending office by designating a different lending office (a "New Lending Office") deliver to the Notification Agent and the Agents, (y) two properly completed and duly executed copies of United States Internal Revenue Service Form 1001 or 4224, or successor applicable form, as the case may be, and (z) an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be; (B) deliver to the Notification Agent and the Agents two further properly completed and duly executed copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Notification Agents or upon the request of the Notification Agent or the Agents; and 77 85 (C) obtain such extension of time for filing and completing such forms or certifications as may reasonably be requested by the Notification Agent and shall, promptly upon the request of the Notification Agent on behalf of the Companies to that effect, deliver to the Notification Agent such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Lender's tax status for withholding purposes; (ii) in the case of a Lender or a Transferee that is not a "bank" under Section 881(c)(3)(A) of the Code: (A) on or before the date it becomes a party to this Agreement (or, in the case of a Participant, on or the date such Participant becomes a Participant hereunder) deliver to the Notification Agent and the Agents (I) a statement under penalty of perjury that such Lender (x) is not a "bank" under Section 881(c)(3)(A) of the Code, is not subject to regulatory or other legal requirements as a bank in any jurisdiction, and has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements, (y) is not a 10-percent shareholder within the meaning of Section 881(c)(3)(B) of the Code and (z) is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code and (II) a properly completed and duly executed Internal Revenue Service Form W-8 or applicable successor form; (B) deliver to the Notification Agent and the Agents two further properly completed and duly executed copies of said Form W-8, or any successor applicable form on or before the date that any such Form W-8 expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Notification Agent or upon the request of the Notification Agent; and (C) obtain such extensions of time for filing and completing such forms or certifications as may be reasonably requested by the Notification Agent or the Agents and shall, promptly upon the request of the Notification Agent on behalf of the Companies to that effect, deliver to the Notification Agent such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Lender's tax status for withholding purposes; unless in any such case any change in law or regulation has occurred subsequent to the date such Lender (or Transferee) became a party to this Agreement (or in the case of a Participant, the 78 86 date such Participant became a Participant hereunder) which renders all such forms inapplicable or which would prevent such Lender from properly completing and executing any such form with respect to it and such Lender so advises the Notification Agent and the Agents in writing no later than 15 calendar days before any payment hereunder or under any Note is due. Each such Lender (and each Transferee) shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (ii) in the case of a Form W-8 or W-9 delivered pursuant to subsection 12.12(a)(i), that it is entitled to an exemption from United States backup withholding tax. 12.13. Amendments. Except as set forth in the last sentence of this Section 12.13, no amendment or waiver of any provision of this Agreement, the Notes, the Applications, the other Loan Documents or the Letters of Credit, nor consent to any departure therefrom by any Paging Entity, shall be effective unless the same shall be in writing and signed by the Companies and the Majority Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders, do (or take action or inaction resulting in) any of the following: (a) increase the amounts or extend the terms of the Lenders' commitments or subject the Lenders to any additional obligations, (b) reduce the principal of, or interest on, the Notes or any fees hereunder or any reimbursement obligations of the Companies with respect to any Letter of Credit, or change the application of the proceeds of any mandatory prepayment or mandatory commitment reduction or any date fixed for such prepayment, (c) postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees hereunder or any reimbursement obligations of the Companies with respect to any Letter of Credit, (d) change the percentage share of the Commitment or of the aggregate unpaid principal amount of the Notes, or the definition of Revolving Loan Specified Percentage, (e) change the definitions of Majority Lenders or Super-Majority Lenders, (f) change any of the subordination provisions in any agreement relating to any Subordinated Indebtedness or (g) change any provisions of this Section 12.13 or Section 12.14 hereof; provided, further, that the Documentation Agent shall not release any Collateral for or guaranty of the Obligations or subordinate any security interest in any of the Property constituting Collateral without the prior written consent of all of the Lenders (except, with the consent of the Managing Agents, Property subject to a Lien securing Indebtedness permitted under Section 9.9(j) hereof may be released by the Managing Agents in their sole discretion and, with the consent of the Majority Lenders, Property (i) which is, as of the Closing Date, specifically permitted to be released or subordinated under the terms of Section 9.14 hereof, any other provision of this Agreement or any provision of any other Loan Document, or (ii) the income from which produces less than 5% of the Paging Entities' Operating Cash Flow as would be shown in the most recent consolidated financial statements of the Paging Entities furnished to the Lenders in accordance with Section 8.1 hereof over the term of this Agreement); and provided, further, that no amendment, waiver or consent to Article XI hereof shall be effective unless signed by each of the Agents. Notwithstanding any of the preceding terms of this Section 12.13, the Managing Agents and the Notification Agent may, without the consent of any of the other Lenders, from time to time, waive or consent to any deviation from the $10,000,000 minimum requirement in Sections 12.9 and 12.10 hereof. 79 87 12.14. Application of Proceeds. Notwithstanding any other provision of this Agreement or of any of the Security Documents, the Paging Entities, the Lenders and the Agents agree as follows: (a) Payment of all of the Obligations and of all obligations of the Paging Entities arising under Interest Hedge Agreements owing to the Lenders or any Institutional Affiliate is secured by the Documentation Agent's security interest, for the benefit of the Agents and the Lenders, in the Collateral; and (b) After the occurrence, and during the continuation, of an Event of Default, any proceeds of any collection or disposition by the Documentation Agent of the Collateral shall be applied, first, to the payment of all expenses incurred in connection with the collection or disposition of the Collateral (including fees of attorneys, who may be employees of the Documentation Agent, and legal expenses), second, to the payment of the Obligations ratably to each Lender in accordance with each Lender's pro rata share of the sum of (i) Total Outstandings plus (ii) obligations due and owing to any Lender or Institutional Affiliate under any Interest Hedge Agreement, and third, to the Notification Agent or as a court of competent jurisdiction may direct. 12.15. Substitution of Lenders. In the event that any Lender (the "Affected Lender") has demanded compensation under Section 5.1 hereof or under the indemnity provisions of Section 7.10 hereof and so long as no Default or Event of Default exists, the Companies shall have the right (a) to request each remaining Lender (the "Non-Affected Lender") to assume its ratable share of such Affected Lender's share of the Commitment and all amounts owing to such Affected Lender in respect of the Revolving Loan under this Agreement and to purchase its ratable share of the Notes and Obligations of such Affected Lender; provided, however, that any such assumption and purchase by a Non-Affected Lender shall be in the sole discretion of such Non-Affected Lender, and (b) with the consent of the Agents (which such consent shall not be unreasonably withheld) to designate another financial institution as a substitute for such Affected Lender to purchase the Notes and Obligations of such Affected Lender and assume such Affected Lender's share of the Commitment and all amounts owing to such Affected Lender in respect of the Revolving Loan under this Agreement; provided, however that, notwithstanding the foregoing, the substitution of an Affected Lender pursuant to this Section shall not relieve the Companies of their obligations to such Affected Lender under Sections 5.1, 5.6, 7.10 and 12.3 hereof. 12.16. Rate Provision. It is not the intention of any party to any Loan Documents to make an agreement violative of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in any of the Loan Documents, no Lender shall ever be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the Maximum Amount. If any Lender ever receives, collects or applies, as interest, any such excess, such amount which would be excessive interest shall be deemed a partial repayment of principal and treated hereunder as such; and if principal is paid in full, any remaining excess shall be paid to the Notification Agent. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Maximum Amount, the Paging Entities and the Lenders shall, 80 88 to the maximum extent permitted under Applicable Laws, (i) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts the total amount of interest throughout the entire contemplated term of the Obligations so that the interest rate is uniform throughout the entire term that the Obligations remain unpaid; provided that if the Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Amount, the Lenders shall refund to the Notification Agent the amount of such excess or credit the amount of such excess against the total principal amount owing, and, in such event, no Lender shall be subject to any penalties provided by any laws for contracting for, charging or receiving interest in excess of the Maximum Amount. This Section 12.16 shall control every other provision of all agreements among the parties to this Agreement pertaining to the transactions contemplated by or contained in the Loan Documents. 12.17. Determination by the Lenders Conclusive and Binding. Any material determination required or expressly permitted to be made by the Administrative Agent, the Documentation Agent or any Lender under this Agreement shall be made in its reasonable judgment and in good faith, and shall when made, absent manifest error, be conclusive and binding on all parties. 12.18. Headings. Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof. 12.19. Exception to Covenants. No Paging Entity shall be deemed to be permitted to take any action or fail to take any action which is permitted as an exception to any of the covenants contained herein or which is within the permissible limits of any of the covenants contained herein if such action or omission would result in the breach of any other covenant contained herein. 12.20. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FIANL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 12.21. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT PURSUANT TO ARTICLE 5069-15.10(b), TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, IT IS AGREED THAT THE PROVISIONS OF CHAPTER 15, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, SHALL NOT APPLY TO THE REVOLVING LOAN AND OBLIGATIONS, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE PAGING ENTITIES AGREE THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE JURISDICTION 81 89 OVER PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 12.22. WAIVER OF JURY TRIAL. EACH OF THE PAGING ENTITIES, THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT, THE MANAGING AGENTS AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT AND MAKING ITS PORTION OF THE REVOLVING LOAN HEREUNDER. 12.23. Survival of Representations and Warranties, etc. All representations and warranties made under Article VI of this Agreement and in the other Loan Documents shall be deemed to be made at and as of the Closing Date and at and as of the date of each Advance, and each shall be true and correct when made, except to the extent (a) previously fulfilled in accordance with the terms hereof, (b) applicable to a specific date or otherwise subsequently inapplicable, (c) previously waived in writing by the Majority Lenders with respect to any particular factual circumstance, or (d) deviations therefrom are specifically permitted by the terms of the Loan Documents. All such representations and warranties shall survive, and not be waived by, the execution hereof by any Lender, any investigation or inquiry by any Lender, or by the making of any portion of its Revolving Loan or Advance under this Agreement. 12.24. Appointment of Notification Agent, Joint and Several Obligations; Senior Obligations of PageNet. (a) Each Company and each other Paging Entity appoints the Notification Agent as its true and lawful agent, to give and receive notices from the Agents and the Lenders hereunder and under the other Loan Documents, and authorizes the Managing Agents and the Lenders to give and receive notices to and from the Notification Agent on behalf of each Paging Entity. (b) All obligations and liabilities of each Company and each other Paging Entity hereunder and under the other Loan Documents shall be joint and several in nature. All obligations and liabilities of PageNet and the Companies hereunder and under the Loan Papers shall be senior in nature to all other indebtedness for borrowed money of PageNet and the Companies, and all documentation of each other indebtedness for borrowed money (including, without limitation, all indebtedness for borrowed money of PageNet) shall be subject to subordination terms and conditions, and subject to documentation, satisfactory to the Managing Agents. (c) Each Company and each other Paging Entity hereby waives any right by which it might be entitled to require suit on an accrued right of action in respect of any of the Obligation or require suit against the Paging Entities or any other Person, whether arising 82 90 pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended, Section 17.001 of the Texas Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of Civil Procedure, as amended, or otherwise. 12.25. Amendment, Restatement, Extension, Renewal and Increase. This Agreement is a renewal, extension, amendment, increase and restatement of the Original Credit Agreement and, as such, except for the "Obligation" as defined in the Original Credit Agreement (which shall survive, be renewed, extended, increased and restated by the terms of this Agreement), all other terms and provisions supersede in their entirety the Original Credit Agreement. All subordination agreements, security agreements, pledge agreements, mortgages, and deeds of trust executed and delivered in connection with this Agreement are hereby ratified by each Paging Entity for and on behalf of the Lenders, and each such document or agreement shall supersede the subordination agreements, security agreements, pledge agreements, mortgages, and deeds of trust executed and delivered in connection with the Original Credit Agreement (the "Original Security Documents"), except for the Liens created under the Original Security Documents which shall remain valid, binding and enforceable Liens against each Paging Entity and each of the other Persons which granted such Liens as security for the Obligations hereunder. REMAINDER OF PAGE LEFT BLANK INTENTIONALLY 83 91 EXHIBIT A NATIONSBANK(r) NationsBank of Texas, N.A. STANDBY LETTER OF CREDIT APPLICATION AND AGREEMENT - -------------------------------------------------------------------------------- NATIONSBANK OF TEXAS, N.A. - ----------------------------------- - ----------------------------------- Date ----------------------- - ----------------------------------- - ----------------------------------- (Herein called "Bank") PLEASE ISSUE ON OUR BEHALF YOUR IRREVOCABLE LETTER OF CREDIT ("CREDIT") AND DELIVER VIA: / / Airmail / / Full Cable / / Airmail with Pre-Advice Cable / / Courier / / - --------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- To Be Transmitted Through (Name and address of advising bank, if any) For The Account of (Name and address of applicant) (If not advising bank indicated, through any of Bank's correspondents or direct to Beneficiary) (Herein called "Obligor") - --------------------------------------------------------------------------------------------------------------------------------- In Favor of (Name and address of Beneficiary) Aggregate Amount of Credit U.S. $ ---------------------------------------------------- Expiration Date (Latest date drafts are to be presented at counters (Herein called "Beneficiary") of Bank) - --------------------------------------------------------------------------------------------------------------------------------- Available by the Beneficiary's Draft(s) Drawn on Bank at Sight and Accompanied by the Following: - --------------------------------------------------------------------------------------------------------------------------------- Special Instructions 1. Partial drawings are / / allowed. / / prohibited. 2. - --------------------------------------------------------------------------------------------------------------------------------- Fees and Terms of Reimbursement 1. Commission is % of the amount of the Credit or $ / / per annum. / / flat fee. --------- --------------------- 2. Charge amounts due under this Agreement to Obligor's account # . ------------------- 3. Maturity Date is the day Bank pays a draft under this Agreement or as provided below. 4. Annual Rate of Interest is the highest rate Bank may lawfully charge or as provided below. - ---------------------------------------------------------------------------------------------------------------------------------
For purposes of this Standby Letter of Credit Application and Agreement, the terms have the meanings indicated in the boxes above and in the definitions below. In consideration of Bank's issuing on behalf of Obligor a Letter of Credit ("Credit") substantially conforming with this Standby Letter of Credit Application and Agreement ("Agreement"), Obligor hereby agrees as follows: 1. REIMBURSEMENT AND OTHER PAYMENTS. On demand, or if prior demand is not made on Maturity Date, Obligor promises to pay to the order of Bank at Bank's address shown above an amount equal to (i) the face amount of each draft drawn or purporting to be drawn under the Credit in United States currency, and (ii) the equivalent in United States currency of the face amount of each draft drawn or purporting to be drawn under the Credit in a currency other than that of the United States, such equivalent to be calculated on the basis of Bank's selling rate of exchange in effect (for the date on which Bank pays such draft or reimburses any of its correspondents which paid such draft) for cable transfers to the place where and in the currency in which such draft is payable; in United States currency (a) the amount of drafts drawn or purporting to be drawn under the Credit and (b) interest on any such amount from the date paid by Bank until the earlier of repayment by Obligor or Maturity Date at the Annual Rate of Interest calculated on the basis of a year of 360 days. Customer shall comply with any and all governmental exchange regulations now or hereafter applicable to any foreign exchange provided Bank pursuant to this Section 1, and shall indemnify and hold Bank harmless from any failure so to comply. If for any cause whatsoever, there exists at the time in question no rate of exchange generally current at Bank for effective cable transfer of the sort above provided for, Obligor agrees to pay Bank on demand an amount in United States dollars equivalent to the actual cost of settlement of Bank's obligation to the payor of the draft or acceptance or any holder thereof, as the case may be, and however and whenever such settlement may be made by Bank, including interest on the amount of dollars payable by Obligor from the date of payment of such draft or acceptance to the date of Obligor's payment to Bank at the rate customarily charged by Bank in like circumstances. Obligor further promises to pay commission, processing fees, and all costs and expenses incurred by Bank in connection with the Credit. In addition, and without limiting the generality of the foregoing, if any law, regulation or the interpretation thereof by any court or administrative or governmental authority shall either impose, modify or deem applicable any capital, reserve, insurance premium or similar requirement against letters of credit issued by Bank and the result thereof shall be to increase the cost to Bank of issuing or maintaining any letter of credit; then, on demand by Bank, Obligor further promises to pay to Bank, from time to time, additional amounts which shall be sufficient to compensate Bank for the portion of such increased costs allocable to the Credit. A written advice(s) setting forth in reasonable detail such costs incurred by Bank, submitted by Bank to Obligor from time to time, shall be conclusive, absent manifest error, as to the amount thereof. Unpaid and past due amounts owed under the Agreement, including interest, shall bear interest at the highest rate Bank may lawfully charge. The maximum lawful interest rate determined under Texas law shall be the indicated rate ceiling as specified in TEX.REV.CIV.STAT.ANN., art 5069-1.04. If any other lawful rate exceeds said indicated rate ceiling, then the higher rate shall apply. The amount of interest payable shall in no event exceed the maximum amount Bank may lawfully charge on the Agreement. If the Annual Rate of Interest is stated in terms of Bank's Prime Rate, Prime Rate shall mean the Prime Interest Rate charged by Bank as announced or published by Bank from time to time and may not be the lowest interest rate charged by Bank. The Annual Rate of Interest shall change with each change in the Prime Rate as of the date of any such change without notice. In any contingency whatsoever, if Bank shall receive anything of value deemed interest under applicable law, the excessive interest shall be applied to the reduction of the unpaid amount which is due or refunded to Obligor. 92 2. ATTORNEY'S FEES. Obligor promises to pay, in addition to all other amounts due hereunder, all expenses incurred by Bank in connection with the Credit including but not limited to reasonable attorney's fees and court costs. Reasonable attorney's fees shall be ten per cent (10%) of the unpaid amount due, including interest, on the Agreement, unless either party shall plead and prove otherwise. If Bank is enjoined or restrained from payment of the Credit or from other action related to the Credit, Obligor also promises to pay reasonable attorney's fees and court costs related to such injunction or restraint. 3. ADDITIONAL TERMS. Obligor agrees that: (a) if partial drawings are permitted in the Agreement, Bank may honor the drafts without inquiry; (b) if Obligor requests or consents to any extension of the maturity or time for negotiation or presentation of drafts or documents, to any increase in the Aggregate Amount of Credit, or to any other modification of the terms of the Credit, then the Agreement shall be binding on Obligor as to such extension, increase, or other modification; (c) Bank may accept or pay any draft dated on or before the expiration of any time limit expressed in the Credit regardless of when drawn and when or whether negotiated, provided the other required documents are dated prior to, the Expiration Date of the Credit; (d) if Obligor, at any time prior to Expiration Date, shall pledge, assign, encumber or grant to any party other than Bank any of its property or assets as collateral security for existing indebtedness, Obligor shall grant to Bank a perfected security interest in such property or assets to the extent of the ratio that the Aggregate Amount of the Credit bears to the amount of such indebtedness; and (e) if at any time and from time to time Bank requires collateral (or additional collateral), Obligor will, on demand, assign and deliver to Bank as security for any and all obligations of Obligor now or hereafter existing under this Agreement, collateral of a type and value satisfactory to Bank or make such cash payment as Bank may require. 4. OTHER CONDITIONS. Obligor agrees that Bank shall not be responsible for (a) the validity, sufficiency or genuineness of documents or of any endorsements thereon even if such documents should in fact prove to be in any respect invalid, insufficient, fraudulent or forged; (b) failure of any draft to bear any reference or adequate reference to the Credit, or failure of documents to accompany any draft at negotiation, or failure of any person to note the amount of any draft on the reverse side of the Credit or to surrender or take up the Credit or to send forward documents apart from drafts as required by the terms of the Credit, each of which provisions, if contained in the Credit itself, it is agreed may be waived by Bank; (c) errors, omissions, interruptions or delays in transmission or delivery of any message by mail, cable, telegram, wireless or otherwise, whether or not they be in cipher; or (d) errors in translation or errors in interpretation of technical terms. Bank shall not be responsible for any act, error, neglect, default, omission, insolvency or failure in business of any correspondent or for any consequences arising from causes beyond Bank's control. Obligor further agrees that any action taken or omitted by Bank in connection with the Credit, if done in good faith, shall be binding on Obligor and shall not put Bank under any resulting liability to Obligor. Bank shall not be liable for any failure by Bank or any one else to pay or accept any draft under the Credit, or for any loss or damage resulting from any declared or undeclared war, censorship, law, control or restriction rightfully or wrongfully exercised by any de facto or de jure domestic or foreign government or agency thereof, or from any other cause beyond Bank's control; and Obligor agrees to indemnify and hold Bank harmless from any claim, loss, liability or expense arising by reason thereof. If Obligor has included any language describing events or conditions in this Agreement that would not be possible for Bank to verify from the documents required to be presented under the credit, we understand that Bank is in no position to make any verification of such events or conditions and is therefore not responsible for verifying the compliance with such requirements. Bank will make payment under the credit provided all other conditions are met. Furthermore, if the term "Beneficiary" includes any successor of the named Beneficiary by operation of law or otherwise, Bank shall have no responsibility to determine that one who draws under the credit and represents himself to be a successor to the named Beneficiary is in fact a duly authorized successor. 5. EVENTS OF DEFAULT. If Obligor fails to pay, perform or discharge any obligation set forth in the Agreement or in any other agreement delivered by the Obligor to Bank, or if Obligor is in default in any manner under the terms and conditions of any other financial obligation, or upon the happening with respect to Obligor, an endorser or guarantor, of any of the following: the commencement of any proceeding, suit, or action for reorganization, dissolution, liquidation, suspension of Obligor's usual business; insolvency; the filing of a petition under any of the provisions of the Bankruptcy Act or amendment thereto; application for or appointment of a conservator, rehabilitator or receiver of Obligor or Obligor's property; death; issuance of an injunction or a warrant of attachment; entry of a judgment; making of any tax assessment by the United States or any state; the calling of a meeting of creditors; appointment of a committee of creditors or liquidating agent; offering a composition or extension to creditors; execution of any assignment for benefit of creditors; making or sending notice of an intended bulk sale; financial responsibility of any of them shall become impaired or unsatisfactory to Bank, then in any of such events the amounts owed or that could be owed under the Agreement, although contingent or not yet due, shall, without notice or demand, forthwith become and be immediately due and payable, notwithstanding any time or credit otherwise allowed thereunder, and Bank may at any time thereafter exercise its right of offset against any amounts which it may then be obliged to pay to Obligor. 6. NOTICES AND WAIVERS. Any notice to or demand on Obligor shall be deemed effective, if not first otherwise given or made, when forwarded by mail, telegraph, cable, radio, telephone or otherwise to the last address or telephone number of Obligor appearing in Bank's records with the same effect as if the same were actually delivered to and received by Obligor in person. Bank shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver whatever shall be valid unless in writing, signed by Bank, and then only to the extent therein set forth. A waiver by Bank of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Bank would otherwise have on any future occasion. 7. MODIFICATION. No term or provision of the Agreement can be changed orally, and no executory agreement shall be effective to modify or to discharge the Agreement unless such executory agreement is in writing and signed by Bank. All Bank's rights and remedies hereunder shall be cumulative and may be exercised singly or concurrently. 8. PRESENTATION OF DOCUMENTS WITHOUT DRAFTS. If the Credit issued by Bank will provide that the Credit will be available by presentation to Bank of the document described in the Agreement, unaccompanied by drafts, Obligor agrees that all reference herein to drafts, documents relative to drafts, and the presentation, acceptance for payment or payment of drafts shall refer to documents presented for payment without drafts, the presentation and acceptance thereof, and payment upon such presentation and that Obligor's obligations and Bank's rights, privileges and remedies hereunder shall be the same as though payments had been made upon presentation of drafts drawn under the Credit accompanied by the said documents. 9. GOVERNING LAW. The Credit shall be subject to the Uniform Customs and Practice for Documentary Credits, as published by the International Chamber of Commerce, and as revised from time to time ("UCPDC"). The Agreement shall be governed by the laws of the State of Texas. 10. RENEWAL PROVISION. In the case of Bank's issuance on behalf of Obligor of a Credit which renews automatically, Obligor hereby agrees that in the event it does not want such Credit to be renewed, it will request Bank in writing not to renew such Credit at least thirty (30) days prior to the notification period specified in the Credit. Obligor acknowledges that its failure to make a timely request for the non-renewal of such Credit may result in such Credit renewing automatically and hereby agrees that in such event Obligor shall have no claim or cause of action against Bank, or defense against payment under the Agreement, for Bank's renewal of such Credit. 11. OTHER PROVISIONS. If the Agreement is executed by two or more Obligors, it shall be the joint and several agreement of such Obligors. The Agreement shall bind Obligor and Obligor's heirs, executors, administrators, and successors; the Agreement shall inure to the benefit of Bank's successors and assigns. The unenforceability or invalidity, as determined by a court of competent jurisdiction, of any provision of the Agreement shall not render unenforceable or invalid any other provision. The heading of sections herein are for convenience only and are not to be construed as part of the text of the Agreement. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN OBLIGOR AND BANK AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN OBLIGOR AND BANK. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OBLIGOR AND BANK. - ----------------------------------------------------------- ----------------------------------------------------------- (Name of Obligor, or signature if Obligor is individual) (Name of Obligor, or signature if Obligor is individual) By: By: -------------------------------------------------------- -------------------------------------------------------- (Authorized Signature) (Authorized Signature) - ----------------------------------------------------------- ----------------------------------------------------------- (Title) (Title) - ------------------------------------------------------------------------------------------------------------------------------- Describe Underlying Transaction (For Bank Use Only) - ------------------------------------------------------------------------------------------------------------------------------- Account Officer Bank Counsel (When over $50,000): - -------------------------------------------------------------------------------------------------------------------------------
93 EXHIBIT B ASSIGNMENT AND ACCEPTANCE Dated ______________ Reference is made to the Second Amended and Restated Credit Agreement dated as of ____________________, 1996 (as amended, restated, or otherwise modified from time to time, the "Credit Agreement") among Paging Network, Inc., a Delaware corporation ("PageNet"), certain Subsidiaries of PageNet, the Lenders parties thereto, NationsBank of Texas, N.A., as Documentation Agent and as a Lender (the "Documentation Agent"), The First National Bank of Boston and Chase Securities Inc, as Co-Syndication Agents and as Lenders, and Toronto Dominion (Texas), Inc., as the Administrative Agent and as a Lender (the "Administrative Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. ____________________ ("Assignor") and __________________ ("Assignee") agree as follows: 1. Assignor hereby sells and assigns to Assignee without recourse or warranty, and Assignee hereby purchases and assumes from Assignor, a _________% interest in and to all of Assignor's rights and obligations under the Credit Agreement as of the Effective Date (as defined below), [with respect to such percentage interest in Assignor's portion of the Commitment as in effect on the Effective Date], and the Notes held by Assignor, subject to the terms and conditions of this Assignment and Acceptance. 2. Assignor (a) represents and warrants that (i) as of the date hereof [the aggregate amount of its portion of the Commitment (without giving effect to assignments thereof which have not yet become effective) is $_________], [as of the date hereof, the outstanding principal amount of Advances owing to it (without giving effect to assignments thereof which have not yet become effective) is $_________,] and (ii) it is the legal and beneficial owner of the interest being assigned by it hereunder; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties, or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of the Credit Agreement, the Loan Documents, or any other instrument or document furnished pursuant thereto or (ii) the financial condition of the Company or the performance or observance by the Company of any of its obligations under the Credit Agreement, the Loan Documents, or any other instrument or document furnished pursuant thereto; and (c) attaches the Notes referred to in Paragraph 1 above to exchange such Notes for new Notes as follows: _____________________________________. 3. Assignee (a) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to in Section 8.1 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (b) agrees that it will, independently and without reliance upon the Documentation Agent, the Administrative Agent, Assignor, or any other Lender, and based on such documents 94 and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement and the other Loan Documents; (c) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement, the other Loan Documents, and this Assignment and Acceptance as are delegated to the Administrative Agent by the terms thereof and hereof, together with such powers as are reasonably incidental thereto and hereto; (d) agrees that it will perform in accordance with its terms all of the obligations which by the terms of the Credit Agreement, the other Loan Documents, and this Assignment and Acceptance are required to be performed by it as a Lender; (e) specifies the addresses set forth in Schedule I attached hereto as its address for the receipt of notices; and (f) if it is not a United States Person, attaches the forms prescribed by the Internal Revenue Service certifying as to Assignee's status for purposes of determining exception from United States withholding taxes with respect to all payments to be made to Assignee under the Credit Agreement, the other Loan Documents, and this Assignment and Acceptance or such other documents as are necessary to indicate that all such payments are subject to such taxes at a rate reduced by an applicable tax treaty. 4. The effective date for this Assignment and Acceptance shall be (the "Effective Date"). 5. Upon remittance of the $3,500 processing fee to the Administrative Agent and the Effective Date, (a) Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (b) Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY OTHER JURISDICTION, ASSIGNEE AGREES THAT THE COURTS OF TEXAS WIN HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH. 7. Assignee's Revolving Loan Specified Percentage shall be __________%. As of the Effective Date, Assignor's Revolving Loan Specified Percentage shall be __________%. -2- 95 8. This Assignment and Acceptance may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. [ASSIGNOR] By: ----------------------------- ----------------------------- ----------------------------- [ASSIGNEE] By: ----------------------------- Its: ----------------------------- ----------------------------- -3- 96 Accepted this ___ day of ________ NATIONSBANK OF TEXAS, N.A., as Documentation Agent and as a Lender By: --------------------- Its: --------------------- TORONTO DOMINION (TEXAS), INC., as Administrative Agent and as Lender By: --------------------- Its: --------------------- -4- 97 Schedule I ASSIGNEE'S ADDRESS 1. Address for the Advances and Receipt of Notices 2. Initial LABOR Lending Office -5- 98 EXHIBIT C PROMISSORY NOTE ______________ Dallas, Texas: June ___, 1996 ON OR BEFORE December 31, 2004, the undersigned, for value received, hereby promises to pay jointly and severally to the order of _______________________________ (the "Lender") the lesser of the principal sum of _________________________ DOLLARS (________________) or the aggregate unpaid principal amount of all Loans made by the Lender to the undersigned pursuant to Section 2.1 of the Credit Agreement hereinafter referred to (as amended, modified or restated from time to time, the "Agreement"), in immediately available funds at the main office of TORONTO DOMINION (TEXAS), INC., as Administrative Agent, in Houston, Texas, together with interest on the unpaid principal amount hereof at rates and on the dates set forth in the Agreement. The undersigned shall make payments of principal and interest as are required to be made under the terms of the Agreement. The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder. This note is one of the Revolving Loan Notes issued pursuant to, and is entitled to the benefits of, the Second Amended and Restated Credit Agreement dated as of June _, 1996 among Paging Network, Inc., the undersigned, NationsBank of Texas, N.A., as Documentation Agent and as a Lender, Toronto Dominion (Texas), Inc., as an Administrative Agent and as a Lender, The First National Bank of Boston and Chase Securities Inc, as Co-Syndication Agents and each as a Lender, and the Lenders named therein, to which Agreement, reference is hereby made for a statement of the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is secured pursuant to certain Security Documents, all as more fully described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement. PAGING NETWORK FINANCE CORP. PAGING NETWORK EQUIPMENT COMPANY, INC. PAGING NETWORK OF ALASKA, INC. PAGING NETWORK OF AMERICA, INC. PAGING NETWORK OF ARIZONA, INC. PAGING NETWORK OF ATLANTA, INC. PAGING NETWORK OF COLORADO, INC. PAGING NETWORK OF DALLAS/FORT WORTH, INC. 99 PAGING NETWORK OF FLORIDA, INC. PAGING NETWORK OF HARTFORD/SPRINGFIELD, INC. PAGING NETWORK OF HAWAII, INC. PAGING NETWORK OF ILLINOIS, INC. PAGING NETWORK OF KANSAS CITY, INC. PAGING NETWORK OF LAS VEGAS, INC. PAGING NETWORK OF LOS ANGELES, INC. PAGING NETWORK OF LOUISIANA, INC. PAGING NETWORK OF MASSACHUSETTS, INC. PAGING NETWORK OF MICHIGAN, INC. PAGING NETWORK OF MINNESOTA, INC. PAGING NETWORK OF NEW JERSEY, INC. PAGING NETWORK OF NEW MEXICO, INC. PAGING NETWORK OF NEW YORK, INC. PAGING NETWORK OF NORTH CAROLINA, INC. PAGING NETWORK OF NORTHERN CALIFORNIA, INC. PAGING NETWORK OF OHIO, INC. PAGING NETWORK OF OKLAHOMA, INC. PAGING NETWORK OF OMAHA, INC. PAGING NETWORK OF OREGON, INC. PAGING NETWORK OF ORLANDO, INC. PAGING NETWORK OF PHILADELPHIA, INC. PAGING NETWORK OF SAN ANTONIO, INC. PAGING NETWORK OF SAN FRANCISCO, INC. PAGING NETWORK SERVICES, INC. PAGING NETWORK OF TENNESSEE, INC. PAGING NETWORK OF UTAH, INC. PAGING NETWORK OF VIRGINIA, INC. (DELAWARE CORP.) PAGING NETWORK OF VIRGINIA, INC. (VIRGINIA CORP.) PAGING NETWORK OF WASHINGTON, INC. PAGING NETWORK OF WESTCHESTER, INC. PAGING NETWORK OF WEST TEXAS, INC. PAGING NETWORK - ATLANTIC REGION, INC. PAGING NETWORK - CENTRAL REGION, INC. PAGING NETWORK - NORTHEASTERN REGION, INC. PAGING NETWORK - NORTHWESTERN REGION, INC. PAGING NETWORK - SOUTHERN REGION, INC. -2- 100 PAGING NETWORK SOUTHEASTERN REGION, INC. PAGING NETWORK SOUTHWESTERN REGION, INC. PAGING NETWORK SATELLITE COMPANY, INC. ---------------------------------------------- By: Kenneth W. Sanders Their: Senior Vice President - Finance -3- 101 Schedule attached to Promissory Note dated as of June __, 1996 LOANS AND PAYMENTS OF PRINCIPAL
Principal Maturity Amount of Unpaid Amount of Interest Principal Principal Notation Date of Loan Period Paid/Prepaid Balance Made By
102 EXHIBIT D NOTICE OF ASSIGNMENT To: PAGING NETWORK FINANCE CORP. 4965 Preston Park Boulevard, Suite 500 Plano, Texas 75093 Attention: ________________ NATIONSBANK OF TEXAS, N.A., as Documentation Agent and Lender 901 Main Street, 64th Floor Dallas, Texas 75202 TORONTO DOMINION (TEXAS), INC., as Administrative Agent and Lender 909 Fannin, Suite 1700 Houston, Texas 77010 Attention: Sophia D. Sgarbi, Manager From: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] __________________, 19______ 1. We refer to the Second Amended and Restated Credit Agreement, dated as of ______________________, 1996 (which, as it may be amended, modified, or restated from time to time, is herein called the "Credit Agreement") among Paging Network, Inc. ("PageNet"), certain Subsidiaries of PageNet party thereto (the "Companies"), certain banks party thereto (each a "Lender"), including __________________ (the "Assignor"), Toronto Dominion (Texas), Inc., as Administrative Agent and a Lender, NationsBank of Texas, N.A., as Documentation Agent and a Lender, The First National Bank of Boston and Chase Securities Inc as Co-Syndication Agents and as Lenders. Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. This Notice of Assignment (this "Notice") is given and delivered to the Company and the Agents pursuant to Section 12.10 of the Credit Agreement. 103 3. The Assignor and ___________________________________ (the "Assignee") have entered into an Assignment Agreement, dated as of ____________________________, 19 _______, pursuant to which, among other things, the Assignor has sold, assigned, delegated and transferred to the Assignee, and the Assignee has purchased, accepted and assumed from the Assignor, an undivided interest in and to all of the Assignor's rights and obligations under the Credit Agreement such that Assignee's percentage of the Commitment shall equal __________% The Effective Date (the "Effective Date") shall be the later of ___________________________, 19______ or two Business Days (or such shorter period agreed to by the Agents) after receipt of this Notice of Assignment and any consents and fees required by the Credit Agreement have been delivered to the Agents, provided that the Effective Date shall not occur if any condition precedent agreed to by the Assignor and the Assignee has not been satisfied. 4. As of this date, the Revolving Loan Specified Percentage of the Assignor is __________%. As of the Effective Date, the Revolving Loan Specified Percentage of the Assignor will be ____________% (as such percentage may be reduced or increased by assignments which become effective prior to the assignment to the Assignee becoming effective). 5. The Assignor and the Assignee hereby give to Paging Network Finance Corp. or other Paging Entity designated by each of the Companies to be the Notification Agent pursuant to the Credit Agreement and the Agents notice of the assignment and delegation referred to herein. The Assignor will confer with the Agents before __________________, 19 _______ to determine if the Assignment Agreement will become effective on such date pursuant to Section 3 hereof, and will confer with the Agents to determine the Effective Date pursuant to Section 3 hereof if it occurs thereafter. The Assignor shall notify the Agents if the Assignment Agreement does not become effective on any proposed Effective Date as a result of the failure to satisfy the conditions precedent agreed to by the Assignor and the Assignee. At the request of the Agents, the Assignor will give the Agents written confirmation of the occurrence of the Effective Date. 6. The Assignee hereby accepts and assumes the assignment and delegation referred to herein and agrees as of the Effective Date (i) to perform fully all of the obligations under the Credit Agreement and Loan Documents which it has hereby assumed and (ii) to be bound by the terms and conditions of the Credit Agreement as if it were a "Lender". 7. The Assignor and the Assignee request and agree that any payments to be made by the Agents to the Assignor on and after the Effective Date shall, to the extent of the assignment referred to herein, be made entirely to the Assignee, it being understood that the Assignor and the Assignee shall make between themselves any desired allocations. 8. The Assignor or the Assignee shall pay to the Administrative Agent, on or before the Effective Date the processing fee of $3,500 required by Section 12.10(b) of the Credit Agreement. -2- 104 9. The Assignor and the Assignee request and direct that the Documentation Agent prepare and cause the Company to execute and deliver (i) to the Assignor, ***[a]*** replacement Note***[s]*** payable to the Assignor and (ii) to the Assignee, ***[a] [new] [replacement]*** Note***[s]*** payable to the Assignee. The Assignor ***[and the Assignee each]*** agree***[s]*** to deliver to the Documentation Agent the original Note received by it from the Company upon its receipt of ***[a]*** new Note***[s]***. 10. The Assignee advises the Agents that the address listed below is its address for notices under the Credit Agreement: ------------------------- ------------------------- ------------------------- ASSIGNOR ASSIGNEE By: By: ------------------------- ------------------------- Title: Title: ------------------------- ------------------------- [applicable only if no Event of Default has occurred and is continuing, and only with respect to a Purchaser (which is not a Lender or an Affiliate) of any interest under the Loan Documents other than with respect to an assignment of an interest with respect to any of the Letters of Credit or Applications:] Consented and Agreed as of _____ day of PAGING NETWORK FINANCE CORP. By: -------------------------- Title: ----------------------- -3- 105 EXHIBIT E COMPLIANCE CERTIFICATE DATE: _________________ TO: Each of the Lenders signatory to the Credit Agreement described below This Certificate is furnished pursuant to and in satisfaction of the requirements of Section 8.l(c) of the Second Amended and Restated Credit Agreement, dated as of June _, 1996 (as amended and modified from time to time, the "Credit Agreement"), among Paging Network, Inc. ("PageNet"), certain Subsidiaries of PageNet (the "Companies"), the Lenders party thereto, Toronto Dominion (Texas), Inc., as the Administrative Agent and as a Lender, NationsBank of Texas, N.A., as Documentation Agent and as a Lender, The First National Bank of Boston, and Chase Securities as Co- Syndication Agents and as Lenders. AR capitalized terms used herein and not otherwise defined herein are defined in the Credit Agreement. For purposes hereof, section references herein related to sections of the Credit Agreement, and bracketed amounts or ratios refer to the maximum or minimum amounts or ratios required under the relevant sections of the Credit Agreement. 1. Covenant Calculations. The undersigned chief financial officer or corporate controller of PageNet hereby certifies that the following computations are true, complete and correct: 9.3 Total Leverage Ratio (a) Total Debt 1) obligations for borrowed money $_________ 2) letter of credit reimbursement obligations $_________ 3) obligations representing the deferred purchase price of services or property $_________ 4) obligations, whether or not assumed, secured by Liens $_________ 5) obligations which are evidenced by notes, acceptances, or other similar instruments $_________ 6) Capitalized Lease Obligations $_________ 7) obligations pursuant to a Guaranty $_________ Total Debt (a) (1) + (2) + (3) + (4) + (5) + (6) + (7) $________ 106 (b) Annualized Operating Cash Flow 1) consolidated pre-tax net income or loss $_________ 2) depreciation expense $_________ 3) amortization expense $_________ 4) interest expense $_________ 5) cash dividends or cash payments on Preferred Stock $_________ 6) amortized costs and expenses in connection with interest rate caps or swaps $_________ 7) fees paid not already included in interest expense $_________ 8) non cash charges $_________ 9) extraordinary losses $_________ 10) extraordinary gains $_________ Annualized Operative Cash Flow (b)(1) + (2) + (3) + (4) + (5) + (6) + (7) + (8) + (9)-(10)x4 $_________ Total Leverage Ratio (a) to (b) _____ to 1 Required Closing Date through June 30, 2000 6.50 to 1.00 July 1, 2000 and thereafter 5.50 to 1.00 9.4 Senior Debt to Annualized Cash Flow (a) Senior Debt 1) (See 9.3 (a)(1)+(2)+(3)+(4)+ (5) +(6) +(7) $_________ 2) Subordinated Indebtedness $_________ Senior Debt (a)(1)-(2) $_________ (b) Annualized Operating Cash Flow (See 9.3(b) above) $_________ Senior Debt to Annualized Cash Flow (a) to (b) _____ to 1 2 107 Required Closing Date through December 31, 1996 January 1, 1997 through December 30, 1997 4.50 to 1.00 January 1, 1998 through December 31, 1998 January 1, 1999 through December 31, 1999 4.00 to 1.00 January 1, 2000 and thereafter 3.50 to 1.00 3.00 to 1.00 2.50 to 1.00 9.5 Pro Forma Debt Service Ratio (a) Annualized Operating Cash Flow (see 9.3(b) above) $_________ (b) Pro Forma Debt Service 1) interest expense on Total Debt for the succeeding 12 months (excluding amortization of debt issuance costs) $_________ 2) cash dividends or cash payments on Preferred Stock for the succeeding 12 months $_________ 3) amortized costs and expenses in connection with interest rate caps or swaps $_________ 4) fees paid not already included in interest expense $_________ 5) principal payments on Indebtedness and mandatory redemptions on Preferred Stock for the succeeding 12 months $_________ Pro Forma Debt Service (1)+(2)+(3)+(4)+(5) $_________ 3 108 Annualized Cash Flow to Pro Forma Debt Service Coverage Ratio (a) to (b) _____ to 1 Required 1.50 to 1 9.6 Interest Coverage (a) Operating Cash Flow $_________ 1) [See 9.3(b)(1)+(2)+(3)+(4)+(5)+(6)+(7) +(8)+(9)+(10)] TOTAL (b) Interest Expense For the Most Recently Completed Three Month Period 1) interest expense on Total Debt $_________ 2) cash dividends or cash payments on Preferred Stock $_________ 3) amortization costs and expenses in connection with interest rate caps and swaps $_________ 4) fees paid not already included in interest expense $_________ 5) principal payments on indebtedness and mandatory redemptions of Preferred Stock $_________ Interest Coverage (a) to (b)(l)+(2)+(3)+(4)+(5) _____ to 1 $_________ Required Closing Date through December 31, 1997 1.50 to 1.00 January 1, 1998 and thereafter 2.00 to 1.00 4 109 9.7 Capital Expenditures $_________ Permitted 1996 $500,000,000 1997 $700,000,000 1998 $600,000,000 1999 $650,000,000 thereafter [plus in fiscal year 1996 only, the amounts actually received by the Companies from the issuance by Page Net of $400,000,000 Senior Subordinated Notes in July of 1995. $_________ [plus beginning in 1997 the lesser of 15% of the amount permitted to be expended (which for fiscal year 1997 only, shall include any unused amounts actually received by the Companies from the issuance by PageNet of $400,000,000 Senior Subordinated Notes on July of 1995) $_________ 2. The undersigned chief financial officer or corporate controller certifies to you as follows: (a) I am, and at all times mentioned herein have been, the duly elected chief financial officer or corporate controller. (b) I have reviewed the provisions of the Credit Agreement and the other Loan Documents, and a review of the activities of PageNet and the Companies during the period from __________________, 19 _____ to _______________, 19 _____ (the "Reporting Period") has been made under my supervision with a view toward determining whether, during the Reporting Period, each of PageNet and the Companies has kept, observed, performed and fulfilled all its obligations under the Credit Agreement and such Loan Documents. (c) The representations and warranties made in the Loan Documents are true and correct in all material respects as of the date hereof as though made at and as of the date hereof, except for such representations and warranties which relate to a particular date, and no Default or Event of Default has occurred or is continuing or is imminent. [Or, if this statement cannot be made, a statement describing why this statement cannot be made.] 5 110 This Compliance Certificate is executed and delivered on the _____________ day of ________________________, 19___. By: --------------------------------- ----------------, --------------- (Print Name) (Print Title) 6 EX-10.15 3 LOAN AGREEMENT 1 EXHIBIT 10.15 C $55,000,000 CREDIT FACILITY FOR PAGING NETWORK OF CANADA INC. (THE "BORROWER") PROVIDED BY THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME BANKS (THE "BANKS") THE TORONTO-DOMINION BANK AS ADMINISTRATIVE AGENT (THE "ADMINISTRATIVE AGENT") CLOSING DATE: JUNE 5, 1996 A. Loan Agreement 1. Loan Agreement, together with Exhibits and Schedules EXHIBITS Exhibit A Form of Draft Bankers' Acceptance Exhibit B Form of Drawing Notice Exhibit C Form of Request for Advance Exhibit D Form of Use of Proceeds Letter Exhibit E Form of Acceptance Exhibit F Form of Borrower's Loan Certificate Exhibit G Form of Subsidiary Loan Certificate Exhibit H Form of Performance Certificate Exhibit I Form of Assignment and Assumption Agreement SCHEDULES Schedule 1 Licenses Schedule 2 Security Documents Schedule 3 Subsidiaries Schedule 4 Agreement with Affiliates 2 B. Collateral Documentation 2. Demand Debenture (Hypothec) executed by the Borrower 3. Debenture Pledge Agreement executed by the Borrower 4. General Assignment of Book Debts executed by the Borrower 5. Securities Pledge Agreement executed by PNCHI 6. Guarantee executed by PNCHI 7. Guarantee executed by PNI 8. Deposit Agreement executed by PNI 9. Section 427 Bank Act Security Documents 10. Locally Filed Security Documents C. Legal Opinions 11. McCarthy Tetrault, Canadian counsel to the Borrower 12. Opinions of local Canadian counsel to the Borrower with respect to the Canadian Security 13. Bingham, Dana & Gould, general corporate counsel to PNI 14. Powell, Goldstein, Frazer & Murphy, special New York counsel to Administrative Agent D. Certificates, Diligence Items, and Other Conditions Precedent to the Closing and Funding 15. Borrower's Loan Certificate Exhibit A - Certificate of Incorporation Exhibit B - By-Laws Exhibit C - Authorizing Resolutions Exhibit D - Certificates of Status, Compliance or Good Standing Exhibit E - Shareholders' Agreement or Voting Trust Agreement -2- 3 16. Copies of Insurance Binders/Certificates with respect to the Assets of the Borrower KEY: PNCHI - Paging Network Canadian Holdings, Inc. PNI - Paging Network, Inc. -3- 4 LOAN AGREEMENT AMONG PAGING NETWORK OF CANADA INC.(THE "BORROWER"); THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND THE TORONTO-DOMINION BANK, AS ADMINISTRATIVE AGENT FOR THE BANKS (THE "ADMINISTRATIVE AGENT") INDEX
PAGE ARTICLE 1 Definitions.............................................. 1 ARTICLE 2 Credit Facility.......................................... 23 Section 2.1 Commitment.................................... 23 Section 2.2 Uncollateralized Advances..................... 23 Section 2.3 Collateralized Advances....................... 25 Section 2.4 Notification of Banks; Disbursement........... 28 Section 2.5 Bankers' Acceptances.......................... 29 Section 2.6 Interest; Fees................................ 33 Section 2.7 Fees.......................................... 35 Section 2.8 Mandatory Commitment Reductions............... 35 Section 2.9 Optional Prepayments; Commitment Reductions... 36 Section 2.10 Mandatory Repayments.......................... 36 Section 2.11 Evidence of Obligations; Accommodation Accounts...................................... 37 Section 2.12 Manner of Payment............................. 37 Section 2.13 Reimbursement................................. 38 Section 2.14 Pro Rata Treatment............................ 39 ARTICLE 3 Conditions Precedent..................................... 40 Section 3.1 Conditions Precedent to Agreement.............. 40 Section 3.2 Conditions Precedent to All Accommodations..... 43 ARTICLE 4 Representations and Warranties........................... 44 Section 4.1 Representations and Warranties................. 44 Section 4.2 Survival of Representations and Warranties, etc............................................ 52 Section 4.3 No Representations by Banks.................... 52 ARTICLE 5 General Covenants........................................ 52 Section 5.1 Preservation of Existence and Similar Matters........................................ 53
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PAGE ---- Section 5.2 Business; Compliance with Applicable Law........ 53 Section 5.3 Maintenance of Properties....................... 53 Section 5.4 Accounting Methods and Financial Records........ 53 Section 5.5 Insurance....................................... 53 Section 5.6 Payment of Taxes and Claims..................... 54 Section 5.7 Compliance with ERISA........................... 54 Section 5.8 Visits and Inspections.......................... 56 Section 5.9 Payment of Indebtedness; Accommodations......... 56 Section 5.10 Use of Proceeds................................. 57 Section 5.11 Protect Security Interests...................... 57 Section 5.12 Environmental Audits............................ 57 Section 5.13 Further Assurances.............................. 58 ARTICLE 6 Information Covenants..................................... 58 Section 6.1 Quarterly Financial Statements and Information..................................... 58 Section 6.2 Annual Financial Statements and Information .... 58 Section 6.3 Performance Certificates........................ 59 Section 6.4 Copies of Other Reports......................... 59 Section 6.5 Notice of Litigation and Other Matters.......... 60 Section 6.6 Environmental Reporting......................... 61 ARTICLE 7 Negative Covenants........................................ 61 Section 7.1 Indebtedness of the Borrower and its Subsidiaries.................................... 62 Section 7.2 Limitation on Liens............................. 62 Section 7.3 Amendment and Waiver............................ 62 Section 7.4 Liquidation, Merger, or Disposition of Assets.......................................... 63 Section 7.5 Limitation on Guaranties........................ 63 Section 7.6 Investments and Acquisitions.................... 63 Section 7.7 Restricted Payments and Purchases............... 63 Section 7.8 Leverage Ratio.................................. 64 Section 7.9 Annualized Operating Cash Flow to Pro Forma Debt Service.................................... 64 Section 7.10 Total Debt Per Subscriber....................... 64 Section 7.11 Capital Expenditures............................ 64 Section 7.12 Minimum Revenue Test............................ 65 Section 7.13 Minimum Units in Service........................ 65 Section 7.14 Affiliate Transactions.......................... 66 Section 7.15 Real Estate..................................... 66 Section 7.16 ERISA Liabilities............................... 66
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PAGE ARTICLE 8 Default.................................................. 66 Section 8.1 Events of Default.............................. 66 Section 8.2 Remedies....................................... 70 ARTICLE 9 The Administrative Agent................................. 71 Section 9.1 Appointment and Authorization.................. 71 Section 9.2 Interest Holders............................... 71 Section 9.3 Consultation with Counsel...................... 71 Section 9.4 Documents...................................... 72 Section 9.5 Administrative Agent and Affiliates............ 72 Section 9.6 Responsibility of the Administrative Agent..... 72 Section 9.7 Security Documents............................. 72 Section 9.8 Action by the Administrative Agent............. 73 Section 9.9 Notice of Default or Event of Default.......... 73 Section 9.10 Responsibility Disclaimed...................... 74 Section 9.11 Indemnification................................ 74 Section 9.12 Credit Decision................................ 75 Section 9.13 Successor Administrative Agent................. 75 Section 9.14 Delegation of Duties........................... 76 Section 9.15 Determination by Administrative Agent Conclusive and Binding......................... 76 ARTICLE 10 Computations and Indemnities............................... 76 Section 10.1 Indemnity for Change in Circumstances.......... 76 Section 10.2 Indemnity for Transactional and Environmental Liability........................ 77 Section 10.3 Taxation on Payments........................... 79 Section 10.4 Judgment Currency.............................. 80 Section 10.5 Claims for Increased Costs and Taxes........... 81 ARTICLE 11 Miscellaneous............................................... 81 Section 11.1 Notices........................................ 81 Section 11.2 Expenses....................................... 84 Section 11.3 Waivers........................................ 84 Section 11.4 Right to Combine and Set-Off................... 85 Section 11.5 Assignment..................................... 85 Section 11.6 Accounting Principles.......................... 87 Section 11.7 Counterparts................................... 87 Section 11.8 Governing Law.................................. 87 Section 11.9 Severability................................... 87 Section 11.10 Interest....................................... 87
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PAGE Section 11.11 Table of Contents and Headings................. 88 Section 11.12 Amendment and Waiver........................... 88 Section 11.13 Non-Merger..................................... 89 Section 11.14 Other Relationships............................ 89 Section 11.15 Directly or Indirectly......................... 90 Section 11.16 Reliance on and Survival of Various Provisions..................................... 90 Section 11.17 Senior Debt.................................... 90 Section 11.18 Obligations Several............................ 90 Section 11.19 Confidentiality................................ 90 Section 11.20 Time of the Essence............................ 91 Section 11.21 Third Party Beneficiaries...................... 91 Section 11.22 Enurement...................................... 91
iv- 8 EXHIBITS Exhibit A - Form of Draft Bankers' Acceptance Exhibit B - Form of Drawing Notice Exhibit C - Form of Request for Advance Exhibit D - Form of Acceptance Exhibit E - Form of Borrower's Loan Certificate Exhibit F - Form of Subsidiary Loan Certificate Exhibit G - Form of Performance Certificate Exhibit H - Form of Assignment and Assumption Agreement SCHEDULES Schedule 1 - Licenses Schedule 2 - Security Documents Schedule 3 - Subsidiaries Schedule 4 - Agreements with Affiliates
-V- 9 LOAN AGREEMENT PAGING NETWORK OF CANADA INC. (THE "BORROWER"); THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND THE TORONTO-DOMINION BANK, AS ADMINISTRATIVE AGENT FOR THE BANKS (THE "ADMINISTRATIVE AGENT") agree as follows as of the 5th day of June, 1996: ARTICLE 1 Definitions For the purposes of this Agreement: "Accommodation" shall mean (i) an Advance made by the Banks or any one or more of them on the occasion of any Borrowing; and (ii) a Bankers' Acceptance created by any Bank on the occasion of any Drawing. "Accommodation Notice" shall mean a Request for Advance or a Drawing Notice. "Administrative Agent" shall mean The Toronto-Dominion Bank, in its capacity as Administrative Agent for the Banks or any successor Administrative Agent appointed pursuant to Section 9.13 of this Agreement. "Administrative Agent's Office" shall mean the office of the Administrative Agent located at 8th Floor, Toronto Dominion Tower, Toronto Dominion Centre, Toronto, Ontario M5K 1A2, or such other office as may be designated pursuant to the provisions of Section 11.1 of this Agreement. "Advance" shall mean amounts advanced by the Banks to the Borrower pursuant to Section 2.2 and Section 2.3 hereof on the occasion of any Borrowing and shall include, as designated by the Borrower in accordance with the terms of this Agreement, a Collateralized Advance and an Uncollateralized Advance; and "Advances" shall mean more than one Advance. "Affiliate" shall mean, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such first Person. For purposes of this definition, "control" when used with respect to any Person includes, without limitation, the direct or indirect beneficial ownership of more than ten percent (10%) of the voting securities 10 or voting equity of such Person or the power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Agreement" shall mean this Loan Agreement, together with all Exhibits and Schedules hereto. "Agreement Date" shall mean June 5, 1996. "Annualized Operating Cash Flow" shall mean, as of any date, the product of (a) the aggregate Operating Cash Flow for the Borrower Group on a combined basis for the fiscal quarter end being tested or the most recently completed fiscal quarter, as the case may be, times (b) four (4). "Applicable Law" shall mean, in respect of any Person, all provisions of constitutions, statutes, codes, ordinances, rules, regulations, municipal by-laws, judicial, arbitral, administrative, ministerial, departmental or regulatory judgments, orders, decisions, rulings or awards, policies and guidelines of any Governmental Entity, or any provisions of the foregoing, including general principles of common and civil law and equity, applicable to such Person, including, without limiting the foregoing, the Licenses, and all orders, decisions, judgments and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a party or by which it is bound. "Applicable Margin" shall mean the interest rate or fee margin applicable to Advances and Bankers' Acceptances, as the case may be, in each case determined in accordance with Section 2.6(d) hereof. "Assets" means, with respect to any Person, all property and assets of such Person, both real and personal, of every kind and wheresoever situate, whether now owned or hereafter acquired. "Authorized Signatory" shall mean such senior personnel of a Person as may be duly authorized and designated in writing by such Person to execute documents, agreements and instruments on behalf of such Person. "Available Commitment" shall mean, as of any date, the greater of (a) the Equivalent Canadian Dollar Amount of the aggregate amount of Permitted Collateral held on such date by the Administrative Agent pursuant to the Deposit Agreement; (b) $41,250,000, but only to the extent that (i) the Minimum Permitted Collateral Amount is held on such date by the Administrative Agent pursuant to the Deposit Agreement and (ii) as of the end of the most recently completed fiscal quarter for - 2 - 11 which financial statements have been delivered pursuant to Sections 6.1 or 6.2, as applicable, hereof either (A) the Leverage Ratio is less than 7.0 to 1 or (B) (i) the aggregate number of Units in Service is greater than or equal to 45,000 and (ii) Gross Revenue for the Borrower Group on a combined basis is greater than or equal to $1,875,000; and (c) $55,000,000, but only to the extent that (i) the Minimum Permitted Collateral Amount is held on such date by the Administrative Agent pursuant to the Deposit Agreement and (ii) as of the end of the most recently completed fiscal quarter for which financial statements have been delivered pursuant to Sections 6.1 or 6.2, as applicable, hereof either (A) the Leverage Ratio is less than 5.0 to 1, or (B) (i) the aggregate number of Units in Service is greater than or equal to 100,000 and (ii) Gross Revenue for the Borrower Group on a combined basis is greater than or equal to $3,750,000; provided, however, that the Available Commitment shall not at anytime exceed (1) the Commitment on such date and (2) the product of (x) the Equivalent Canadian Dollar Amount of the aggregate amount of Permitted Collateral held on such date by the Administrative Agent pursuant to the Deposit Agreement times (y) two (2); and provided, further, however, that from and after the date of any event which, with respect to the Licenses, results in a violation of the Canadian ownership and control rules promulgated under the Radiocommunication Act (Canada), the Telecommmunications Act (Canada) and any replacement act or any regulations made under any such act, the Available Commitment shall be as set forth in clause (a) of this definition. "Bankers' Acceptance" shall have the meaning set forth in Section 2.5 hereof and shall include, as designated by the Borrower in accordance with the terms of this Agreement, a Collateralized Bankers' Acceptance and an Uncollateralized Bankers' Acceptance. "Bankers' Acceptance Fee Rate" shall mean the Applicable Margin for Bankers' Acceptances as determined in accordance with Section 2.6(d) hereof. "Bankers' Acceptance Permitted Collateral Rate" shall mean, with respect to any Bankers' Acceptance, the sum of (a) the rate of interest per annum which is equivalent to the rate quoted to the Borrower by the Administrative Agent as the Administrative Agent's Canadian Dollar bankers' acceptance rate for bankers' acceptances having the same term to maturity as such Bankers' Acceptance, plus (b) 0.500%. "Banks" shall mean those financial institutions whose names appear as "Banks" on the signature pages to this Agreement, together with any assignees thereof pursuant to Section 11.5 hereof; and "Bank" shall mean any one of the foregoing Banks. - 3 - 12 "Borrower" shall mean Paging Network of Canada Inc., a Canada corporation. "Borrower Group" shall mean, collectively, the Borrower and its Subsidiaries and MadTel Holdings and its Subsidiaries. "Borrowing" shall mean a borrowing consisting of one or more Advances. "Business" shall have the meaning specified in Section 4.1(e) hereof. "Business Day" shall mean a day on which banks and foreign exchange markets are open for the transaction of business required for this Agreement in Toronto, Canada, as relevant to the determination to be made or the action to be taken. "Capital Expenditures" shall mean, for any Person for any period, expenditures for the purchase of assets of long-term use which would be required to be capitalized on the balance sheet of such Person in accordance with GAAP; provided, however, that Capital Expenditures for any period shall be reduced by the net book value of Units in Service sold during such period, which had been reflected in the determination of Capital Expenditures for any prior periods' Capital Expenditures. "Capital Stock" shall mean, as applied to any Person, any capital stock of such Person, regardless of class or designation, and all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any character with respect thereto. "Capitalized Lease Obligation" shall mean that portion of any obligation of a Person as lessee under a lease which at the time would be required to be capitalized on the balance sheet of such Person in accordance with GAAP. "Change Event" shall mean the occurrence of any of the following events or the existence of any of the following conditions: (i) Paging Network, Inc. shall cease to own, directly or indirectly, 100% of the Capital Stock of the Borrower; or (ii) the Borrower shall fail to own, directly or indirectly through one or more wholly-owned Subsidiaries all of the issued and outstanding capital Stock of each of its Subsidiaries. "Claim" shall mean any claim of any nature whatsoever, including any demand, liability (whether accrued or accruing, actual or contingent), obligation, debt, cause of action, suit, proceeding, judgment, award, assessment and reassessment. -4 - 13 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Collateral" shall mean any property of any kind constituting or intended to constitute collateral for the obligations under any of the Loan Documents and shall include, without limitation, the Permitted Collateral. "Collateralized Advance" shall mean a Collateralized Prime Rate Advance and a Cost of Funds Rate Advance; provided, however, that the Borrower may not request a Collateralized Advance (and no Collateralized Advance shall be made) if on the date of such Collateralized Advance the Equivalent Canadian Dollar Amount of the Permitted Collateral held under the Deposit Agreement does not equal or exceed the sum of the principal amount of all Collateralized Advances and the Face Amount of all Collateralized Bankers' Acceptances then outstanding plus the principal amount of the Collateralized Advance so requested. "Collateralized Bankers' Acceptance" shall mean a Drawing which the Borrower requests to be made as a Collateralized Bankers' Acceptance or is continued as or converted into a Collateralized Bankers' Acceptance in accordance with the provisions of Section 2.5 hereof; provided, however, that the Borrower may not request a Collateralized Bankers' Acceptance (and no such Bankers' Acceptance shall be issued) if on the date of such Drawing the aggregate amount of the Equivalent Canadian Dollar Amount of the Permitted Collateral held pursuant to the Deposit Agreement does not equal or exceed the sum of the principal amount of all Collateralized Advances and the Face Amount of all Collateralized Bankers' Acceptances outstanding on such date plus the amount of the Face Amount of all Collateralized Bankers' Acceptance so requested. "Collateralized Prime Rate Advance" shall mean a Collateralized Advance which bears interest at the Prime Rate Basis and which the Borrower requests to be made as a Collateralized Prime Rate Advance or is continued as or converted into a Collateralized Prime Rate Advance, in accordance with the provisions of this Agreement, and which shall be in a principal amount of at least $500,000 and in an integral multiple of $500,000. "Commitment" shall mean the several obligations of the Banks to make Accommodations to the Borrower pro rata, in accordance with their respective Commitment Ratios, in an aggregate amount of up to $55,000,000 pursuant to the terms hereof, as such obligations may be reduced from time to time pursuant to the terms hereof. - 5 - 14 "Commitment Ratio" shall mean, with respect to any Bank, the percentage equivalent of the ratio which such Bank's pro rata portion of the total Commitment bears to the aggregate amount of the Commitment (as each may be adjusted from time to time as provided herein); and "Commitment Ratios" shall mean the Commitment Ratios of all of the Banks with respect to the Commitment. As of the Agreement Date the Commitment Ratio of the only Bank party to this Agreement, The Toronto-Dominion Bank, is 100%. "Cost of Funds Rate" shall mean, for each Interest Period for each Collateralized Advance which bears interest at the Cost of Funds Rate, the per annum rate of interest equal to the rate of interest per annum, calculated on the basis of a year of 365 days or 366 days (in the case of a leap year), equal to the rate of interest per annum quoted by The Toronto-Dominion Bank at approximately 10:00 a.m. (Toronto time) on the first day of such Interest Period, as the rate that would be payable by The Toronto-Dominion Bank if it were to issue in the Canadian money market its deposit liability instruments in an aggregate principal amount approximately equal to the principal amount of, and for a length of time approximately equal to the Interest Period for, such Collateralized Advance, whether or not The Toronto-Dominion Bank shall actually issue such deposit liability instruments on the date on which such quotation is given, plus one-half of one percent (0.5%). The Cost of Funds Rate shall apply to Interest Periods of one (1), two (2), three (3) or six (6) months (nine (9) or twelve (12) months subject to availability) and, once determined, shall remain unchanged during such Interest Period. "Cost of Funds Rate Advance" shall mean a Collateralized Advance which bears interest at the Cost of Funds Rate and which the Borrower requests to be made as a Cost of Funds Rate Advance or is continued as or converted into a Cost of Funds Rate Advance, in accordance with the provisions of this Agreement, and which shall be in a principal amount of at least $500,000 and in an integral multiple of $500,000. "Default" shall mean any Event of Default, and any of the events specified in Section 8.1 hereof, regardless of whether there shall have occurred any passage of time or giving of notice, or both, that would be necessary in order to constitute such event an Event of Default. "Default Rate" shall mean a simple per annum interest rate equal to the sum of (a) the Prime Rate, plus (b) the Applicable Margin for Uncollateralized Prime Rate Advances, plus (c) two percent (2%). - 6 - 15 "Deposit Agreement" shall mean that certain Deposit Agreement of even date herewith between PageNet and the Administrative Agent for the benefit of the Banks. "Dollar" or "$" shall mean (except where specifically designated otherwise) lawful money of Canada. "Draft" shall mean, at any time, a blank bill of exchange within the meaning of the Bills of Exchange Act (Canada) in substantially the form set out in Exhibit A hereto drawn by the Borrower on a Bank and bearing such distinguishing letters and numbers as such Bank may determine, but which at such time, except as otherwise provided herein, has not been completed or accepted by such Bank. "Drawing" shall mean the creation of a Bankers' Acceptance by a Bank. "Drawing Date" shall have the meaning ascribed to such term in the definition of "Drawing Notice" set forth herein. "Drawing Fee" shall mean, with respect to each Draft drawn by the Borrower hereunder and accepted by a Bank on any Drawing Date, an amount equal to the Bankers' Acceptance Fee Rate multiplied by the aggregate Face Amount of such Draft, calculated daily on the basis of the term to maturity of such Draft and a year of 365 days or 366 days (in the case of a leap year). "Drawing Notice" shall mean a certificate designated as a "Drawing Notice," signed by an Authorized Signatory of the Borrower requesting a Drawing hereunder, which shall be in substantially the form of Exhibit B and shall, among other things, specify: (a) the requested date for such Drawing (the "Drawing Date"); (b) the aggregate Face Amount of Drafts to be accepted in Canadian Dollars; (c) the Interest Period for such Drafts; and (d) whether the requested Drawing is to be a Collateralized Bankers' Acceptance or an Uncollateralized Bankers' Acceptance. "Employee Pension Plan" shall mean any Plan subject to the minimum funding requirement of Section 302 of ERISA or Section 412 of the Code. "Environmental Auditor" shall mean a qualified environmental auditor at arm's length from the Borrower and acceptable to the Administrative Agent. "Environmental Laws" shall mean all Applicable Laws in force from time to time relating to the environment, Hazardous Substances, pollution or protection of the environment, including - 7 - 16 Laws relating to: (i) on site or off-site contamination; (ii) occupational health and safety; (iii) chemical substances or products; (iv) Releases of pollutants, contaminants, chemicals or other industrial, toxic or radioactive substances or Hazardous Substances into the environment; and (v) the manufacture, processing, distribution, use, treatment, storage, transport or handling of Hazardous Substances. "Environmental Liabilities and Costs" shall mean all Losses and Claims, whether known or unknown, current or potential, past, present or future, imposed by, under or pursuant to Environmental Laws, including all Losses and Claims related to Remedial Actions and all reasonable fees, disbursements and expenses of counsel, experts, personnel and consultants, where such Losses and Claims are based on, arise out of or are otherwise in respect of: (i) the ownership or operation of the Business or any Assets related to the Business; (ii) the conditions on, under, above or about any real property, assets, equipment or facilities currently or previously owned, leased or operated by the Borrower or its Subsidiaries; (iii) expenditures necessary to cause the operations of the Business or Assets either related to the Business or owned, leased or operated by the Borrower or its Subsidiaries to comply materially with any and all requirements, including expenditures necessary to effect the closure, decommissioning or rehabilitation of any of the operations of the business or Assets either related to the Business or owned, leased or operated by the Borrower or its Subsidiaries; (iv) the use, generation, manufacture, refining, treatment, transportation, storage, handling, recycling, disposal, depositing, transferring, producing or processing of Hazardous Substances; (v) liability for personal injury or property damage, including damages assessed for the maintenance of a public or private nuisance; and (vi) any other matter affecting the Real Estate or other Assets within the jurisdiction of any Governmental Entity administering any Environmental Law. "Environmental Notice" shall mean any written claim, citation, directive, request for information, statement of claim, notice of investigation, letter or other communication from any Person given pursuant to Environmental Laws. "Environmental Permits" shall mean all permits, certificates, approvals, registrations and licenses issued by any Governmental Entity to the Borrower, its Subsidiaries or to the Business pursuant to Environmental Laws and relating to or required for the operation of the Business or the use of the Real Estate or other Assets of the Borrower or its Subsidiaries. "Equivalent Canadian Dollar Amount" shall mean, on any day (a) with respect to Permitted Collateral denominated in Dollars, - 8 - 17 the principal or face amount of such Permitted Collateral, and (b) with respect to Permitted Collateral denominated in U.S. Dollars, the equivalent amount of Dollars determined using the quoted spot rate at which the Administrative Agent's principal office in Toronto offers to provide Dollars in exchange for U.S. Dollars in Toronto at 12:00 noon (Toronto time) on such day. "Equivalent U.S. Dollar Amount" shall mean, on any day, with respect to any amount of Dollars, the equivalent amount of U.S. Dollars determined by using the quoted spot rate at which the Administrative Agent's principal office in Toronto offers to provide U.S. Dollars in exchange for Dollars in Toronto at 12:00 noon (Toronto time) on such day. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as in effect from time to time. "ERISA Affiliate" shall mean any Person, including a Subsidiary or an Affiliate of the Borrower, that is treated as a single employer with the Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code. "Event of Default" shall mean any of the events specified in Section 8.1 hereof, provided that any requirement for notice or lapse of time has been satisfied. "Face Amount" shall mean, in respect of a Bankers' Acceptance, the amount payable to the holder thereof on its maturity. "GAAP" shall mean accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants as in effect on the Agreement Date. "Government List" shall mean a list maintained by any Governmental Entity of sites identified for investigation or clean-up pursuant to any Environmental Law. "Governmental Entity" shall mean any: (i) multinational, federal, provincial, state, municipal, local or other government, governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision, agent, commission, board, or authority of any of the foregoing; or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing. - 9 - 18 "Gross Revenue" shall mean, with respect to any Person and its Subsidiaries on a consolidated basis, for the most recently completed fiscal quarter, gross revenues determined in accordance with GAAP. "Guaranty" or "Guaranteed," as applied to an obligation, shall mean and include (a) a guaranty, direct or indirect, in any manner, of all or any part of such obligation, and (b) any agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, any reimbursement obligations with respect to outstanding letters of credit or capital call requirements. "Hazardous Substance" shall mean any Substance which is or is deemed to be, alone or in any combination, hazardous, hazardous waste, toxic, a pollutant, a deleterious substance, a contaminant or a source of pollution or contamination under any Environmental Law, whether or not such Substance is defined as hazardous under the Environmental Law. "Immaterial Site Specific Licenses" shall mean, at any time, the aggregate Site Specific Licenses, the termination or cancellation of which, without contemporaneous replacement, would not reasonably be expected to have a Materially Adverse Effect. "Indebtedness" shall mean, with respect to any Person, and without duplication, (a) all items which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person, except (i) items of shareholders' and partners' equity or capital stock, (ii) items of surplus or general contingency or deferred tax reserves incurred in the ordinary course of business, (iii) accounts incurred and payable in the ordinary course of business, (iv) dividends payable, or (v) deferred pension costs, (b) all direct or indirect obligations of any other Person secured by any Lien to which any property or asset owned by such Person is subject, whether or not the obligation secured thereby shall have been assumed, (c) all Capitalized Lease Obligations of such Person and all obligations of such Person with respect to leases constituting part of a sale and lease-back arrangement, (d) all reimbursement obligations with respect to outstanding letters of credit, bankers' acceptances or similar instruments, (e) all obligations, contingent or otherwise, arising under Guaranties issued by such Person, and (f) all obligations of such Person under Interest Rate Hedge Agreements. - 10 - 19 "Indebtedness for Money Borrowed" shall mean, with respect to any Person, Indebtedness for money borrowed and Indebtedness represented by notes payable and drafts accepted representing extensions of credit, all obligations evidenced by bonds, debentures, notes or other similar instruments, all Indebtedness upon which interest charges are customarily paid, all Capitalized Lease Obligations, all reimbursement obligations with respect to outstanding letters of credit, bankers' acceptances or similar instruments, all Indebtedness issued or assumed as full or partial payment for property or services, whether or not any such notes, drafts, obligations or Indebtedness represent Indebtedness for money borrowed, and, without duplication, Guaranties of any of the foregoing. For purposes of this definition, interest which is accrued but not paid on the scheduled due date for such interest shall be deemed Indebtedness for Money Borrowed. "Interest Expense" shall mean, for any Person for any period, all interest expense (including imputed interest with respect to Capitalized Lease Obligations) with respect to any Indebtedness for Money Borrowed of such Person during such period pursuant to the terms of such Indebtedness for Money Borrowed, together with all fees paid in respect of such Indebtedness for Money Borrowed to the extent not already included in cash interest paid, all as calculated in accordance with GAAP. "Interest Period" shall mean (a) in connection with any Prime Rate Advance, the period beginning on the date such Advance is made and ending on the last day of the calendar month in which such Advance is made, provided, however, that if a Prime Rate Advance is made on the last day of any calendar month, it shall have an Interest Period ending on, and its Payment Date shall be, the last day of the following calendar month, (b) in connection with any Collateralized Advance which bears interest at the Cost of Funds Rate, the term of such Advance selected by the Borrower or otherwise determined in accordance with this Agreement; provided, however, (i) any applicable Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any applicable Interest Period which begins on a day for which there is no numerically corresponding day in the calendar month during which such Interest Period is to end shall (subject to clause (i) above) end on the last day of such calendar month and (c) in connection with any Bankers' Acceptance, the term of such Bankers' Acceptance selected by the Borrower or otherwise determined in accordance with this Agreement. "Interest Rate Hedge Agreements" shall mean the obligations of any Person pursuant to any arrangement with any other Person -11- 20 whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar arrangements. "known to the Borrower" or "to the knowledge of the Borrower" shall mean known by the executive officers of the Borrower or any Subsidiary (which shall mean the chairman/president, the chief executive officer, the chief financial officer, the chief operating officer, the treasurer, and any in-house general counsel or other Persons performing like functions) or, based upon the reasonable inquiry that an executive officer would make, should have been known by such executive officer. "Leasehold Real Estate" shall mean the land and premises of the Borrower and its Subsidiaries held under agreement to lease or other right of occupation. "Leverage Ratio" shall mean, as of any date, the ratio of (a) Total Debt for the Borrower Group on a combined basis to (b) Annualized Operating Cash Flow. "Licenses" shall mean any radio, telephone, microwave, wireless messaging or other license (excluding Immaterial Site Specific Licenses), authorization, certificate of compliance or convenience, franchise, approval or permit, granted or issued by any Governmental Entity and held by the Borrower, MadTel Holdings or any of their Subsidiaries, all of which (other than Site Specific Licenses) are listed as of the Agreement Date on Schedule 1 hereto. "Lien" shall mean, with respect to any property, any mortgage, lien, pledge, negative pledge or other agreement not to pledge, assignment, charge, security interest, title retention agreement, levy, execution, seizure, attachment, garnishment or other encumbrance of any kind in respect of such property, whether created by statute, contract, the common law or otherwise, and whether or not choate, vested or perfected. "Loan Documents" shall mean this Agreement, the Security Documents, all subordination agreements entered into by creditors of the Borrower or any of its Subsidiaries with respect to Indebtedness for Money Borrowed of the Borrower or any of its Subsidiaries, all legal opinions or reliance letters issued by counsel to the Borrower or any of its Subsidiaries, all fee -12- 21 letters, all Requests for Advance, all Interest Rate Hedge Agreements between the Borrower, on the one hand, and the Administrative Agent and the Banks, or any of them, on the other hand, and all other documents and agreements executed or delivered in connection with or contemplated by this Agreement. "Loss" means any loss whatsoever, whether direct or indirect, including expenses, costs, damages, judgments, penalties, fines, charges, claims, demands, liabilities, loss of profits, debts, interest, any and all legal fees and disbursements, on a solicitor and own client basis. "MadTel Holdings" shall mean Madison Telecommunications Holdings Inc., a Canada corporation. "MadTel Holdings Agreement" shall mean that certain Loan Agreement dated as of even date herewith by and among MadTel Holdings, the Banks and the Administrative Agent. "Majority Banks" shall mean (i) at any time that no Accommodations are outstanding hereunder, Banks the total of whose Commitment Ratios equals or exceeds sixty-six and two-thirds percent (66-2/3%) of the aggregate Commitment Ratios of all Banks entitled to vote hereunder, or (ii) at any time that there are Accommodations outstanding hereunder, Banks the total of whose Accommodations outstanding equals or exceeds sixty-six and two-thirds percent (66-2/3%) of the total principal amount of the Accommodations then outstanding of all Banks hereunder (excluding from such calculation the Accommodations of any Banks who fail to provide Accommodations as provided in Section 2.4(b) hereof). "Materially Adverse Effect" shall mean (a) any material adverse effect upon the business, assets, liabilities, financial condition, results of operations, properties, or business of the Borrower and its Subsidiaries on a consolidated basis, or (b) except as a result of the action or inaction of the Administrative Agent or any Bank, a material adverse effect upon the validity or enforceability of this Agreement or any of the Loan Documents, or upon the ability of the Borrower or any of its Subsidiaries to perform the payment obligations or other obligations under this Agreement or any other Loan Document, or upon the value of the Collateral or upon the rights, benefits or interests of the Banks in and to the Accommodations or the rights of the Administrative Agent and the Banks in the Collateral; in either case, whether resulting from any single act, omission, situation, status, event or undertaking, or taken together with other such acts, omissions, situations, statuses, events or undertakings. -13 - 22 "Maturity Date" shall mean June 30, 2003, or as the case may be, such earlier date as payment of the Obligations shall be due (whether by acceleration, reduction of the Commitment to zero or otherwise). "Minimum Permitted Collateral Amount" shall mean, as of any date, (a) prior to June 30, 1999, $27,500,000 (or the Equivalent U.S. Dollar Amount), and (b) thereafter, the lesser of (i) $27,500,000 (or the Equivalent U.S. Dollar Amount) and (ii) the product of (A) 50% times (B) the Commitment as of such date. "Multiemployer Plan" shall mean an Employee Pension Plan which is a "multiemployer plan" within the meaning set forth in Section 4001(a)(3) of ERISA. "Necessary Authorizations" shall mean all approvals and licenses from, and all filings and registrations with, any Governmental Entity or other regulatory authority, including, without limiting the foregoing, the Licenses and all approvals, licenses, filings and registrations under Applicable Law, necessary in order to enable the Borrower and its Subsidiaries to own, construct, maintain, and operate wireless messaging systems currently being constructed, maintained or operated and to invest in other Persons who own, construct, maintain, and operate wireless messaging systems. "Net Income" shall mean, for any Person and its Subsidiaries on a consolidated basis, for any period, net income determined in accordance with GAAP for such Person and its Subsidiaries. "Network and Equipment Agreement" shall mean that certain Network Coordination and Equipment Supply Agreement dated as of October 28, 1994 between PageNet and Madison Telecommunications Inc., as amended by Amendment No. 1 dated as of October 26, 1995. "Obligations" shall mean all payment and performance obligations of every kind, nature and description of the Borrower, its Subsidiaries, and any other obligors to the Banks or the Administrative Agent, or any of them, under this Agreement and the other Loan Documents (including any interest, fees and other charges on the Accommodations or otherwise under the Loan Documents that would accrue but for the filing of a bankruptcy action with respect to the Borrower or any of its Subsidiaries, whether or not such claim is allowed in such bankruptcy action and including obligations to the Administrative Agent or any of the Banks under any Interest Rate Hedge Agreements) as they may be amended, restated or supplemented from time to time and all extensions or renewals, or as a result of making the Accommodations, whether such obligations are direct or indirect, -14- 23 absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, arising by operation of Applicable Law or otherwise, now existing or hereafter arising. "Operating Cash Flow" shall mean, with respect to any Person and its Subsidiaries, on a consolidated basis, at the end of the most recently completed fiscal quarter, as determined in accordance with GAAP, the sum of (a) Net Income for such period (after eliminating any extraordinary gains and losses, including gains and losses from the sale of assets), plus (b) to the extent deducted in determining Net Income, the sum of the following for such period: (i) depreciation and amortization expense, (ii) Interest Expense and (iii) income tax expense and (iv) all other non-cash items which will not require cash payment in the future. Operating Cash Flow attributable to any acquisition will be included in the determination of Operating Cash Flow as if the Assets so acquired had been acquired on the first day of such fiscal period, and the operating results of any acquired Assets for that portion of any fiscal period in which they were not owned by the Borrower or any of its Subsidiaries shall be determined by reference to financial information prepared by the prior owners thereof, subject to such adjustments as the Administrative Agent may reasonably require. "PageNet" shall mean Paging Network, Inc. , a Delaware corporation. "PageNet Guaranty" shall mean that certain Guaranty in favor of the Administrative Agent for the benefit of the Banks, given by PageNet of even date herewith. "Payment Date" shall mean the last day of any Interest Period. "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto. "Permitted Asset Sale" shall mean the sale by the Borrower or any of its Subsidiaries of all or any part of its Assets as permitted under Section 7.4 hereof. "Permitted Collateral" shall mean (a) U.S. Dollars, (b) marketable, direct obligations of the United States of America maturing within ninety (90) days of the date of purchase, or (c) other collateral acceptable to the Banks at any time and from time to time held by or on deposit with the Administrative Agent pursuant to the Deposit Agreement as collateral for the PageNet Guaranty. -15- 24 "Permitted Investments" shall mean: (a) negotiable instruments or securities in bearer or registered form which are not held for more than 30 days and which evidence: (i) obligations of or guaranteed by the Government of Canada so long as they have the Permitted Rating; (ii) obligations of or guaranteed by a province or municipality of Canada so long as they have the Permitted Rating; (iii) deposits or bankers' acceptances issued or accepted by any Schedule I Canadian chartered bank so long as they have the Permitted Rating; (iv) commercial paper of Canadian corporations or other Canadian issuers so long as it has the Permitted Rating; (v) other similar negotiable instruments or securities which are issued or guaranteed by Persons which have the Permitted Rating; or (b) demand deposits in any Schedule I Canadian chartered bank so long as they have the Permitted Rating or (c) investments in any wholly-owned Subsidiary of the Borrower so long as the corresponding debt instruments, if any, are pledged to the Administrative Agent as security for the obligations. "Permitted Liens" shall mean, as applied to any Person: (a) Any Lien in favor of the Administrative Agent or any Bank given to secure the Obligations; (b) (i) Liens on real estate or other property for taxes, assessments, governmental charges or levies not yet delinquent and (ii) Liens for taxes, assessments, judgments, governmental charges or levies or claims the non-payment of which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been set aside on such Person's books, but only so long as no foreclosure, distraint, sale or similar proceedings have been commenced with respect thereto; (c) Liens of carriers, warehousemen, mechanics, laborers and materialmen incurred in the ordinary course of business for sums not yet more than sixty (60) days past due or being diligently contested in good faith, if adequate reserves shall have been set aside on such Person's books, but only so long as no foreclosure, distraint, sale or similar proceedings have been commenced with respect thereto; (d) Liens incurred in the ordinary course of business in connection with worker's compensation and unemployment insurance; (e) Restrictions on the transfer of the Licenses or assets of the Borrower or its Subsidiaries imposed by any of the Licenses as presently in effect; -16- 25 (f) Easements, rights-of-way, and other similar encumbrances on the use of real property which do not materially interfere with the ordinary conduct of the business of such Person or the use of such property; (g) The reservations, limitations, provisos and conditions, if any, expressed in any original grants of real property from the Crown; (h) Purchase money security interests to the extent incurred in connection with the acquisition of any property or assets by the Borrower or any of its subsidiaries permitted hereunder; provided, that (1) such Lien shall attach only to the property or asset acquired in such transaction and shall not extend to or cover any other assets or properties of the Borrower or any of its Subsidiaries; (2) the Indebtedness secured or covered by such Lien shall not exceed the cost of the asset or property acquired and shall not be increased; and (3) all such Indebtedness secured or covered by such Liens shall not exceed $500,000 in the aggregate at anytime outstanding; (i) Undetermined and inchoate Liens, rights of distress and charges incurred in the ordinary course of business which have not been filed or exercised or which relate to obligations not due or payable, or if due or payable, the validity of which is being contested diligently and in good faith by appropriate proceedings, but only so long as no foreclosure, distraint, sale or similar proceedings have been commenced with respect thereto; (j) Title defects or irregularities in respect of real property which are of a minor nature and which in the aggregate do not materially impair the use of such property for the purpose for which it is used or the conduct of the business of such Person; (k) The rights reserved to or vested in any Governmental Entity by the terms of any lease, License, franchise, grant or permit or by any statutory provision, to terminate any such lease, license, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof; and -17- 26 (1) Any Liens resulting from the deposit of cash or securities in connection with contracts, tenders or expropriation proceedings, or to secure surety or appeal bonds, costs of litigation when required by law and public, statutory and other like obligations incurred in the ordinary course of business. "Permitted Rating" shall mean, with respect to any Permitted Investment, a rating for short-term indebtedness of R-1 (Middle) or better from Dominion Bond Rating Service Limited or A-l+ from CBRS Inc. or a rating for long-term indebtedness of A (High) or better from Dominion Bond Rating Service Limited or A (High) from CBRS Inc. "Person" shall mean an individual, corporation, limited liability company, association, partnership, joint venture, trust or estate, an unincorporated organization, any Governmental Entity or any other entity. "Plan" shall mean an employee benefit plan within the meaning of Section 3(3) of ERISA. "Prime Rate" shall mean, for any particular day, a per annum interest rate equal to the higher of (a) the variable rate of interest per annum, calculated on the basis of a year of 365 days or 366 days (in the case of a leap year), equal to the rate of interest per annum established and reported by The Toronto-Dominion Bank to the Bank of Canada for such day as the variable rate of interest per annum for determination of interest rates that The Toronto-Dominion Bank charges to its customers of varying degrees of creditworthiness in Canada for Canadian Dollar loans made by it in Canada, and (b) the sum of the simple average of the rates per annum for Canadian Dollar bankers' acceptances having a term of 30 days that appears on the Reuters Screen CDOR Page as of 10:00 a.m. (Toronto time) for such day plus one percent (1%). The Prime Rate is not necessarily the lowest rate of interest charged to customers of The Toronto-Dominion Bank. "Prime Rate Advance" shall mean a Collateralized Prime Rate Advance or an Uncollateralized Prime Rate Advance. "Prime Rate Basis" shall mean a simple interest rate equal to the sum of (i) the Prime Rate and (ii) the Applicable Margin for Prime Rate Advances which are Collateralized Advances or Uncollateralized Advances, as the case may be. The Prime Rate Basis shall be adjusted automatically as of the opening of business on the effective date of each change in the Prime Rate to account for such change, and shall also be changed to reflect changes in the Applicable Margin for Prime Rate Advances in accordance with Section 2.6(d). -18- 27 "Pro Forma Debt Service" shall mean, as of any date with respect of any Person and its Subsidiaries, on a consolidated basis, with respect to the next succeeding complete twelve (12) month period following the calculation date, and after giving effect to any Interest Rate Hedge Agreements and taking into account Bankers' Acceptances, the sum of the aggregate of all principal, interest expense, fees and other payments payable by such Persons during such next succeeding twelve (12) month period with respect to Indebtedness for Money Borrowed of such Persons. For purposes of this definition, where interest payments for the twelve (12) month period immediately succeeding the calculation date are not fixed by way of Interest Rate Hedge Agreements, Bankers' Acceptances or otherwise for the entire period, interest shall be calculated on such Indebtedness for Money Borrowed for periods for which interest payments are not so fixed at the Bankers' Acceptance Permitted Collateral Rate for a Bankers' Acceptance having an Interest Period of twelve (12) months as determined on the date of calculation; provided, however, that if such Bankers' Acceptance Permitted Collateral Rate cannot be determined in the reasonable opinion of the Administrative Agent, such interest shall be calculated using the Prime Rate Basis as then in effect. "Real Estate" shall mean the real estate of the Borrower and its Subsidiaries held in fee simple (or an interest analogous to a fee simple interest as it relates to real estate situate in the Province of Quebec). "Release" when used as a verb includes release, spill, leak, emit, deposit, discharge, leach, migrate or dispose into the environment and "Release" when used as a noun has a correlative meaning. "Remedial Action" shall mean any action, whether voluntary or compelled, that is reasonably necessary to: (i) clean up, remove, treat or in any other way deal with Hazardous Substances in the environment; (ii) prevent any Release of Hazardous Substances where such Release would violate any Environmental Laws or would endanger or threaten to endanger public health or welfare or the environment; or (iii) perform remedial studies, investigations, restoration and post-remedial studies, investigations and monitoring on, about or in connection with the business or any of the Real Estate or other Assets (including the Collateral). "Reportable Event" shall mean, with respect to any Employee Pension Plan subject to Title IV of ERISA, an event described in Section 4043(b) of ERISA as to which the requirement of advance notice has not been waived or an event described in Sections -19- 28 2615.11, 2615.12, 2615.13, 2615.15 or 2615.19 of PBGC regulations. "Request for Advance" shall mean a certificate designated as a "Request for Advance," signed by an Authorized Signatory of the Borrower requesting an Advance hereunder, which shall be in substantially the form of Exhibit C attached hereto, and shall, among other things, (a) specify the date of the Advance, which shall be a Business Day, the amount of the Advance, the type of Advance (Collateralized or Uncollateralized) and, with respect to Collateralized Advances (if appropriate), the Interest Period selected by the Borrower and (b) state that there shall not exist a Default as of the date of such Advance and after giving effect thereto. "Restricted Payment" shall mean (a) any direct or indirect distribution, dividend or other payment to any Person (other than to the Borrower or any wholly-owned Subsidiary of the Borrower) on account of any general or limited partnership interest in, or shares of Capital Stock or other securities of, the Borrower or any of its Subsidiaries (other than dividends payable solely in the Capital Stock of such Person and stock splits), including, without limitation, any direct or indirect distribution, dividend or other payment to any Person (other than to the Borrower or any wholly-owned Subsidiary of the Borrower) on account of any warrants or other rights or options to acquire shares of Capital Stock of the Borrower or any of its Subsidiaries; (b) any payment of principal of, or interest on, or payment into a sinking fund for the retirement of, or any defeasance of subordinated debt; and (c) any management, consulting or similar fees, or any interest thereon, payable by the Borrower or any of its Subsidiaries to any partner, shareholder or Affiliate of any such Person. "Restricted Purchase" shall mean any payment (including, without limitation, any sinking fund payment, prepayment or installment payment) on account of the purchase, redemption or other acquisition or retirement of any general or limited partnership interest in, or shares of Capital Stock of or other securities or subordinated debt of the Borrower or any of the Borrower's Subsidiaries (other than to the Borrower or any wholly-owned Subsidiary of the Borrower), including, without limitation, any warrants or other rights or options to acquire shares of Capital Stock of the Borrower or of any of the Borrower's Subsidiaries or any loan, advance, release or forgiveness of Indebtedness by the Borrower or any of its Subsidiaries to any partner, shareholder or Affiliate of any such Person. -20- 29 "Sales and Distribution Agreement" shall mean that certain Sales and Distribution Agreement dated as of October 28, 1994 between the Borrower and Madison Telecommunications Inc. as amended by Amendment No. 1 dated as of October 26, 1995. "Security Documents" means those agreements and other documents in favor of the Administrative Agent for the benefit of itself and the Banks described in Schedule 2, as such documents may be amended or supplemented from time to time, and any other agreement or instrument which may from time to time be held by the Administrative Agent for the benefit of itself and the Banks as security for all or any portion of the Obligations. "Security interest" shall mean all Liens in favor of the Administrative Agent, for the benefit of itself and the Banks, created or intended to be created hereunder or under any of the Security Documents to secure the Obligations. "Site Specific Licenses" shall mean all licenses or other authorizations granted in respect of the use of specific transmitter locations pursuant to the Licenses listed on Schedule 1. "Subsidiary" shall mean, as applied to any Person, (a) any corporation of which more than fifty percent (50%) of the outstanding stock (other than directors' qualifying shares) having ordinary voting power to elect a majority of its board of directors, regardless of the existence at the time of a right of the holders of any class or classes of securities of such corporation to exercise such voting power by reason of the happening of any contingency, or any partnership of which more than fifty percent (50%) of the outstanding partnership interests, is at the time owned directly or indirectly by such Person, or by one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person, or (b) any other entity which is directly or indirectly controlled or capable under the current facts of being controlled by such Person, or by one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person. The Subsidiaries of the Borrower as of the Agreement Date are set forth on Schedule 3 attached hereto. "Substance" shall mean any substance, waste, liquid, gaseous or solid matter, fuel, micro-organism, sound, vibration, ray, heat, odor, radiation, energy vector, plasma, and organic or inorganic matter. "Taxes" shall mean all taxes imposed by any Governmental Entity, including income, profits, real property, personal property, goods and services, sales, transfer, purchase, -21- 30 stumpage, registration, capital, excise, payroll, unemployment, disability, employee's income withholding, social security or withholding. "Total Debt" shall mean, as of any date with respect of any Person and its Subsidiaries on a consolidated basis, the difference between (a) the aggregate amount of Indebtedness for Money Borrowed, determined in accordance with GAAP, minus (b) the aggregate principal amount of Collateralized Advances and Face Amount of Collateralized Bankers' Acceptances outstanding on such date. "Total Subscribers" shall mean, as of any date, the aggregate number of subscribers for the wireless messaging services of the Borrower Group on a combined basis. "Transponder Lease Agreement" shall mean any agreement by and between the Borrower or any of its Subsidiaries and any other Person for the license, lease or other agreement to use telecommunications satellites in the operation of the business of the Borrower or such Subsidiaries and any other agreement related thereto. "U.S. Dollars" and "U.S. $" shall mean lawful money of the United States of America. "Uncollateralized Advance" shall mean an Uncollateralized Prime Rate Advance. "Uncollateralized Bankers' Acceptance" shall mean a Drawing which the Borrower requests to be made as an Uncollateralized Bankers' Acceptance or is continued as or converted into an Uncollateralized Bankers' Acceptance in accordance with the provisions of Section 2.5 hereof. "Uncollateralized Prime Rate Advance" shall mean an Uncollateralized Advance which bears interest at the Prime Rate Basis and which the Borrower requests to be made as an Uncollateralized Prime Rate Advance or is continued or converted as an Uncollateralized Prime Rate Advance, in accordance with the provisions of this Agreement, and which shall be in a principal amount of at least $500,000 and in an integral multiple of $500,000. "Units in Service" shall mean, as of any date, for the Borrower Group on a combined basis, the aggregate number of wireless messaging units that are operating pursuant to valid and binding agreements with customers, where the customer is delinquent less than sixty (60) days (unless the amount for such customer which is delinquent sixty (60) days or more constitutes -22- 31 less than thirty-five (35) percent of such customer's current monthly billing), except for governmental or corporate customers delinquent less than ninety (90) days that (a) have been serviced by such Person for at least six (6) months and have a consistent prior payment history and in which the customer has made a payment within the last forty-five (45) days equal to or greater than the amount of the current monthly billing for such customer, or (b) have a regular history of paying on their accounts amounts equal to or greater than the amount of the current monthly billing for such customer and whose total account receivable is (i) no older and (ii) no greater in dollar amount, than such account receivable was on the date ninety (90) days prior. Each definition of an agreement in this Article 1 shall include such agreement as modified, amended or supplemented from time to time in accordance herewith. ARTICLE 2 Credit Facility Section 2.1 Commitment. The Banks agree, severally, in accordance with their respective Commitment Ratios and not jointly, upon the terms and subject to the conditions of this Agreement, to make available to the Borrower such Accommodations as may be requested by the Borrower, prior to the Maturity Date, in an amount not at any one time outstanding to exceed, in the aggregate, the Available Commitment. Each of the Banks shall, on the terms and conditions of this Agreement, make its pro rata share of Advances, and Bankers' Acceptances on the occasion of any Borrowing or Drawing, as applicable, available to the Borrower under the Commitment. All Advances and Bankers' Acceptances requested hereunder shall be made available to the Borrower in accordance with Sections 2.2, 2.3 and 2.5 hereof, respectively. Any notice given to the Administrative Agent in connection with a requested Accommodation hereunder shall be given to the Administrative Agent prior to 12:00 noon (Toronto time) in the case of Advances and 1:00 p.m. (Toronto time) in the case of Bankers' Acceptances in order for such Business Day to count toward the minimum number of Business Days required. Section 2.2 Uncollateralized Advances. (a) Choice of Interest Rate, Etc. Any Uncollateralized Advance shall be made as an Uncollateralized Prime Rate Advance. (b) Manner of Borrowing. -23- 32 (i) Uncollateralized Advances. The Borrower shall give the Administrative Agent irrevocable prior written notice prior to 12:00 noon (Toronto time) at least one (1) Business Day prior to the date of any requested Uncollateralized Prime Rate Advance in the form of a Request for Advance, or telephonic notice followed immediately by a Request for Advance; provided, however, that the Borrower's failure to confirm any telephonic notice with a Request for Advance shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of such notice from the Borrower, the Administrative Agent shall promptly notify each Bank by telephone of the contents thereof. (ii) Conversions of Uncollateralized Prime Rate Advances. At least two (2) Business Days prior to the Payment Date for each Uncollateralized Prime Rate Advance, the Borrower shall give the Administrative Agent written notice specifying whether all or a portion of such Uncollateralized Prime Rate Advance is to be converted, in whole or in part, to Uncollateralized Bankers' Acceptances, Collateralized Prime Rate Advances, Cost of Funds Rate Advances or Collateralized Bankers' Acceptances. The Borrower may, subject to the provisions of this Agreement, convert the outstanding principal amount of an Uncollateralized Prime Rate Advance, in whole or in part, to (A) Bankers' Acceptances, by giving a Drawing Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), (B) Cost of Funds Rate Advances by giving a Request for Advance in accordance with Section 2.3(c) hereof (including in accordance with the period for notice set forth in Section 2.3(c)(ii) hereof), and (C) Collateralized Prime Rate Advances by giving the Request for Advance in accordance with Section 2.3(b) hereof (including in accordance with the period for notice set forth in Section 2.3(b) hereof). The Borrower may convert the Uncollateralized Prime Rate Advance on any Business Day. If the Uncollateralized Prime Rate Advance to be converted cannot be converted to an aggregate Face Amount of Bankers' Acceptances in an amount which may be drawn as Bankers' Acceptances under this Agreement, then the amount which cannot be so converted shall, subject to the other terms and conditions of this Agreement, thereafter continue to be outstanding as an Uncollateralized Prime Rate Advance. When any Uncollateralized Prime Rate Advances are to be converted, in whole or in part, to Bankers' Acceptances, the Borrower shall repay and there shall become due and payable on the Drawing Date, the principal amount of such Uncollateralized Prime Rate Advances which are to be so -24- 33 converted. Upon such Payment Date such Uncollateralized Prime Rate Advance will, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. Section 2.3 Collateralized Advances. (a) Choice of Interest Rate, Etc. Any Collateralized Advance shall, at the option of the Borrower, be made as a Collateralized Prime Rate Advance or as a Cost of Funds Rate Advance. (b) Collateralized Prime Rate Advances. (i) Advances. The Borrower shall give the Administrative Agent irrevocable prior written notice prior to 12:00 noon (Toronto time) at least one (1) Business Day prior to the date of any requested Collateralized Prime Rate Advance in the form of a Request for Advance, or telephonic notice followed immediately by a Request for Advance; provided, however, that the Borrower's failure to confirm any telephonic notice with a Request for Advance shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of such notice from the Borrower, the Administrative Agent shall promptly notify each Bank by telephone of the contents thereof. (ii) Conversions of Collateralized Prime Rate Advances. At least two (2) Business Days prior to the Payment Date for each Collateralized Prime Rate Advance, the Borrower shall give the Administrative Agent written notice specifying whether all or a portion of such Collateralized Prime Rate Advance is to be converted, in whole or in part, to Collateralized Bankers' Acceptances, Cost of Funds Rate Advances, Uncollateralized Prime Rate Advances or Uncollateralized Bankers' Acceptances. The Borrower may, subject to the provisions of this Agreement, convert the outstanding principal amount of a Collateralized Prime Rate Advance, in whole or in part, to (A) Bankers' Acceptances, by giving a Drawing Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), (B) Cost of Funds Rate Advances by giving a Request for Advance in accordance with Section 2.3(c) hereof (including in accordance with the period for notice set forth in Section 2.3(c)(ii) hereof), and (C) Uncollateralized Prime Rate Advances by giving the Request for Advance in accordance with Section 2.2 (b) hereof (including in accordance with the period for notice set forth in Section 2.2(b) hereof). In the case of any such conversion, the Borrower shall notify the Administrative Agent of the amount of any Collateralized Prime Rate Advance to be converted. The Borrower may convert a Collateralized Prime Rate Advance on any Business Day. If the Collateralized Prime Rate Advance to be converted to -25- 34 Bankers' Acceptances cannot be converted to an aggregate Face Amount of Bankers' Acceptances in an amount which may be drawn as Bankers' Acceptances under this Agreement, then the amount which cannot be so converted shall, subject to the other terms and conditions of this Agreement, thereafter continue to be outstanding as a Collateralized Prime Rate Advance. When any Collateralized Prime Rate Advances are to be converted, in whole or in part, to Bankers' Acceptances the Borrower shall repay and there shall become due and payable on the Drawing Date, the principal amount of such Collateralized Prime Rate Advances which are to be so converted. Upon such Payment Date such Collateralized Prime Rate Advance will, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. (c) Cost of Funds Rate Advances. (i) Advances. The Borrower shall give the Administrative Agent irrevocable prior written notice prior to 12:00 noon (Toronto time) at least one (1) Business Day prior to the date of any requested Cost of Funds Rate Advance in the form of a Request for Advance, or telephonic notice followed immediately by a Request for Advance; provided, however, that the Borrower's failure to confirm any telephonic notice with a Request for Advance shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of such notice from the Borrower, the Administrative Agent shall promptly notify each Bank by telephone of the contents thereof. (ii) Conversions and Continuations of Cost of Funds Rate Advances. At least two (2) Business Days prior to the Payment Date for each Cost of Funds Rate Advance, the Borrower shall give the Administrative Agent written notice specifying whether all or a portion of such Cost of Funds Rate Advance is to be converted or continued, in whole or in part, to Collateralized Bankers' Acceptances, Collateralized Prime Rate Advances, Uncollateralized Prime Rate Advances, Uncollateralized Bankers' Acceptances, or Cost of Funds Rate Advances. The Borrower may, subject to the provisions of this Agreement, convert or continue the outstanding principal amount of a Cost of Funds Rate Advance, in whole or in part, to (A) Bankers' Acceptances, by giving a Drawing Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), (B) Collateralized Prime Rate Advances by giving a Request for Advance in accordance with Section 2.3(b) hereof (including in accordance with the notice provisions set forth in Section 2.3(b) hereof), (C) Uncollateralized Prime Rate Advances by giving the Request for Advance in accordance with Section 2.2(b) hereof (including in accordance with the notice provisions set forth in Section 2.2(b) hereof), and (D) Cost of Funds Rate Advances by giving a Request for Advance in accordance with -26- 35 Section 2.3(c)(i) hereof (including in accordance with the notice provisions set forth in Section 2.3(c)(ii) hereof). In the case of any such conversion, the Borrower shall notify the Administrative Agent of the amount of any Cost of Funds Rate Advance to be converted. The Borrower may convert a Cost of Funds Rate Advance on the Payment Date for such Advance. If the Cost of Funds Rate Advance to be converted to Bankers' Acceptances cannot be converted to an aggregate Face Amount of Bankers' Acceptances in an amount which may be drawn as Bankers' Acceptances under this Agreement, then the amount which cannot be so converted shall, subject to the other terms and conditions of this Agreement, thereafter be converted to a Collateralized Prime Rate Advance. When any Cost of Funds Rate Advances are to be converted or continued, in whole or in part, to Bankers' Acceptances or Cost of Funds Rate Advances, as the case may be, the Borrower shall repay and there shall become due and payable on the Drawing Date or the date of the Advance, as the case may be, the principal amount of such Cost of Funds Rate Advances which are to be so converted or continued. Upon such Payment Date such Cost of Funds Rate Advance will, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. (iii) Interest if no Notice of Selection of Interest Rate Given. If the Borrower fails to give the Administrative Agent timely notice of a continuation or conversion of a Cost of Funds Rate Advance, such Cost of Funds Rate Advance shall, on its Payment Date, automatically be converted to a Collateralized Prime Rate Advance (or, if subsection (d) of this Section 2.3 is applicable, an Uncollateralized Prime Rate Advance). (d) Automatic Conversion of Collateralized Advances and Collateralized Bankers' Acceptances. If, on any date, the sum of the principal amount of Collateralized Advances and the Face Amount of Collateralized Bankers' Acceptances then outstanding exceeds the Equivalent Canadian Dollar Amount of the amount of Permitted Collateral held by the Administrative Agent pursuant to the Deposit Agreement on such date, (i) an amount of Collateralized Advances up to the amount of such excess (beginning with Collateralized Prime Rate Advances, then Cost of Funds Rate Advances) shall automatically (A) if such Advance is a Collateralized Prime Rate Advance, be converted to an Uncollateralized Prime Rate Advance, and (B) if such Advance is a Cost of Funds Rate Advance, bear interest at the Prime Rate Basis for Uncollateralized Advances from such date until the Payment Date for such Advance, and (ii) if after such conversions of, or adjustments to, all Collateralized Advances there remains an excess, the Borrower shall on such date pay to the Administrative Agent for the benefit of the Banks an amount equal to the increased Drawing Fee which would be payable for Uncollateralized -27- 36 Bankers' Acceptances from such date until the Payment Date for the Face Amount of Collateralized Bankers' Acceptances equal to such excess. Section 2.4 Notification of Banks; Disbursement. (a) Notification of Banks. Upon receipt of a Request for Advance, or a notice from the Borrower with respect to any outstanding Advance prior to the Payment Date for such Advance, the Administrative Agent shall promptly notify each Bank by telephone or telecopy of the contents thereof and the amount of such Bank's pro rata portion of the Advance. Each Bank shall, not later than 11:00 a.m. (Toronto time) on the date of borrowing specified in such notice, make available to the Administrative Agent at the Administrative Agent's Office, or at such account as the Administrative Agent shall designate, the amount of its pro rata portion of any Advance which represents an additional borrowing hereunder in immediately available funds. (b) Disbursement. (i) Prior to 2:00 p.m. (Toronto time) on the date of an Advance hereunder, the Administrative Agent shall, subject to the satisfaction of the conditions set forth in Article 3 hereof, disburse the amounts made available to the Administrative Agent by the Banks in like funds by (a) transferring the amounts so made available by wire transfer pursuant to the Borrower's instructions, or (b) in the absence of such instructions, crediting the amounts so made available to the account of the Borrower maintained with the Administrative Agent. (ii) Unless the Administrative Agent shall have received notice from a Bank prior to 11:00 a.m. (Toronto time) on the date of any Advance that such Bank will not make available to the Administrative Agent such Bank's pro rata portion of such Advance, the Administrative Agent may assume that such Bank has made or will make such pro rata portion available to the Administrative Agent on the date of such Advance and the Administrative Agent may in its sole discretion and in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent the Bank does not make such pro rata portion available to the Administrative Agent, such Bank agrees to repay to the Administrative Agent on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at the Prime Rate. -28- 37 (iii) If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank's pro rata portion of the applicable Advance for purposes of this Agreement. If such Bank does not repay such corresponding amount immediately upon the Administrative Agent's demand therefor, the Administrative Agent shall notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent, with interest at the Prime Rate. The failure of any Bank to fund its pro rata portion of any Advance shall not relieve any other Bank of its obligation, if any, hereunder to fund its respective pro rata portion of the Advance on the date of such borrowing, but no Bank shall be responsible for any such failure of any other Bank. (iv) In the event that, at any time when the Borrower is not in Default and has otherwise satisfied each of the conditions in Article 3 hereof, a Bank for any reason fails or refuses to fund its pro rata portion of such Advance, then, until such time as such Bank has funded its pro rata portion of such Advance (which late funding shall not absolve such Bank from any liability it may have to the Borrower), or all other Banks have received payment in full from the Borrower (whether by repayment or prepayment) or otherwise of the principal and interest due in respect of such Advance, such non-funding Bank shall not have the right (A) to vote regarding any issue on which voting is required or advisable under this Agreement or any other Loan Document, and such Bank's pro rata portion of the Accommodations shall not be counted as outstanding for purposes of determining "Majority Banks" hereunder, or (B) to receive payments of principal, interest or fees from the Borrower, the Administrative Agent or the other Banks in respect of its pro rata portion of the Accommodations. Section 2.5 Bankers' Acceptances. (a) Acceptances and Drafts. The Banks agree subject to the terms and conditions of this Agreement to create acceptances ("Bankers' Acceptances") by accepting Drafts of the Borrower under the Available Commitment from time to time, on any Business Day prior to the Maturity Date, which Drafts have an aggregate Face Amount equal to such Bank's pro rata share of the total Accommodations being made by way of Bankers' Acceptances. Bankers' Acceptances shall be created by Banks acceptance of Drafts. Each Drawing shall be in an aggregate amount of not less than $1,000,000 and in an integral amount of $100,000. (b) Procedure for Drawing. The Borrower shall give the Administrative Agent irrevocable prior written notice prior -29- 38 to 1:00 p.m. (Toronto time) at least two (2) Business Days prior to the date of the proposed Drawing in the form of a Drawing Notice, or telephonic notice followed immediately by a Drawing Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with a Drawing Notice shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of a Drawing Notice, the Administrative Agent shall be responsible for making all necessary arrangements with each of the Banks with respect to the stamping of Bankers' Acceptances in the manner contemplated in this Section 2.5. The Borrower shall not in any Drawing Notice select an Interest Period for a Draft which ends after the Maturity Date or which conflicts with the repayments provided for in Sections 2.8 or 2.10(b) hereof. (c) Form of Drafts. Each Draft presented by the Borrower for acceptance by a Bank: (i) shall be in a Face Amount of not less than $1,000,000 and in an integral multiple of $100,000; (ii) shall be dated the date of the Drawing; (iii) shall mature and be payable by the Borrower on a Business Day which occurs one (1), two (2), three (3) or six (6) months (nine (9) or twelve (12) months subject to availability) after the Drawing Date; and (iv) be substantially in the form of Exhibit A hereto. The acceptance endorsed by a Bank on any Draft shall be substantially in the form of Exhibit D hereto. The Borrower hereby renounces, and shall not claim, any days of grace for the payment of any Bankers' Acceptances. (d) Acceptance of Drafts. Not later than 12:00 noon (Toronto time) on the Drawing Date specified for a relevant Drawing, a Bank: (i) shall complete one or more Drafts dated the date of such Drawing in an aggregate Face Amount equal to such Bank's pro rata portion of the amount of such Drawing and with the Interest Period specified by the Borrower in its Drawing Notice; (ii) shall accept the Drafts; and (iii) shall purchase the Bankers' Acceptance thereby created in the manner provided in Section 2.5(e) hereof. (e) Purchase of Bankers' Acceptances. The Borrower shall request a quotation from the Administrative Agent of the purchase price of all Bankers' Acceptances created hereunder on the Drawing Date for such Bankers' Acceptances. The Administrative Agent, after consultation with the Banks, shall notify the Borrower of the purchase price for the Bankers' Acceptance in the Face Amount and for the Interest Period specified by the Borrower. The purchase price shall be calculated by reference to a discount rate which is an arithmatic average (rounded up to the nearest 0.01%) of the discount rates of the Banks determined in accordance with normal market practice at or about 10:00 a.m. (Toronto time) on the applicable Drawing Date for Bankers' Acceptances of each Bank having a comparable -30- 39 Face Amount and comparable maturity date as such Bankers' Acceptances. Each Bank shall purchase all Bankers' Acceptances created by such Bank hereunder at the purchase price quoted by the Administrative Agent to such Bank and such purchase price shall be paid and satisfied by such Bank making payment to the Administrative Agent in the amount of such purchase price less the applicable Drawing Fee. The Administrative Agent shall disburse the amounts made available to the Administrative Agent by the Banks in like funds by (a) transferring the amounts so made available by wire transfer pursuant to the Borrower's instructions, or (b) in the absence of such instructions, crediting the amounts so made available to the account of the Borrower maintained with the Administrative Agent. Bankers' Acceptances purchased by a Bank hereunder may be held by it for its own account until maturity or sold by it at any time prior thereto in the relevant market therefor in Canada, in the Bank's sole discretion. (f) Reimbursement at Payment Date. Subject to Section 2.5(g) hereof, the Borrower shall pay to the Administrative Agent on behalf of a Bank in same day funds, and there shall become due and payable at 11:00 a.m. (Toronto time) on the Payment Date for each Bankers' Acceptance, an amount in Canadian Dollars equal to the Face Amount of such Bankers' Acceptance accepted by such Bank. The Borrower shall make each payment hereunder in respect of Bankers' Acceptances by deposit of the required funds in accordance with Section 2.12 hereof. If the Borrower fails to pay the Bank pursuant to this Section 2.5 (f), or to convert or renew the Face Amount of such Bankers' Acceptance pursuant to Section 2.5(g) hereof, the unpaid amount due and payable to such Bank in respect of such Bankers' Acceptance shall automatically be converted to a Prime Rate Advance on the Payment Date, and shall bear interest: (i) for the first three (3) days from the date on which such amount is converted, or until such earlier date as a Request for Advance is given in accordance with Section 2.2 or 2.3 hereof, as the case may be, at a per annum rate of interest equal to 115% of the Prime Rate Basis; and (ii) thereafter, at a rate per annum equal to the Prime Rate Basis, in each case, until such amount is paid in full. (g) Renewal or Conversion of Bankers' Acceptances. For effect on the Payment Date of a Bankers' Acceptance, the Borrower may elect: (i) to renew all or a portion of the Face Amount of such Bankers' Acceptance by giving a Drawing Notice in accordance with this Section 2.5 (including in accordance with the period for notice set forth in Section 2.5(b) hereof); or (ii) to have all or a portion of the Face Amount of such Bankers' Acceptance converted to an Advance, by giving a Request for Advance in accordance with Section 2.2 or 2.3 hereof (including in accordance with the period for notice set forth in Section 2.2 -31- 40 or 2.3 hereof, as the case may be). If the Bankers' Acceptance to be converted cannot be converted into an Advance in an amount which may be outstanding as an Advance under this Agreement, then the amount which cannot be so converted shall be repaid to the Administrative Agent on behalf of a Bank on the date of such conversion in accordance with Section 2.5(f) hereof. (h) Prepayments. Except as required by Section 2.9 or 2.10 hereof, no repayment of Bankers' Acceptances shall be made by the Borrower to a Bank prior to the Payment Dates of such Bankers' Acceptances as have been created by the Borrower. If the Borrower shall prepay any Bankers' Acceptances accepted by a Bank as required by Section 2.9 or 2.10 hereof then (unless such prepayment has been rescinded or otherwise is required to be returned by such Bank for any reason), as between the Borrower and such Bank, such Bank shall thereafter be solely responsible for the payment of the Face Amount of such Bankers' Acceptances as have been created by the Borrower to the holder or holders thereof in accordance with the terms thereof. (i) Circumstances Making Bankers' Acceptances Unavailable. If the Banks or any one or more of them determine in good faith that by reason of circumstances affecting the money market there is no market for Bankers' Acceptances and advises the Administrative Agent and the Borrower to such effect, in writing, then the right of the Borrower to request a Drawing shall be suspended until the Banks determine that the circumstances causing such suspension no longer exist and the Administrative Agent so notifies the Borrower. Any Drawing Notice which is outstanding at the time of such notice by the Banks or any one or more of them shall be deemed to be a Request for Advance requesting a Prime Rate Advance in the principal amount equal to the requested Face Amount in such Drawing Notice. (j) Presigned Draft Forms. To enable the Banks to create Bankers' Acceptances or complete Drafts in the manner specified in this Section 2.5, the Borrower shall supply the Banks with such number of Drafts as the Banks may reasonably request, duly endorsed and executed on behalf of the Borrower by any one or more Authorized Signatories in accordance with the Borrower's required signing authorities as evidenced by the then current borrowing by-law and resolution, certified copies of which have been delivered to the Bank. Each Bank shall exercise such care in the custody and safekeeping of Drafts as it would exercise in the custody and safekeeping of similar property owned by it. The signatures of such Authorized Signatories may be mechanically reproduced in facsimile and Drafts and Bankers' Acceptances bearing such facsimile signatures shall be binding upon the Borrower as if they had been manually signed by such Authorized Signatories. Notwithstanding that any of the -32- 41 Authorized Signatories whose manual or facsimile signature appears on any Draft as one of such Authorized Signatories may no longer hold office at the date thereof or at the date of its acceptance by a Bank hereunder or at any time thereafter, any Draft or Bankers' Acceptance so signed shall be valid and binding upon the Borrower. A Bank shall not be liable for its failure to accept a Bankers' Acceptance as required hereunder if the cause of such failure is, in whole or in part, due to the failure of the Borrower to provide Drafts, duly endorsed and executed on behalf of the Borrower, on a timely basis. Section 2.6 Interest; Fees. (a) Interest on Uncollateralized Prime Rate Advances. Interest on each Uncollateralized Prime Rate Advance shall be computed daily and shall be payable at the Prime Rate Basis for such Advance, in arrears on the applicable Payment Date. Interest on Uncollateralized Prime Rate Advances then outstanding shall also be due and payable on the Maturity Date. (b) Interest on Collateralized Advances. (i) Cost of Funds Rate. Interest on each Cost of Funds Rate Advance shall be computed daily and shall be payable at the Cost of Funds Rate for such Advance, in arrears on the applicable Payment Date, and, in addition, if the Interest Period for a Cost of Funds Rate Advance exceeds one (1) month, interest on such Cost of Funds Rate Advance shall also be due and payable in arrears on every one (1) month anniversary of the beginning of such Interest Period. Interest on Cost of Funds Rate Advances then outstanding shall also be due and payable on the Maturity Date. (ii) Collateralized Prime Rate Advances. Interest on each Collateralized Prime Rate Advance shall be computed daily and shall be payable at the Prime Rate Basis for such Advance, in arrears on the applicable Payment Date. Interest on Collateralized Prime Rate Advances then outstanding shall also be due and payable on the Maturity Date. (c) Interest Upon Default. Immediately upon the occurrence and during the continuance of an Event of Default under (1) Section 8.1(b) hereof, or (2) resulting from a failure to comply with any provision of Article 7 hereof, the outstanding Obligations (to the extent permitted by Applicable Law) shall bear interest at the Default Rate. Such interest shall be payable on demand by the Majority Banks and shall accrue until the earlier of (i) waiver or cure of the applicable Event of Default, (ii) agreement by the Majority Banks (or, if applicable to the underlying Event of Default, all of the Banks) to rescind -33- 42 the charging of interest at the Default Rate, or (iii) payment in full of the Obligations. (d) Applicable Margin. With respect to any Accommodation, the Applicable Margin shall be determined by the Administrative Agent based upon the Leverage Ratio as of the end of the fiscal quarter most recently ended, effective as of the fifth (5th) Business Day after the financial statements referred to in Section 6.1 or 6.2 hereof, as the case may be, are furnished to the Administrative Agent and each Bank for such fiscal quarter, as follows:
Collateral- ized Collateral- Uncollateralized Bankers' ized Prime Rate Uncollateralized Acceptances Advances Advance Bankers' Applicable Applicable Applicable Acceptance Leverage Ratio Margin Margin Margin Applicable Margin - -------------- ------ ------ ------ ----------------- A. Greater than 6.00:1 0.500% 0.00% 2.000% 3.000% B. Greater than 5.00:1, but less than or equal to 6.00:1 0.500% 0.00% 1.750% 2.750% C. Greater than 4.00:1, but less than or equal to 5.00:1 0.500% 0.00% 1.500% 2.500% D. Greater than 3.00:1, but less than or equal to 4.00:1 0.500% 0.00% 1.000% 2.000% E. Less than or equal to 3.00:1 0.500% 0.00% 0.500% 1.500%
Notwithstanding the foregoing, if the Borrower shall fail timely to deliver to the Administrative Agent the financial statements required for the calculation of the Leverage Ratio for any fiscal quarter, then commencing with the fifth (5th) Business Day after the date such financial statements were due and continuing through the fifth (5th) Business Day following the date of delivery thereof, the Leverage Ratio for such period shall be conclusively presumed to be, and the Applicable Margin shall be calculated based upon, the Leverage Ratio which is one level greater than the Leverage Ratio in effect for the immediately preceding fiscal quarter for which financial -34- 43 statements were delivered or were due to be delivered. If, for any reason, the Leverage Ratio cannot be calculated or determined, the Applicable Margin shall be based upon the Leverage Ratio set forth for level A above. Section 2.7 Fees. (a) Commitment Fees. The Borrower agrees to pay each of the Banks, in accordance with their respective Commitment Ratios, commitment fees as follows: (i) a commitment fee on the aggregate unborrowed available balance of the Commitment, for each day from June 19, 1996 until the Maturity Date at the rate of five-tenths of one percent (0.500%) per annum and (ii) a commitment fee on the aggregate unborrowed unavailable balance of the Commitment, for each day from June 19, 1996 until the Maturity Date at the rate of three-eighths of one percent (0.375%) per annum. Such commitment fees shall be computed daily on the basis of a year of 365 or 366 days (in the case of a leap year), shall be payable quarterly in arrears on the last day of each quarter, and shall be fully earned when due and non-refundable when paid. A final payment of all commitment fees then payable shall also be due and payable on the Maturity Date. (b) Drawing Fees. Drawing Fees for Bankers' Acceptances hereunder shall be payable in advance on the date of its respective Drawing, and shall be fully earned when due and non-refundable when paid. Section 2.8 Mandatory Commitment Reductions. Commencing June 30, 1999 and at the end of each fiscal quarter thereafter, an amount equal to fifty percent (50%) of the Commitment as in effect on June 29, 1999, shall be automatically and permanently reduced by the percentages set forth below:
Quarterly Percentage Reduction of an Amount Equal to fifty percent (50%) of Commitment In Dates of Commitment Reduction Effect On June 29, 1999 ----------------------------- ----------------------- June 30, 1999, September 30, 1999 December 31, 1999 and March 31, 2000 2.000% June 30, 2000, September 30, 2000 December 31, 2000 and March 31, 2001 6.750% June 30, 2001, September 30, 2001 December 31, 2001 and March 31, 2002 9.500% June 30, 2002, September 30, 2002 December 31, 2002 and March 31, 2003 6.750%
-35- 44 The Borrower shall make a repayment of the Accommodations outstanding under the Commitment, together with accrued interest thereon, on or before the effective date of each reduction in the Commitment under this Section 2.8, such that the aggregate principal amount of the Accommodations outstanding at no time exceeds the Commitment as so reduced. In addition, any remaining unpaid principal and interest under the Commitment shall be due and payable in full on the Maturity Date. Section 2.9 Optional Prepayments; Commitment Reductions. (a) Prepayment of Accommodations. The Borrower may without penalty (but subject to Section 2.13 hereof) at any time prepay in full or in part the principal amount of any Advance prior to the Payment Date for such Advance, upon three (3) Business Days' prior written notice to the Administrative Agent of such prepayment. Partial prepayments shall be in a principal amount of not less than $1,000,000.00, and in an integral multiple of $500,000.00. (b) Commitment Reduction. The Borrower may without penalty (but subject to Section 2.13 hereof) at any time terminate or permanently reduce all or any part of the Commitment by giving the Administrative Agent and the Banks at least three (3) Business Days' prior written notice thereof; provided, however, that any reduction shall reduce the Commitment in a principal amount of at least $3,500,000.00 and in an integral multiple of $500,000.00, and provided, further, that no such reduction shall be permitted if it would require a prepayment of a Bankers' Acceptance. The Borrower shall make any required repayment or prepayment of Accommodations outstanding under the Commitment, plus accrued interest on such portion of the Accommodations and any accrued fees in respect thereof, on or before the effective date of the reduction of the Commitment, so that the principal amount of the Accommodations outstanding after such repayment or prepayment does not exceed the Commitment as so reduced. The Borrower shall not have any right to rescind any termination or reduction pursuant to this Section 2.9(b). Reductions in the Commitment after June 30, 1999 pursuant to this Section 2.9(b) shall be applied pro rata over the Commitment reduction schedule set forth in Section 2.8 hereof. Section 2.10 Mandatory Repayments. In addition to the scheduled Commitment reductions provided for in Section 2.8 hereof, the Borrower shall repay the obligations as follows: (a) Accommodations in Excess of Available Commitment. If, at any time, the amount of the Accommodations then outstanding under the Commitment shall exceed the Available -36- 45 Commitment, the Borrower shall, on such date and subject to Section 2.13 hereof, make a repayment of the principal amount of the Accommodations in an amount equal to such excess, together with any accrued interest and fees with respect thereto. If any such repayment results in a prepayment of any Bankers' Acceptance, the Borrower shall make a deposit with the Administrative Agent in the Face Amount of such Bankers' Acceptances and hereby irrevocably authorizes and directs the Administrative Agent to apply such payment to the Borrower's reimbursement obligations in respect of such Drawing on the Payment Date therefor. (b) Maturity Date. In addition to the foregoing, a final payment of all Obligations then outstanding shall be due and payable on the Maturity Date. Section 2.11 Evidence of Obligations; Accommodation Accounts. (a) The indebtedness of the Borrower in respect of all Obligations (other than Accommodations and interest) hereunder shall be prima facie evidenced by the account records maintained by the Administrative Agent. The failure of the Administrative Agent to correctly record any amount or date shall not, however, affect the obligation of the Borrower to pay amounts due hereunder to the Administrative Agent or any of the Banks in accordance with this Agreement. (b) Each Bank may open and maintain on its books in the name of the Borrower a loan account with respect to its pro rata portion of the Accommodations and interest thereon. Each Bank which opens such a loan account shall debit such loan account for the principal amount of its pro rata portion of each Advance made by it and accrued interest thereon, and shall credit such loan account for each payment on account of principal of or interest on its Accommodations. The records of a Bank with respect to the loan account maintained by it shall be prima facie evidence of its pro rata portion of the Accommodations and accrued interest thereon absent manifest error, but the failure of any Bank to make any such notations or any error or mistake in such notations shall not affect the Borrower's repayment obligations with respect to such Accommodations. Section 2.12 Manner of Payment. (a) Each payment (including any prepayment) by the Borrower on account of the principal of or interest on the Accommodations, commitment fees and any other amount owed to the Banks or the Administrative Agent or any of them under this Agreement or the other Loan Documents shall be made not later -37- 46 than 1:00 p.m. (Toronto time) on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent's Office, for the account of the Banks or the Administrative Agent, as the case may be, in lawful Canadian currency in immediately available funds. Any payment received by the Administrative Agent after 1:00 p.m. (Toronto time) shall be deemed received on the next Business Day. Receipt by the Administrative Agent of any payment intended for any Bank or Banks hereunder prior to 1:00 p.m. (Toronto time) on any Business Day shall be deemed to constitute receipt by such Bank or Banks on such Business Day. In the case of a payment for the account of a Bank, the Administrative Agent will promptly thereafter distribute the amount so received in like funds to such Bank. If the Administrative Agent shall not have received any payment from the Borrower as and when due, the Administrative Agent will promptly notify the Banks accordingly. (b) Prior to the declaration of an Event of Default under Section 8.2 hereof, if some but less than all amounts due from the Borrower are received by the Administrative Agent with respect to the obligations, the Administrative Agent shall distribute such amounts in the following order of priority, all on a pro rata basis to the Banks: (i) to the payment on a pro rata basis of any fees or expenses then due and payable to the Administrative Agent and the Banks, or any of them; (ii) to the payment of interest then due and payable on the Accommodations; (iii) to the payment of all other amounts not otherwise referred to in this Section 2.12(b) then due and payable to the Administrative Agent and the Banks, or any of them, hereunder or under any other Loan Document; and (iv) to the payment of principal then due and payable on the Accommodations. (c) Subject to any contrary provisions in the definition of Interest Period, if any payment under this Agreement or any of the other Loan Documents is specified to be made on a day which is not a Business Day, it shall be made on the next Business Day, and such extension of time shall in such case be included in computing interest and fees, if any, in connection with such payment. Section 2.13 Reimbursement. (a) Upon the earlier of demand or the Maturity Date, the Borrower shall pay to the Administrative Agent or the Banks such amount or amounts as will compensate the Administrative Agent or the Banks for any loss, cost or expense incurred by them: (i) as a result of (A) failure by the Borrower to borrow any Cost of Funds Rate Advance after having given notice of its intention to borrow in accordance with Section 2.3 hereof (whether by reason of the Borrower's election not to proceed or -38- 47 the non-fulfillment of any of the conditions set forth in Article 3 hereof), or (B) prepayment (or failure to prepay after giving notice thereof) of any Cost of Funds Rate Advance in whole or in part prior to its Payment Date; or (ii) with respect to any Bankers' Acceptance arising from any Claim, including legal fees and disbursements, respecting the collection of amounts owing by the Borrower hereunder in respect of such Bankers' Acceptance or the enforcement of the Administrative Agent's or Banks' rights hereunder in respect of such Bankers' Acceptance, including legal proceedings attempting to restrain the Administrative Agent or the Banks from paying any amount under such Bankers' Acceptance, except for any loss, cost or expense resulting from the gross negligence or willful misconduct of the Administrative Agent or such Bank, as applicable, as determined by a final, nonappealable judicial order of a court of competent jurisdiction. Such Bank's good faith determination of the amount of such losses or out-of-pocket expenses, as set forth in writing and accompanied by calculations in reasonable detail demonstrating the basis for its demand, shall be prima facie evidence of such losses or expenses absent manifest error. (b) Losses subject to reimbursement hereunder shall include, without limiting the generality of the foregoing, expenses incurred by any Bank or any participant of such Bank permitted hereunder in connection with the re-employment of funds prepaid, paid, repaid, not borrowed, or not paid, as the case may be, and will be payable as a result of acceleration of the obligations. Section 2.14 Pro Rata Treatment. (a) Advances. Each Advance from the Banks hereunder shall be made pro rata on the basis of the respective Commitment Ratios of the Banks. (b) Payments Prior to Declaration of Event of Default. Except as provided in Section 2.5(f) hereof and Article 10 hereof, each payment and prepayment of principal of the Accommodations and each payment of interest on the Accommodations, shall be made to the Banks pro rata on the basis of their respective unpaid principal amounts outstanding hereunder immediately prior to such payment or prepayment. If any Bank shall obtain any payment (whether involuntary, through the exercise of any right of set-off, or otherwise) on account of the Accommodations in excess of its pro rata share of the Accommodations under its Commitment Ratio, such Bank shall forthwith purchase from the other Banks such participations in the portion of the Accommodations made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided, however, that if all -39- 48 or any portion of such excess payment is thereafter recovered from such purchasing Bank, such purchase from each Bank shall be rescinded and such Bank shall repay to the purchasing Bank the purchase price to the extent of such recovery. The Borrower agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 2.14(b) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Bank were the direct creditor of the Borrower in the amount of such participation. (c) Payments Subsequent to Declaration of Event of Default. Subsequent to the acceleration of the Accommodations under Section 8.2 hereof, payments and prepayments made to the Administrative Agent or the Banks or otherwise received by any of them (from realization on Collateral for the Obligations or otherwise) on account of the Accommodations shall be distributed as follows: first, to the Administrative Agent's reasonable costs and expenses, if any, incurred in connection with the collection of such payment or prepayment, including, without limitation, any reasonable costs incurred in connection with the sale or disposition of any Collateral for the Obligations; second, to the payment of fees then due and payable to the Administrative Agent and the Banks and any reasonable costs and expenses, if any, incurred by any of the Banks under Section 11.2 hereof, pro rata on the basis of the amount of such Obligations; third, to any unpaid interest which may have accrued on the Obligations, pro rata on the basis of the amount of such obligations; fourth, to any unpaid principal or the Face Amount of the Obligations and Obligations under Interest Rate Hedge Agreements, pro rata on the basis of the amount of such obligations; fifth, to damages incurred by the Administrative Agent or any Bank by reason of any breach hereof or of any other Loan Document, pro rata on the basis of the amount of such Obligations; and sixth, upon satisfaction in full of all remaining Obligations, to the Borrower or as otherwise required by Applicable Law. ARTICLE 3 Conditions Precedent Section 3.1 Conditions Precedent to Agreement. The obligation of the Banks to undertake the Commitment and the effectiveness of this Agreement are subject to the prior or contemporaneous fulfillment of each of the following conditions: (a) The Administrative Agent and the Banks shall have received each of the following: -40- 49 (i) the loan certificate of the Borrower dated as of the Agreement Date, in substantially the form attached hereto as Exhibit E, including a certificate of incumbency with respect to each Authorized Signatory of such Person, together with the following items: (A) a true, complete and correct copy of the Certificate and Articles of Incorporation and By-laws of the Borrower as in effect on the Agreement Date, (B) certificates of status, compliance or good standing for the Borrower issued by the appropriate government officials of the jurisdiction of incorporation of the Borrower and for each jurisdiction in which the Borrower carries on business, (C) a true, complete and correct copy of the corporate resolutions of the Borrower authorizing the Borrower to execute, deliver and perform this Agreement and the other Loan Documents to which it is a party and the transactions contemplated hereby and thereby, and (D) a true, complete and correct copy of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of the Borrower; (ii) a loan certificate of each Subsidiary of the Borrower dated as of the Agreement Date, in substantially the form attached hereto as Exhibit F, including a certificate of incumbency with respect to each Authorized Signatory of such Person, together with the following items: (A) a true, complete and correct copy of the Certificate and Articles of Incorporation or Certificate of Partnership, as applicable, of such Person as in effect on the Agreement Date, (B) a true, complete and correct copy of the By-laws or Partnership Agreement, as applicable, of such Person as in effect on the Agreement Date, (C) certificates of status, compliance or good standing for such Person issued by the appropriate government officials of the jurisdiction of incorporation or formation, as applicable, of such Person and for each jurisdiction in which such Person is required to qualify to do business, (D) a true, complete and correct copy of the corporate resolutions of such Person (or another appropriate Person) authorizing such Person to execute, deliver and perform the Loan Documents to which it is party and the transactions contemplated thereby, and (E) a true, complete and correct copy of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of such Person; (iii) duly executed Security Documents; (iv) evidence of the registration and perfection of the Security Documents in all offices where such registration, filing or recording is necessary or desirable to -41- 50 protect any rights or remedies of the Administrative Agent and the Banks thereunder; (v) copies of insurance binders or certificates covering the assets of the Borrower and its Subsidiaries, and otherwise meeting the requirements of Section 5.5 hereof, together with copies of the underlying insurance policies; (vi) legal opinions of (a) McCarthy Tetrault, Canadian counsel to the Borrower and its Subsidiaries; (b) local counsel opinions for each of the Canadian provinces, each as counsel to the Borrower and its Subsidiaries, and (c) Bingham, Dana & Gould, counsel to PageNet and Paging Network Canadian Holdings, Inc., each addressed to each Bank and the Administrative Agent, and dated as of the Agreement Date; (vii) unaudited financial information of the Borrower and its Subsidiaries on a consolidated basis through the fiscal quarter ending March 31, 1996 and the month ending April 30, 1996 and certified by the chief financial officer or the chief executive officer of the Borrower; (viii) lien search results with respect to the Borrower and its Subsidiaries from appropriate jurisdictions; and (ix) all such other documents as the Administrative Agent or any Bank may reasonably request, certified by an appropriate governmental official or an Authorized Signatory if so requested. (b) The Administrative Agent and the Banks shall have received evidence satisfactory to them that all Necessary Authorizations, including any consent or authorization of Industry Canada and all other necessary consents to the closing of this Agreement and the other Loan Documents, have been obtained or made, are in full force and effect and are not subject to any pending or, to the knowledge of the Borrower, threatened reversal or cancellation, and the Administrative Agent and the Banks shall have received a certificate of an Authorized Signatory so stating. (c) The Borrower shall certify to the Administrative Agent and the Banks that each of the representations and warranties in Article 4 hereof are true and correct as of the Agreement Date and that no Default or Event of Default then exists or is continuing. -42- 51 (d) There shall not exist as of the Agreement Date any action, suit, proceeding or investigation pending against, or, to the knowledge of the Borrower, threatened against or in any manner relating adversely to, the Borrower, any of its Subsidiaries, any of their respective properties, which, in the judgment of the Administrative Agent, could be expected to have a Materially Adverse Effect. (e) No event shall have occurred and no condition shall exist which, in the judgment of the Administrative Agent, has had or could be expected to have a Materially Adverse Effect. (f) The Administrative Agent and the Banks shall have received evidence satisfactory to them of the simultaneous closing of the MadTel Holdings Agreement dated as of even date hereof. (g) The Administrative Agent and the Banks shall have received all agreements entered into, in connection with the Business, by Paging Network, Inc. and Madison Venture Corporation and their respective Subsidiaries, which agreements shall be in form and substance satisfactory to the Administrative Agent and the Banks and shall each be collaterally assigned to the Administrative Agent for the benefit of the Banks. (h) The Administrative Agent and the Banks and their counsel shall have received payment of all fees due and payable on the Agreement Date. Section 3.2 Conditions Precedent to All Accommodations. The obligation of the Banks to make any Accommodation hereunder is subject to the fulfillment of each of the following conditions immediately prior to or contemporaneously with such Accommodation satisfactory to the Majority Banks: (a) All of the representations and warranties of the Borrower under this Agreement and the other Loan Documents (including, without limitation, all representations and warranties with respect to the Borrower's Subsidiaries), which, pursuant to Section 4.2 hereof or otherwise, are made at and as of the time of such Accommodation, shall be true and correct at such time in all material respects, both before and after giving effect to the application of the proceeds of such Accommodation, and after giving effect to any updates to information provided to the Banks in accordance with the terms of such representations and warranties, and no Default hereunder shall then exist or be caused thereby; (b) With respect to Advances which, if funded, would increase the aggregate principal amount of Accommodations -43- 52 outstanding hereunder, the Administrative Agent shall have received a duly executed Request for Advance; (c) Each of the Administrative Agent and the Banks shall have received all such other certificates, reports, statements, opinions of counsel (if such Advance is in connection with an acquisition) or other documents as the Administrative Agent or any Bank may reasonably request; (d) No event shall have occurred and no condition shall exist which has had or which could reasonably be expected to have a Materially Adverse Effect; and (e) No Applicable Law, proposed Applicable Law, change in any Applicable Law, or the interpretation or enforcement of any Applicable Law shall have been enacted (including the enactment of any Applicable Law respecting Taxes or environmental matters or any change therein or in the interpretation or enforcement thereof), the effect of which will be to prohibit the Administrative Agent or any of the Banks from making such Accommodation or to increase materially the cost thereof to the Banks. ARTICLE 4 Representations and Warranties Section 4.1 Representations and Warranties. To induce the Administrative Agent and each of the Banks to make Accommodations available hereunder, the Borrower hereby agrees, represents and warrants, upon the Agreement Date, and at all times thereafter as required pursuant to Sections 3.2 and 4.2 hereof, in favor of the Administrative Agent and each Bank that: (a) Organization; Ownership; Power; Qualification. The Borrower is a corporation duly incorporated or amalgamated, as the case may be, and organized, validly subsisting and in good standing under the laws of its jurisdiction of incorporation. The Borrower has the corporate power and authority to own its properties and to carry on its business as now being and as proposed hereafter to be conducted and to borrow monies and to enter into agreements therefor. Each Subsidiary of the Borrower is a corporation or partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, as the case may be, and has the corporate or partnership power, as the case may be, and authority to own its properties and to carry on its business as now being and as proposed hereafter to be conducted. The Borrower and each of its Subsidiaries are duly qualified, licensed or registered to -44- 53 carry on business as an extra-provincial corporation in the jurisdictions in which the nature of its properties or the business carried on by it make such qualification necessary. (b) Authorization; Enforceability. The Borrower has the corporate power and has taken all necessary corporate action to authorize it to obtain Accommodations hereunder, to execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms, and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by the Borrower and is, and each of the other Loan Documents to which the Borrower is party is, a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject only to their enforceability against the other parties thereto and to any limitation under Applicable Laws relating to: (i) bankruptcy, insolvency, reorganization, moratorium or creditors' rights generally; and (ii) the discretion that a court may exercise in the granting of equitable remedies (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower). (c) Subsidiaries: Authorization; Enforceability. The Borrower's Subsidiaries and the Borrower's direct and indirect ownership thereof as of the Agreement Date are as set forth on Schedule 3 attached hereto, and to the extent such Subsidiaries are corporations, the Borrower has the unrestricted right to vote the issued and outstanding shares of the Subsidiaries shown thereon and such shares of such Subsidiaries have been duly authorized and issued and are fully paid and nonassessable. Each Subsidiary of the Borrower has the corporate or partnership power and has taken all necessary corporate or partnership action to authorize it to execute, deliver and perform each of the Loan Documents to which it is a party in accordance with their respective terms and to consummate the transactions contemplated by this Agreement and by such Loan Documents. Each of the Loan Documents to which any Subsidiary of the Borrower is party is a legal, valid and binding obligation of such Subsidiary enforceable against such Subsidiary in accordance with its terms, subject only to their enforceability against the other parties thereto and to any limitation under Applicable Laws relating to: (i) bankruptcy, insolvency, reorganization, moratorium or creditors' rights generally; and (ii) the discretion that a court may exercise in the granting of equitable remedies (insofar as any such law relates to the bankruptcy, insolvency or similar event of any such Subsidiary). The Borrower's ownership interest in each of its Subsidiaries represents a direct or indirect controlling interest of such Subsidiary for purposes of directing -45- 54 or causing the direction of the management and policies of each Subsidiary. (d) Compliance with Other Loan Documents and Contemplated Transactions. The execution, delivery and performance, in accordance with their respective terms, by the Borrower of this Agreement, and by the Borrower and its Subsidiaries of each of the other Loan Documents to which they are respectively party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) require any consent or approval, governmental or otherwise, not already obtained, (ii) violate any Applicable Law respecting the Borrower or any Subsidiary of the Borrower, (iii) conflict with, result in a breach of, or constitute a default under the certificate of incorporation, constating documents or by-laws or partnership agreements, as the case may be, as amended, of the Borrower or of any Subsidiary of the Borrower, or under any indenture, agreement, or other instrument, including without limitation the Licenses, to which the Borrower or any of its Subsidiaries is a party or by which any of them or their respective properties may be bound, or (iv) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower or any of its Subsidiaries, except for Permitted Liens. (e) Business. The Borrower, together with its Subsidiaries, is engaged solely in the business of owning, managing, operating, investing in, the marketing and distribution of wireless messaging services and communications businesses incidental or directly relating thereto. (f) Licenses, etc. The Licenses have been duly issued and are in full force and effect. The Borrower and its Subsidiaries are in compliance in all material respects with all of the provisions thereof. The Borrower and its Subsidiaries have secured all Necessary Authorizations and all such Necessary Authorizations are in full force and effect. Neither any License nor any Necessary Authorization is the subject of any pending or, to the best of the Borrower's knowledge, threatened revocation. (g) Compliance with Law. The Borrower and its Subsidiaries are in compliance in all material respects with all material Applicable Law, including, without limitation, all Environmental Laws. (h) Title to Assets. Each of the Borrower and its Subsidiaries is the sole beneficial owner of, and has a good and marketable title to, and will be lawfully possessed of its Assets, including the Collateral, free and clear of all Liens, except Permitted Liens, and each of the Borrower and the -46- 55 Subsidiaries has full legal right to mortgage, pledge, charge and assign to the Administrative Agent for the benefit of itself and the Banks the Collateral to the Administrative Agent pursuant to the Security Documents as contemplated herein. No Person has any written or oral agreement, option, understanding or commitment, or any right or privilege capable of becoming any agreement, option, understanding or commitment, for the purchase from the Borrower or the Subsidiaries of any of the Collateral. (i) Litigation. There is no action, suit, proceeding or investigation pending against, or, to the knowledge of the Borrower, threatened against or in any other manner relating adversely to, the Borrower or any of its Subsidiaries or any of their respective properties, including without limitation the Licenses, in any court or before any arbitrator of any kind or before or by any Governmental Entity in Canada or elsewhere, nor is there any such material action, suit or proceeding which would prevent the Borrower from proceeding with any Accommodations. None of the Borrower or any of its Subsidiaries is in default with respect to any judgment, order, writ, injunction, decree or award of any court or Governmental Entity or any arbitrator or board in Canada or elsewhere, nor is there any judgment, order, writ, injunction, decree or award which would prevent the Borrower from proceeding with any Accommodations. No such action, suit, proceeding or investigation (i) calls into question the validity of this Agreement or any other Loan Document, or (ii) individually or collectively involves the possibility of any judgment or liability not fully covered by insurance which, if determined adversely to the Borrower or any of its Subsidiaries, would have a Materially Adverse Effect. (j) Taxes. Each of the Borrower and its Subsidiaries has in a timely manner filed all tax returns, elections, filings and reports with respect to Taxes required by, and in accordance with, Applicable Law to be filed by it. Each of the Borrower and its subsidiaries has paid, or reserved in the financial statements, all Taxes which are due and payable, and has paid all assessments and reassessments and all other Taxes, governmental charges penalties, interest and fines due and payable by it on or before the date hereof. Each of the Borrower and its Subsidiaries has no liability, contingent or otherwise, for Taxes, except Taxes not now due and payable with respect to ordinary operations during the current fiscal period adequate provision for the payment of which has been made. Each of the Borrower and its Subsidiaries has paid as and when due all applicable Taxes and remitted as required by Applicable Law all applicable Taxes and deductions and any interest or penalties related thereto, except any such taxes (i) the payment of which the Borrower or any Subsidiary is diligently contesting in good faith by appropriate proceedings, (ii) for which adequate -47- 56 reserves to the extent required by GAAP have been provided on the books of the Borrower or the Subsidiary involved, and (iii) as to which no Lien other than a Permitted Lien has attached and no foreclosure, distraint, sale or similar proceedings have been commenced. (k) Financial Statements. The Borrower has furnished or caused to be furnished to the Administrative Agent and the Banks financial information for the Borrower and its Subsidiaries, all of which, together with other financial statements furnished to the Banks subsequent to the Agreement Date have been prepared in accordance with GAAP and present fairly in all material respects the financial position of the Borrower and its Subsidiaries on a consolidated and consolidating (unconsolidated) basis, as the case may be, on and as at such dates and the results of operations for the periods then ended (subject, in the case of unaudited financial statements, to normal year-end and audit adjustments). Neither the Borrower nor any of its Subsidiaries has any material liabilities, contingent or otherwise, other than as disclosed in the financial statements referred to in the preceding sentence or as set forth or referred to in this Agreement. (l) No Material Adverse Change Since December 31, 1995, there has occurred no event which has had or which could reasonably be expected to have a Materially Adverse Effect. (m) ERISA. The Borrower and each ERISA Affiliate of the Borrower and each of their respective Plans are in compliance with ERISA and the Code (except for instances of non-compliance which, individually and in the aggregate, would not have a Materially Adverse Effect) and neither the Borrower nor any of its ERISA Affiliates has incurred any accumulated funding deficiency with respect to any such Employee Pension Plan within the meaning of ERISA or the Code. The Borrower and each other ERISA Affiliate have complied with all requirements of COBRA (except for instances of non-compliance which, individually and in the aggregate, would not have a Materially Adverse Effect). Neither the Borrower nor any of its ERISA Affiliates has made any promises of retirement or other benefits to employees, except as set forth in the Plans, in written agreements with such employees, or in the Borrower's employee handbook and memoranda to employees except for promises which, individually or in the aggregate, would not have a Materially Adverse Effect. Neither the Borrower nor any of its ERISA Affiliates has incurred any material liability to PBGC in connection with any Plan. The assets of each Plan of the Borrower and its ERISA Affiliates which is subject to Title IV of ERISA are sufficient to provide the benefits under such Plan, the payment of which PBGC would guarantee if such Plan were terminated, and such assets are also -48- 57 sufficient to provide all other "benefit liabilities" (within the meaning of Section 4041 of ERISA) due under the Plan upon termination. No Reportable Event has occurred and is continuing with respect to any Plan. No Plan or trust created thereunder, or party in interest (as defined in Section 3(14) of ERISA), or any fiduciary (as defined in Section 3(21) of ERISA), has engaged in a nonexempt "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) which would subject the Borrower or any of its ERISA Affiliates to the tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the Code, which tax or penalty, individually or in the aggregate, would have a Materially Adverse Effect. Neither the Borrower nor any of its ERISA Affiliates is obligated to make any contribution to a Multiemployer Plan. (n) No Margin Stock. The Borrower and its Subsidiaries do not own or have any present intention of acquiring any "margin stock" as defined in Regulation U (12 CFR Part 221, as amended) of the Board of Governors of the Federal Reserve System (herein called "Margin Stock"). None of the proceeds of any Accommodation will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock or maintaining, reducing or retiring any indebtedness which was originally incurred to purchase or carry any Margin Stock, or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulation (12 CFR Part 207, as amended). Neither the Borrower nor any agent acting on its behalf has taken or will take any action which might cause this Agreement or any of the Loan Documents to violate, or be inconsistent with, Regulation G, Regulation U or Regulation X (12 CFR Part 224, as amended) or any other regulation of the Board of Governors of the Federal Reserve System or to violate, or be inconsistent with, the Securities Exchange Act of 1934, as amended, in each case as in effect now or as the same may hereafter be in effect. (o) Governmental Regulation. Neither the Borrower nor any of its Subsidiaries is required to obtain any consent, approval, authorization, permit or license (excluding Immaterial Site Specific Licenses) which has not already been obtained from, or effect any filing or registration which has not already been effected with, any Governmental Entity in connection with the execution and delivery of this Agreement or any other Loan Document. Neither the Borrower nor any of its Subsidiaries is required to obtain any consent, approval, authorization, permit or license (excluding Immaterial Site Specific Licenses) which has not already been obtained from, or effect any filing or registration which has not already been effected with, any Governmental Entity in connection with the performance, in -49- 58 accordance with their respective terms, of this Agreement or any other Loan Document. (p) Absence of Default, Etc. Neither the Borrower nor any of its Subsidiaries is subject to, or a party to, any charter or by-law restriction, any Applicable Law, any Claim, any contract or instrument, a Lien or any other restriction of any kind or character which would prevent the consummation of the transactions contemplated by this Agreement or compliance by the Borrower or such Subsidiary with the terms, conditions and provisions hereof or of any Loan Document to which it is a party or the continued operation of the business on or after the date hereof on substantially the same basis as operated to the date hereof in each case. Neither the Borrower nor any of its Subsidiaries is a party to or bound by any contract or agreement continuing after the Agreement Date, or bound by any Applicable Law, the performance of which or the compliance with which, as applicable, could have a Materially Adverse Effect or result in the loss of any License. (q) Accuracy and Completeness of Information. None of: (i) this Agreement, (ii) any of the Loan Documents, or (iii) any certificate or statement in writing which has been supplied by or on behalf of the Borrower or its Subsidiaries or by any of the directors, officers or employees of the Borrower or its Subsidiaries in connection with the transactions contemplated hereby or by any of the Loan Documents contained any untrue statement of a material fact, or omitted any statement of a material fact, necessary in order to make the statements contained herein or therein not materially misleading at the time it was furnished. There is no material fact known to the Borrower or its Subsidiaries or any of their directors, officers or employees which the Borrower has not disclosed to the Administrative Agent in writing and which could be expected to have a Materially Adverse Effect. (r) Agreements with Affiliates. Except for (1) agreements or arrangements set forth on Schedule 4 and (2) agreements or arrangements with Affiliates wherein the Borrower or one or more of its Subsidiaries provides services to such Affiliates on terms no less advantageous to the Borrower or such Subsidiary than would be the case if such transaction had been effected with a non-Affiliate, neither the Borrower nor any of its Subsidiaries has (i) any agreements or arrangements of any kind with any Affiliate or (ii) any management or consulting agreements of any kind with any Affiliate. (s) Priority. Except as a result of the action or inaction of the Administrative Agent or any Bank, the Security Interest is a valid and perfected first priority security -50- 59 interest in the Collateral in favor of the Administrative Agent, for the benefit of itself and the Banks, securing, in accordance with the terms of the Security Documents, the Obligations, and the Collateral is subject to no Liens other than Permitted Liens. The Liens created by the Security Documents are enforceable as security for the obligations in accordance with their terms with respect to the Collateral subject, as to enforcement of remedies, to the following qualifications: (i) an order of specific performance and an injunction are discretionary remedies and, in particular, may not be available where damages are considered an adequate remedy at law, and (ii) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors' rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower or any of its Subsidiaries, as the case may be). (t) Indebtedness. Neither the Borrower nor any of its Subsidiaries has outstanding, as of the Agreement Date, and after giving effect to the initial Accommodations hereunder on the Agreement Date, any Indebtedness for Money Borrowed other than the obligations hereunder. (u) Solvency. As of the Agreement Date after the closing of the MadTel Holdings Agreement, and after giving effect to the transactions contemplated by the Loan Documents, the Borrower and its Subsidiaries were and continue to be able to pay their liabilities as they become due. (v) Books and Records. All books and records of the Borrower and its Subsidiaries have been fully, properly and accurately kept and completed in accordance with GAAP and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. (w) Environmental Liabilities. Neither the Borrower nor any of its Subsidiaries has incurred or is incurring any material liability pursuant to any Environmental Law, including any material Environmental Liabilities and Costs. To the best knowledge of the Borrower, there is no past or present fact, condition or circumstance relating to the Business, or the Real Estate, the Leasehold Real Estate and the Assets currently or formerly owned or leased by or under the charge, management or control of the Borrower or any of its Subsidiaries (the "Affected Properties") that could reasonably be expected to result in any material liability or material potential liability under any Environmental Laws. Neither the Borrower nor any of its Subsidiaries has received an Environmental Notice pursuant to, or raising concerns in respect of, any material liability pursuant to any Environmental Laws and to the best of the knowledge of the -51- 60 Borrower, there are no reasonable grounds which would give rise to the issuance of any Environmental Notice concerning material liability pursuant to any Environmental Law. To the best knowledge of the Borrower, there are no Hazardous Substances at, in, or under the Affected Properties at levels or concentrations in excess of levels or concentrations set out in Environmental Laws. Neither the Borrower nor, to the best of the knowledge of the Borrower, any of its directors or officers has ever: (i) been convicted of any offense for non-compliance with any Environmental Laws; (ii) been fined or otherwise penalized for non-compliance with Environmental Laws; or (iii) settled any prosecution in respect thereof short of conviction. (x) The Transponder Lease Agreement, the Network and Equipment Agreement and the Sales and Distribution Agreement represent the only material agreements of the Borrower and its Subsidiaries. Section 4.2 Survival of Representations and Warranties, etc. All representations and warranties made under this Agreement and any other Loan Document shall be deemed to be made, and shall be true and correct, at and as of the Agreement Date and on the date of each Accommodation except to the extent previously fulfilled in accordance with the terms hereof and to the extent relating specifically to the Agreement Date. All representations and warranties made under this Agreement and the other Loan Documents shall survive, and not be waived by, the execution hereof by the Banks and the Administrative Agent, any investigation or inquiry by any Bank or the Administrative Agent, or the making of any Advance under this Agreement. Section 4.3 No Representations by Banks. No representation, warranty or other statement made by the Administrative Agent or any one or more of the Banks in respect of the Commitment or any Accommodation made hereunder shall be binding on such Person unless made by it in writing. ARTICLE 5 General Covenants So long as any of the obligations is outstanding and unpaid or the Banks have any Commitment hereunder (whether or not the conditions to borrowing have been or can be fulfilled), and unless the Majority Banks, or such greater number of Banks as may be expressly provided herein, shall otherwise consent in writing: -52- 61 Section 5.1 Preservation of Existence and Similar Matters. The Borrower will, and will cause each of its Subsidiaries to: (a) preserve and maintain its existence, and its material rights, franchises, licenses and privileges in the jurisdiction of its incorporation, including, without limiting the foregoing, the Licenses and all other Necessary Authorizations; and (b) qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization. Section 5.2 Business; Compliance with Applicable Law. The Borrower will, and will cause each of its Subsidiaries to, (a) comply in all material respects with the requirements of all material Applicable Law, including, without limitation, all Environmental Laws, and (b) engage solely in the Business. Section 5.3 Maintenance of Properties. The Borrower will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in the ordinary course of business in good repair, working order and condition (reasonable wear and tear excepted) all properties used in their respective businesses (whether owned or held under lease), other than obsolete equipment or unused assets, and from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, betterments and improvements thereto. Section 5.4 Accounting Methods and Financial Records. The Borrower will, and will cause each of its Subsidiaries on a consolidated and consolidating basis to, maintain a system of accounting established and administered in accordance with GAAP, keep adequate records and books of account in which complete entries will be made in accordance with GAAP and reflecting all transactions required to be reflected by GAAP, and keep accurate and complete records of their respective properties and assets. The Borrower and its Subsidiaries will maintain a fiscal year ending on December 31. Section 5.5 Insurance. The Borrower will, and will cause each of its Subsidiaries to: (a) Maintain in respect of itself, and each of its Subsidiaries, or cause each of its Subsidiaries to maintain directly: (i) in respect of the Collateral, adequate insurance coverage at all times with financially sound and reputable insurers in such forms and amounts and against such risks -53- 62 acceptable to the Administrative Agent, showing the Administrative Agent as an additional named insured and loss payee; and (ii) in respect of itself and its Assets (other than the Collateral), adequate insurance coverage at all times with financially sound and reputable insurers in such forms and amounts and against such risks as are reasonable for the business operations that are carried on by it from time to time. (b) Require that each insurance policy provide for at least thirty (30) days' prior written notice to the Administrative Agent of any termination of or proposed cancellation or nonrenewal of such policy. Section 5.6 Payment of Taxes and Claims. The Borrower will, and will cause each of its Subsidiaries to, pay and discharge, before the same shall become delinquent: (i) all Taxes, assessments and governmental charges or levies or Claims imposed upon it or upon any of its Assets; and (ii) all lawful Claims which, if unpaid, might by Applicable Law become a Lien upon its Assets, in each case except for any such Tax, assessment, charge, levy or Claim which would result in a Lien which is a Permitted Lien. The Borrower will, and will cause each of its Subsidiaries to, timely file all information returns required by any Governmental Entity. Section 5.7 Compliance with ERISA. (a) The Borrower shall, and shall cause its Subsidiaries to avoid any "accumulated funding deficiency" within the meaning of Section 412(a) of the Code with respect to any Employee Pension Plan, whether or not waived, and will otherwise comply in all material respects with the requirements of the Code and ERISA with respect to the operation of all Plans. (b) The Borrower shall furnish to the Administrative Agent and the Banks (i) within thirty (30) days after any officer of the Borrower obtains knowledge that a "prohibited transaction" (within the meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to any Plan of the Borrower or its ERISA Affiliates, including its Subsidiaries, which could subject the Borrower or any of its ERISA Affiliates to the tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the Code which tax or penalty, individually or in the aggregate, would have a Materially Adverse Effect, that any Reportable Event has occurred with respect to any Employee Pension Plan of the Borrower or any of its ERISA Affiliates or that PBGC has instituted or will institute proceedings under Title IV of ERISA to terminate any Employee Pension Plan of the Borrower or any of its ERISA Affiliates or to appoint a trustee to administer any Employee Pension Plan of the -54- 63 Borrower or any of its ERISA Affiliates, a statement setting forth the details as to such prohibited transaction, Reportable Event or termination or appointment proceedings and the action which it (or any other Employee Pension Plan sponsor if other than the Borrower) proposes to take with respect thereto, together with a copy of the notice of such Reportable Event given to PBGC if a copy of such notice is available to the Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) promptly after receipt thereof, a copy of any notice the Borrower, any of its Subsidiaries or any of its ERISA Affiliates or the sponsor of any Plan receives from PBGC, or the Internal Revenue Service or the Department of Labor which sets forth or proposes any action or determination with respect to such Plan which could have a Materially Adverse Effect, (iii) promptly upon the Administrative Agent's request therefor, any annual report filed pursuant to ERISA in connection with each Employee Pension Plan maintained by the Borrower or any of its ERISA Affiliates, including the Subsidiaries, and (iv) promptly upon the Administrative Agent's request therefor, such additional information concerning any such Employee Pension Plan as may be reasonably requested by the Administrative Agent or any Bank. (c) The Borrower will promptly notify the Administrative Agent and the Banks of any excise taxes which have been assessed or which the Borrower, any of its Subsidiaries or any of its ERISA Affiliates has reason to believe may be assessed against the Borrower, any of its Subsidiaries or any of its ERISA Affiliates by the Internal Revenue Service or the Department of Labor with respect to any Plan of the Borrower or its ERISA Affiliates, including its Subsidiaries which, individually or in the aggregate, could have a Materially Adverse Effect. (d) Within the time required for notice to the PBGC under Section 302(f)(4)(A) of ERISA, the Borrower will notify the Administrative Agent and the Banks of any lien arising under Section 302(f) of ERISA in favor of any Plan of the Borrower or its ERISA Affiliates, including its Subsidiaries. (e) The Borrower will not, and will not permit any of its Subsidiaries or any of its ERISA Affiliates to take any of the following actions or permit any of the following events to occur if such action or event together with all other such actions or events would subject the Borrower, any of its Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or other liabilities which would have a Materially Adverse Effect: (i) engage in any transaction in connection with which the Borrower or any of its Subsidiaries would be subject to either a civil penalty assessed pursuant to -55- 64 Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code; (ii) terminate any Employee Pension Plan in a manner, or take any other action, which would result in any liability of the Borrower, any of its Subsidiaries or any ERISA Affiliate to the PBGC, other than for payment of PBGC premiums; (iii) fail to make full payment when due of all amounts which, under the provisions of any Employee Pension Plan, the Borrower, any of its Subsidiaries or any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency within the meaning of Section 412(a) of the Code, whether or not waived, with respect to any Employee Pension Plan; or (iv) permit the present value of all benefit liabilities under all Employee Pension Plans which are subject to Title IV of ERISA to exceed the present value of the assets of such Plans allocable to such benefit liabilities (within the meaning of Section 4041 of ERISA), except as may be permitted under actuarial funding standards adopted in accordance with Section 412 of the Code. Section 5.8 Visits and Inspections. The Borrower will, and will cause each of its Subsidiaries to, permit representatives of the Administrative Agent and any of the Banks, upon reasonable notice, to (i) visit and inspect the properties of the Borrower or any of its Subsidiaries during business hours, (ii) inspect and make extracts from and copies of their respective books and records, and (iii) discuss with their respective principal officers their respective businesses, assets, liabilities, financial positions, results of operations and business prospects. The Borrower and each of its Subsidiaries will also permit representatives of the Administrative Agent and any of the Banks to discuss with their respective accountants the Borrower's and the Borrower's Subsidiaries' businesses, assets, liabilities, financial positions, results of operations and business prospects. Section 5.9 Payment of Indebtedness; Accommodations. Subject to any provisions herein or in any other Loan Document, the Borrower will, and will cause each of its Subsidiaries to, pay any and all of their respective Indebtedness prior to its becoming delinquent or having any late fees assessed or to the extent of trade payables of such Persons otherwise in accordance with-ordinary business practices customary for the wireless messaging industry, other than amounts diligently disputed in -56- 65 good faith and for which adequate reserves have been set aside in accordance with GAAP. Section 5.10 Use of Proceeds. The Borrower will use the aggregate proceeds of all Advances under the Accommodations directly or indirectly: (a) to fund Capital Expenditures associated with the Business and the ongoing need for wireless messaging units for its Canadian wireless messaging system; (b) for working capital needs and other general corporate purposes of the Borrower which do not otherwise conflict with this Section 5.10 (including, without limitation, the payment of fees and expenses incurred in connection with the execution and delivery of this Agreement and the other Loan Documents and payments permitted under Section 7.7 hereof). No proceeds of Advances hereunder shall be used for the purchase or carrying or the extension of credit for the purpose of purchasing or carrying, any Margin Stock. Section 5.11 Protect Security Interests. Except for the filing of renewal statements and the making of other filings by the Administrative Agent as a secured party or assignee, at all times take all action and supply the Administrative Agent with all information necessary to maintain the Liens provided for under the Security Documents and confer upon the Administrative Agent the security interests intended to be created thereby. Section 5.12 Environmental Audits. Promptly if requested by the Administrative Agent: (i) if a Default has occurred and is continuing or the Administrative Agent or the Majority Banks have a reasonable good faith commercial concern as to the financial condition of the Borrower, conduct environmental audits having a scope acceptable to the Administrative Agent with respect to the potential liability under applicable Environmental Laws of the Borrower and its Subsidiaries, their respective Real Estate or other Assets, and the Business, such environmental audits to be conducted by the Environmental Auditor, and provide copies of such environmental audits to the Administrative Agent; (ii) if the Administrative Agent or the Majority Banks have a good faith concern that there is a material non-compliance by the Borrower or any of its Subsidiaries with Environmental Laws, conduct such environmental audit concerning alleged material non-compliance as the Administrative Agent or such Majority Banks may require, such audits to be conducted by the Environmental Auditor, and provide copies of such environmental audits to the Administrative Agent; and (iii) diligently remedy any material non-compliance with Environmental Laws revealed by any such audit. -57- 66 Section 5.13 Further Assurances. At its cost and expense, upon request of the Administrative Agent, the Borrower will duly execute and deliver or cause to be duly executed and delivered to the Administrative Agent such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Administrative Agent to carry out more effectively the provisions and purposes of the Loan Documents. ARTICLE 6 Information Covenants So long as any of the Obligations is outstanding and unpaid or the Banks have any Commitment hereunder (whether or not the conditions to borrowing have been or can be fulfilled) and unless the Majority Banks shall otherwise consent in writing, the Borrower will furnish or cause to be furnished to each Bank and the Administrative Agent, at their respective offices: Section 6.1 Quarterly Financial Statements and Information. Within forty-five (45) days after the last day of each of the first three (3) fiscal quarters of the Borrower during any fiscal year, a copy of the balance sheets of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as at the end of such quarter and as of the end of the preceding fiscal year, and the related statements of operations and the related statements of cash flows of the Borrower on a consolidated basis with its Subsidiaries for such quarter and for the elapsed portion of the year ended with the last day of such quarter, which shall set forth in comparative form such figures as at the end of and for such quarter and appropriate prior period, shall provide consolidated and consolidating (unconsolidated) figures with respect to any acquisitions consummated during such quarter, and shall be certified by the chief financial officer of the Borrower to have been prepared in accordance with GAAP and to present fairly in all material respects the financial position of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as at the end of such quarter and the results of operations for such quarter, and for the elapsed portion of the year ended with the last day of such quarter, subject only to normal year-end and audit adjustments and the absence of footnotes. Section 6.2 Annual Financial Statements and Information. Within ninety (90) days after the end of each fiscal year of the Borrower, a copy of the audited consolidated and consolidating (unconsolidated) balance sheets of the Borrower and its -58- 67 Subsidiaries as of the end of such fiscal year and the related audited unconsolidated statements of operations for such fiscal year and for the previous fiscal year, the related audited consolidated and consolidating (unconsolidated) statements of cash flow and stockholders' equity for such fiscal year and for the previous fiscal year, which shall be accompanied by an opinion of Ernst & Young or such other independent auditor acceptable to the Administrative Agent, certified to have been prepared in accordance with GAAP and to present fairly in all material respects the financial position of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as at the end of such fiscal year. Section 6.3 Performance Certificates. At the time the financial statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of the president or chief financial officer of the Borrower as to its financial performance, in substantially the form of Exhibit G hereto: (a) setting forth as and at the end of such quarter or fiscal year, as the case may be, the arithmetical calculations required to establish (i) any adjustment to the Applicable Margins, as provided for in Section 2.6(d) hereof, and (ii) whether or not the Borrower was in compliance with the requirements of Sections 7.8, 7.9, 7.10, 7.11, 7.12 and 7.13 hereof; and (b) stating that no Default has occurred as at the end of such quarter or fiscal year, as the case may be, or, if a Default has occurred, disclosing each such Default and its nature, when it occurred, whether it is continuing and the steps being taken by the Borrower with respect to such Default. Section 6.4 Copies of Other Reports. (a) Promptly upon receipt thereof, copies of all material reports, if any, submitted to the Borrower by the Borrower's independent auditors regarding the Borrower, including, without limitation, any management report prepared in connection with the annual audit referred to in Section 6.2 hereof. (b) Promptly upon receipt thereof, copies of any material adverse notice or report regarding any License from any Governmental Entity. (c) From time to time and promptly upon each request, such data, certificates, reports, statements, documents or further information regarding the business, assets, liabilities, financial position, projections, results of operations or -59- 68 business prospects of the Borrower or any of its Subsidiaries, as the Administrative Agent or any Bank may reasonably request. (d) Promptly upon request but not more frequently than annually, certificates of insurance indicating that the requirements of Section 5.5 hereof remain satisfied for such fiscal year, together with copies of any new or replacement insurance policies obtained during such year. (e) Within sixty (60) days after each fiscal year end, the annual budget for the Borrower and its Subsidiaries, including forecasts of the income statement and a cash flow statement for such fiscal year, on a quarter by quarter basis. (f) Promptly after the sending thereof, copies of all statements, reports and other information which the Borrower or any of its subsidiaries sends to security holders of the Borrower generally or files with the Ontario Securities Commission or any other securities commission or stock exchange. Section 6.5 Notice of Litigation and Other Matters. Notice specifying the nature and status of any of the following events, promptly, but in any event not later than fifteen (15) days after the occurrence of any of the following events becomes known to the Borrower: (i) the commencement of all material proceedings and investigations by or before any Governmental Entity particular to the Borrower and/or any of its Subsidiaries and all actions and proceedings in any court or before any arbitrator against, or to the extent known to the Borrower, in any other way relating materially adversely to the Borrower or any Subsidiary of the Borrower, or any of their respective properties, assets or businesses or any License; (ii) any material adverse change with respect to the business, assets, liabilities, financial position, results of operations or business prospects of the Borrower or any Subsidiary of the Borrower other than changes in the ordinary course of business which have not had and would not reasonably be expected to have a Materially Adverse Effect; (iii) any material amendment or change to the financial projections or annual budget provided to the Banks by the Borrower; (iv) any Default or the occurrence or non-occurrence of any event (A) which constitutes, or which with the passage of time or giving of notice or both would constitute a default by the Borrower or any Subsidiary of -60- 69 the Borrower under any material agreement other than this Agreement and the other Loan Documents to which the Borrower or any Subsidiary of the Borrower is party or by which any of their respective properties may be bound, or (B) which could have a Materially Adverse Effect, giving in each case the details thereof and specifying the action proposed to be taken with respect thereto; and (v) the occurrence of any Reportable Event or a "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan of the Borrower or any of its ERISA Affiliates or the institution or threatened institution by PBGC of proceedings under ERISA to terminate or to partially terminate any such Plan or the commencement or threatened commencement of any litigation regarding any such Plan or naming it or the trustee of any such Plan with respect to such Plan or any action taken by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate of the Borrower to withdraw or partially withdraw from any Plan or to terminate any Plan, to the extent any of the foregoing would have, individually or in the aggregate, a Materially Adverse Effect. Section 6.6 Environmental Reporting. Promptly, and in any event within fifteen (15) days of becoming aware of its existence, notify the Administrative Agent in writing of any notice or other state of affairs (providing details of any actions taken by the Borrower in response) which could reasonably be expected to give rise to: (i) Environmental Liabilities and Costs of $500,000 or more; or (ii) any violation of Environmental Laws involving the possible imposition of a fine of $500,000 or MORE or the shutting down of any facility forming part of the Business for a period in excess of 24 hours; and (iii) any facts or circumstances which could reasonably be expected to give rise to (x) Environmental Liabilities and Costs of $500,000 or more, or (y) any violation of Environmental Laws involving the possible imposition of a fine of $500,000 or more or the shutting down of any facility forming part of the Assets for a period in excess of 24 hours. ARTICLE 7 Negative Covenants So long as any of the obligations is outstanding and unpaid or the Banks have any Commitment hereunder (whether or not the conditions to borrowing have been or can be fulfilled) and unless the Majority Banks, or such greater number of Banks as may be -61- 70 expressly provided herein, shall otherwise give their prior consent in writing: Section 7.1 Indebtedness of the Borrower and its Subsidiaries. The Borrower shall not, and shall not permit any of its Subsidiaries to, create, assume, incur or otherwise become or remain obligated in respect of, or permit to be outstanding, any Indebtedness except: (a) the Obligations (other than the obligations described in Section 7.1(c) below); (b) Indebtedness secured by Permitted Liens; (c) obligations under Interest Rate Hedge Agreements having a notional principal amount of not more than fifty percent (50%) of the Accommodations in the aggregate outstanding at any time; (d) Indebtedness of the Borrower or any of its wholly-owned Subsidiaries to any other wholly-owned Subsidiary of the Borrower so long as the corresponding debt instruments are pledged to the Administrative Agent as security for the Obligations; (e) Indebtedness of any of wholly-owned Subsidiaries of the Borrower to the Borrower so long as the corresponding debt instruments are pledged to the Administrative Agent as security for the Obligations; and (f) Capitalized Lease Obligations in an aggregate amount not to exceed $500,000 at any time outstanding. Section 7.2 Limitation on Liens. The Borrower shall not, and shall not permit any of its Subsidiaries to, create,, assume, incur or permit to exist or to be created, assumed, incurred or permitted to exist, directly or indirectly, any Lien on any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Liens. Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any amendment of, or agree to or accept or consent to any waiver of any of the provisions of its articles or certificate of incorporation or partnership agreement or by-laws, as appropriate (other than immaterial amendments relating to corporate governance which could not reasonably be expected to have an adverse effect on the Administrative Agent or any Bank or any of their rights or claims under any of the Loan Documents). -62- 71 Section 7.4 Liquidation, Merger, or Disposition of Assets. (a) Disposition of Assets. The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time sell, exchange, lease, abandon, or otherwise dispose of any Assets (other than Assets disposed of in the ordinary course of business) without the prior written consent of all the Banks. (b) Liquidation or Merger. The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time liquidate or dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up, or enter into any merger, other than (i) a merger or consolidation among the Borrower and one or more of its Subsidiaries, provided the Borrower is the surviving corporation, or (ii) a merger between or among two or more Subsidiaries of the Borrower, or (iii) in connection with an acquisition permitted hereunder effected by a merger in which the Borrower or, in a merger in which the Borrower is not a party, a Subsidiary of the Borrower is the surviving corporation. Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time Guaranty, assume, be obligated with respect to, or permit to be outstanding any Guaranty of, any obligation of any other Person other than (a) a guaranty by endorsement of negotiable instruments for collection in the ordinary course of business, (b) obligations under agreements of the Borrower or any of its Subsidiaries entered into in connection with leases of real property or the acquisition of services, supplies and equipment in the ordinary course of business of the Borrower or any of its Subsidiaries, or (c) Guaranties of Indebtedness incurred as permitted pursuant to Section 7.1 hereof. Section 7.6 Investments and Acquisitions. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, (a) make any loan or advance, or otherwise acquire for consideration evidences of Indebtedness, Capital Stock or other securities of any Person or other assets or property other than (i) assets or property in the ordinary course of business or (ii) Permitted Investments; or (b) except with the consent of the Majority Banks, make any acquisition. Section 7.7 Restricted Payments and Purchases. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly declare or make any Restricted Payment or Restricted Purchase, except that so long as no Default hereunder then exists or would be caused thereby the Borrower may make (a) payments to Paging Network, Inc. for reimbursement of start-up expenses in an aggregate amount of not more than U.S. -63- 72 Dollars $8,900,000, and (b) distributions to Paging Network International N.V. so long as the Leverage Ratio is below 4.00 to 1 (both before and after giving effect to such distribution). Section 7.8 Leverage Ratio. Commencing April 1, 1998, the Borrower shall not permit the Leverage Ratio to exceed the ratios set forth below during the periods indicated:
Period Ratio ------ ----- April 1, 1998 through June 30, 1998 6.00:1 July 1, 1998 through September 30, 1998 5.00:1 October 1, 1998 through December 31, 1998 4.00:1 January 1, 1999 through March 31, 1999 3.00:1 April 1, 1999 and thereafter 2.50:1.
Section 7.9 Annualized Operating Cash Flow to Pro Forma Debt Service. Commencing October 1, 1998, the Borrower shall not permit the ratio of Annualized Operating Cash Flow to Pro Forma Debt Service for the Borrower Group on a combined basis to be less than the ratios set forth below for the periods indicated:
Period Ratio ------ ----- October 1, 1998 through September 30, 2001 1.25:1 October 1, 2001 and thereafter 1.50:1
Section 7.10 Total Debt Per Subscriber. The Borrower shall not at any time permit the Total Debt for the Borrower Group on a combined basis divided by Total Subscribers to be greater than or equal to $275.00. Section 7.11 Capital Expenditures. Commencing with the year in which the Available Commitment exceeds the Minimum Permitted Collateral Amount, the Borrower shall not permit the aggregate Capital Expenditures for the Borrower Group on a -64- 73 combined basis to exceed the following for the fiscal years indicated:
Total Capital Period Expenditures ------ ------------ At December 31, 1996 $45,000,000.00 At December 31, 1997 $20,000,000.00 At December 31, 1998 and thereafter $17,500,000.00
To the extent not used in 1996, an amount equal to the unused Total Capital Expenditure availability may be carried forward to 1997. Thereafter, to the extent not used in any fiscal year, an amount equal to the lesser of (a) the unused Total Capital Expenditure availability (exclusive of any carry forwards from prior periods) for such fiscal year and (b) 10% of the Total Capital Expenditure availability shown above (exclusive of any carry forwards from prior periods) for such fiscal year, may be carried forward to the next succeeding fiscal year. Section 7.12 Minimum Revenue Test. Commencing December 31, 1996 and continuing for each fiscal quarter through the fiscal quarter ending June 30, 1998, the Borrower shall not permit the aggregate Gross Revenue for the Borrower Group on a combined basis to be less than the following for the fiscal quarters indicated:
Quarter Ending Minimum Revenue -------------- --------------- 12/31/96 $1,770,000 03/31/97 $2,800,000 06/30/97 $3,860,000 09/30/97 $4,960,000 12/31/97 $6,100,000 03/31/98 $7,270,000 06/30/98 $8,490,000
Section 7.13 Minimum Units in Service. Commencing December 31, 1996 and continuing for each fiscal quarter through the fiscal quarter ending June 30, 1998, the Borrower shall not -65- 74 permit the minimum number of Units in Service to be less than the following for the fiscal quarters indicated:
Minimum Pagers Quarter Ending In Service -------------- -------------- 12/31/96 42,200 03/31/97 63,800 06/30/97 86,400 09/30/97 110,200 12/31/97 135,200 03/31/98 161,400 06/30/98 188,900
Section 7.14 Affiliate Transactions. Except for those agreements described in Schedule 4 hereto, the Borrower shall not, and shall not permit any of its Subsidiaries to, at any time engage in any transaction with an Affiliate, or make an assignment or other transfer of any of its properties or assets to any Affiliate, on terms less advantageous to the Borrower or such Subsidiary than would be the case if such transaction had been effected with a non-Affiliate. Section 7.15 Real Estate. Neither the Borrower nor any of its Subsidiaries shall purchase any Real Estate or enter into any sale/leaseback transaction. Section 7.16 ERISA Liabilities. The Borrower shall not, and shall cause each of its ERISA Affiliates not to enter into any Multiemployer Plan. ARTICLE 8 Default Section 8.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of Applicable Law or pursuant to any judgment or order of any court or any order, rule or regulation of any Person. (a) Any representation or warranty made under this Agreement or any other Loan Document shall prove incorrect or misleading in any material respect when made or deemed to be made pursuant to Section 4.2 hereof; -66- 75 (b) The Borrower shall default in the payment of: (i) any interest under any of the Loan Documents or fees or other amounts payable to the Banks and the Administrative Agent under any of the Loan Documents, or any of them, when due and such default is not cured within three (3) Business Days after the occurrence thereof; or (ii) any principal under any of the Loan Documents when due; (c) The Borrower shall default in the performance or observance of any agreement or covenant contained in Sections 5.2 or 5.10 or in Articles 6 or 7 hereof; provided however, that on any date on which the aggregate of Accommodations outstanding hereunder is less than the aggregate amount of the Equivalent Canadian Dollar Amount of the Permitted Collateral held by the Administrative Agent pursuant to the Deposit Agreement, the failure to comply with Section 7.12 or 7.13 hereof shall not constitute a default hereunder until any such failure has continued for a period of two (2) consecutive complete calendar quarters; (d) The Borrower shall default in the performance or observance of any other agreement or covenant contained in this Agreement not specifically referred to elsewhere in this Section 8.1 or there shall occur any default in the performance or observance of any agreement or covenant contained in any of the Loan Documents (other than this Agreement or as otherwise provided in Section 8.1 of this Agreement) by the Borrower, any of its Subsidiaries, or any other obligor thereunder, and such default shall not be cured within a period of thirty (30) days from the date on which the Borrower becomes aware of or receives notice of default; (e) The Borrower or any of its Subsidiaries shall: (i) become insolvent or generally not pay its debts as such debts become due; (ii) admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; (iii) file a notice of intention to file a proposal under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors; (iv) have instituted against it any proceeding, which proceeding continues undismissed or unstayed for a period of sixty (60) consecutive days or any of the actions sought in such proceeding (including the entry of an order for relief against it or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Assets) shall occur, or institute any proceeding seeking: (A) to adjudicate it a bankrupt or insolvent; (B) any liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts -67- 76 under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors; or (C) the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Assets; or (v) take any corporate action to authorize any of the foregoing actions; (f) A notice is sent to or received by the Borrower or any of its Subsidiaries from any creditor with respect to the intention of such creditor to enforce security on: (i) any of the Collateral; or (ii) any Assets of the Borrower or any of its Subsidiaries (other than the Collateral) unless such notice is being contested in good faith by appropriate legal proceedings and such notice does not involve any immediate danger of the sale,, forfeiture or loss of any of the Assets of the Borrower or any of its Subsidiaries (other than the Collateral) that are the subject of such notice; (g) A judgment or order for the payment of money not covered by insurance shall be entered by any court against the Borrower or any of the Borrower's Subsidiaries for the payment of money which exceeds singly or in the aggregate with other such judgments, $500,000, or a warrant of attachment or execution or similar process shall be issued or levied against property of the Borrower or any of the Borrower's Subsidiaries which, together with all other such property of the Borrower or any of the Borrower's Subsidiaries subject to other such process, exceeds in value $500,000 in the aggregate, and if, within thirty (30) days after the entry, issue or levy thereof, such judgment, warrant or process shall not have been paid or discharged or stayed pending appeal or removed to bond, or if, commenced and not stayed, after the expiration of any such stay, such judgment, warrant or process shall not have been paid or discharged or removed to bond; (h) There shall be at any time any "accumulated funding deficiency," as defined in ERISA or in Section 412 of the Code, with respect to any Plan maintained by the Borrower or any ERISA Affiliate, or to which the Borrower or any ERISA Affiliate has any liabilities, or any trust created thereunder; or a trustee shall be appointed by a United States District Court to administer any Employee Pension Plan; or PBGC shall institute proceedings to terminate any Employee Pension Plan; or the Borrower or any ERISA Affiliate shall incur any liability to PBGC in connection with the termination of any Employee Pension Plan; or any Plan or trust created under any Plan of the Borrower or any ERISA Affiliate shall engage in a "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 -68- 77 of the Code) which would subject the Borrower or any Subsidiary to any tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; (i) There shall occur (i) any default which entitles the holders to accelerate the maturity thereof under any document, instrument or agreement relating to any Indebtedness of any member of the Borrower Group having an aggregate principal amount exceeding $1,000,000; or (ii) any default which entitles the holders to terminate any Interest Rate Hedge Agreement having a notional principal amount of $1,000,000 or more; (j) One or more Licenses shall be terminated or revoked, substantially adversely modified or no longer available such that the Borrower and its Subsidiaries are no longer able to operate the related wireless messaging system or portions thereof and retain the revenue received therefrom, if any, or any such License shall fail to be renewed at the stated expiration thereof such that the Borrower and its Subsidiaries are no longer able to operate the related wireless messaging system or portions thereof and retain the revenue received therefrom, if any, and, in either case, there shall be a loss of revenue of the Borrower or any of its Subsidiaries as a direct or indirect result thereof which loss of revenues could reasonably be expected to have a Materially Adverse Effect; (k) Any Loan Document or any material provision thereof, shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by the Borrower or any of the Borrower's Subsidiaries or any shareholder, or by any governmental authority having jurisdiction over the Borrower or any of the Borrower's Subsidiaries or any shareholder, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or the Borrower or any of the Borrower's Subsidiaries shall deny that it has any liability or obligation for the payment of principal or interest purported to be created under any Loan Document; (l) Subject only to Permitted Liens, any Security Document shall for any reason (other than as a result of the action or inaction of the Administrative Agent or any Bank), fail or cease to create a valid and perfected and first-priority Lien on or Security Interest in any portion of the Collateral purported to be covered thereby; (m) Any Change Event shall occur or exist; or -69- 78 (n) There shall occur any default by the Borrower or any Subsidiary of the Borrower under or a cancellation of, in any case without contemporaneous replacement, any Transponder Lease Agreement, the Network and Equipment Agreement or the Sales and Distribution Agreement which default is not cured within any applicable cure period and which default would be reasonably likely to have a Materially Adverse Effect. Section 8.2 Remedies. (a) If an Event of Default specified in Section 8.1 hereof (other than an Event of Default under Section 8.1(e) hereof) shall have occurred and shall be continuing, the Administrative Agent, at the request of the Majority Banks subject to Section 9.8(a) hereof, shall (i) terminate the Commitment, and/or (ii) declare the principal of and interest on the Accommodations and all other amounts owed to the Banks and the Administrative Agent under this Agreement and any other Loan Documents to be forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or any other Loan Document to the contrary notwithstanding, and the Commitment shall thereupon forthwith terminate, and/or (iii) the security constituted by the Security Documents and any other security now or hereafter held by the Administrative Agent shall become and be enforceable. (b) Upon the occurrence and continuance of an Event of Default specified in Section 8.1(e) hereof, all principal, interest and other amounts due hereunder and under the Loan Documents, and all other Obligations, shall thereupon and concurrently therewith become due and payable and the Commitment shall forthwith terminate and the principal amount of the Accommodations outstanding hereunder shall bear interest at the Default Rate, all without any action by the Administrative Agent or the Banks, or the Majority Banks, or any of them, and without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or in the other Loan Documents to the contrary notwithstanding. (c) Upon acceleration of the Obligations, as provided in subsection (a) or (b) of this Section 8.2, the Administrative Agent and the Banks shall have all of the post-default rights granted to them, or any of them, as applicable, under the Loan Documents and under Applicable Law. (d) Upon acceleration of the Obligations, as provided in subsection (a) or (b) of this Section 8.2, the Administrative -70- 79 Agent, upon request of the Majority Banks, shall have the right to the appointment of a receiver for the properties and assets of the Borrower and its Subsidiaries, and the Borrower, for itself and on behalf of its Subsidiaries, hereby consents to such rights and such appointment and hereby waives any objection the Borrower or any Subsidiary may have thereto or the right to have a bond or other security posted by the Administrative Agent on behalf of the Banks, in connection therewith. (e) The rights and remedies of the Administrative Agent and the Banks hereunder shall be cumulative, and not exclusive. ARTICLE 9 The Administrative Agent Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably appoints and authorizes, and hereby agrees that it will require any transferee of any of its interest in its pro rata portion of the Accommodations irrevocably to appoint and authorize, the Administrative Agent to take such actions as its agent on its behalf and to exercise such powers hereunder and under the other Loan Documents as are delegated by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Neither the Administrative Agent nor any of its directors, officers, employees, agents or counsel, shall be liable to the Banks for any action taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. Section 9.2 Interest Holders. The Administrative Agent may treat each Bank, or the Person designated in the last notice filed with the Administrative Agent, as the holder of all of the interests of such Bank in its pro rata portion of the Accommodations until written notice of transfer, signed by such Bank (or the Person designated in the last notice filed with the Administrative Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the Administrative Agent, shall have been filed with the Administrative Agent. Section 9.3 Consultation with Counsel. The Administrative Agent may consult with legal counsel selected by it and shall not be liable to the Banks for any action taken or -71- 80 suffered by it in good faith in consultation with such counsel and in reasonable reliance on such consultations. Section 9.4 Documents. The Administrative Agent shall be under no duty to examine, inquire into, or pass upon the validity, effectiveness or genuineness of this Agreement, any other Loan Document, or any instrument, document or communication furnished pursuant hereto or in connection herewith, and the Administrative Agent shall be entitled to assume that they are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be. Section 9.5 Administrative Agent and Affiliates. With respect to the Commitment and the Accommodations, the Bank which is the Administrative Agent shall have the same rights and powers hereunder as any other Bank and the Administrative Agent and Affiliates of the Administrative Agent may accept deposits from, lend money to and generally engage in any kind of business with the Borrower, any of its Subsidiaries or any Affiliates of, or Persons doing business with, the Borrower, as if they were not affiliated with the Administrative Agent and without any obligation to account therefor. Section 9.6 Responsibility of the Administrative Agent. The duties and obligations of the Administrative Agent under this Agreement are only those expressly set forth in this Agreement. The Administrative Agent shall be entitled to assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge, or has been notified in writing by the Borrower, of such fact, or has been notified by a Bank in writing that such Bank considers that a Default or an Event of Default has occurred and is continuing, and such Bank shall specify in detail the nature thereof in writing. The Administrative Agent shall not be liable hereunder for any action taken or omitted to be taken except for its own gross negligence or willful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. The Administrative Agent shall provide each Bank with copies of such documents received from the Borrower as such Bank may reasonably request. Section 9.7 Security Documents. The Administrative Agent is hereby authorized to act on behalf of the Banks, in its own capacity and through other agents and sub-agents appointed by it, under the Security Documents, provided that the Administrative Agent shall not agree to the release of any Collateral, or any property encumbered by any mortgage, pledge or security interest, except in compliance with Section 11.12 hereof. -72- 81 Section 9.8 Action by the Administrative Agent. (a) The Administrative Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, and with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, this Agreement or any other Loan Document, unless the Administrative Agent shall have been instructed by the Majority Banks (or, where expressly required, all the Banks) to exercise or refrain from exercising such rights or to take or refrain from taking such action; provided that the Administrative Agent shall not exercise any rights under Section 8.2(a) of this Agreement without the request of the Majority Banks (or, where expressly required, all the Banks) unless time is of the essence. The Administrative Agent shall incur no liability to the Banks under or in respect of this Agreement with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment or which may seem to it to be necessary or desirable in the circumstances, except for its gross negligence or willful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. (b) The Administrative Agent shall not be liable to the Banks or to any Bank or the Borrower or any of its subsidiaries in acting or refraining from acting under this Agreement or any other Loan Document in accordance with the instructions of the Majority Banks (or, where expressly required, all the Banks), and any action taken or failure to act pursuant to such instructions shall be binding on all Banks. The Administrative Agent shall not be obligated to take any action which is contrary to Applicable Law or which would in the Administrative Agent's reasonable opinion subject the Administrative Agent to liability. Section 9.9 Notice of Default or Event of Default. In the event that the Administrative Agent or any Bank shall acquire actual knowledge, or shall have been notified, of any Default or Event of Default, the Administrative Agent or such Bank shall promptly notify the Banks and the Administrative Agent, as applicable (provided failure to give such notice shall not result in any liability on the part of such Bank or the Administrative Agent), and the Administrative Agent shall take such action and assert such rights under this Agreement and the other Loan Documents as the Majority Banks shall request in writing, and the Administrative Agent shall not be subject to any liability by reason of its acting pursuant to any such request. If the Majority Banks (or, where expressly required, all the Banks) -73- 82 shall fail to request the Administrative Agent to take action or to assert rights under this Agreement or any other Loan Documents in respect of any Default or Event of Default within ten (10) days after their receipt of the notice of any Default or Event of Default from the Administrative Agent or any Bank, the Administrative Agent may, but shall not be required to, take such action and assert such rights (other than rights under Sections 8.2(a) or 11.12 of this Agreement) as it deems in its discretion to be advisable for the protection of the Banks, except that, if the Majority Banks have instructed the Administrative Agent not to take such action or assert such right, in no event shall the Administrative Agent act contrary to such instructions. Section 9.10 Responsibility Disclaimed. The Administrative Agent shall not be under any liability or responsibility whatsoever as Administrative Agent: (a) To the Borrower or any other Person as a consequence of any failure or delay in performance by or any breach by, any Bank or Banks of any of its or their obligations under this Agreement or any of the other Loan Documents; (b) To any Bank or Banks, as a consequence of any failure or delay in performance by, or any breach by, (i) the Borrower of any of its obligations under this Agreement or any other Loan Document, or (ii) the Borrower, any Subsidiary of the Borrower or any other obligor under any other Loan Document; (c) To any Bank or Banks, for any statements, representations or warranties in this Agreement or any other Loan document, or any information provided pursuant to this Agreement or any other Loan Document, or for the validity, effectiveness, enforceability or sufficiency of this Agreement or any other Loan Document; or (d) To any Person for any act or omission other than that arising from gross negligence or willful misconduct of the Administrative Agent as determined by a final, non-appealable judicial order of a court of competent jurisdiction. Section 9.11 Indemnification. The Banks agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower) pro rata according to their respective Commitment Ratios, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including fees and expenses of experts, agents, consultants and counsel), or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or -74- 83 asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Administrative Agent under this Agreement or any other Loan Document, except that no Bank shall be liable to the Administrative Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the gross negligence or willful misconduct of the Administrative Agent as determined by a final, non-appealable judicial order of a court of competent jurisdiction. Section 9.12 Credit Decision. Each Bank represents and warrants to each other and to the Administrative Agent that: (a) In making its decision to enter into this Agreement and to make its pro rata portion of the Accommodations it has independently taken whatever steps it considers necessary to evaluate the financial condition and affairs of the Borrower and that it has made an independent credit judgment, and that it has not relied upon the Administrative Agent or information provided by the Administrative Agent (other than information provided to the Administrative Agent by the Borrower and forwarded by the Administrative Agent to the Banks); and (b) So long as any portion of the Accommodations remains outstanding or such Bank has an obligation to make its pro rata portion of Advances hereunder, it will continue to make its own independent evaluation of the Collateral and of the financial condition and affairs of the Borrower. Section 9.13 Successor Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by giving fifteen (15) days prior written notice thereof to the Banks and the Borrower and may be removed at any time for cause by the Majority Banks. Upon any such resignation or removal, the Majority Banks, and prior to the occurrence of a Default with the consent of the Borrower not to be unreasonably withheld, shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gave notice of resignation or the Majority Banks' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent which shall be any Person organized under the laws of Canada which has combined capital and reserves in excess of $250,000,000. Upon the -75- 84 acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, duties and obligations of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent the provisions of this Article shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent. Section 9.14 Delegation of Duties. The Administrative Agent may execute any of its duties under the Loan Documents by or through agents or attorneys selected by it using reasonable care, and shall be entitled to rely upon advice of counsel concerning all matters pertaining to such duties. Section 9.15 Determination by Administrative Agent Conclusive and Binding. Any determination to be made by the Administrative Agent on behalf of or with the approval of the Banks or the Majority Banks under this Agreement shall be made by the Administrative Agent in good faith and, if so made, shall be binding on the Banks, absent manifest error. ARTICLE 10 Computations and Indemnities Section 10.1 Indemnity for Change in Circumstances. If with respect to the Banks: (a) any change in Applicable Law, or any change in the interpretation or application by any Governmental Entity of any Applicable Law occurring or becoming effective after the date hereof; or (b) any compliance by the Administrative Agent or any of the Banks with any direction, request or requirement (whether or not having the force of Applicable Law) of any Governmental Entity made or becoming effective after the date hereof, in either case shall have the effect of causing Loss to the Administrative Agent or any of the Banks by: (i) increasing the cost to the Administrative Agent or any of the Banks of performing its obligations under this Agreement or in respect of any Advance or Bankers' Acceptance (including the costs of maintaining any -76- 85 capital, reserve or special deposit requirements in connection therewith); (ii) requiring the Administrative Agent or any of the Banks to maintain or allocate any capital or additional capital or affecting its allocation of capital in respect of its obligations under this Agreement or in respect of any Advances or Bankers' Acceptances; (iii) reducing any amount payable to the Administrative Agent or any of the Banks under this Agreement or in respect of any Advance or Bankers' Acceptance by any amount it deems material (other than a reduction resulting from a higher rate of income tax or other special tax relating to the Administrative Agent's or any Bank's income in general); or (iv) causing the Administrative Agent or any of the Banks to make any payment or to forgo any return on, or calculated by reference to, any amount received or receivable by the Administrative Agent or any of the Banks under this Agreement in respect of any Advance or Bankers' Acceptance; then the Administrative Agent may give notice to the Borrower specifying the nature of the event giving rise to such Loss and the Borrower shall, within thirty (30) days or, if earlier, on the Maturity Date, pay such amounts as the Administrative Agent may specify to be necessary to compensate the Administrative Agent or any of the Banks for any such Loss incurred after the date of such notice. The Administrative Agent or any Bank claiming compensation under this Section 10.1 shall provide the Borrower with a written certificate setting forth the additional amount or amounts to be paid to it hereunder and calculations therefor in reasonable detail. Such certificate shall be presumptively correct absent manifest error. In determining such amount, such Person may use any reasonable averaging and attribution methods which are consistently applied to similarly situated borrowers of such Person. Section 10.2 Indemnity for Transactional and Environmental Liability. (a) The Borrower hereby agrees to indemnify, exonerate and hold the Administrative Agent and each Bank and each of their respective officers, directors, employees, agents and other representatives (collectively, the "Indemnified Parties") free and harmless from and against any and all claims, demands, actions, causes of action, suits, losses, costs (including all documentary, recording, filing, mortgage or stamp -77- 86 taxes or duties), charges, liabilities and damages, and expenses in connection therewith (irrespective of whether such Indemnified Party is a party to the action for which such indemnification hereunder is sought), and including reasonable legal fees and disbursements (collectively, in this Section 10.2(a), the "Indemnified Liabilities") paid, incurred or suffered by, or asserted against, the Indemnified Parties or any of them or, with respect to, or as a direct or indirect result of: (i) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Accommodation obtained hereunder; or (ii) the execution, delivery, performance or enforcement of this Agreement or any other Loan Document, except for such Indemnified Liabilities that a court of competent jurisdiction determines by a final non-appealable order are on account of the relevant Indemnified Party's gross negligence or wilful misconduct. (b) Without limiting the generality of the indemnity set out in Section 10.2(a) hereof, the Borrower hereby further agrees to indemnify, exonerate and hold the Indemnified Parties free and harmless from and against any and all claims, demands, actions, causes of action, suits, losses, costs, charges, liabilities and damages, and expenses in connection therewith, including reasonable legal fees and disbursements (collectively, in this Section 10.2(b), the "Indemnified Liabilities") paid, incurred or suffered by, or asserted against, the Indemnified Parties or any of them for, with respect to, or as a direct or indirect result of any Environmental Liabilities and Costs. (c) All obligations provided for in this Section 10.2 shall not be reduced or impaired by any investigation made by or on behalf of the Administrative Agent or any of the Banks. (d) The Borrower hereby agrees that, for the purposes of effectively allocating the risk of loss placed on the Borrower by this Section 10.2, the Administrative Agent and each of the Banks shall be deemed to be acting as the agent or trustee on behalf of and for the benefit of its officers, directors and agents. (e) If, for any reason, the obligations of the Borrower pursuant to this Section 10.2 shall be unenforceable, the Borrower agrees to make the maximum contribution to the payment and satisfaction of each obligation that is permissible under Applicable Law, except to the extent that a court of competent jurisdiction determines by a final non-appealable order such obligations arose on account of the gross negligence or wilful misconduct of any Indemnified Party. -78- 87 Section 10.3 Taxation on Payments. The Borrower hereby agrees: (a) that any and all payments made by the Borrower under or pursuant to any of the Loan Documents shall be made without set-off or counterclaim and free and clear of, and without deduction for, any and all present or future Taxes, levies, imposts, deductions, charges, fees, duties or withholding or other charges of any nature imposed by any taxing authority, and all liabilities with respect thereto, imposed by any jurisdiction as a consequence or result of any action taken by the Borrower, including the making of any payment under or pursuant to any of the Loan Documents, excluding, in the case of the Administrative Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and franchise taxes. If the Borrower shall be required by Law to deduct any Taxes from or in respect of any sum payable to the Administrative Agent or any Bank hereunder or pursuant to any of the Loan Documents, the sum payable to the Administrative Agent or such Bank, as the case may be, shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 10.3) the Administrative Agent or such Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made. If a Tax credit is received by the Administrative Agent or such Bank for any Taxes deducted or withheld by the Borrower in accordance with this Section 10.3(a) and in respect of which additional amounts have been paid by the Borrower under this Section 10.3(a), then, to the extent such Tax credit is reasonably identified by the Administrative Agent or such Bank as being related to the additional amounts paid by the Borrower under this Section 10.3(a) and has been received and utilized by the Administrative Agent or such Bank, the Administrative Agent or such Bank shall pay to the Borrower an amount equal to such Tax credit; provided that such amount shall not exceed the additional amounts paid by the Borrower to the Administrative Agent or such Bank under this Section 10.3(a); and (b) to indemnify and hold harmless the Administrative Agent and each Bank for the full amount of Taxes (excluding, in the case of the Administrative Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and franchise taxes) and for any incremental Taxes due to the Borrower's failure to remit to the Administrative Agent and the Banks the required receipts or other required documentary evidence of payment of such Taxes or due to the Borrower's failure to pay any Taxes (excluding, in the case of the Administrative Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and -79- 88 franchise taxes) when due to the appropriate taxing authority (including any Taxes imposed by any taxing authority on amounts payable under this Section 10.3) paid by the Administrative Agent or any Bank and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally assessed. The Administrative Agent or any Bank shall promptly notify the Borrower of such payment and, if such payment was made pursuant to an incorrect or illegal assessment, shall reasonably cooperate with the Borrower, at the expense of the Borrower, in any dispute of such assessment. The Administrative Agent or any Bank claiming compensation under this Section 10.3 shall provide the Borrower with a written certificate setting forth the additional amount or amounts to be paid to it hereunder and calculations therefor in reasonable detail. Such certificate shall be presumptively correct absent manifest error. Payment pursuant to this indemnification shall be made within thirty (30) days from the date the Administrative Agent or such Bank makes written demand therefor or if earlier, on the Maturity Date. Section 10.4 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert any sum due, or owing hereunder or under any other Loan Document to the Administrative Agent or any one or more of the Banks in any currency (the "Original Currency") into another currency (the "Other Currency"), the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the Original Currency with the Other Currency on the Business Day preceding that on which final judgment is granted. The obligations of the Borrower in respect of any sum due in the Original Currency from it to the Administrative Agent or any one or more of the Banks under any of the Loan Documents shall, notwithstanding any judgement in any Other Currency, be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due or owing in such Other Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Original Currency with such Other Currency. If the amount of the Original Currency so purchased is less than the sum originally due or owing to the Administrative Agent or any one or more of the Banks in the Original Currency, the Borrower shall, as a separate obligation and notwithstanding any such judgement, indemnify the Administrative Agent or such Bank against such Loss, and if the amount of the Original Currency so purchased exceeds the sum originally due or owing to the Administrative -80- 89 Agent or such Bank in the Original Currency, the Administrative Agent or such Bank shall remit such excess to the Borrower. Section 10.5 Claims for Increased Costs and Taxes. Prior to the occurrence of a Default in the event that any Bank shall have notified the Borrower that it is entitled to claim compensation pursuant to Section 10.01 or 10.3 hereof (each such Bank being an "Affected Bank"), the Borrower may designate a replacement Canadian chartered bank reasonably acceptable to the Administrative Agent (a "Replacement Bank") to assume the Commitment and the obligations of any such Affected Bank hereunder, and to purchase the outstanding Accommodations of such Affected Bank and such Affected Bank's rights hereunder and with respect thereto, without recourse upon, or warranty by, or expense to, such Affected Bank, for a purchase price equal to the outstanding principal amount of the Accommodations of such Affected Bank plus all interest accrued and unpaid thereon and all other amounts owing to such Affected Bank hereunder and upon such assumption and purchase by the Replacement Bank, such Replacement Bank shall be deemed to be a "Bank" for purposes of this Agreement and such Affected Bank shall cease to be a "Bank" for purposes of this Agreement and shall no longer have any obligations or rights hereunder (other than any obligations or rights which according to this Agreement shall survive the termination of the Commitment). Article II Miscellaneous Section 11.1 Notices. (a) Except as otherwise expressly provided herein, all notices and other communications under this Agreement and the other Loan Documents (unless otherwise specifically stated therein) shall be in writing and shall be personally delivered to an officer or other responsible employee of the addressee or sent by facsimile, charges prepaid, at or to the applicable addresses or facsimile numbers, as the case may be, set forth in this Section 11.1. Any communication which is personally delivered as aforesaid shall be deemed to have been validly and effectively given on the date of such delivery if such date is a Business Day and such delivery was made during normal business hours of the recipient; otherwise, it shall be deemed to have been validly and effectively given on the Business Day next following such date of delivery. Any communication which is transmitted by facsimile as aforesaid shall be deemed to have been validly and effectively -81- 90 given on the date of transmission if such date is a Business Day and such transmission was made during normal business hours of the recipient; otherwise, it shall be deemed to have been validly and effectively given on the Business Day next following such date of transmission. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses: (i) If to the Borrower, to it at: Paging Network of Canada Inc. c/o Paging Network, Inc. 4965 Preston Park Boulevard Suite 500 Plano, Texas 75093 Attn: Mr. Robert Thompson Telecopy No.: (214) 985-6551 with a copy to: Paging Network of Canada Inc. 3250 Bloor Street, West Suite 700 Toronto, Ontario M8X 2X9 Attn: President Telecopy No.: (416) 207-4321 Madison Telecommunications Holdings, Inc. c/o Madison Ventures Corporation 1970 Alberta Street Vancouver, British Columbia V5Y 3X4 Attn: Mr. Bruce W. Aunger Telecopy No.: (604) 879-1483 Roger Feldman, Esq. Bingham, Dana & Gould 150 Federal Street Boston, Massachusetts 02110 Telecopy No.: (617) 951-8736 -82- 91 McCarthy Tetrault 275 Sparks Street Suite 1000 Ottawa Ontario K1R 7X9 Canada Attn: Anthony H.A. Keenleyside, Esq. Telecopy No.: (613) 563-9386 Blake, Cassels & Graydon 1700-1030 West George Street Vancouver, BC V6E2Y3 Attn: Anne M. Stewart, Q.C. Telecopy No.: (604) 631-3309 (ii) If to the Administrative Agent, to it at: Toronto Dominion Tower, 8th Floor Toronto Dominion Centre Toronto, Ontario M5K 1A2 Attn: Manager, Agency Telecopy No.: (416) 982-5535 with a copy to: The Toronto-Dominion Bank Communications Finance 31 West 52nd Street New York, New York 10019-6101 Attn: Mr. David E. Oliver Telecopy No.: (212) 262-1928 (iii) If to the Banks, to them at the addresses set forth beside their names on the signature pages hereof. (b) Each Accommodation Notice and any notice of a prepayment shall be irrevocable and binding on the Borrower. With respect to any Accommodation Notice, the Administrative Agent may act upon the basis of telephonic notice believed by it reasonably and in good faith to be from the Borrower prior to receipt of an Accommodation Notice. In the event of conflict between the Administrative Agent's record of the applicable terms of any Accommodation and such Accommodation Notice, the Administrative Agent's record shall prevail. (c) Any party hereto may change the address to which notices shall be directed under this Section 11.1 by giving five -83- 92 (5) days' prior written notice of such change to the other parties. Section 11.2 Expenses. The Borrower will promptly pay, or reimburse: (a) all reasonable and customary out-of-pocket expenses of the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents, and the transactions contemplated hereunder and thereunder and the making of the initial Advance hereunder (whether or not such Advance is made), including, but not limited to, the reasonable fees and disbursements of counsel for the Administrative Agent; (b) all reasonable and customary out-of-pocket expenses of the Administrative Agent in connection with the restructuring and "work out" of the transactions contemplated in this Agreement or the other Loan Documents, and the preparation, negotiation, execution and delivery of any waiver, amendment or consent by the Administrative Agent and the Banks, or any of them, relating to this Agreement or the other Loan Documents, including, but not limited to, the fees and disbursements of any experts, agents or consultants and of counsel for the Administrative Agent; and (c) all reasonable and customary out-of-pocket costs and expenses of obtaining performance under this Agreement or the other Loan Documents and all out-of-pocket costs and expenses of collection if an Event of Default occurs in the payment of the Obligations, which in each case shall include reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent and the Banks. Section 11.3 Waivers. The rights and remedies of the Administrative Agent and the Banks under this Agreement and the other Loan Documents shall be cumulative and not exclusive of any rights or remedies which they would otherwise have. No failure or delay by the Administrative Agent, the Majority Banks, or the Banks, or any of them, in exercising any right, shall operate as a waiver of such right. The Administrative Agent and the Banks expressly reserve the right to require strict compliance with the terms of this Agreement and the other Loan Documents in connection with any future funding of a Request for Advance. In the event the Banks decide to fund a Request for Advance at a time when the Borrower is not in strict compliance with the terms of this Agreement and the other Loan Documents, such decision by the Banks shall not be deemed to constitute an undertaking by the -84- 93 Banks to fund any further Request for Advance or preclude the Banks or the Administrative Agent from exercising any rights available under the Loan Documents or at law or equity. Any waiver or indulgence granted by the Administrative Agent, the Banks, or the Majority Banks, or any of them, shall not constitute a modification of this Agreement or any other Loan Document, except to the extent expressly provided in such waiver or indulgence, or constitute a course of dealing at variance with the terms of this Agreement or any other Loan Document such as to require further notice of their intent to require strict adherence to the terms of this Agreement or any other Loan Document in the future. Section 11.4 Right to Combine and Set-Off. Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent or any one or more of the Banks is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to combine, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Administrative Agent or such Bank to or for the credit or the account of the Borrower with or against any and all of the obligations of the Borrower now or hereafter existing under any of the Loan Documents, irrespective of whether or not the Administrative Agent shall have made any demand under any of the Loan Documents and although such Obligations may be unmatured. The Administrative Agent or such Bank agrees promptly to notify the Borrower after any such combination or set-off and application made by the Administrative Agent or such Bank provided that the failure to give such notice shall not affect the validity of such combination or set-off and application. The rights of the Administrative Agent and the Banks under this Section are in addition to other rights and remedies (including, without limitation, other rights of combination and set-off) which the Administrative Agent or the Banks may have. Section 11.5 Assignment. (a) The Borrower may not assign or transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of each Bank and the Administrative Agent. (b) Any Bank may, without the consent of the Borrower grant participations in all or any part of the Commitment to one or more Persons (each a "Participant"). Any Bank may, with the consent of the Administrative Agent, and, prior to the occurrence -85- 94 and continuance of a Default, with the consent of the Borrower (which consent is not to be unreasonably withheld or delayed), assign all or any part of its respective interest in the Commitment to one or more Persons; provided that prior to the occurrence and continuance of a Default (i) such Person is a resident of Canada for the purpose of the Income Tax Act (Canada) or (ii) such assignment will not cause the Borrower to incur any increased costs pursuant to Section 10.3 hereof (each an "Assignee"). (c) The Administrative Agent or any Bank may deliver a copy of any financial statement or any other information relating to the prospects, business, Assets or condition (financial or otherwise) of the Borrower or any of its Subsidiaries which may be furnished to it under this Agreement or otherwise to any Participant or Assignee or any prospective Participant or Assignee; provided that each such delivery is made on the understanding that the information contained therein is confidential in nature. (d) Without limitation of its obligations hereunder, the Borrower shall, at its sole cost and expense, give such certificates, acknowledgments and other further assurances in respect, of this Agreement and the Commitment as any Bank may reasonably require in connection with any participation or assignment pursuant to this Section. (e) Except in the case of an Assignee which has delivered an Assignment and Assumption Agreement substantially in the form of Exhibit H hereto, prior to the occurrence of a Default or an Event of Default, a Bank granting a participation or making an assignment shall act on behalf of all of its Participants and Assignees in all dealings with the Borrower in respect hereof. (f) Any Bank shall deliver to the Borrower an agreement substantially in the form of Exhibit H hereto by which any Assignee of such Bank assumes the obligations and agrees to be bound by all the terms and conditions of this Agreement, all as if such Assignee had been an original party hereto. Upon any such assignment and such assumption of the obligations of a Bank by an Assignee, the assigning Bank and the Borrower shall be mutually released from their respective obligations to each other hereunder to the extent of such assignment and assumption and shall thenceforth have no liability or obligations to each other to such extent, except in respect of matters which shall have arisen prior to such assignment. -86- 95 (g) An administrative fee of $5,000 shall be payable to the Administrative Agent by the assigning Bank at the time of any assignment hereunder. Section 11.6 Accounting Principles. All accounting terms used herein without definition shall be used as defined under GAAP. GAAP shall be applied on a basis consistent with prior fiscal years of the Borrower. Section 11.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Section 11.8 Governing Law. This Agreement and all Loan Documents shall be governed by and interpreted in accordance with the Applicable Laws of the Province of Ontario and the Applicable Laws of Canada applicable therein which apply to contracts made and to be performed entirely in Ontario; provided that any Loan Document stated to be governed by and interpreted in accordance with the laws of any other jurisdiction shall be governed by and interpreted in accordance with the laws of such jurisdiction. The parties hereby irrevocably attorn and submit to the non-exclusive jurisdiction of the courts of Ontario with respect to any matter arising under or related to this Agreement or any Loan Document; provided that, with respect to any other Loan Document stated to be governed by the laws of any other jurisdiction, the parties agree to attorn and submit to the non-exclusive jurisdiction of the courts of such other jurisdiction. The Borrower agrees that final judgment in such suit, action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by Applicable Law. Section 11.9 Severability. If any provision of this Agreement or any Loan Document is, or becomes, illegal, invalid or unenforceable, such provision shall be severed from this Agreement or such Loan Document and be ineffective to the extent of such illegality, invalidity or unenforceability. The remaining provisions hereof or thereof shall be unaffected by such provision and shall continue to be valid and enforceable. Section 11.10 Interest. (a) For purposes of the Interest Act (Canada): (i) Whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days, such rate determined pursuant to such calculation, when expressed as an -87- 96 annual rate, is equivalent to (x) the applicable rate based on a year of 360 days, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is calculated ends, and (z) divided by 360; (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. (b) Notwithstanding any provision to the contrary contained in this Agreement, in no event shall the aggregate "interest" (as defined in Section 347 of the Criminal Code, Revised Statutes of Canada, 1985, c.46 as the same may be amended, replaced or re-enacted from time to time) payable under this Agreement exceed the maximum amount of interest on the "Credit advanced" (as defined in that section) under this Agreement lawfully permitted under that section and, if any payment, collection or demand pursuant to this Agreement in respect of "interest" (as defined in that section) is determined to be contrary to the provisions of that section, such payment, collection or demand shall be deemed to have been made by mutual mistake of the Borrower and the Administrative Agent and the Banks and the amount of such payment or collection shall be refunded to the Borrower. For purposes of this Agreement, the effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles over the term of the Credit Facilities are outstanding on the basis of annual compounding of the lawfully permitted rate of interest and, in the event of dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Administrative Agent will be conclusive for the purposes of such determination absent manifest error. Section 11.11 Table of Contents and Headings. The Table of Contents and the headings of the various subdivisions used in this Agreement are for convenience only and shall not in any way modify or amend any of the terms or provisions hereof, nor be used in connection with the interpretation of any provision hereof. Section 11.12 Amendment and Waiver. Neither this Agreement nor any other Loan Document nor any term hereof or thereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by the Majority Banks and the Administrative Agent and, in the case of an amendment, by the Borrower, except that in the event of (a) any increase in the amount of the Commitment, (b) any delay or extension in the terms of repayment of the Accommodations or any mandatory reductions in -88- 97 the Commitment provided in Sections 2.6 or 2.8 hereof or amend the provisions of this Agreement dealing with the types of Accommodations available hereunder, (c) any reduction in principal, interest or fees due hereunder (without a corresponding payment by the Borrower in the amount of such reduction) or postponement or subordination of the payment thereof without a corresponding payment by the Borrower, (d) any release of any portion of the Collateral for the Accommodations, except in connection with a merger, sale or other disposition otherwise permitted hereunder (in which case such release shall require no further approval by the Banks), (e) any waiver of any Default due to the failure by the Borrower to pay any sum due to any of the Banks hereunder, (f) any release or amendment of any Security Document except in connection with a merger, sale or other disposition otherwise permitted hereunder (in which case, such release or amendment shall require no further approval by the Banks), or (g) any amendment of this Section 11.12, or the definitions of Majority Banks or Permitted Collateral, or of any Section herein to the extent that such Section requires action by all Banks, any amendment or waiver or consent may be made only by an instrument in writing signed by each of the Banks and the Administrative Agent and, in the case of an amendment, by the Borrower. Any amendment to any provision hereunder governing the rights, obligations, or liabilities of the Administrative Agent solely to any of the Banks may be made only by an instrument in writing signed by the Administrative Agent and by each of the Banks. Section 11.13 Non-Merger. Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties of the parties contained in this Agreement and the other Loan Documents shall not merge on and shall survive the Agreement Date and the making of any Accommodation, and notwithstanding such closing or Accommodation, or any investigation made by or on behalf of any party, shall continue in full force and effect. Neither the Agreement Date nor the making of any Accommodation shall prejudice any right of one party against any other party in respect of anything done or omitted hereunder or under any of the other Loan Documents or in respect of any right to damages or other remedies. Section 11.14 Other Relationships. No relationship created hereunder or under any other Loan Document shall in any way affect the ability of the Administrative Agent and each Bank to enter into or maintain business relationships with the Borrower or any of its Affiliates beyond the relationships specifically contemplated by this Agreement and the other Loan Documents. -89- 98 Section 11.15 Directly or Indirectly. If any provision in this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, whether or not expressly specified in such provision. Section 11.16 Reliance on and Survival of Various Provisions. All covenants, agreements, statements, representations and warranties made herein or in any certificate delivered pursuant hereto (i) shall be deemed to have been relied upon by the Administrative Agent and each of the Banks notwithstanding any investigation heretofore or hereafter made by them, and (ii) shall survive the execution and delivery of this Agreement and shall continue in full force and effect so long as any obligation is outstanding and unpaid. Any right to indemnification hereunder, including, without limitation, rights pursuant to Sections 2.13, 10.1, 10.2, 10.3 and 11.2 hereof, shall survive the termination of this Agreement and the payment and performance of all Obligations for a period of three (3) years thereafter. Section 11.17 Senior Debt. The Obligations are secured by the Security Documents and are intended by the parties hereto to be senior in right of payment to all other Indebtedness of the Borrower. Section 11.18 Obligations Several. The obligations of the Administrative Agent and each of the Banks hereunder are several, not joint. Section 11.19 Confidentiality. The Banks shall hold all non-public, proprietary or confidential information (which has been identified as such by the Borrower) obtained pursuant to the requirements of this Agreement in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices; provided, however, the Banks may make disclosure of any such information to such of their examiners, Affiliates, outside auditors, counsel, consultants, appraisers and other professional advisors as may be reasonably necessary in connection with this Agreement or as reasonably required by any proposed participant or assignee or as required or requested by any Governmental Entity or representative thereof or in connection with the enforcement hereof or of any other Loan Document or related document or pursuant to legal process or with respect to any litigation between or among the Borrower and any of the Banks; provided, however, that, as a condition to receipt of any such -90- 99 information, each such Affiliate, auditor, counsel, consultant, appraiser, professional advisor, proposed participant or assignee shall agree in writing to treat all such information as confidential; and provided, further, that prior to any such disclosure to any unrelated entity outside the ordinary course of business or pursuant to legal process, the disclosing Bank shall give notice of such disclosure to the Borrower and cooperate with the Borrower in any efforts to limit or restrict such disclosure. In no event shall any Bank be obligated or required to return any materials furnished to it by the Borrower. The foregoing provisions shall not apply to a Bank with respect to information that (i) is or becomes generally available to the public (other than through such Bank), (ii) is already in the possession of such Bank on a nonconfidential basis, or (iii) comes into the possession of such Bank in a manner not known to such Bank to involve a breach of a duty of confidentiality owing to the Borrower. Section 11.20 Time of the Essence. Time shall be of the essence of this Agreement. Section 11.21 Third Party Beneficiaries. Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person, other than the parties hereto and the Persons contemplated in Section 10.2 hereof, and no Person, other than the parties hereto and the Persons contemplated in Section 10.2 hereof, shall be entitled to rely on the provisions hereof in any action, suit, proceeding, hearing or other forum. Section 11.22 Enurement. This Agreement shall enure to the benefit of and be binding upon the parties hereto and any Person becoming a party to this Agreement through the procedure set out in Section 11.5 hereof. This Agreement shall be binding upon any assigns and enure to the benefit of any permitted assigns. -91- 100 IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused it to be executed under seal by their duly authorized officers, all as of the day and year first above written. BORROWER: PAGING NETWORK OF CANADA INC., a Canada corporation By: /s/ G. FITZGERALD -------------------------------------- G. FITZGERALD Its: President ------------------------------ ADMINISTRATIVE AGENT: THE TORONTO-DOMINION BANK By: [ILLEGIBLE] -------------------------------------- Its: Manager-Agency ------------------------------ BANK: ADDRESS: THE TORONTO-DOMINION BANK 8th Floor By: [ILLEGIBLE] Toronto Dominion Tower -------------------------------------- Toronto Dominion Centre Its: Manager-Communications Finance Toronto, Ontario M5K 1A2 ------------------------------ PAGING NETWORK OF CANADA INC. LOAN AGREEMENT SIGNATURE PAGE 1
101 EXHIBIT A FORM OF DRAFT BANKERS' ACCEPTANCE 102 EXHIBIT A FORM OF DRAFT BANKERS' ACCEPTANCE B.A.: ----------------- DUE DATE: ------------- - ------------- ------------------ ---------------- TERM IN DAYS BRANCH DOMICILE ISSUE DATE ON _________________ WITHOUT GRACE, FOR VALUE RECEIVED, PAY TO THE ORDER OF THE UNDERSIGNED, THE SUM OF $______ DOLLARS -- -- -- TO: [INSERT NAME OF PURCHASER] - ----------------------------- -------------------------- Signature - ----------------------------- -------------------------- Signature 103 EXHIBIT B FORM OF DRAWING NOTICE 104 EXHIBIT B FORM OF DRAWING NOTICE The undersigned, Paging Network of Canada Inc., a Canada corporation (the "Borrower"), acting by and through, _______________________ the duly elected and qualified ____________________ of the Borrower, in connection with that certain Loan Agreement (as in effect on the date hereof, the "Loan Agreement"), dated as of June 5, 1996, among the various financial institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent"), and the Borrower, hereby certifies to the Administrative Agent and the Banks that: 1. The Borrower, pursuant to Section 2.5(b) of the Loan Agreement, hereby requests a Drawing under the Loan Agreement, and in that connection sets forth below the information relating to such Drawing (the "Proposed Drawing") as required by Section 2.5(b) of the Loan Agreement: (i) The Business Day of Proposed Drawing is _____________, 19_____. (ii) The aggregate Face Amount of Drafts to be accepted is [insert amount in Canadian dollars]. (iii) The contract maturity date for such Drafts is ________ days). (iv) The Proposed Drawing shall be a (Collateralized/Uncollateralized] Bankers' Acceptance. After giving effect to the Proposed Drawing, $_______________ which is the Equivalent Canadian Dollar Amount of the Permitted Collateral, and which represents the Minimum Permitted Collateral Amount is on deposit with the Administrative Agent pursuant to the Deposit Agreement. After giving effect to the Proposed Drawing, the Applicable Margin for such Drawing shall be: ______________________. The proceeds of the Proposed Drawing should be wired as set forth on Schedule 1 attached hereto. The foregoing instructions shall be irrevocable. 2. All of the representations and warranties of the Borrower made under the Loan Agreement (including, without limitation, all representations and warranties with respect to the Borrower's Subsidiaries) and the other Loan Documents, which, pursuant to Section 4.2 of the Loan Agreement or otherwise, are made on the date hereof, are as of the date hereof, and will be as of the date of such Proposed Drawing, true and correct in all material respects both before and after giving effect to the application of the proceeds of the Proposed Drawing in connection 105 with which this Drawing Notice is given, and after giving effect to any updates to information provided to the Banks in accordance with the terms of such representations and warranties. 3. There does not exist, as of this date, and there will not exist after giving effect to the Proposed Drawing requested in this Drawing Notice, any Default under the Loan Agreement. 4. All Necessary Authorizations have been obtained or made, are in full force and effect and are not subject to any pending or threatened reversal or cancellation. 5. There has occurred no event having, or which could be reasonably expected to have, a Materially Adverse Effect since December 31, 1995. 6. All other conditions precedent to the Proposed Drawing requested hereby set forth in Section 3.2 of the Loan Agreement have been satisfied. Capitalized terms used in this Drawing Notice and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, the Borrower, acting through an Authorized Signatory, has signed this Drawing Notice, as of the _______ day of ______________, _______. PAGING NETWORK OF CANADA INC., a Canada corporation By: -------------------------------------- Its: ------------------------------------- Schedule 1 - Wiring Instructions Schedule 2 - Compliance Calculations B-2 106 EXHIBIT C FORM OF REQUEST FOR ADVANCE 107 EXHIBIT C FORM OF REQUEST FOR ADVANCE Paging Network of Canada Inc., a Canada corporation (the "Borrower"), acting by and through , the duly elected and qualified of the Borrower, in connection with that certain Loan Agreement (as in effect on the date hereof, the "Loan Agreement"), dated as of June 5, 1996, among the various financial institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent"), and the Borrower, hereby certifies to the Administrative Agent and the Banks that: 1. The Borrower, pursuant to Section [2.2(b)/2.3(b)/2.3(c)] of the Loan Agreement, hereby requests a [Collateralized/Uncollateralized Prime Rate Advance] [Cost of Funds Rate Advance] (the "Proposed Advance") in the amount of $ to be made on , , under the Commitment. After giving effect to the Proposed Advance, $ which is the Equivalent Canadian Dollar Amount of the Permitted Collateral, and which represents the Minimum Permitted Collateral Amount, is on deposit with the Administrative Agent pursuant to the Deposit Agreement. After giving effect to the Proposed Advance, the Applicable Margin for such Advance shall be: . The proceeds of the Proposed Advance should be wired as set forth on Schedule 1 attached hereto. [The Interest Period for the Proposed Advance shall be month(s).] The foregoing instructions shall be irrevocable. 2. All of the representations and warranties of the Borrower made under the Loan Agreement (including, without limitation, all representations and warranties with respect to the Borrower's Subsidiaries) and the other Loan Documents, which, pursuant to Section 4.2 of the Loan Agreement or otherwise, are made on the date hereof, are as of the date hereof, and will be as of the date of such Advance, true and correct in all material respects both before and after giving effect to the application of the proceeds of the Advance in connection with which this Request for Advance is given, and after giving effect to any updates to information provided to the Banks in accordance with the terms of the representations and warranties. 3. There does not exist, as of this date, and there will not exist after giving effect to the Advance requested in this Request for Advance, any Default under the Loan Agreement. 4. All Necessary Authorizations have been obtained or made, are in full force and effect and are not subject to any pending or threatened reversal or cancellation. 108 5. There has occurred no event having, or which could be reasonably expected to have, a Materially Adverse Effect since December 31, 1995. 6. All other conditions precedent to the Advance requested hereby set forth in Section 3.2 of the Loan Agreement have been satisfied. Capitalized terms used in this Request for Advance and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, the Borrower, acting through an Authorized Signatory, has signed this Request for Advance, as of the day of , . PAGING NETWORK OF CANADA INC., a Canada corporation By: Its: Schedule 1 - Wiring Instructions Schedule 2 - Compliance Calculations C-2 109 EXHIBIT D FORM OF ACCEPTANCE 110 EXHIBIT D FORM OF ACCEPTANCE FOR: [INSERT NAME OF BANK] BRANCH MANAGER OFFICER IN CHARGE OF OPERATIONS 111 EXHIBIT E FORM OF BORROWER'S LOAN CERTIFICATE 112 EXHIBIT E FORM OF BORROWER'S LOAN CERTIFICATE The undersigned, who is the of Paging Network of Canada Inc., a Canada corporation (the "Borrower"), does hereby certify on behalf of the Borrower that he is the duly elected and qualified of the Borrower and an Authorized Signatory of the Borrower. In connection with the making of certain Accommodations to the Borrower by the Banks under that certain Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent"), and The Toronto-Dominion Bank and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the Administrative Agent and the Banks on behalf of the Borrower that: 1. Attached hereto as Exhibit A is a true, complete, and correct copy of the Certificate and Articles of Incorporation of the Borrower, certified by appropriate government officials of the jurisdiction of incorporation of the Borrower, as in full force and effect on the date hereof. 2. Attached hereto as Exhibit B is a true, complete and correct copy of the By-Laws of the Borrower, together with all amendments thereto, as in full force and effect on the date hereof. 3. Attached hereto as Exhibit C is a true, complete and correct copy of the resolutions of the Board of Directors of the Borrower authorizing the execution of the Loan Agreement, each other Loan Document to which the Borrower is a party, and the creation and assumption, by the Borrower, of the Obligations. 4. Attached hereto as Exhibit D are true, complete, and correct copies of certificates of good standing for the Borrower from appropriate government officials of the jurisdiction of incorporation of the Borrower and for each other jurisdiction in which the Borrower carries on business. The Borrower has, from the dates of such certificates to the date hereof, remained in good standing under the laws of such jurisdiction. 5. Attached hereto as Exhibit E are true, complete and correct copies of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of the Borrower. 113 6. The following persons are the Authorized Signatories of the Borrower, each of such persons having been duly elected, and set forth opposite their respective names below are their respective genuine signatures: NAME SIGNATURE DATE ____ _________ ____ - ------------------ --------------------- ------------ - ------------------ --------------------- ------------ - ------------------ --------------------- ------------ Capitalized terms used herein and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, I have signed this Certificate on the ____ day of ____________ 1996. PAGING NETWORK OF CANADA INC., a Canada corporation By: _____________________________ Name: ________________________ Title: _______________________ EXHIBITS: Exhibit A - Certificate and Articles of Incorporation Exhibit B - By-Laws Exhibit C - Authorizing Resolutions Exhibit D - Certificates of Good Standing Exhibit E - Shareholder's Agreements or Voting Trust Agreements E-2 114 EXHIBIT F FORM OF SUBSIDIARY LOAN CERTIFICATE 115 EXHIBIT F FORM OF SUBSIDIARY LOAN CERTIFICATE The undersigned, who is the ________________ of _________________ a ____________________ [corporation] [partnership] (the "Subsidiary"), does hereby certify on behalf of the Subsidiary that he is the duly elected and qualified ____________________ of [_______________, the _______________ of] the Subsidiary and an Authorized Signatory. In connection with the making of certain Accommodations to Paging Network of Canada Inc., a Canada corporation (the "Borrower") by the Banks under that certain Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent), and The Toronto-Dominion Bank and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the Administrative Agent and the Banks on behalf of the Subsidiary that: 1. Attached hereto as Exhibit A is a true, complete, and correct copy of the Certificate and Articles of Incorporation of the Subsidiary, certified by appropriate government officials of the jurisdiction of incorporation of the Subsidiary, as in full force and effect on the date hereof. 2. Attached hereto as Exhibit B is a true, complete and correct copy of the By-Laws of the Subsidiary, together with all amendments thereto, as in full force and effect on the date hereof. 3. Attached hereto as Exhibit C is a true, complete and correct copy of the resolutions of the Board of Directors of the Subsidiary authorizing the execution of each Loan Document to which the Subsidiary is a party. 4. Attached hereto as Exhibit D are true, complete, and correct copies of certificates of good standing for the Subsidiary from appropriate government officials of the jurisdiction of incorporation of the Subsidiary and for each other jurisdiction in which the Subsidiary carries on business. The Subsidiary has, from the dates of such certificates to the date hereof, remained in good standing under the laws of such jurisdiction. 5. Attached hereto as Exhibit E are true, complete and correct copies of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of the Subsidiary. 116 6. The following persons are the Authorized Signatories of the Subsidiary, each of such persons having been duly elected, and set forth opposite their respective names below are their respective genuine signatures: NAME SIGNATURE DATE ---- --------- ---- - ------------------ --------------------- ------------ - ------------------ --------------------- ------------ - ------------------ --------------------- ------------ Capitalized terms used herein and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, I have signed this Certificate this ____ day of _____________, 1996. [___________________________ a _____________________ partnership, through its General Partner:) _______________________, a ______________ corporation By: ____________________________________ Its:____________________________________ EXHIBITS: Exhibit A - Certificate and Articles of Incorporation/Partnership Exhibit B - By-Laws/Partnership Agreement Exhibit C - Authorizing Resolutions Exhibit D - Certificates of Good Standing Exhibit E - Shareholder's Agreements or Voting Trust Agreements F-2 117 EXHIBIT G FORM OF PERFORMANCE CERTIFICATE 118 EXHIBIT G FORM OF PERFORMANCE CERTIFICATE The undersigned, who is the _______________ of Paging Network of Canada Inc., a Canada corporation (the "Borrower"), does hereby certify on behalf of the Borrower that he is the duly elected and qualified ___________ of the Borrower and an Authorized Signatory of the Borrower. 1. [WITH RESPECT TO QUARTERLY STATEMENTS: The accompanying unaudited financial statements of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as of [DATE] and for the quarterly accounting period ended [DATE] are complete and correct and present fairly, in accordance with GAAP, the financial condition of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries, and the results of operations for such quarter, and for the elapsed portion of the fiscal year ended with the last day of such quarter, in each case on the basis presented and subject only to normal year-end adjustments and the absence of footnotes.] [WITH RESPECT TO FISCAL YEAR STATEMENTS: The accompanying audited financial statements of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as of [DATE] and for the fiscal year ended [DATE], and for the previous fiscal year, are complete and correct and present fairly, in accordance with GAAP, the financial condition of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as of the end of such period, and the results of operations for such fiscal year, and for the previous fiscal year.] 2. Attached hereto are arithmetical calculations required to establish (i) any adjustment to the Applicable Margins, as provided for in Section 2.6(d) of the Loan Agreement, and (ii) whether or not the Borrower was in compliance with the requirements of the following Sections of the Loan Agreement: (a) Section 7.8 - Leverage Ratio (b) Section 7.9 - Annualized Operating Cash Flow to Pro Forma Debt Service (c) Section 7.10 - Total Debt Per Subscriber (d) Section 7.11 - Capital Expenditures (e) Section 7.12 - Minimum Revenue Test (f) Section 7.13 - Minimum Units in Service (including a breakdown by each category set forth in the definition of Units in Service) 119 3. Based on an examination sufficient to enable me to make an informed statement, no Default exists at the end of such quarter or fiscal year, as applicable. 4. All capitalized terms not otherwise defined herein are used herein as defined in the Loan Agreement. Date:____________________ ________________ [OFFICER] [TITLE] G-2 120 EXHIBIT H FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT 121 EXHIBIT H FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement is made and entered into as of ______________, by ______________, and between ________________________ (the "Assignor"), and _____________________ (the "Assignee"). Recitals A. Paging Network of Canada Inc., a Canada corporation (the "Borrower"), the Assignor (together with any other Person which becomes a 'Bank' under the Loan Agreement, as such term is hereinafter defined, the "Banks") and The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent"), are parties to a certain Loan Agreement dated as of June 5, 1996 (the "Loan Agreement"). Pursuant to the Loan Agreement, the Banks have agreed to make Accommodations to the Borrower pro rata in an aggregate original principal amount of the Commitment, as such amount may be reduced from time to time pursuant to the Loan Agreement. The Assignor's pro rata portion of the Commitment is the amount specified in Item 1 of Schedule 1 hereto (the "Assignor's Commitment"). The aggregate principal amount of the outstanding Accommodations made by the Assignor to the Borrower under the Commitment pursuant to the Assignor's Commitment is specified in Item 2 of Schedule 1 hereto (the "Assignor's Accommodations"). All capitalized terms not otherwise defined herein are used herein as defined in the Loan Agreement. B. The Assignor wishes to sell and assign to the Assignee, and the Assignee wishes to purchase and assume from the Assignor, (i) the portion of the Assignor's Commitment specified in Item 3 of Schedule 1 hereto ("Assigned Commitment"), and (ii) the portion of the Assignor's Accommodations under the Commitment specified in Item 4 of Schedule 1 hereto (the "Assigned Accommodations"). The parties agree as follows: 1. Assignment. Subject to the terms and conditions set forth herein, the Assignor hereby sells and assigns to the Assignee, and the Assignee purchases and assumes from the Assignor, without recourse and except as provided in Section 3(a) hereof, without representation or warranty to the Assignor, on the date set forth above (the "Assignment Date") (a) all right, title, and interest of the Assignor to the Assigned Accommodations and (b) all obligations of the Assignor under the Loan Agreement with respect to the Assigned Commitment. As full consideration for the sale of the Assigned Accommodations and the Assigned Commitment, the Assignee shall pay to the Assignor on the Assignment Date such amount as shall have been agreed to between the Assignor and the Assignee (the "Purchase Price"). 122 2. Consents. The Administrative Agent [and the Borrower] hereby consent[s] to the assignment made herein. [Note: Borrower consent only required prior to a Default.] 3. Representations and Warranties. Each of the Assignor and the Assignee represents and warrants to the other, to the Administrative Agent and to the Borrower (a) that (i) it has full power and legal right to execute and deliver this Agreement and to perform the provisions of this Agreement; (ii) the execution, delivery, and performance of this Agreement have been authorized by all necessary action, corporate or otherwise, on its part and do not violate any provisions of its charter or by-laws or any contractual obligations or requirement of law binding on it; and (iii) this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms subject, as to enforcement of remedies, to the following qualifications: (A) an order of specific performance and an injunction are discretionary remedies and, in particular, may not be available where damages are considered an adequate remedy at law, and (B) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors' rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Assignee or the Assignor, as the case may be), and (b) that its purchase of the Assigned Accommodations and the Assigned Commitment does not constitute a "prohibited transaction" as defined in Section 4.1(m) of the Loan Agreement. 4. Condition Precedent. The obligations of the Assignor and the Assignee hereunder shall be subject to the fulfillment of the condition that (a) the Assignor shall have received payment in full of the Purchase Price and (b) the Assignor and the Assignee shall have complied with other applicable provisions of Section 11.5 of the Loan Agreement. 5. Notice of Assignment. The Assignor hereby gives notice of the assignment and assumption of the Assigned Accommodations and the Assigned Commitment to the Administrative Agent and hereby instructs the Borrower to make payments with respect to the Assigned Accommodations and the Assigned Commitment directly to the Administrative Agent for the benefit of the Assignee as provided in the Loan Agreement; provided, however, that the Borrower and the Administrative Agent shall be entitled to continue to deal solely and directly with the Assignor in connection with the interests so assigned until the Administrative Agent shall have received a copy of this Assignment and Assumption Agreement duly executed by the Assignor, the Assignee, the Administrative Agent, and, if applicable, the Borrower, and shall have received the assignment fee described in Section 11.5 of the Loan Agreement. From and H-2 123 after the Assignment Date, the Assignee shall be deemed to be a party to the Loan Agreement and, to the extent that rights and obligations thereunder shall have been assigned to Assignee as provided herein, shall have the rights and obligations of a Bank under the Loan Agreement. After the Assignment Date, and with respect to all such amounts accrued from the Assignment Date, (a) all interest, principal, fees, and other amounts that would otherwise be payable to the Assignor in respect of the Assigned Accommodations and the Assigned Commitment shall be paid to the Assignee, (b) if the Assignor receives any payment on account of the Assigned Accommodations or the Assigned Commitment that is payable to the Assignee, the Assignor shall promptly deliver such payment to the Assignee, and (c) if the Assignee receives any payment in respect of Obligations of the Borrower accrued prior to the Assignment Date, then Assignee shall pay over the same to Assignor. 6. Independent Investigation. The Assignee acknowledges that it is purchasing the Assigned Accommodations and the Assigned Commitment from the Assignor without recourse and, except as provided in Section 3(a) hereof, without representation or warranty. The Assignee further acknowledges that it has made its own independent investigation and credit evaluation of the Borrower in connection with its purchase of the Assigned Accommodations and the Assigned Commitment and has received copies of all Loan Documents that it has requested. Except for the representations or warranties set forth in Section 3(a), the Assignee acknowledges that it is not relying on any representation or warranty of the Assignor, expressed or implied, including without limitation, any representation or warranty relating to the legality, validity, genuineness, enforceability, collectibility, interest rate, repayment schedule, or accrual status of the Assigned Accommodations or the Assigned Commitment, the legality, validity, genuineness, or enforceability of the Loan Agreement, or any other Loan Document referred to in or delivered pursuant to the Loan Agreement, or the financial condition or creditworthiness of the Borrower. The Assignor has not acted and will not be acting as either the representative, agent or trustee of the Assignee with respect to matters arising out of or relating to the Loan Agreement or this Agreement. From and after the Assignment Date, the Assignor shall have no rights or obligations with respect to the Assigned Accommodations or the Assigned Commitment. 7. Method of Payment. All payments to be made by the Assignor or the Assignee party hereunder shall be in funds available at the place of payment on the same day and shall be made by wire transfer to the account designated by the party to receive payment. H-3 124 8. Integration. This Agreement shall supersede any prior agreement or understanding between the parties (other than the Loan Agreement or other Loan Documents) as to the subject matter hereof. 9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon the parties, their successors and assigns. 10. Governing Law. This Agreement shall be governed by, and construed in accordance with, the Applicable Laws of the Province of Ontario and the Applicable Laws of Canada applicable therein which apply to contracts to be performed entirely in Ontario. H-4 125 IN WITNESS WHEREOF, the Assignor and Assignee have executed, sealed and delivered this Agreement as of the date first above written. [ASSIGNOR] By: ------------------------------- Title: -------------------------- [ASSIGNEE] By: ------------------------------- Title: -------------------------- ASSIGNMENT AND ASSUMPTION AGREEMENT SIGNATURE PAGE 1 126 Consented to by: THE TORONTO-DOMINION BANK, as Administrative Agent By: --------------------------- Title: ------------------------- PAGING NETWORK OF CANADA INC., a Canada corporation By: --------------------------- Title: ------------------------- ASSIGNMENT AND ASSUMPTION AGREEMENT SIGNATURE PAGE 2 EX-10.16 4 LOAN AGREEMENT 1 EXHIBIT 10.16 C $35,000,000 CREDIT FACILITY FOR MADISON TELECOMMUNICATIONS HOLDINGS INC. (THE "BORROWER") PROVIDED BY THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME BANKS (THE "BANKS") THE TORONTO-DOMINION BANK AS ADMINISTRATIVE AGENT (THE "ADMINISTRATIVE AGENT") CLOSING DATE: JUNE 5, 1996 A. Loan Agreement 1. Loan Agreement, together with Exhibits and Schedules EXHIBITS Exhibit A Form of Draft Bankers' Acceptance Exhibit B Form of Drawing Notice Exhibit C Form of Request for Advance Exhibit D Form of Use of Proceeds Letter Exhibit E Form of Acceptance Exhibit F Form of Borrower's Loan Certificate Exhibit G Form of Subsidiary Loan Certificate Exhibit H Form of Performance Certificate Exhibit I Form of Assignment and Assumption Agreement SCHEDULES Schedule 1 Licenses Schedule 2 Security Documents Schedule 3 Subsidiaries Schedule 4 Agreements with Affiliates 2 B. Collateral Documents 2. Demand Debenture (Hypothec) executed by the Borrower 3. Debenture Pledge Agreement executed by the Borrower 4. General Assignment of Book Debts executed by the Borrower 5. Securities Pledge Agreement executed by the Borrower Exhibit A - Securities 6. Demand Debenture (Hypothec) executed by MTI 7. Debenture Pledge Agreement executed by MTI 8. General Assignment of Book Debts executed by MTI 9. Guarantee executed by MTI 10. Securities Pledge Agreement executed by PNCHI Exhibit A - Securities 11. Guarantee executed by PNCHI 12. Securities Pledge Agreement executed by MVC Exhibit A - Securities 13. Guarantee executed by MVC 14. Letter of Credit 15. Guarantee executed by PNI 16. Deposit Agreement executed by PNI 17. Deposit Agreement executed by MVC C. Legal Opinions 18. McCarthy Tetrault, Canadian counsel to the Borrower -2- 3 19. Legal opinions of local Canadian counsel to the Borrower with respect to the Canadian Security 20. Bingham, Dana & Gould, general corporate counsel to PNI 21. Ferris, Vaughan, Wills & Murphy, general corporate counsel to PNI 22. Powell, Goldstein, Frazer & Murphy, special New York counsel to Administrative Agent D. Certificates, Diligence Items, and Other Conditions Precedent to the Closing and Funding 23. Borrower's Loan Certificate Exhibit A - Certificate of Incorporation Exhibit B - By-Laws Exhibit C - Authorizing Resolutions Exhibit D - Certificates of Status, Compliance or Good Standing Exhibit E - Shareholders' Agreement or Voting Trust Agreement 24. Subsidiary Loan Certificate of MTI Exhibit A - Certificate of Incorporation/Partnership Exhibit B - By-Laws/Partnership Agreement Exhibit C - Authorizing Resolutions Exhibit D - Certificates of Status, Compliance or Good Standing Exhibit E - Shareholders' Agreement or Voting Trust Agreement 25. Copies of Insurance Binders/Certificates with respect to the Assets of the Borrower and the Borrower's Subsidiaries KEY: MTI - Madison Telecommunications Inc. MVC - Madison Venture Corporation PNCHI - Paging Network Canadian Holdings, Inc. -3- 4 LOAN AGREEMENT AMONG MADISON TELECOMMUNICATIONS HOLDINGS INC. (THE "BORROWER"); THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND THE TORONTO-DOMINION BANK, AS ADMINISTRATIVE AGENT FOR THE BANKS (THE "ADMINISTRATIVE AGENT") INDEX
Page ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 2 Credit Facility . . . . . . . . . . . . . . . . . . . . . . 23 Section 2.1 Commitment . . . . . . . . . . . . . . . . . . . . . 23 Section 2.2 Uncollateralized Advances . . . . . . . . . . . . . . 24 Section 2.3 Collateralized Advances . . . . . . . . . . . . . . . 25 Section 2.4 Notification of Banks; Disbursement . . . . . . . . . 28 Section 2.5 Bankers' Acceptances . . . . . . . . . . . . . . . . 30 Section 2.6 Interest; Fees . . . . . . . . . . . . . . . . . . . 33 Section 2.7 Fees . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 2.8 Mandatory Commitment Reductions . . . . . . . . . . . 36 Section 2.9 Optional Prepayments; Commitment Reductions . . . . . . . . . . . . . . . . . . . . . 37 Section 2.10 Mandatory Repayments . . . . . . . . . . . . . . . . 37 Section 2.11 Evidence of Obligations; Accommodation Accounts . . . . . . . . . . . . . . . . . . . . . . 38 Section 2.12 Manner of Payment . . . . . . . . . . . . . . . . . . 38 Section 2.13 Reimbursement . . . . . . . . . . . . . . . . . . . . 39 Section 2.14 Pro Rata Treatment . . . . . . . . . . . . . . . . . 40 ARTICLE 3 Conditions Precedent . . . . . . . . . . . . . . . . . . . 41 Section 3.1 Conditions Precedent to Agreement . . . . . . . . . . 41 Section 3.2 Conditions Precedent to All Accommodations . . . . . . . . . . . . . . . . . . . 44 ARTICLE 4 Representations and Warranties . . . . . . . . . . . . . . 45 Section 4.1 Representations and Warranties . . . . . . . . . . . 45 Section 4.2 Survival of Representations and Warranties, etc . . . . . . . . . . . . . . . . . . . 53 Section 4.3 No Representations by Banks . . . . . . . . . . . . . 53
5
Page ---- ARTICLE 5 General Covenants . . . . . . . . . . . . . . . . . . . . . 53 Section 5.1 Preservation of Existence and Similar Matters . . . . . . . . . . . . . . . . . . . . . . . 54 Section 5.2 Business; Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 5.3 Maintenance of Properties . . . . . . . . . . . . . . 54 Section 5.4 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . 54 Section 5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . 54 Section 5.6 Payment of Taxes and Claims . . . . . . . . . . . . . 55 Section 5.7 Compliance with ERISA . . . . . . . . . . . . . . . . 55 Section 5.8 Visits and Inspections . . . . . . . . . . . . . . . 57 Section 5.9 Payment of Indebtedness; Accommodations . . . . . . . 57 Section 5.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . 58 Section 5.11 Protect Security Interests . . . . . . . . . . . . . 58 Section 5.12 Environmental Audits . . . . . . . . . . . . . . . . 58 Section 5.13 Further Assurances . . . . . . . . . . . . . . . . . 59 ARTICLE 6 Information Covenants . . . . . . . . . . . . . . . . . . . 59 Section 6.1 Quarterly Financial Statements and Information . . . . . . . . . . . . . . . . . . . . . 59 Section 6.2 Annual Financial Statements and Information . . . . . . . . . . . . . . . . . . . . . 59 Section 6.3 Performance Certificates . . . . . . . . . . . . . . 60 Section 6.4 Copies of Other Reports . . . . . . . . . . . . . . . 60 Section 6.5 Notice of Litigation and Other Matters . . . . . . . 61 Section 6.6 Environmental Reporting . . . . . . . . . . . . . . . 62 ARTICLE 7 Negative Covenants . . . . . . . . . . . . . . . . . . . . 62 Section 7.1 Indebtedness of the Borrower and its Subsidiaries . . . . . . . . . . . . . . . . . . . . 63 Section 7.2 Limitation on Liens . . . . . . . . . . . . . . . . . 63 Section 7.3 Amendment and Waiver . . . . . . . . . . . . . . . . 63 Section 7.4 Liquidation, Merger, or Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.5 Limitation on Guaranties . . . . . . . . . . . . . . 64 Section 7.6 Investments and Acquisitions . . . . . . . . . . . . 64 Section 7.7 Restricted Payments and Purchases . . . . . . . . . . 64 Section 7.8 Leverage Ratio . . . . . . . . . . . . . . . . . . . 65 Section 7.9 Annualized Operating Cash Flow to Pro Forma Debt Service . . . . . . . . . . . . . . . . . 65 Section 7.10 Total Debt Per Subscriber . . . . . . . . . . . . . . 65
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Page ---- Section 7.11 Capital Expenditures . . . . . . . . . . . . . . . . 65 Section 7.12 Minimum Revenue Test . . . . . . . . . . . . . . . . 66 Section 7.13 Minimum Units in Service . . . . . . . . . . . . . . 66 Section 7.14 Affiliate Transactions . . . . . . . . . . . . . . . 67 Section 7.15 Real Estate . . . . . . . . . . . . . . . . . . . . . 67 Section 7.16 ERISA Liabilities . . . . . . . . . . . . . . . . . . 67 ARTICLE 8 Default . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . 67 Section 8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . 71 ARTICLE 9 The Administrative Agent . . . . . . . . . . . . . . . . . 72 Section 9.1 Appointment and Authorization . . . . . . . . . . . . 72 Section 9.2 Interest Holders . . . . . . . . . . . . . . . . . . 72 Section 9.3 Consultation with Counsel . . . . . . . . . . . . . . 72 Section 9.4 Documents . . . . . . . . . . . . . . . . . . . . . . 73 Section 9.5 Administrative Agent and Affiliates . . . . . . . . . 73 Section 9.6 Responsibility of the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 9.7 Security Documents . . . . . . . . . . . . . . . . . 73 Section 9.8 Action by the Administrative Agent . . . . . . . . . 74 Section 9.9 Notice of Default or Event of Default . . . . . . . . 74 Section 9.10 Responsibility Disclaimed . . . . . . . . . . . . . . 75 Section 9.11 Indemnification . . . . . . . . . . . . . . . . . . . 75 Section 9.12 Credit Decision . . . . . . . . . . . . . . . . . . . 76 Section 9.13 Successor Administrative Agent . . . . . . . . . . . 76 Section 9.14 Delegation of Duties . . . . . . . . . . . . . . . . 77 Section 9.15 Determination by Administrative Agent Conclusive and Binding . . . . . . . . . . . . . . . 77 ARTICLE 10 Computations and Indemnities . . . . . . . . . . . . . . . 77 Section 10.1 Indemnity for Change in Circumstances . . . . . . . . 77 Section 10.2 Indemnity for Transactional and Environmental Liability . . . . . . . . . . . . . . . 78 Section 10.3 Taxation on Payments . . . . . . . . . . . . . . . . 80 Section 10.4 Judgment Currency . . . . . . . . . . . . . . . . . . 81 Section 10.5 Claims for Increased Costs and Taxes . . . . . . . . 82 Article II Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 82 Section 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 82 Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . 84
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Page ---- Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . 85 Section 11.4 Right to Combine and Set-Off . . . . . . . . . . . . 86 Section 11.5 Assignment . . . . . . . . . . . . . . . . . . . . . 86 Section 11.6 Accounting Principles . . . . . . . . . . . . . . . . 87 Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . . 88 Section 11.8 Governing Law . . . . . . . . . . . . . . . . . . . . 88 Section 11.9 Severability . . . . . . . . . . . . . . . . . . . . 88 Section 11.10 Interest . . . . . . . . . . . . . . . . . . . . . . 88 Section 11.11 Table of Contents and Headings . . . . . . . . . . . 89 Section 11.12 Amendment and Waiver . . . . . . . . . . . . . . . . 89 Section 11.13 Non-Merger . . . . . . . . . . . . . . . . . . . . . 90 Section 11.14 Other Relationships . . . . . . . . . . . . . . . . . 90 Section 11.15 Directly or Indirectly . . . . . . . . . . . . . . . 90 Section 11.16 Reliance on and Survival of Various Provisions . . . . . . . . . . . . . . . . . . . . . 91 Section 11.17 Senior Debt . . . . . . . . . . . . . . . . . . . . . 91 Section 11.18 Obligations Several . . . . . . . . . . . . . . . . . 91 Section 11.19 Confidentiality . . . . . . . . . . . . . . . . . . . 91 Section 11.20 Time of the Essence . . . . . . . . . . . . . . . . . 92 Section 11.21 Third Party Beneficiaries . . . . . . . . . . . . . . 92 Section 11.22 Enurement . . . . . . . . . . . . . . . . . . . . . . 92
-iv- 8 EXHIBITS Exhibit A - Form of Draft Bankers' Acceptance Exhibit B - Form of Drawing Notice Exhibit C - Form of Request for Advance Exhibit D - Form of Acceptance Exhibit E - Form of Borrower's Loan Certificate Exhibit F - Form of Subsidiary Loan Certificate Exhibit G - Form of Performance Certificate Exhibit H - Form of Assignment and Assumption Agreement SCHEDULES Schedule 1 - Licenses Schedule 2 - Security Documents Schedule 3 - Subsidiaries Schedule 4 - Agreements with Affiliates -v- 9 LOAN AGREEMENT MADISON TELECOMMUNICATIONS HOLDINGS INC. (THE "BORROWER"); THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND THE TORONTO-DOMINION BANK, AS ADMINISTRATIVE AGENT FOR THE BANKS (THE "ADMINISTRATIVE AGENT") agree as follows as of the 5th day of June, 1996: ARTICLE 1 Definitions For the purposes of this Agreement: "Accommodation" shall mean (i) an Advance made by the Banks or any one or more of them on the occasion of any Borrowing; and (ii) a Bankers' Acceptance created by any Bank on the occasion of any Drawing. "Accommodation Notice" shall mean a Request for Advance or a Drawing Notice. "Administrative Agent" shall mean The Toronto-Dominion Bank, in its capacity as Administrative Agent for the Banks or any successor Administrative Agent appointed pursuant to Section 9.13 of this Agreement. "Administrative Agent's Office" shall mean the office of the Administrative Agent located at 8th Floor, Toronto Dominion Tower, Toronto Dominion Centre, Toronto, Ontario M5K lA2, or such other office as may be designated pursuant to the provisions of Section 11.1 of this Agreement. "Advance" shall mean amounts advanced by the Banks to the Borrower pursuant to Section 2.2 and Section 2.3 hereof on the occasion of any Borrowing and shall include, as designated by the Borrower in accordance with the terms of this Agreement, a Collateralized Advance and an Uncollateralized Advance; and "Advances" shall mean more than one Advance. "Affiliate" shall mean, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such first Person. For purposes of this definition, "control" when used with respect to any Person includes, without limitation, the direct or indirect beneficial ownership of more than ten percent (10%) of the voting securities 10 or voting equity of such Person or the power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Agreement" shall mean this Loan Agreement, together with all Exhibits and Schedules hereto. "Agreement Date" shall mean June 5, 1996. "Annualized Operating Cash Flow" shall mean, as of any date, the product of (a) the aggregate Operating Cash Flow for the Borrower Group on a combined basis for the fiscal quarter end being tested or the most recently completed fiscal quarter, as the case may be, times (b) four (4). "Applicable Law" shall mean, in respect of any Person, all provisions of constitutions, statutes, codes, ordinances, rules, regulations, municipal by-laws, judicial, arbitral, administrative, ministerial, departmental or regulatory judgments, orders, decisions, rulings or awards, policies and guidelines of any Governmental Entity, or any provisions of the foregoing, including general principles of common and civil law and equity, applicable to such Person, including, without limiting the foregoing, the Licenses, and all orders, decisions, judgments and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a party or by which it is bound. "Applicable Margin" shall mean the interest rate or fee margin applicable to Advances and Bankers' Acceptances, as the case may be, in each case determined in accordance with Section 2.6(d) hereof. "Assets" means, with respect to any Person, all property and assets of such Person, both real and personal, of every kind and wheresoever situate, whether now owned or hereafter acquired. "Authorized Signatory" shall mean such senior personnel of a Person as may be duly authorized and designated in writing by such Person to execute documents, agreements and instruments on behalf of such Person. "Available Commitment" shall mean, as of any date, the greater of (a) the Equivalent Canadian Dollar Amount of the aggregate amount of Permitted Collateral held on such date by the Administrative Agent pursuant to the Deposit Agreement; and (b) $35,000,000, but only to the extent that (i) the Minimum Permitted Collateral Amount is held on such date by the Administrative Agent pursuant to the Deposit Agreement and (ii) as of end of the most recently completed fiscal quarter for which -2- 11 financial statements have been delivered pursuant to Sections 6.1 or 6.2, as applicable, hereof either (A) the Leverage Ratio is less than 7.0 to 1 or (B) (i) the aggregate number of Units in Service is greater than or equal to 45,000 and (ii) Gross Revenue for the Borrower Group on a combined basis is greater than or equal to $1,875,000; provided, however, that the Available Commitment shall not at any time exceed (1) the Commitment on such date and (2) the product of (x) the Equivalent Canadian Dollar Amount of the aggregate amount of Permitted Collateral held on such date by the Administrative Agent pursuant to the Deposit Agreement times (y) 1.55555556; and provided, further, however, that from and after the date of any event which, with respect to the Licenses, results in a violation of the Canadian ownership and control rules promulgated under the Radiocommunication Act (Canada), the Telecommunications Act (Canada) and any replacement act or any regulations made under any such act, the Available Commitment shall be as set forth in clause (a) of this definition. "Bankers' Acceptance" shall have the meaning set forth in Section 2.5 hereof and shall include, as designated by the Borrower in accordance with the terms of this Agreement, a Collateralized Bankers' Acceptance and an Uncollateralized Bankers' Acceptance. "Bankers' Acceptance Fee Rate" shall mean the Applicable Margin for Bankers' Acceptances as determined in accordance with Section 2.6(d) hereof. "Bankers' Acceptance Permitted Collateral Rate" shall mean, with respect to any Bankers' Acceptance, the sum of (a) the rate of interest per annum which is equivalent to the rate quoted to the Borrower by the Administrative Agent as the Administrative Agent's Canadian Dollar bankers' acceptance rate for bankers' acceptances having the same term to maturity as such Bankers' Acceptance, plus (b) 0.500%. "Banks" shall mean those financial institutions whose names appear as "Banks" on the signature pages to this Agreement, together with any assignees thereof pursuant to Section 11.5 hereof; and "Bank" shall mean any one of the foregoing Banks. "Borrower" shall mean Madison Telecommunications Holdings Inc., a Canada corporation. "Borrower Group" shall mean, collectively, the Borrower and its Subsidiaries and PageNet Canada and its Subsidiaries. "Borrowing" shall mean a borrowing consisting of one or more Advances. -3- 12 "Business" shall have the meaning specified in Section 4.1(e) hereof. "Business Day" shall mean a day on which banks and foreign exchange markets are open for the transaction of business required for this Agreement in Toronto, Canada, as relevant to the determination to be made or the action to be taken. "Capital Expenditures" shall mean, for any Person for any period, expenditures for the purchase of assets of long-term use which would be required to be capitalized on the balance sheet of such Person in accordance with GAAP; provided, however, that Capital Expenditures for any period shall be reduced by the net book value of Units in Service sold during such period, which had been reflected in the determination of Capital Expenditures for any prior periods' Capital Expenditures. "Capital Stock" shall mean, as applied to any Person, any capital stock of such Person, regardless of class or designation, and all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any character with respect thereto. "Capitalized Lease Obligation" shall mean that portion of any obligation of a Person as lessee under a lease which at the time would be required to be capitalized on the balance sheet of such Person in accordance with GAAP. "Change Event" shall mean the occurrence of any of the following events or the existence of any of the following conditions: (a) Paging Network, Inc. shall cease to own, directly or indirectly, (i) 33-1/3% of the voting Capital Stock of the Borrower and (ii) 100% of the nonvoting Capital Stock of the Borrower; or (b) except in connection with a transfer to (i) a Person acceptable to all of the Banks acting reasonably, or (ii) Paging Network, Inc. (or a wholly-owned Subsidiary of Paging Network, Inc.) so long as on such date (A) the sum of the principal amount of all Advances and the Face Amount of all Bankers' Acceptances then outstanding does not exceed the sum of (1) the Equivalent Canadian Dollar Amount of the Permitted Collateral held by the Administrative Agent under the Deposit Agreement on such date and (2) the Letter of Credit or (B) such transfer is in full compliance with the Canadian ownership and control rules promulgated under the Radiocommunication Act (Canada), the Telecommunications Act (Canada) and any replacement act or any regulations made under any such act, Madison Venture Corporation shall cease to own, directly or indirectly, 66-2/3% of the voting Capital Stock of the Borrower; or (c) the Borrower shall fail to own, directly or indirectly through one or more -4- 13 wholly-owned Subsidiaries all of the issued and outstanding Capital Stock of each of its Subsidiaries. "Claim" shall mean any claim of any nature whatsoever, including any demand, liability (whether accrued or accruing, actual or contingent), obligation, debt, cause of action, suit, proceeding, judgment, award, assessment and reassessment. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Collateral" shall mean any property of any kind constituting or intended to constitute collateral for the Obligations under any of the Loan Documents and shall include, without limitation, the Permitted Collateral. "Collateralized Advance" shall mean a Collateralized Prime Rate Advance and a Cost of Funds Rate Advance; provided, however, that the Borrower may not request a Collateralized Advance (and no Collateralized Advance shall be made) if on the date of such Collateralized Advance the sum of the Equivalent Canadian Dollar Amount of the Permitted Collateral held under the Deposit Agreement and the Letter of Credit does not equal or exceed the sum of the principal amount of all Collateralized Advances and the Face Amount of all Collateralized Bankers' Acceptances then outstanding plus the principal amount of the Collateralized Advance so requested. "Collateralized Bankers' Acceptance" shall mean a Drawing which the Borrower requests to be made as a Collateralized Bankers' Acceptance or is continued as or converted into a Collateralized Bankers' Acceptance in accordance with the provisions of Section 2.5 hereof; provided, however, that the Borrower may not request a Collateralized Bankers' Acceptance (and no such Bankers' Acceptance shall be issued) if on the date of such Drawing the sum of the Equivalent Canadian Dollar Amount of the Permitted Collateral held pursuant to the Deposit Agreement and the Letter of Credit does not equal or exceed the sum of the principal amount of all Collateralized Advances and the Face Amount of all Collateralized Bankers' Acceptances outstanding on such date plus the Face Amount of the Collateralized Bankers' Acceptance so requested. "Collateralized Prime Rate Advance" shall mean a Collateralized Advance which bears interest at the Prime Rate Basis and which the Borrower requests to be made as a Collateralized Prime Rate Advance or is continued as or converted into a Collateralized Prime Rate Advance, in accordance with the provisions of this Agreement, and which shall be in a principal -5- 14 amount of at least $500,000 and in an integral multiple of $500,000. "Commitment" shall mean the several obligations of the Banks to make Accommodations to the Borrower pro rata, in accordance with their respective Commitment Ratios, in an aggregate amount of up to $35,000,000 pursuant to the terms hereof, as such obligations may be reduced from time to time pursuant to the terms hereof. "Commitment Ratio" shall mean, with respect to any Bank, the percentage equivalent of the ratio which such Bank's pro rata portion of the total Commitment bears to the aggregate amount of the Commitment (as each may be adjusted from time to time as provided herein); and "Commitment Ratios" shall mean the Commitment Ratios of all of the Banks with respect to the Commitment. As of the Agreement Date the Commitment Ratio of the only Bank party to this Agreement, The Toronto-Dominion Bank, is 100%. "Cost of Funds Rate" shall mean, for each Interest Period for each Collateralized Advance which bears interest at the Cost of Funds Rate, the per annum rate of interest equal to the rate of interest per annum, calculated on the basis of a year of 365 days or 366 days (in the case of a leap year), equal to the rate of interest per annum quoted by The Toronto-Dominion Bank at approximately 10:00 a.m. (Toronto time) on the first day of such Interest Period, as the rate that would be payable by The Toronto-Dominion Bank if it were to issue in the Canadian money market its deposit liability instruments in an aggregate principal amount approximately equal to the principal amount of, and for a length of time approximately equal to the Interest Period for, such Collateralized Advance, whether or not The Toronto-Dominion Bank shall actually issue such deposit liability instruments on the date on which such quotation is given, plus one-half of one percent (0.5%). The Cost of Funds Rate shall apply to Interest Periods of one (1), two (2), three (3) or six (6) months (nine (9) or twelve (12) months subject to availability) and, once determined, shall remain unchanged during such Interest Period. "Cost of Funds Rate Advance" shall mean a Collateralized Advance which bears interest at the Cost of Funds Rate and which the Borrower requests to be made as a Cost of Funds Rate Advance or is continued as or converted into a Cost of Funds Rate Advance, in accordance with the provisions of this Agreement, and which shall be in a principal amount of at least $500,000 and in an integral multiple of $500,000. -6- 15 "Default" shall mean any Event of Default, and any of the events specified in Section 8.1 hereof, regardless of whether there shall have occurred any passage of time or giving of notice, or both, that would be necessary in order to constitute such event an Event of Default. "Default Rate" shall mean a simple per annum interest rate equal to the sum of (a) the Prime Rate, plus (b) the Applicable Margin for Uncollateralized Prime Rate Advances, plus (c) two percent (2%). "Deposit Agreement" shall mean, collectively, that certain Deposit Agreement of even date herewith between PageNet and the Administrative Agent for the benefit of the Banks, the Deposit Agreement of even date herewith between Madison Venture Corporation and the Administrative Agent for the benefit of the Banks and any other Deposit Agreement entered into by the Administrative Agent after the Agreement Date. "Dollar" or "$" shall mean (except where specifically designated otherwise) lawful money of Canada. "Draft" shall mean, at any time, a blank bill of exchange within the meaning of the Bills of Exchange Act (Canada) in substantially the form set out in Exhibit A hereto drawn by the Borrower on a Bank and bearing such distinguishing letters and numbers as such Bank may determine, but which at such time, except as otherwise provided herein, has not been completed or accepted by such Bank. "Drawing" shall mean the creation of a Bankers' Acceptance by a Bank. "Drawing Date" shall have the meaning ascribed to such term in the definition of "Drawing Notice" set forth herein. "Drawing Fee" shall mean, with respect to each Draft drawn by the Borrower hereunder and accepted by a Bank on any Drawing Date, an amount equal to the Bankers' Acceptance Fee Rate multiplied by the aggregate Face Amount of such Draft, calculated daily on the basis of the term to maturity of such Draft and a year of 365 days or 366 days (in the case of a leap year). "Drawing Notice" shall mean a certificate designated as a "Drawing Notice," signed by an Authorized Signatory of the Borrower requesting a Drawing hereunder, which shall be in substantially the form of Exhibit B and shall, among other things, specify: (a) the requested date for such Drawing (the "Drawing Date"); (b) the aggregate Face Amount of Drafts to be accepted in Canadian Dollars; (c) the Interest Period for such -7- 16 Drafts; and (d) whether the requested Drawing is to be a Collateralized Bankers' Acceptance or an Uncollateralized Bankers' Acceptance. "Employee Pension Plan" shall mean any Plan subject to the minimum funding requirement of Section 302 of ERISA or Section 412 of the Code. "Environmental Auditor" shall mean a qualified environmental auditor at arm's length from the Borrower and acceptable to the Administrative Agent. "Environmental Laws" shall mean all Applicable Laws in force from time to time relating to the environment, Hazardous Substances, pollution or protection of the environment, including Laws relating to: (i) on site or off-site contamination; (ii) occupational health and safety; (iii) chemical substances or products; (iv) Releases of pollutants, contaminants, chemicals or other industrial, toxic or radioactive substances or Hazardous Substances into the environment; and (v) the manufacture, processing, distribution, use, treatment, storage, transport or handling of Hazardous Substances. "Environmental Liabilities and Costs" shall mean all Losses and Claims, whether known or unknown, current or potential, past, present or future, imposed by, under or pursuant to Environmental Laws, including all Losses and Claims related to Remedial Actions and all reasonable fees, disbursements and expenses of counsel, experts, personnel and consultants, where such Losses and Claims are based on, arise out of or are otherwise in respect of: (i) the ownership or operation of the Business or any Assets related to the Business; (ii) the conditions on, under, above or about any real property, assets, equipment or facilities currently or previously owned, leased or operated by the Borrower or its Subsidiaries; (iii) expenditures necessary to cause the operations of the Business or Assets either related to the Business or owned, leased or operated by the Borrower or its Subsidiaries to comply materially with any and all requirements, including expenditures necessary to effect the closure, decommissioning or rehabilitation of any of the operations of the business or Assets either related to the Business or owned, leased or operated by the Borrower or its Subsidiaries; (iv) the use, generation, manufacture, refining, treatment, transportation, storage, handling, recycling, disposal, depositing, transferring, producing or processing of Hazardous Substances; (v) liability for personal injury or property damage, including damages assessed for the maintenance of a public or private nuisance; and (vi) any other matter affecting the Real Estate or other Assets within the jurisdiction of any Governmental Entity administering any Environmental Law. -8- 17 "Environmental Notice" shall mean any written claim, citation, directive, request for information, statement of claim, notice of investigation, letter or other communication from any Person given pursuant to Environmental Laws. "Environmental Permits" shall mean all permits, certificates, approvals, registrations and licenses issued by any Governmental Entity to the Borrower, its Subsidiaries or to the Business pursuant to Environmental Laws and relating to or required for the operation of the Business or the use of the Real Estate or other Assets of the Borrower or its Subsidiaries. "Equivalent Canadian Dollar Amount" shall mean, on any day (a) with respect to Permitted Collateral denominated in Dollars, the principal or face amount of such Permitted Collateral, and (b) with respect to Permitted Collateral denominated in U.S. Dollars, the equivalent amount of Dollars determined using the quoted spot rate at which the Administrative Agent's principal office in Toronto offers to provide Dollars in exchange for U.S. Dollars in Toronto at 12:00 noon (Toronto time) on such day. "Equivalent U.S. Dollar Amount" shall mean, on any day, with respect to any amount of Dollars, the equivalent amount of U.S. Dollars determined by using the quoted spot rate at which the Administrative Agent's principal office in Toronto offers to provide U.S. Dollars in exchange for Dollars in Toronto at 12:00 noon (Toronto time) on such day. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as in effect from time to time. "ERISA Affiliate" shall mean any Person, including a Subsidiary or an Affiliate of the Borrower, that is treated as a single employer with the Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code. "Event of Default" shall mean any of the events specified in Section 8.1 hereof, provided that any requirement for notice or lapse of time has been satisfied. "Face Amount" shall mean, in respect of a Bankers' Acceptance, the amount payable to the holder thereof on its maturity. "GAAP" shall mean accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants as in effect on the Agreement Date. -9- 18 "Government List" shall mean a list maintained by any Governmental Entity of sites identified for investigation or clean-up pursuant to any Environmental Law. "Governmental Entity" shall mean any: (i) multinational, federal, provincial, state, municipal, local or other government, governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision, agent, commission, board, or authority of any of the foregoing; or (iii) any quasigovernmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing. "Gross Revenue" shall mean, with respect to any Person and its Subsidiaries on a consolidated basis, for the most recently completed fiscal quarter, gross revenues determined in accordance with GAAP. "Guaranty" or "Guaranteed," as applied to an obligation, shall mean and include (a) a guaranty, direct or indirect, in any manner, of all or any part of such obligation, and (b) any agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, any reimbursement obligations with respect to outstanding letters of credit or capital call requirements. "Hazardous Substance" shall mean any Substance which is or is deemed to be, alone or in any combination, hazardous, hazardous waste, toxic, a pollutant, a deleterious substance, a contaminant or a source of pollution or contamination under any Environmental Law, whether or not such Substance is defined as hazardous under the Environmental Law. "Immaterial Site Specific Licenses" shall mean, at any time, the aggregate Site Specific Licenses, the termination or cancellation of which, without contemporaneous replacement, would not reasonably be expected to have a Materially Adverse Effect. "Indebtedness" shall mean, with respect to any Person, and without duplication, (a) all items which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person, except (i) items of shareholders' and partners' equity or capital stock, (ii),items of surplus or general contingency or deferred tax reserves incurred in the ordinary course of business, (iii) accounts incurred and payable in the ordinary course of business, -10- 19 (iv) dividends payable, or (v) deferred pension costs, (b) all direct or indirect obligations of any other Person secured by any Lien to which any property or asset owned by such Person is subject, whether or not the obligation secured thereby shall have been assumed, (c) all Capitalized Lease Obligations of such Person and all obligations of such Person with respect to leases constituting part of a sale and lease-back arrangement, (d) all reimbursement obligations with respect to outstanding letters of credit, bankers' acceptances or similar instruments, (e) all obligations, contingent or otherwise, arising under Guaranties issued by such Person, and (f) all obligations of such Person under Interest Rate Hedge Agreements. "Indebtedness for Money Borrowed" shall mean, with respect to any Person, Indebtedness for money borrowed and Indebtedness represented by notes payable and drafts accepted representing extensions of credit, all obligations evidenced by bonds, debentures, notes or other similar instruments, all Indebtedness upon which interest charges are customarily paid, all Capitalized Lease Obligations, all reimbursement obligations with respect to outstanding letters of credit, bankers' acceptances or similar instruments, all Indebtedness issued or assumed as full or partial payment for property or services, whether or not any such notes, drafts, obligations or Indebtedness represent Indebtedness for money borrowed, and, without duplication, Guaranties of any of the foregoing. For purposes of this definition, interest which is accrued but not paid on the scheduled due date for such interest shall be deemed Indebtedness for Money Borrowed. "Interest Expense" shall mean, for any Person for any period, all interest expense (including imputed interest with respect to Capitalized Lease Obligations) with respect to any Indebtedness for Money Borrowed of such Person during such period pursuant to the terms of such Indebtedness for Money Borrowed, together with all fees paid in respect of such Indebtedness for Money Borrowed to the extent not already included in cash interest paid, all as calculated in accordance with GAAP. "Interest Period" shall mean (a) in connection with any Prime Rate Advance, the period beginning on the date such Advance is made and ending on the last day of the calendar month in which such Advance is made, provided, however, that if a Prime Rate Advance is made on the last day of any calendar month, it shall have an Interest Period ending on, and its Payment Date shall be, the last day of the following calendar month, (b) in connection with any Collateralized Advance which bears interest at the Cost of Funds Rate, the term of such Advance selected by the Borrower or otherwise determined in accordance with this Agreement; provided, however, (i) any applicable Interest Period which would otherwise end on a day which is not a Business Day shall be -11- 20 extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any applicable Interest Period which begins on a day for which there is no numerically corresponding day in the calendar month during which such Interest Period is to end shall (subject to clause (i) above) end on the last day of such calendar month, and (c) in connection with any Bankers' Acceptance, the term of such Bankers' Acceptance selected by the Borrower or otherwise determined in accordance with this Agreement. "Interest Rate Hedge Agreements" shall mean the obligations of any Person pursuant to any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar arrangements. "known to the Borrower" or "to the knowledge of the Borrower" shall mean known by the executive officers of the Borrower or any Subsidiary (which shall mean the chairman/president, the chief executive officer, the chief financial officer, the chief operating officer, the treasurer, and any in-house general counsel or other Persons performing like functions) or, based upon the reasonable inquiry that an executive officer would make, should have been known by such executive officer. "Leasehold Real Estate" shall mean the land and premises of the Borrower and its Subsidiaries held under agreement to lease or other right of occupation. "Letter of Credit" shall mean that certain irrevocable letter of credit in the original principal amount of at least $4,500,000 issued in favor of the Administrative Agent for the benefit of the Banks and all renewals thereof and substitutions therefor, all of which shall be in form and substance satisfactory to the Administrative Agent. "Leverage Ratio" shall mean, as of any date, the ratio of (a) Total Debt for the Borrower Group on a combined basis to (b) Annualized Operating Cash Flow. "Licenses" shall mean any radio, telephone, microwave, wireless messaging or other license (excluding Immaterial Site Specific Licenses), authorization, certificate of compliance or -12- 21 convenience, franchise, approval or permit, granted or issued by any Governmental Entity and held by the Borrower or any of its Subsidiaries, all of which (other than Site Specific Licenses) are listed as of the Agreement Date on Schedule 1 hereto. "Lien" shall mean, with respect to any property, any mortgage, lien, pledge, negative pledge or other agreement not to pledge, assignment, charge, security interest, title retention agreement, levy, execution, seizure, attachment, garnishment or other encumbrance of any kind in respect of such property, whether created by statute, contract, the common law or otherwise, and whether or not choate, vested or perfected. "Loan Documents" shall mean this Agreement, the Security Documents, all subordination agreements entered into by creditors of the Borrower or any of its Subsidiaries with respect to Indebtedness for Money Borrowed of the Borrower or any of its Subsidiaries, all legal opinions or reliance letters issued by counsel to the Borrower or any of its Subsidiaries, all fee letters, all Requests for Advance, all Interest Rate Hedge Agreements between the Borrower, on the one hand, and the Administrative Agent and the Banks, or any of them, on the other hand, and all other documents and agreements executed or delivered in connection with or contemplated by this Agreement. "Loss" means any loss whatsoever, whether direct or indirect, including expenses, costs, damages, judgments, penalties, fines, charges, claims, demands, liabilities, loss of profits, debts, interest, any and all legal fees and disbursements, on a solicitor and own client basis. "Majority Banks" shall mean (i) at any time that no Accommodations are outstanding hereunder, Banks the total of whose Commitment Ratios equals or exceeds sixty-six and two-thirds percent (66-2/3%) of the aggregate Commitment Ratios of all Banks entitled to vote hereunder, or (ii) at any time that there are Accommodations outstanding hereunder, Banks the total of whose Accommodations outstanding equals or exceeds sixty-six and two-thirds percent (66-2/3%) of the total principal amount of the Accommodations then outstanding of all Banks hereunder (excluding from such calculation the Accommodations of any Banks who fail to provide Accommodations as provided in Section 2.4(b) hereof). "Materially Adverse Effect" shall mean (a) any material adverse effect upon the business, assets, liabilities, financial condition, results of operations, properties, or business of the Borrower and its Subsidiaries on a consolidated basis, or (b) except as a result of the action or inaction of the Administrative Agent or any Bank, a material adverse effect upon -13- 22 the validity or enforceability of this Agreement or any of the Loan Documents, or upon the ability of the Borrower or any of its Subsidiaries to perform the payment obligations or other obligations under this Agreement or any other Loan Document, or upon the value of the Collateral or upon the rights, benefits or interests of the Banks in and to the Accommodations or the rights of the Administrative Agent and the Banks in the Collateral; in either case, whether resulting from any single act, omission, situation, status, event or undertaking, or taken together with other such acts, omissions, situations, statuses, events or undertakings. "Maturity Date" shall mean June 30, 2003, or as the case may be, such earlier date as payment of the obligations shall be due (whether by acceleration, reduction of the Commitment to zero or otherwise). "Minimum Permitted Collateral Amount" shall mean, as of any date, (a) prior to June 30, 1999, $22,500,000 (or the Equivalent U.S. Dollar Amount), and (b) thereafter, the lesser of (i) $22,500,000 (or the Equivalent U.S. Dollar Amount) and (ii) the product of (A) sixty-four and three-tenths of one percent (64.3%) times (B) the Commitment as of such date. "Multiemployer Plan" shall mean an Employee Pension Plan which is a "multiemployer plan" within the meaning set forth in Section 4001(a)(3) of ERISA. "Necessary Authorizations" shall mean all approvals and licenses from, and all filings and registrations with, any Governmental Entity or other regulatory authority, including, without limiting the foregoing, the Licenses and all approvals, licenses, filings and registrations under Applicable Law, necessary in order to enable the Borrower and its Subsidiaries to own, construct, maintain, and operate wireless messaging systems currently being constructed, maintained or operated and to invest in other Persons who own, construct, maintain, and operate wireless messaging systems. "Net Income" shall mean, for any Person and its Subsidiaries on a consolidated basis, for any period, net income determined in accordance with GAAP for such Person and its Subsidiaries. "Network and Equipment Agreement" shall mean that certain Network Coordination and Equipment Supply Agreement dated as of October 28, 1994 between PageNet and Madison Telecommunications Inc., as amended by Amendment No.1 dated as of October 26, 1995. "Obligations" shall mean all payment and performance obligations of every kind, nature and description of the -14- 23 Borrower, its Subsidiaries, and any other obligors to the Banks or the Administrative Agent, or any of them, under this Agreement and the other Loan Documents (including any interest, fees and other charges on the Accommodations or otherwise under the Loan Documents that would accrue but for the filing of a bankruptcy action with respect to the Borrower or any of its Subsidiaries, whether or not such claim is allowed in such bankruptcy action and including Obligations to the Administrative Agent or any of the Banks under any Interest Rate Hedge Agreements) as they may be amended, restated or supplemented from time to time and all extensions or renewals, or as a result of making the Accommodations, whether such obligations are direct or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, arising by operation of Applicable Law or otherwise, now existing or hereafter arising. "Operating Cash Flow" shall mean, with respect to any Person and its Subsidiaries, on a consolidated basis, at the end of the most recently completed fiscal quarter, as determined in accordance with GAAP, the sum of (a) Net Income for such period (after eliminating any extraordinary gains and losses, including gains and losses from the sale of assets), plus (b) to the extent deducted in determining Net Income, the sum of the following for such period: (i) depreciation and amortization expense, (ii) Interest Expense and (iii) income tax expense and (iv) all other non-cash items which will not require cash payment in the future. Operating Cash Flow attributable to any acquisition will be included in the determination of Operating Cash Flow as if the Assets so acquired had been acquired on the first day of such fiscal period, and the operating results of any acquired Assets for that portion of any fiscal period in which they were not owned by the Borrower or any of its Subsidiaries shall be determined by reference to financial information prepared by the prior owners thereof, subject to such adjustments as the Administrative Agent may reasonably require. "PageNet" shall mean Paging Network, Inc., a Delaware corporation. "PageNet Canada" shall mean Paging Network of Canada Inc., a Canada corporation. "PageNet Canada Agreement" shall mean that certain Loan Agreement dated as of even date herewith by and among Paging Network of Canada Inc., the Banks and the, Administrative Agent. "PageNet Guaranty" shall mean that certain Guaranty in favor of the Administrative Agent for the benefit of the Banks, given by PageNet of even date herewith. -15- 24 "Payment Date" shall mean the last day of any Interest Period. "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto. "Permitted Asset Sale" shall mean the sale by the Borrower or any of its Subsidiaries of all or any part of its Assets as permitted under Section 7.4 hereof. "Permitted Collateral" shall mean (a) the Letter of Credit (or the proceeds thereof in Dollars if such Letter of Credit is drawn), (b) U.S. Dollars, (c) marketable, direct obligations of the United States of America maturing within ninety (90) days of the date of purchase, or (d) other collateral acceptable to the Banks at any time and from time to time held by or on deposit with the Administrative Agent pursuant to the Deposit Agreement as collateral for the PageNet Guaranty. "Permitted Investments" shall mean: (a) negotiable instruments or securities in bearer or registered form which are not held for more than 30 days and which evidence: (i) obligations of or guaranteed by the Government of Canada so long as they have the Permitted Rating; (ii) obligations of or guaranteed by a province or municipality of Canada so long as they have the Permitted Rating; (iii) deposits or bankers' acceptances issued or accepted by any Schedule I Canadian chartered bank so long as they have the Permitted Rating; (iv) commercial paper of Canadian corporations or other Canadian issuers so long as it has the Permitted Rating; (v) other similar negotiable instruments or securities which are issued or guaranteed by Persons which have the Permitted Rating; or (b) demand deposits in any Schedule I Canadian chartered bank so long as they have the Permitted Rating or (c) investments in any wholly-owned Subsidiary of the Borrower so long as the corresponding debt instruments, if any, are pledged to the Administrative Agent as security for the Obligations. "Permitted Liens" shall mean, as applied to any Person: (a) Any Lien in favor of the Administrative Agent or any Bank given to secure the Obligations; (b) (i) Liens on real estate or other property for taxes, assessments, governmental charges or levies not yet delinquent and (ii) Liens for taxes, assessments, judgments, governmental charges or levies or claims the non-payment of which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been set aside on such Person's books, but only so long as no foreclosure, -16- 25 distraint, sale or similar proceedings have been commenced with respect thereto; (c) Liens of carriers, warehousemen, mechanics, laborers and materialmen incurred in the ordinary course of business for sums not yet more than sixty (60) days past due or being diligently contested in good faith, if adequate reserves shall have been set aside on such Person's books, but only so long as no foreclosure, distraint, sale or similar proceedings have been commenced with respect thereto; (d) Liens incurred in the ordinary course of business in connection with worker's compensation and unemployment insurance; (e) Restrictions on the transfer of the Licenses or assets of the Borrower or its Subsidiaries imposed by any of the Licenses as presently in effect; (f) Easements, rights-of-way, and other similar encumbrances on the use of real property which do not materially interfere with the ordinary conduct of the business of such Person or the use of such property; (g) The reservations, limitations, provisos and conditions, if any, expressed in any original grants of real property from the Crown; (h) Purchase money security interests to the extent incurred in connection with the acquisition of any property or assets by the Borrower or any of its Subsidiaries permitted hereunder; provided, that (1) such Lien shall attach only to the property or asset acquired in such transaction and shall not extend to or cover any other assets or properties of the Borrower or any of its Subsidiaries; (2) the Indebtedness secured or covered by such Lien shall not exceed the cost of the asset or property acquired and shall not be increased; and (3) all such Indebtedness secured or covered by such Liens shall not exceed $500,000 in the aggregate at anytime outstanding; (i) Undetermined and inchoate Liens, rights of distress and charges incurred in the ordinary course of business which have not been filed or exercised or which relate to obligations not due or payable, or if due or payable, the -17- 26 validity of which is being contested diligently and in good faith by appropriate proceedings, but only so long as no foreclosure, distraint, sale or similar proceedings have been commenced with respect thereto; (j) Title defects or irregularities in respect of real property which are of a minor nature and which in the aggregate do not materially impair the use of such property for the purpose for which it is used or the conduct of the business of such Person; (k) The rights reserved to or vested in any Governmental Entity by the terms of any lease, License, franchise, grant or permit or by any statutory provision, to terminate any such lease, license, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof; and (1) Any Liens resulting from the deposit of cash or securities in connection with contracts, tenders or expropriation proceedings, or to secure surety or appeal bonds, costs of litigation when required by law and public, statutory and other like obligations incurred in the ordinary course of business. "Permitted Rating" shall mean, with respect to any Permitted Investment, a rating for short-term indebtedness of R-1 (Middle) or better from Dominion Bond Rating Service Limited or A-l+ from CBRS Inc. or a rating for long-term indebtedness of A (High) or better from Dominion Bond Rating Service Limited or A (High) from CBRS Inc. "Person" shall mean an individual, corporation, limited liability company, association, partnership, joint venture, trust or estate, an unincorporated organization, any Governmental Entity or other entity. "Plan" shall mean an employee benefit plan within the meaning of Section 3(3) of ERISA. "Prime Rate" shall mean, for any particular day, a per annum interest rate equal to the higher of (a) the variable rate of interest per annum, calculated on the basis of a year of 365 days or 366 days (in the case of a leap year), equal to the rate of interest per annum established and reported by The Toronto-Dominion Bank to the Bank of Canada for such day as the variable rate of interest per annum for determination of interest rates that The Toronto-Dominion Bank charges to its customers of varying degrees of creditworthiness in Canada for Canadian Dollar loans made by it in Canada, and (b) the sum of the simple average of the rates per annum for Canadian Dollar bankers' acceptances -18- 27 having a term of 30 days that appears on the Reuters Screen CDOR Page as of 10:00 a.m. (Toronto time) for such day plus one percent (1%). The Prime Rate is not necessarily the lowest rate of interest charged to customers of The Toronto-Dominion Bank. "Prime Rate Advance" shall mean a Collateralized Prime Rate Advance or an Uncollateralized Prime Rate Advance. "Prime Rate Basis" shall mean a simple interest rate equal to the sum of (i) the Prime Rate and (ii) the Applicable Margin for Prime Rate Advances which are Collateralized Advances or Uncollateralized Advances, as the case may be. The Prime Rate Basis shall be adjusted automatically as of the opening of business on the effective date of each change in the Prime Rate to account for such change, and shall also be changed to reflect changes in the Applicable Margin for Prime Rate Advances in accordance with Section 2.6(d). ",Pro Forma Debt Service" shall mean, as of any date with respect of any Person and its Subsidiaries, on a consolidated basis, with respect to the next succeeding complete twelve (12) month period following the calculation date, and after giving effect to any Interest Rate Hedge Agreements and taking into account Bankers' Acceptances, the sum of the aggregate of all principal, interest expense, fees and other payments payable by such Persons during such next succeeding twelve (12) month period with respect to Indebtedness for Money Borrowed of such Persons. For purposes of this definition, where interest payments for the twelve (12) month period immediately succeeding the calculation date are not fixed by way of Interest Rate Hedge Agreements, Bankers' Acceptances or otherwise for the entire period, interest shall be calculated on such Indebtedness for Money Borrowed for periods for which interest payments are not so fixed at the Bankers' Acceptance Permitted Collateral Rate for a Bankers' Acceptance having an Interest Period of twelve (12) months as determined on the date of calculation; provided, however, that if such Bankers' Acceptance Permitted Collateral Rate cannot be determined in the reasonable opinion of the Administrative Agent, such interest shall be calculated using the Prime Rate Basis as then in effect. "Real Estate" shall mean the real estate of the Borrower and its Subsidiaries held in fee simple (or an interest analogous to a fee simple interest as it relates to real estate situate in the Province of Quebec). "Release" when used as a verb includes release, spill, leak, emit, deposit, discharge, leach, migrate or dispose into the environment and "Release" when used as a noun has a correlative meaning. -19- 28 "Remedial Action" shall mean any action, whether voluntary or compelled, that is reasonably necessary to: (i) clean up, remove, treat or in any other way deal with Hazardous Substances in the environment; (ii) prevent any Release of Hazardous Substances where such Release would violate any Environmental Laws or would endanger or threaten to endanger public health or welfare or the environment; or (iii) perform remedial studies, investigations, restoration and post-remedial studies, investigations and monitoring on, about or in connection with the business or any of the Real Estate or other Assets (including the Collateral). "Reportable Event" shall mean, with respect to any Employee Pension Plan subject to Title IV of ERISA, an event described in Section 4043(b) of ERISA as to which the requirement of advance notice has not been waived or an event described in Sections 2615.11, 2615.12, 2615.13, 2615.15 or 2615.19 of PBGC regulations. "Request for Advance" shall mean a certificate designated as a "Request for Advance," signed by an Authorized Signatory of the Borrower requesting an Advance hereunder, which shall be in substantially the form of Exhibit C attached hereto, and shall, among other things, (a) specify the date of the Advance, which shall be a Business Day, the amount of the Advance, the type of Advance (Collateralized or Uncollateralized) and, with respect to Collateralized Advances (if appropriate), the Interest Period selected by the Borrower, and (b) state that there shall not exist a Default as of the date of such Advance and after giving effect thereto. "Restricted Payment" shall mean (a) any direct or indirect distribution, dividend or other payment to any Person (other than to the Borrower or any wholly-owned Subsidiary of the Borrower) on account of any general or limited partnership interest in, or shares of Capital Stock or other securities of, the Borrower or any of its Subsidiaries (other than dividends payable solely in the Capital Stock of such Person and stock splits), including, without limitation, any direct or indirect distribution, dividend or other payment to any Person (other than to the Borrower or any wholly-owned Subsidiary of the Borrower) on account of any warrants or other rights or options to acquire shares of Capital Stock of the Borrower or any of its Subsidiaries; (b) any payment of principal of, or interest on, or payment into a sinking fund for the retirement of, or any defeasance of subordinated debt; and (c) any management, consulting or similar fees, or any interest thereon, payable by the Borrower or any of its Subsidiaries to any partner, shareholder or Affiliate of any such Person. -20- 29 "Restricted Purchase" shall mean any payment (including, without limitation, any sinking fund payment, prepayment or installment payment) on account of the purchase, redemption or other acquisition or retirement of any general or limited partnership interest in, or shares of Capital Stock of or other securities or subordinated debt of the Borrower or any of the Borrower's Subsidiaries (other than to the Borrower or any wholly-owned Subsidiary of the Borrower), including, without limitation, any warrants or other rights or options to acquire shares of Capital Stock of the Borrower or of any of the Borrower's Subsidiaries or any loan, advance, release or forgiveness of Indebtedness by the Borrower or any of its Subsidiaries to any partner, shareholder or Affiliate of any such Person. "Sales and Distribution Agreement" shall mean that certain Sales and Distribution Agreement dated as of October 28, 1994 between Paging Network of Canada Inc. and Madison Telecommunications Inc. as amended by Amendment No.1 dated as of October 26, 1995. "Security Documents" means those agreements and other documents in favor of the Administrative Agent for the benefit of itself and the Banks described in Schedule 2, as such documents may be amended or supplemented from time to time, and any other agreement or instrument which may from time to time be held by the Administrative Agent for the benefit of itself and the Banks as security for all or any portion of the Obligations. "Security Interest" shall mean all Liens in favor of the Administrative Agent, for the benefit of itself and the Banks, created or intended to be created hereunder or under any of the Security Documents to secure the Obligations. "Site Specific Licenses" shall mean all licenses or other authorizations granted in respect of the use of specific transmitter locations pursuant to the Licenses listed on Schedule 1. "Subsidiary" shall mean, as applied to any Person, (a) any corporation of which more than fifty percent (50%) of the outstanding stock (other than directors' qualifying shares) having ordinary voting power to elect a majority of its board of directors, regardless of the existence at the time of a right of the holders of any class or classes of securities of such corporation to exercise such voting power by reason of the happening of any contingency, or any partnership of which more than fifty percent (50%) of the outstanding partnership interests, is at the time owned directly or indirectly by such Person, or by one or more Subsidiaries of such Person, or by such -21- 30 Person and one or more Subsidiaries of such Person, or (b) any other entity which is directly or indirectly controlled or capable under the current facts of being controlled by such Person, or by one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person. The Subsidiaries of the Borrower as of the Agreement Date are set forth on Schedule 3 attached hereto. "Substance" shall mean any substance, waste, liquid, gaseous or solid matter, fuel, micro-organism, sound, vibration, ray,, heat, odor, radiation, energy vector, plasma, and organic or inorganic matter. "Taxes" shall mean all taxes imposed by any Governmental Entity, including income, profits, real property, personal property, goods and services, sales, transfer, purchase, stumpage, registration, capital, excise, payroll, unemployment, disability, employee's income withholding, social security or withholding. "Total Debt" shall mean, as of any date, with respect of any Person and its Subsidiaries on a consolidated basis, the difference between (a) the aggregate amount of Indebtedness for Money Borrowed, determined in accordance with GAAP, minus (b) the aggregate principal amount of Collateralized Advances and the Face Amount of Collateralized Bankers' Acceptances outstanding on such date. "Total Subscribers" shall mean, as of any date, the aggregate number of subscribers for the wireless messaging services of the Borrower Group on a combined basis. "Transponder Lease Agreement" shall mean any agreement by and between the Borrower or any of its Subsidiaries and any other Person for the license, lease or other agreement to use telecommunications satellites in the operation of the business of the Borrower or such Subsidiaries and any other agreement related thereto. "U.S. Dollars" and "U.S.$" shall mean lawful money of the United States of America. "Uncollateralized Advance" shall mean an Uncollateralized Prime Rate Advance. "Uncollateralized Bankers' Acceptance" shall mean a Drawing which the Borrower requests to be made as an Uncollateralized Bankers' Acceptance or is continued as or converted into an Uncollateralized Bankers' Acceptance in accordance with the provisions of Section 2.5 hereof. -22- 31 "Uncollateralized Prime Rate Advance" shall mean an Uncollateralized Advance which bears interest at the Prime Rate Basis and which the Borrower requests to be made as an Uncollateralized Prime Rate Advance or is continued or converted as an Uncollateralized Prime Rate Advance, in accordance with the provisions of this Agreement, and which shall be in a principal amount of at least $500,000 and in an integral multiple of $500,000. "Units in Service" shall mean, as of any date, for the Borrower Group on a combined basis, the aggregate number of wireless messaging units that are operating pursuant to valid and binding agreements with customers, where the customer is delinquent less than sixty (60) days (unless the amount for such customer which is delinquent sixty (60) days or more constitutes less than thirty-five (35) percent of such customer's current monthly billing), except for governmental or corporate customers delinquent less than ninety (90) days that (a) have been serviced by such Person for at least six (6) months and have a consistent prior payment history and in which the customer has made a payment within the last forty-five (45) days equal to or greater than the amount of the current monthly billing for such customer, or (b) have a regular history of paying on their accounts amounts equal to or greater than the amount of the current monthly billing for such customer and whose total account receivable is (i) no older and (ii) no greater in dollar amount, than such account receivable was on the date ninety (90) days prior. Each definition of an agreement in this Article 1 shall include such agreement as modified, amended or supplemented from time to time in accordance herewith. ARTICLE 2 Credit Facility Section 2.1 Commitment. The Banks agree, severally, in accordance with their respective Commitment Ratios and not jointly, upon the terms and subject to the conditions of this Agreement, to make available to the Borrower such Accommodations as may be requested by the Borrower, prior to the Maturity Date, in an amount not at any one time outstanding to exceed, in the aggregate, the Available Commitment. Each of the Banks shall, on the terms and conditions of this Agreement, make its pro rata share of Advances, and Bankers' Acceptances on the occasion of any Borrowing or Drawing, as applicable, available to the Borrower under the Commitment. All Advances and Bankers' Acceptances requested hereunder shall be made available to the Borrower in accordance with Sections 2.2, 2.3 and 2.5 hereof, -23- 32 respectively. Any notice given to the Administrative Agent in connection with a requested Accommodation hereunder shall be given to the Administrative Agent prior to 12:00 noon (Toronto time) in the case of Advances and 1:00 p.m. (Toronto time) in the case of Bankers' Acceptances in order for such Business Day to count toward the minimum number of Business Days required. Section 2.2 Uncollateralized Advances. (a) Choice of Interest Rate, Etc. Any Uncollateralized Advance shall be made as an Uncollateralized Prime Rate Advance. (b) Manner of Borrowing. (i) Uncollateralized Advances. The Borrower shall give the Administrative Agent irrevocable prior written notice prior to 12:00 noon (Toronto time) at least one (1) Business Day prior to the date of any requested Uncollateralized Prime Rate Advance in the form of a Request for Advance, or telephonic notice followed immediately by a Request for Advance; provided, however, that the Borrower's failure to confirm any telephonic notice with a Request for Advance shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of such notice from the Borrower, the Administrative Agent shall promptly notify each Bank by telephone of the contents thereof. (ii) Conversions of Uncollateralized Prime Rate Advances. At least two (2) Business Days prior to the Payment Date for each Uncollateralized Prime Rate Advance, the Borrower shall give the Administrative Agent written notice specifying whether all or a portion of such Uncollateralized Prime Rate Advance is to be converted, in whole or in part, to Uncollateralized Bankers' Acceptances, Collateralized Prime Rate Advances, Cost of Funds Rate Advances or Collateralized Bankers' Acceptances. The Borrower may, subject to the provisions of this Agreement, convert the outstanding principal amount of an Uncollateralized Prime Rate Advance, in whole or in part, to (A) Bankers' Acceptances, by giving a Drawing Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), (B) Cost of Funds Rate Advances by giving a Request for Advance in accordance with Section 2.3(c) hereof (including in accordance with the period for notice set forth in Section 2.3 (c) (ii) hereof), and (C) Collateralized Prime Rate Advances by giving the Request for Advance in accordance with Section 2.3(b) hereof (including in -24- 33 accordance with the period for notice set forth in Section 2.3(b) hereof). The Borrower may convert the Uncollateralized Prime Rate Advance on any Business Day. If the Uncollateralized Prime Rate Advance to be converted cannot be converted to an aggregate Face Amount of Bankers' Acceptances in an amount which may be drawn as Bankers' Acceptances under this Agreement, then the amount which cannot be so converted, subject to the other terms and conditions of this Agreement, shall thereafter continue to be outstanding as an Uncollateralized Prime Rate Advance. When any Uncollateralized Prime Rate Advances are to be converted, in whole or in part, to Bankers' Acceptances, the Borrower shall repay and there shall become due and payable on the Drawing Date, the principal amount of such Uncollateralized Prime Rate Advances which are to be so converted. Upon such Payment Date such Uncollateralized Prime Rate Advance will, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. Section 2.3 Collateralized Advances. (a) Choice of Interest Rate, Etc. Any Collateralized Advance shall, at the option of the Borrower, be made as a Collateralized Prime Rate Advance or as a Cost of Funds Rate Advance. (b) Collateralized Prime Rate Advances. (i) Advances. The Borrower shall give the Administrative Agent irrevocable prior written notice prior to 12:00 noon (Toronto time) at least one (1) Business Day prior to the date of any requested Collateralized Prime Rate Advance in the form of a Request for Advance, or telephonic notice followed immediately by a Request for Advance; provided, however, that the Borrower's failure to confirm any telephonic notice with a Request for Advance shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of such notice from the Borrower, the Administrative Agent shall promptly notify each Bank by telephone of the contents thereof. (ii) Conversions of Collateralized Prime Rate Advances. At least two (2) Business Days prior to the Payment Date for each Collateralized Prime Rate Advance, the Borrower shall give the Administrative Agent written notice specifying whether all or a portion of such Collateralized Prime Rate Advance is to be converted, in whole or in part, to Collateralized Bankers' Acceptances, Cost of Funds Rate Advances, Uncollateralized Prime Rate Advances or Uncollateralized Bankers, Acceptances. The Borrower may, subject to the provisions of this Agreement, convert the outstanding principal amount of a -25- 34 Collateralized Prime Rate Advance, in whole or in part, to (A) Bankers' Acceptances, by giving a Drawing Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2. 5 (b) hereof), (B) Cost of Funds Rate Advances by giving a Request for Advance in accordance with Section 2.3 (c) hereof (including in accordance with the period for notice set forth in Section 2.3(c)(ii) hereof), and (C) Uncollateralized Prime Rate Advances by giving the Request for Advance in accordance with Section 2.2(b) hereof (including in accordance with the period for notice set forth in Section 2.2(b) hereof). In the case of any such conversion, the Borrower shall notify the Administrative Agent of the amount of any Collateralized Prime Rate Advance to be converted. The Borrower may convert a Collateralized Prime Rate Advance on any Business Day. If the Collateralized Prime Rate Advance to be converted to Bankers' Acceptances cannot be converted to an aggregate Face Amount of Bankers' Acceptances in an amount which may be drawn as Bankers' Acceptances under this Agreement, then the amount which cannot be so converted shall, subject to the other terms and conditions of this Agreement, thereafter continue to be outstanding as a Collateralized Prime Rate Advance. When any Collateralized Prime Rate Advances are to be converted, in whole or in part, to Bankers' Acceptances the Borrower shall repay and there shall become due and payable on the Drawing Date, the principal amount of such Collateralized Prime Rate Advances which are to be so converted. Upon such Payment Date such Collateralized Prime Rate Advance will, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. (c) Cost of Funds Rate Advances. (i) Advances. The Borrower shall give the Administrative Agent irrevocable prior written notice prior to 12:00 noon (Toronto time) at least one (1) Business Day prior to the date of any requested Cost of Funds Rate Advance in the form of a Request for Advance, or telephonic notice followed immediately by a Request for Advance; provided, however, that the Borrower's failure to confirm any telephonic notice with a Request for Advance shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of such notice from the Borrower, the Administrative Agent shall promptly notify each Bank by telephone of the contents thereof. (ii) Conversions and Continuations of Cost of Funds Rate Advances. At least two (2) Business Days prior to the Payment Date for each Cost of Funds Rate Advance, the Borrower shall give the Administrative Agent written notice specifying whether all or a portion of such Cost of Funds Rate Advance is to be converted or continued, in whole or in part, to Collateralized Bankers' Acceptances, Collateralized Prime Rate Advances, -26- 35 Uncollateralized Prime Rate Advances, Cost of Funds Rate Advances or Uncollateralized Bankers' Acceptances. The Borrower may, subject to the provisions of this Agreement, convert or continue the outstanding principal amount of a Cost of Funds Rate Advance, in whole or in part, to (A) Bankers' Acceptances, by giving a Drawing Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), (B) Collateralized Prime Rate Advances by giving a Request for Advance in accordance with Section 2.3(b) hereof (including in accordance with the notice provisions set forth in Section 2.3(b) hereof), (C) Uncollateralized Prime Rate Advances by giving the Request for Advance in accordance with Section 2.2(b) hereof (including in accordance with the notice provisions set forth in Section 2.2(b) hereof) and (D) Cost of Funds Rate Advances by giving a Request for Advance in accordance with Section 2.3(c)(i) hereof (including in accordance with the notice provisions of Section 2.3(c)(ii) hereof). In the case of any such conversion, the Borrower shall notify the Administrative Agent of the amount of any Cost of Funds Rate Advance to be converted. The Borrower may convert a Cost of Funds Rate Advance on the Payment Date for such Advance. If the Cost of Funds Rate Advance to be converted to Bankers' Acceptances cannot be converted to an aggregate Face Amount of Bankers' Acceptances in an amount which may be drawn as Bankers' Acceptances under this Agreement, then the amount which cannot be so converted shall, subject to the other terms and conditions of this Agreement, thereafter be converted to a Collateralized Prime Rate Advance. When any Cost of Funds Rate Advances are to be converted or continued, in whole or in part, to Bankers' Acceptances or Cost of Funds Rate Advances, as the case may be, the Borrower shall repay and there shall become due and payable on the Drawing Date or the date of the Advance, as the case may be, the principal amount of such Cost of Funds Rate Advances which are to be so converted or continued. Upon such Payment Date such Cost of Funds Rate Advance will, subject to the provisions hereof, be so repaid and, as applicable, reborrowed. (iii) Interest if no Notice of Selection of Interest Rate Given. If the Borrower fails to give the Administrative Agent timely notice of a continuation or conversion of a Cost of Funds Rate Advance, such Cost of Funds Rate Advance shall, on its Payment Date, automatically be converted to a Collateralized Prime Rate Advance (or, if subsection (d) of this Section 2.3 is applicable, an Uncollateralized Prime Rate Advance). (d) Automatic Conversion of Collateralized Advances and Collateralized Bankers' Acceptances. If, on any date, the sum of the principal amount of Collateralized Advances and the Face Amount of Collateralized Bankers' Acceptances then -27- 36 outstanding exceeds the sum of the Equivalent Canadian Dollar Amount of Permitted Collateral held by the Administrative Agent pursuant to the Deposit Agreement on such date and the Letter of Credit, (i) an amount of Collateralized Advances up to the amount of such excess (beginning with Collateralized Prime Rate Advances, then Cost of Funds Rate Advances) shall automatically (A) if such Advance is a Collateralized Prime Rate Advance, be converted to an Uncollateralized Prime Rate Advance, and (B) if such Advance is a Cost of Funds Rate Advance, bear interest at the Prime Rate Basis for Uncollateralized Advances from such date until the Payment Date for such Advance, and (ii) if after such conversions of, or adjustments to, all Collateralized Advances there remains an excess, the Borrower shall on such date pay to the Administrative Agent for the benefit of the Banks an amount equal to the increased Drawing Fee which would be payable for Uncollateralized Bankers' Acceptances from such date until the Payment Date for the Face Amount of Collateralized Bankers' Acceptances equal to such excess. Section 2.4 Notification of Banks; Disbursement. (a) Notification of Banks. Upon receipt of a Request for Advance, or a notice from the Borrower with respect to any outstanding Advance prior to the Payment Date for such Advance, the Administrative Agent shall promptly notify each Bank by telephone or telecopy of the contents thereof and the amount of such Bank's pro rata portion of the Advance. Each Bank shall, not later than 11:00 a.m. (Toronto time) on the date of borrowing specified in such notice, make available to the Administrative Agent at the Administrative Agent's Office, or at such account as the Administrative Agent shall designate, the amount of its pro rata portion of any Advance which represents an additional borrowing hereunder in immediately available funds. (b) Disbursement. (i) Prior to 2:00 p.m. (Toronto time) on the date of an Advance hereunder, the Administrative Agent shall, subject to the satisfaction of the conditions set forth in Article 3 hereof, disburse the amounts made available to the Administrative Agent by the Banks in like funds by (a) transferring the amounts so made available by wire transfer pursuant to the Borrower's instructions, or (b) in the absence of such instructions, crediting the amounts so made available to the account of the Borrower maintained with the Administrative Agent. (ii) Unless the Administrative Agent shall have received notice from a Bank prior to 11:00 a.m. (Toronto time) on the date of any Advance that such Bank will not -28- 37 make available to the Administrative Agent such Bank's pro rata portion of such Advance, the Administrative Agent may assume that such Bank has made or will make such pro rata portion available to the Administrative Agent on the date of such Advance and the Administrative Agent may in its sole discretion and in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent the Bank does not make such pro rata portion available to the Administrative Agent, such Bank agrees to repay to the Administrative Agent on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at the Prime Rate. (iii) If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank's pro rata portion of the applicable Advance for purposes of this Agreement. If such Bank does not repay such corresponding amount immediately upon the Administrative Agent's demand therefor, the Administrative Agent shall notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent, with interest at the Prime Rate. The failure of any Bank to fund its pro rata portion of any Advance shall not relieve any other Bank of its obligation, if any, hereunder to fund its respective pro rata portion of the Advance on the date of such borrowing, but no Bank shall be responsible for any such failure of any other Bank. (iv) In the event that, at any time when the Borrower is not in Default and has otherwise satisfied each of the conditions in Article 3 hereof, a Bank for any reason fails or refuses to fund its pro rata portion of such Advance, then, until such time as such Bank has funded its pro rata portion of such Advance (which late funding shall not absolve such Bank from any liability it may have to the Borrower), or all other Banks have received payment in full from the Borrower (whether by repayment or prepayment) or otherwise of the principal and interest due in respect of such Advance, such non-funding Bank shall not have the right (A) to vote regarding any issue on which voting is required or advisable under this Agreement or any other Loan Document, and such Bank's pro rata portion of the Accommodations shall not be counted as outstanding for purposes of determining "Majority Banks" hereunder, or (B) to receive payments of principal, interest or fees from the Borrower, the Administrative Agent or the other Banks in respect of its pro rata portion of the Accommodations. -29- 38 Section 2.5 Bankers' Acceptances. (a) Acceptances and Drafts. The Banks agree subject to the terms and conditions of this Agreement to create acceptances ("Bankers' Acceptances") by accepting Drafts of the Borrower under the Available Commitment from time to time, on any Business Day prior to the Maturity Date, which Drafts have an aggregate Face Amount equal to such Bank's pro rata share of the total Accommodations being made by way of Bankers' Acceptances. Bankers' Acceptances shall be created by Banks acceptance of Drafts. Each Drawing shall be in an aggregate amount of not less than $1,000,000 and in an integral amount of $100,000. (b) Procedure for Drawing. The Borrower shall give the Administrative Agent irrevocable prior written notice prior to 1:00 p.m. (Toronto time) at least two (2) Business Days prior to the date of the proposed Drawing in the form of a Drawing Notice, or telephonic notice followed immediately by a Drawing Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with a Drawing Notice shall not invalidate any notice so given if acted upon by the Administrative Agent. Upon receipt of a Drawing Notice, the Administrative Agent shall be responsible for making all necessary arrangements with each of the Banks with respect to the stamping of Bankers' Acceptances in the manner contemplated in this Section 2.5. The Borrower shall not in any Drawing Notice select an Interest Period for a Draft which ends after the Maturity Date or which conflicts with the repayments provided for in Sections 2.8 or 2.10(b) hereof. (c) Form of Drafts. Each Draft presented by the Borrower for acceptance by a Bank: (i) shall be in a Face Amount of not less than $1,000,000 and in an integral multiple of $100,000; (ii) shall be dated the date of the Drawing; (iii) shall mature and be payable by the Borrower on a Business Day which occurs one (1), two (2), three (3) or six (6) months (nine (9) or twelve (12) months subject to availability) after the Drawing Date; and (iv) be substantially in the form of Exhibit A hereto. The acceptance endorsed by a Bank on any Draft shall be substantially in the form of Exhibit D hereto. The Borrower hereby renounces, and shall not claim, any days of grace for the payment of any Bankers' Acceptances. (d) Acceptance of Drafts. Not later than 12:00 noon (Toronto time) on the Drawing Date specified for a relevant Drawing, a Bank: (i) shall complete one or more Drafts dated the date of such Drawing in an aggregate Face Amount equal to such Bank's pro rata portion of the amount of such Drawing and with the Interest Period specified by the Borrower in its Drawing Notice; (ii) shall accept the Drafts; and (iii) shall purchase -30- 39 the Bankers' Acceptance thereby created in the manner provided in Section 2.5(e) hereof. (e) Purchase of Bankers' Acceptances. The Borrower shall request a quotation from the Administrative Agent of the purchase price of all Bankers' Acceptances created hereunder on the Drawing Date for such Bankers' Acceptances. The Administrative Agent, after consultation with the Banks, shall notify the Borrower of the purchase price for the Bankers' Acceptance in the Face Amount and for the Interest Period specified by the Borrower. The purchase price shall be calculated by reference to a discount rate which is an arithmatic average (rounded up to the nearest 0.01%) of the discount rates of the Banks determined in accordance with normal market practice at or about 10:00 a.m. (Toronto time) on the applicable Drawing Date for Bankers' Acceptances of each Bank having a comparable Face Amount and comparable maturity date as such Bankers' Acceptances. Each Bank shall purchase all Bankers' Acceptances created by such Bank hereunder at the purchase price quoted by the Administrative Agent to such Bank and such purchase price shall be paid and satisfied by such Bank making payment to the Administrative Agent in the amount of such purchase price less the applicable Drawing Fee. The Administrative Agent shall disburse the amounts made available to the Administrative Agent by the Banks in like funds by (a) transferring the amounts so made available by wire transfer pursuant to the Borrower's instructions, or (b) in the absence of such instructions, crediting the amounts so made available to the account of the Borrower maintained with the Administrative Agent. Bankers' Acceptances purchased by a Bank hereunder may be held by it for its own account until maturity or sold by it at any time prior thereto in the relevant market therefor in Canada, in the Bank's sole discretion. (f) Reimbursement at Payment Date. Subject to Section 2.5(g) hereof, the Borrower shall pay to the Administrative Agent on behalf of a Bank in same day funds, and there shall become due and payable at 11:00 a.m. (Toronto time) on the Payment Date for each Bankers' Acceptance, an amount in Canadian Dollars equal to the Face Amount of such Bankers' Acceptance accepted by such Bank. The Borrower shall make each payment hereunder in respect of Bankers' Acceptances by deposit of the required funds in accordance with Section 2.12 hereof. If the Borrower fails to pay the Bank pursuant to this Section 2.5(f), or to convert or renew the Face Amount of such Bankers' Acceptance pursuant to Section 2.5(g) hereof, the unpaid amount due and payable to such Bank in respect of such Bankers' Acceptance shall automatically be converted to a Prime Rate Advance on the Payment Date, and shall bear interest: (i) for the first three (3) days from the date on which such amount is converted, or until such earlier -31- 40 date as a Request for Advance is given in accordance with Section 2.2 or 2.3 hereof, as the case may be, at a per annum rate of interest equal to 115% of the Prime Rate Basis; and (ii) thereafter, at a rate per annum equal to the Prime Rate Basis, in each case, until such amount is paid in full. (g) Renewal or Conversion of Bankers' Acceptances. For effect on the Payment Date of a Bankers' Acceptance, the Borrower may elect: (i) to renew all or a portion of the Face Amount of such Bankers' Acceptance by giving a Drawing Notice in accordance with this Section 2.5 (including in accordance with the period for notice set forth in Section 2.5(b) hereof); or (ii) to have all or a portion of the Face Amount of such Bankers, Acceptance converted to an Advance, by giving a Request for Advance in accordance with Section 2.2 or 2.3 hereof (including in accordance with the period for notice set forth in Section 2.2 or 2.3 hereof, as the case may be). If the Bankers' Acceptance to be converted cannot be converted into an Advance in an amount which may be outstanding as an Advance under this Agreement, then the amount which cannot be so converted shall be repaid to the Administrative Agent on behalf of a Bank on the date of such conversion in accordance with Section 2.5(f) hereof. (h) Prepayments. Except as required by Section 2.9 or 2.10 hereof, no repayment of Bankers' Acceptances shall be made by the Borrower to a Bank prior to the Payment Dates of such Bankers' Acceptances as have been created by the Borrower. if the Borrower shall prepay any Bankers' Acceptances accepted by a Bank as required by Section 2.9 or 2.10 hereof then (unless such prepayment has been rescinded or otherwise is required to be returned by such Bank for any reason), as between the Borrower and such Bank, such Bank shall thereafter be solely responsible for the payment of the Face Amount of such Bankers' Acceptances as have been created by the Borrower to the holder or holders thereof in accordance with the terms thereof. (i) Circumstances Making Bankers' Acceptances Unavailable. If the Banks or any one or more of them determine in good faith that by reason of circumstances affecting the money market there is no market for Bankers' Acceptances and advises the Administrative Agent and the Borrower to such effect, in writing, then the right of the Borrower to request a Drawing shall be suspended until the Banks determine that the circumstances causing such suspension no longer exist and the Administrative Agent so notifies the Borrower. Any Drawing Notice which is outstanding at the time of such notice by the Banks or any one or more of them shall be deemed to be a Request for Advance requesting a Prime Rate Advance in the principal amount equal to the requested Face Amount in such Drawing Notice. -32- 41 (j) Presigned Draft Forms. To enable the Banks to create Bankers' Acceptances or complete Drafts in the manner specified in this Section 2.5, the Borrower shall supply the Banks with such number of Drafts as the Banks may reasonably request, duly endorsed and executed on behalf of the Borrower by any one or more Authorized Signatories in accordance with the Borrower's required signing authorities as evidenced by the then current borrowing by-law and resolution, certified copies of which have been delivered to the Bank. Each Bank shall exercise such care in the custody and safekeeping of Drafts as it would exercise in the custody and safekeeping of similar property owned by it. The signatures of such Authorized Signatories may be mechanically reproduced in facsimile and Drafts and Bankers' Acceptances bearing such facsimile signatures shall be binding upon the Borrower as if they had been manually signed by such Authorized Signatories. Notwithstanding that any of the Authorized Signatories whose manual or facsimile signature appears on any Draft as one of such Authorized Signatories may no longer hold office at the date thereof or at the date of its acceptance by a Bank hereunder or at any time thereafter, any Draft or Bankers' Acceptance so signed shall be valid and binding upon the Borrower. A Bank shall not be liable for its failure to accept a Bankers' Acceptance as required hereunder if the cause of such failure is, in whole or in part, due to the failure of the Borrower to provide Drafts, duly endorsed and executed on behalf of the Borrower, on a timely basis. Section 2.6 Interest; Fees. (a) Interest on Uncollateralized Prime Rate Advances. Interest on each Uncollateralized Prime Rate Advance shall be computed daily and shall be payable at the Prime Rate Basis for such Advance, in arrears on the applicable Payment Date. Interest on Uncollateralized Prime Rate Advances then outstanding shall also be due and payable on the Maturity Date. (b) Interest on Collateralized Advances. (i) Cost of Funds Rate. Interest on each Cost of Funds Rate Advance shall be computed daily and shall be payable at the Cost of Funds Rate for such Advance, in arrears on the applicable Payment Date, and, in addition, if the Interest Period for a Cost of Funds Rate Advance exceeds one (1) month, interest on such Cost of Funds Rate Advance shall also be due and payable in arrears on every one (1) month. anniversary of the beginning of such Interest Period. Interest on Cost of Funds Rate Advances then outstanding shall also be due and payable on the Maturity Date. -33- 42 (ii) Collateralized Prime Rate Advances. Interest on each Collateralized Prime Rate Advance shall be computed daily and shall be payable at the Prime Rate Basis for such Advance, in arrears on the applicable Payment Date. Interest on Collateralized Prime Rate Advances then outstanding shall also be due and payable on the Maturity Date. (c) Interest Upon Default. Immediately upon the occurrence and during the continuance of an Event of Default under (1) Section 8.1(b) hereof, or (2) resulting from a failure to comply with any provision of Article 7 hereof, the outstanding Obligations (to the extent permitted by Applicable Law) shall bear interest at the Default Rate. Such interest shall be payable on demand by the Majority Banks and shall accrue until the earlier of (i) waiver or cure of the applicable Event of Default, (ii) agreement by the Majority Banks (or, if applicable to the underlying Event of Default, all of the Banks) to rescind the charging of interest at the Default Rate, or (iii) payment in full of the Obligations. (d) Applicable Margin. With respect to any Accommodation, the Applicable Margin shall be determined by the Administrative Agent based upon the Leverage Ratio as of the end of the fiscal quarter most recently ended, effective as of the fifth (5th) Business Day after the financial statements referred [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -34- 43 to in Section 6.1 or 6.2 hereof, as the case may be, are furnished to the Administrative Agent and each Bank for such fiscal quarter, as follows:
Collateral- ized Collateral- Uncollateralized Bankers' ized Prime Rate Uncollateralized Acceptances Advances Advance Bankers' Applicable Applicable Applicable Acceptance Leverage Ratio Margin Margin Margin Applicable Margin --------------- ------ ------ ------ ----------------- A. Greater than 6.00:1 0.500% 0.00% 2.000% 3.000% B. Greater than 5.00:1, but less than or equal to 6.00:1 0.500% 0.00% 1.750% 2.750% C. Greater than 4.00:1, but less than or equal to 5.00:1 0.500% 0.00% 1.500% 2.500% D. Greater than 3.00:1, but less than or equal to 4.00:1 0.500% 0.00% 1.000% 2.000% E. Less than or equal to 3.00:1 0.500% 0.00% 0.500% 1.500%
Notwithstanding the foregoing, if the Borrower shall fail timely to deliver to the Administrative Agent the financial statements required for the calculation of the Leverage Ratio for any fiscal quarter, then commencing with the fifth (5th) Business Day after the date such financial statements were due and continuing through the fifth (5th) Business Day following the date of delivery thereof, the Leverage Ratio for such period shall be conclusively presumed to be, and the Applicable Margin shall be calculated based upon, the Leverage Ratio which is one level greater than the Leverage Ratio in effect for the immediately preceding fiscal quarter for which financial statements were delivered or were due to be delivered. If, for any reason, the Leverage Ratio cannot be calculated or determined, the Applicable Margin shall be based upon the Leverage Ratio set forth for level A above. -35- 44 Section 2.7 Fees. (a) Commitment Fees. The Borrower agrees to pay each of the Banks, in accordance with their respective Commitment Ratios, commitment fees as follows: (i) a commitment fee on the aggregate unborrowed available balance of the Commitment, for each day from June 19, 1996 until the Maturity Date at the rate of five-tenths of one percent (0.500%) per annum and (ii) a commitment fee on the aggregate unborrowed unavailable balance of the Commitment, for each day from June 19, 1996 until the Maturity Date at the rate of three-eighths of one percent (0.375%) per annum. Such commitment fees shall be computed daily on the basis of a year of 365 or 366 days (in the case of a leap year), shall be payable quarterly in arrears on the last day of each quarter, and shall be fully earned when due and nonrefundable when paid. A final payment of all commitment fees then payable shall also be due and payable on the Maturity Date. (b) Drawing Fees. Drawing Fees for Bankers, Acceptances hereunder shall be payable in advance on the date of its respective Drawing, and shall be fully earned when due and non-refundable when paid. Section 2.8 Mandatory Commitment Reductions. Commencing June 30, 1999 and at the end of each fiscal quarter thereafter, an amount equal to thirty-five and seven tenths of one percent (35.70%) of the Commitment as in effect on June 29, 1999, shall be automatically and permanently reduced by the percentages set forth below:
Quarterly Percentage Reduction of an Amount Equal to thirty-five and seven tenths of one percent (35.70%) of Commitment In Effect on Dates of Commitment Reduction June 29, 1999 ----------------------------- ------------- June 30, 1999, September 30, 1999 December 31, 1999 and March 31, 2000 2.000% June 30, 2000, September 30, 2000 December 31, 2000 and March 31, 2001 6.750% June 30, 2001, September 30, 2001 December 31, 2001 and March 31, 2002 9.500% June 30, 2002, September 30, 2002 December 31, 2002 and March 31, 2003 6.750%
The Borrower shall make a repayment of the Accommodations outstanding under the Commitment, together with accrued interest thereon, on or before the effective date of each reduction in the -36- 45 Commitment under this Section 2.8, such that the aggregate principal amount of the Accommodations outstanding at no time exceeds the Commitment as so reduced. In addition, any remaining unpaid principal and interest under the Commitment shall be due and payable in full on the Maturity Date. Section 2.9 Optional Prepayments; Commitment Reductions. (a) Prepayment of Accommodations. The Borrower may without penalty (but subject to Section 2.13 hereof) at any time prepay in full or in part the principal amount of any Advance prior to the Payment Date for such Advance, upon three (3) Business Days' prior written notice to the Administrative Agent of such prepayment. Partial prepayments shall be in a principal amount of not less than $1,000,000.00, and in an integral multiple of $500,000.00. (b) Commitment Reduction. The Borrower may without penalty (but subject to Section 2.13 hereof) at any time terminate or permanently reduce all or any part of the Commitment by giving the Administrative Agent and the Banks at least three (3) Business Days' prior written notice thereof; provided, however, that any reduction shall reduce the Commitment in a principal amount of at least $3,500,000.00 and in an integral multiple of $500,000.00, and provided, further, that no such reduction shall be permitted if it would require a prepayment of a Bankers' Acceptance. The Borrower shall make any required repayment or prepayment of Accommodations outstanding under the Commitment, plus accrued interest on such portion of the Accommodations and any accrued fees in respect thereof, on or before the effective date of the reduction of the Commitment, so that the principal amount of the Accommodations outstanding after such repayment or prepayment does not exceed the Commitment as so reduced. The Borrower shall not have any right to rescind any termination or reduction pursuant to this Section 2.9(b). Reductions in the Commitment after June 30, 1999 pursuant to this Section 2.9(b) shall be applied pro rata over the Commitment reduction schedule set forth in Section 2.8 hereof. Section 2.10 Mandatory Repayments. In addition to the scheduled Commitment reductions provided for in Section 2.8 hereof, the Borrower shall repay the obligations as follows: (a) Accommodations in Excess of Available Commitment. If, at any time, the amount of the Accommodations then outstanding under the Commitment shall exceed the Available Commitment, the Borrower shall, on such date and subject to Section 2.13 hereof, make a repayment of the principal amount of the Accommodations in an amount equal to such excess, together with any accrued interest and fees with respect thereto. If any -37- 46 such repayment results in a prepayment of any Bankers, Acceptance, the Borrower shall make a deposit with the Administrative Agent the Face Amount of such Bankers' Acceptances and hereby irrevocably authorizes and directs the Administrative Agent to apply such payment to the Borrower's reimbursement obligations in respect of such Drawing on the Payment Date therefor. (b) Maturity Date. In addition to the foregoing, a final payment of all Obligations then outstanding shall be due and payable on the Maturity Date. Section 2.11 Evidence of obligations; Accommodation Accounts. (a) The indebtedness of the Borrower in respect of all obligations (other than Accommodations and interest) hereunder shall be prima facie evidenced by the account records maintained by the Administrative Agent. The failure of the Administrative Agent to correctly record any amount or date shall not, however, affect the obligation of the Borrower to pay amounts due hereunder to the Administrative Agent or any of the Banks in accordance with this Agreement. (b) Each Bank may open and maintain on its books in the name of the Borrower a loan account with respect to its pro rata portion of the Accommodations and interest thereon. Each Bank which opens such a loan account shall debit such loan account for the principal amount of its pro rata portion of each Advance made by it and accrued interest thereon, and shall credit such loan account for each payment on account of principal of or interest on its Accommodations. The records of a Bank with respect to the loan account maintained by it shall be prima facie evidence of its pro rata portion of the Accommodations and accrued interest thereon absent manifest error, but the failure of any Bank to make any such notations or any error or mistake in such notations shall not affect the Borrower's repayment obligations with respect to such Accommodations. Section 2.12 Manner of Payment. (a) Each payment (including any prepayment) by the Borrower on account of the principal of or interest on the Accommodations, commitment fees and any other amount owed to the Banks or the Administrative Agent or any of them under this Agreement or the other Loan Documents shall be made not later than 1:00 p.m. (Toronto time) on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent's Office, for the account of the Banks or the Administrative Agent, as the case may be, in lawful Canadian -38- 47 currency in immediately available funds. Any payment received by the Administrative Agent after 1:00 p.m. (Toronto time) shall be deemed received on the next Business Day. Receipt by the Administrative Agent of any payment intended for any Bank or Banks hereunder prior to 1:00 p.m. (Toronto time) on any Business Day shall be deemed to constitute receipt by such Bank or Banks on such Business Day. In the case of a payment for the account of a Bank, the Administrative Agent will promptly thereafter distribute the amount so received in like funds to such Bank. If the Administrative Agent shall not have received any payment from the Borrower as and when due, the Administrative Agent will promptly notify the Banks accordingly. (b) Prior to the declaration of an Event of Default under Section 8.2 hereof, if some but less than all amounts due from the Borrower are received by the Administrative Agent with respect to the Obligations, the Administrative Agent shall distribute such amounts in the following order of priority, all on a pro rata basis to the Banks: (i) to the payment on a pro rata basis of any fees or expenses then due and payable to the Administrative Agent and the Banks, or any of them; (ii) to the payment of interest then due and payable on the Accommodations; (iii) to the payment of all other amounts not otherwise referred to in this Section 2.12(b) then due and payable to the Administrative Agent and the Banks, or any of them, hereunder or under any other Loan Document; and (iv) to the payment of principal then due and payable on the Accommodations. (c) Subject to any contrary provisions in the definition of Interest Period, if any payment under this Agreement or any of the other Loan Documents is specified to be made on a day which is not a Business Day, it shall be made on the next Business Day, and such extension of time shall in such case be included in computing interest and fees, if any, in connection with such payment. Section 2.13 Reimbursement. (a) Upon the earlier of demand or the Maturity Date, the Borrower shall pay to the Administrative Agent or the Banks such amount or amounts as will compensate the Administrative Agent or the Banks for any loss, cost or expense incurred by them: (i) as a result of (A) failure by the Borrower to borrow any Cost of Funds Rate Advance after having given notice of its intention to borrow in accordance with Section 2.3 hereof (whether by reason of the Borrower's election not to proceed or the non-fulfillment of any of the conditions set forth in Article 3 hereof), or (B) prepayment (or failure to prepay after giving notice thereof) of any Cost of Funds Rate Advance in whole or in part prior to its Payment Date; or (ii) with respect to any -39- 48 Bankers' Acceptance arising from any Claim, including legal fees and disbursements, respecting the collection of amounts owing by the Borrower hereunder in respect of such Bankers' Acceptance or the enforcement of the Administrative Agent's or Banks' rights hereunder in respect of such Bankers' Acceptance, including legal proceedings attempting to restrain the Administrative Agent or the Banks from paying any amount under such Bankers' Acceptance, except for any loss, cost or expense resulting from the gross negligence or willful misconduct of the Administrative Agent or such Bank, as applicable, as determined by a final, non-appealable judicial order of a court of competent jurisdiction. Such Bank's good faith determination of the amount of such losses or out-of-pocket expenses, as set forth in writing and accompanied by calculations in reasonable detail demonstrating the basis for its demand, shall be prima facie evidence of such losses or expenses absent manifest error. (b) Losses subject to reimbursement hereunder shall include, without limiting the generality of the foregoing, expenses incurred by any Bank or any participant of such Bank permitted hereunder in connection with the re-employment of funds prepaid, paid, repaid, not borrowed, or not paid, as the case may be, and will be payable as a result of acceleration of the Obligations. Section 2.14 Pro Rata Treatment. (a) Advances. Each Advance from the Banks hereunder shall be made pro rata on the basis of the respective Commitment Ratios of the Banks. (b) Payments Prior to Declaration of Event of Default. Except as provided in Section 2.5(f) hereof and Article 10 hereof, each payment and prepayment of principal of the Accommodations and each payment of interest on the Accommodations, shall be made to the Banks pro rata on the basis of their respective unpaid principal amounts outstanding hereunder immediately prior to such payment or prepayment. If any Bank shall obtain any payment (whether involuntary, through the exercise of any right of set-off, or otherwise) on account of the Accommodations in excess of its pro rata share of the Accommodations under its Commitment Ratio, such Bank shall forthwith purchase from the other Banks such participations in the portion of the Accommodations made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Bank, such purchase from each Bank shall be rescinded and such Bank shall repay to the purchasing Bank the purchase price to the extent of such recovery. The Borrower -40- 49 agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 2.14(b) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Bank were the direct creditor of the Borrower in the amount of such participation. (c) Payments Subsequent to Declaration of Event of Default. Subsequent to the acceleration of the Accommodations under Section 8.2 hereof, payments and prepayments made to the Administrative Agent or the Banks or otherwise received by any of them (from realization on Collateral for the Obligations or otherwise) on account of the Accommodations shall be distributed as follows: first, to the Administrative Agent's reasonable costs and expenses, if any, incurred in connection with the collection of such payment or prepayment, including, without limitation, any reasonable costs incurred in connection with the sale or disposition of any Collateral for the Obligations; second, to the payment of fees then due and payable to the Administrative Agent and the Banks and any reasonable costs and expenses, if any, incurred by any of the Banks under Section 11.2 hereof, pro rata on the basis of the amount of such Obligations; third, to any unpaid interest which may have accrued on the Obligations, pro rata on the basis of the amount of such Obligations; fourth, to any unpaid principal or the Face Amount of the Obligations and Obligations under Interest Rate Hedge Agreements, pro rata on the basis of the amount of such Obligations; fifth, to damages incurred by the Administrative Agent or any Bank by reason of any breach hereof or of any other Loan Document, pro rata on the basis of the amount of such Obligations; and sixth, upon satisfaction in full of all remaining Obligations, to the Borrower or as otherwise required by Applicable Law. ARTICLE 3 Conditions Precedent Section 3.1 Conditions Precedent to Agreement. The obligation of the Banks to undertake the Commitment and the effectiveness of this Agreement are subject to the prior or contemporaneous fulfillment of each of the following conditions: (a) The Administrative Agent and the Banks shall have received each of the following: (i) the loan certificate of the Borrower dated as of the Agreement Date, in substantially the form attached hereto as Exhibit E, including a certificate of incumbency -41- 50 with respect to each Authorized Signatory of such Person, together with the following items: (A) a true, complete and correct copy of the Certificate and Articles of Incorporation and By-laws of the Borrower as in effect on the Agreement Date, (B) certificates of status, compliance or good standing for the Borrower issued by the appropriate government officials of the jurisdiction of incorporation of the Borrower and for each jurisdiction in which the Borrower carries on business, (C) a true, complete and correct copy of the corporate resolutions of the Borrower authorizing the Borrower to execute, deliver and perform this Agreement and the other Loan Documents to which it is a party and the transactions contemplated hereby and thereby, and (D) a true, complete and correct copy of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of the Borrower; (ii) a loan certificate of each Subsidiary of the Borrower dated as of the Agreement Date, in substantially the form attached hereto as Exhibit F, including a certificate of incumbency with respect to each Authorized Signatory of such Person, together with the following items: (A) a true, complete and correct copy of the Certificate and Articles of Incorporation or Certificate of Partnership, as applicable, of such Person as in effect on the Agreement Date, (B) a true, complete and correct copy of the By-laws or Partnership Agreement, as applicable, of such Person as in effect on the Agreement Date, (C) certificates of status, compliance or good standing for such Person issued by the appropriate government officials of the jurisdiction of incorporation or formation, as applicable, of such Person and for each jurisdiction in which such Person is required to qualify to do business, (D) a true, complete and correct copy of the corporate resolutions of such Person (or another appropriate Person) authorizing such Person to execute, deliver and perform the Loan Documents to which it is party and the transactions contemplated thereby, and (E) a true, complete and correct copy of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of such Person; (iii) duly executed Security Documents; (iv) evidence of the registration and perfection of the Security Documents in all offices where such registration, filing or recording is necessary or desirable to protect any rights or remedies of the Administrative Agent and the Banks thereunder; -42- 51 (v) copies of insurance binders or certificates covering the assets of the Borrower and its Subsidiaries, and otherwise meeting the requirements of Section 5.5 hereof, together with copies of the underlying insurance policies; (vi) legal opinions of (a) McCarthy Tetrault, Canadian counsel to the Borrower and its Subsidiaries; (b) local counsel opinions for each of the Canadian provinces, each as counsel to the Borrower and its Subsidiaries, (c) Farris, Vaughan, Wills & Murphy, counsel to Madison Venture Corporation and (iv) Bingham, Dana & Gould, counsel to PageNet and Paging Network Canadian Holdings, Inc., each addressed to each Bank and the Administrative Agent, and dated as of the Agreement Date; (vii) unaudited financial information of the Borrower and its Subsidiaries on a consolidated basis through the fiscal quarter ending March 31, 1996 and the month ending April 30, 1996 and certified by the chief financial officer or the chief executive officer of the Borrower; (viii) lien search results with respect to the Borrower and its Subsidiaries from appropriate jurisdictions; and (ix) all such other documents as the Administrative Agent or any Bank may reasonably request, certified by an appropriate governmental official or an Authorized Signatory if so requested. (b) The Administrative Agent and the Banks shall have received evidence satisfactory to them that all Necessary Authorizations, including any consent or authorization of Industry Canada and all other necessary consents to the closing of this Agreement and the other Loan Documents, have been obtained or made, are in full force and effect and are not subject to any pending or, to the knowledge of the Borrower, threatened reversal or cancellation, and the Administrative Agent and the Banks shall have received a certificate of an Authorized Signatory so stating. (c) The Borrower shall certify to the Administrative Agent and the Banks that each of the representations and warranties in Article 4 hereof are true and correct as of the Agreement Date and that no Default or Event of Default then exists or is continuing. -43- 52 (d) There shall not exist as of the Agreement Date any action, suit, proceeding or investigation pending against, or, to the knowledge of the Borrower, threatened against or in any manner relating adversely to, the Borrower, any of its Subsidiaries, any of their respective properties, which, in the judgment of the Administrative Agent, could be expected to have a Materially Adverse Effect. (e) No event shall have occurred and no condition shall exist which, in the judgment of the Administrative Agent, has had or could be expected to have a Materially Adverse Effect. (f) The Administrative Agent and the Banks shall have received evidence satisfactory to them of the simultaneous closing of the PageNet Canada Agreement dated as of even date hereof. (g) The Administrative Agent and the Banks shall have received all agreements entered into, in connection with the Business, by Paging Network, Inc. and Madison Venture Corporation and their respective Subsidiaries, which agreements shall be in form and substance satisfactory to the Administrative Agent and the Banks and shall each be collaterally assigned to the Administrative Agent for the benefit of the Banks. (h) The Administrative Agent and the Banks and their counsel shall have received payment of all fees due and payable on the Agreement Date. Section 3.2 Conditions Precedent to All Accommodations. The obligation of the Banks to make any Accommodation hereunder is subject to the fulfillment of each of the following conditions immediately prior to or contemporaneously with such Accommodation satisfactory to the Majority Banks: (a) All of the representations and warranties of the Borrower under this Agreement and the other Loan Documents (including, without limitation, all representations and warranties with respect to the Borrower's Subsidiaries), which, pursuant to Section 4.2 hereof or otherwise, are made at and as of the time of such Accommodation, shall be true and correct at such time in all material respects, both before and after giving effect to the application of the proceeds of such Accommodation, and after giving effect to any updates to information provided to the Banks in accordance with the terms of such representations and warranties, and no Default hereunder shall then exist or be caused thereby; (b) With respect to Advances which, if funded, would increase the aggregate principal amount of Accommodations -44- 53 outstanding hereunder, the Administrative Agent shall have received a duly executed Request for Advance; (c) Each of the Administrative Agent and the Banks shall have received all such other certificates, reports, statements, opinions of counsel (if such Advance is in connection with an acquisition) or other documents as the Administrative Agent or any Bank may reasonably request; (d) No event shall have occurred and no condition shall exist which has had or which could reasonably be expected to have a Materially Adverse Effect; (e) No Applicable Law, proposed Applicable Law, change in any Applicable Law, or the interpretation or enforcement of any Applicable Law shall have been enacted (including the enactment of any Applicable Law respecting Taxes or environmental matters or any change therein or in the interpretation or enforcement thereof), the effect of which will be to prohibit the Administrative Agent or any of the Banks from making such Accommodation or to increase materially the cost thereof to the Banks. ARTICLE 4 Representations and Warranties Section 4.1 Representations and Warranties. To induce the Administrative Agent and each of the Banks to make Accommodations available hereunder, the Borrower hereby agrees, represents and warrants, upon the Agreement Date, and at all times thereafter as required pursuant to Sections 3.2 and 4.2 hereof, in favor of the Administrative Agent and each Bank that: (a) Organization; Ownership; Power; Qualification. The Borrower is a corporation duly incorporated or amalgamated, as the case may be, and organized, validly subsisting and in good standing under the laws of its jurisdiction of incorporation. The Borrower has the corporate power and authority to own its properties and to carry on its business as now being and as proposed hereafter to be conducted and to borrow monies and to enter into agreements therefor. Each Subsidiary of the Borrower is a corporation or partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, as the case may be, and has the corporate or partnership power, as the case may be, and authority to own its properties and to carry on its business as now being and as proposed hereafter to be conducted. The Borrower and each of its Subsidiaries are duly qualified, licensed or registered to -45- 54 carry on business as an extra-provincial corporation in the jurisdictions in which the nature of its properties or the business carried on by it make such qualification necessary. (b) Authorization; Enforceability. The Borrower has the corporate power and has taken all necessary corporate action to authorize it to obtain Accommodations hereunder, to execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms, and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by the Borrower and is, and each of the other Loan Documents to which the Borrower is party is, a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject only to their enforceability against the other parties thereto and to any limitation under Applicable Laws relating to: (i) bankruptcy, insolvency, reorganization, moratorium or creditors' rights generally; and (ii) the discretion that a court may exercise in the granting of equitable remedies (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower). (c) Subsidiaries: Authorization; Enforceability. The Borrower's Subsidiaries and the Borrower's direct and indirect ownership thereof as of the Agreement Date are as set forth on Schedule 3 attached hereto, and to the extent such Subsidiaries are corporations, the Borrower has the unrestricted right to vote the issued and outstanding shares of the Subsidiaries shown thereon and such shares of such Subsidiaries have been duly authorized and issued and are fully paid and nonassessable. Each Subsidiary of the Borrower has the corporate or partnership power and has taken all necessary corporate or partnership action to authorize it to execute, deliver and perform each of the Loan Documents to which it is a party in accordance with their respective terms and to consummate the transactions contemplated by this Agreement and by such Loan Documents. Each of the Loan Documents to which any Subsidiary of the Borrower is party is a legal, valid and binding obligation of such Subsidiary enforceable against such Subsidiary in accordance with its terms, subject only to their enforceability against the other parties thereto and to any limitation under Applicable Laws relating to: (i) bankruptcy, insolvency, reorganization, moratorium or creditors' rights generally; and (ii) the discretion that a court may exercise in the granting of equitable remedies (insofar as any such law relates to the bankruptcy, insolvency or similar event of any such Subsidiary). The Borrower's ownership interest in each of its Subsidiaries represents a direct or indirect controlling interest of such Subsidiary for purposes of directing -46- 55 or causing the direction of the management and policies of each Subsidiary. (d) Compliance with Other Loan Documents and Contemplated Transactions. The execution, delivery and performance, in accordance with their respective terms, by the Borrower of this Agreement, and by the Borrower and its Subsidiaries of each of the other Loan Documents to which they are respectively party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) require any consent or approval, governmental or otherwise, not already obtained, (ii) violate any Applicable Law respecting the Borrower or any Subsidiary of the Borrower, (iii) conflict with, result in a breach of, or constitute a default under the certificate of incorporation, constating documents or by-laws or partnership agreements, as the case may be, as amended, of the Borrower or of any Subsidiary of the Borrower, or under any indenture, agreement, or other instrument, including without limitation the Licenses, to which the Borrower or any of its Subsidiaries is a party or by which any of them or their respective properties may be bound, or (iv) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower or any of its Subsidiaries, except for Permitted Liens. (e) Business. The Borrower, together with its Subsidiaries, is engaged solely in the business of owning, constructing, managing, operating, investing in, wireless messaging systems and communications businesses incidental or directly relating thereto. (f) Licenses, etc. The Licenses have been duly issued and are in full force and effect. The Borrower and its Subsidiaries are in compliance in all material respects with all of the provisions thereof. The Borrower and its Subsidiaries have secured all Necessary Authorizations and all such Necessary Authorizations are in full force and effect. Neither any License nor any Necessary Authorization is the subject of any pending or, to the best of the Borrower's knowledge, threatened revocation. (g) Compliance with Law. The Borrower and its Subsidiaries are in compliance in all material respects with all material Applicable Law, including, without limitation, all Environmental Laws. (h) Title to Assets. Each of the Borrower and its Subsidiaries is the sole beneficial owner of, and has a good and marketable title to, and will be lawfully possessed of its Assets, including the Collateral, free and clear of all Liens, except Permitted Liens, and each of the Borrower and the -47- 56 Subsidiaries has full legal right to mortgage, pledge, charge and assign to the Administrative Agent for the benefit of itself and the Banks the Collateral to the Administrative Agent pursuant to the Security Documents as contemplated herein. No Person has any written or oral agreement, option, understanding or commitment, or any right or privilege capable of becoming any agreement, option, understanding or commitment, for the purchase from the Borrower or the Subsidiaries of any of the Collateral. (i) Litigation. There is no action, suit, proceeding or investigation pending against, or, to the knowledge of the Borrower, threatened against or in any other manner relating adversely to, the Borrower or any of its Subsidiaries or any of their respective properties, including without limitation the Licenses, in any court or before any arbitrator of any kind or before or by any Governmental Entity in Canada or elsewhere, nor is there any such material action, suit or proceeding which would prevent the Borrower from proceeding with any Accommodations. None of the Borrower or any of its Subsidiaries is in default with respect to any judgment, order, writ, injunction, decree or award of any court or Governmental Entity or any arbitrator or board in Canada or elsewhere, nor is there any judgment, order, writ, injunction, decree or award which would prevent the Borrower from proceeding with any Accommodations. No such action, suit, proceeding or investigation (i) calls into question the validity of this Agreement or any other Loan Document, or (ii) individually or collectively involves the possibility of any judgment or liability not fully covered by insurance which, if determined adversely to the Borrower or any of its Subsidiaries, would have a Materially Adverse Effect. (j) Taxes. Each of the Borrower and its Subsidiaries has in a timely manner filed all tax returns, elections, filings and reports with respect to Taxes required by, and in accordance with, Applicable Law to be filed by it. Each of the Borrower and its Subsidiaries has paid, or reserved in the financial statements, all Taxes which are due and payable, and has paid all assessments and reassessments and all other Taxes, governmental charges penalties, interest and fines due and payable by it on or before the date hereof. Each of the Borrower and its Subsidiaries has no liability, contingent or otherwise, for Taxes, except Taxes not now due and payable with respect to ordinary operations during the current fiscal period adequate provision for the payment of which has been made. Each of the Borrower and its Subsidiaries has paid as and when due all applicable Taxes and remitted as required by Applicable Law all applicable Taxes and deductions and any interest or penalties related thereto, except any such taxes (i) the payment of which the Borrower or any subsidiary is diligently contesting in good faith by appropriate proceedings, (ii) for which adequate -48- 57 reserves to the extent required by GAAP have been provided on the books of the Borrower or the Subsidiary involved, and (iii) as to which no Lien other than a Permitted Lien has attached and no foreclosure, distraint, sale or similar proceedings have been commenced. (k) Financial Statements. The Borrower has furnished or caused to be furnished to the Administrative Agent and the Banks financial information for the Borrower and its Subsidiaries, all of which, together with other financial statements furnished to the Banks subsequent to the Agreement Date have been prepared in accordance with GAAP and present fairly in all material respects the financial position of the Borrower and its Subsidiaries on a consolidated and consolidating (unconsolidated) basis, as the case may be, on and as at such dates and the results of operations for the periods then ended (subject, in the case of unaudited financial statements, to normal year-end and audit adjustments). Neither the Borrower nor any of its Subsidiaries has any material liabilities, contingent or otherwise, other than as disclosed in the financial statements referred to in the preceding sentence or as set forth or referred to in this Agreement. (l) No Material Adverse Change. Since December 31, 1995, there has occurred no event which has had or which could reasonably be expected to have a Materially Adverse Effect. (m) ERISA. The Borrower and each ERISA Affiliate of the Borrower and each of their respective Plans are in compliance with ERISA and the Code (except for instances of non-compliance which, individually and in the aggregate, would not have a Materially Adverse Effect) and neither the Borrower nor any of its ERISA Affiliates has incurred any accumulated funding deficiency with respect to any such Employee Pension Plan within the meaning of ERISA or the Code. The Borrower and each other ERISA Affiliate have complied with all requirements of COBRA (except for instances of non-compliance which, individually and in the aggregate, would not have a Materially Adverse Effect). Neither the Borrower nor any of its ERISA Affiliates has made any promises of retirement or other benefits to employees, except as set forth in the Plans, in written agreements with such employees, or in the Borrower's employee handbook and memoranda to employees except for promises which, individually or in the aggregate, would not have a Materially Adverse Effect. Neither the Borrower nor any of its ERISA Affiliates has incurred any material liability to PBGC in connection with any Plan. The assets of each Plan of the Borrower and its ERISA Affiliates which is subject to Title IV of ERISA are sufficient to provide the benefits under such Plan, the payment of which PBGC would guarantee if such Plan were terminated, and such assets are also -49- 58 sufficient to provide all other "benefit liabilities" (within the meaning of Section 4041 of ERISA) due under the Plan upon termination. No Reportable Event has occurred and is continuing with respect to any Plan. No Plan or trust created thereunder, or party in interest (as defined in Section 3(14) of ERISA), or any fiduciary (as defined in Section 3(21) of ERISA), has engaged in a nonexempt "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) which would subject the Borrower or any of its ERISA Affiliates to the tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the Code, which tax or penalty, individually or in the aggregate, would have a Materially Adverse Effect. Neither the Borrower nor any of its ERISA Affiliates is obligated to make any contribution to a Multiemployer Plan. (n) No Margin Stock. The Borrower and its Subsidiaries do not own or have any present intention of acquiring any "margin stock" as defined in Regulation U (12 CFR Part 221, as amended) of the Board of Governors of the Federal Reserve System (herein called "Margin Stock"). None of the proceeds of any Accommodation will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock or maintaining, reducing or retiring any indebtedness which was originally incurred to purchase or carry any Margin Stock, or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulation (12 CFR Part 207, as amended). Neither the Borrower nor any agent acting on its behalf has taken or will take any action which might cause this Agreement or any of the Loan Documents to violate, or be inconsistent with, Regulation G, Regulation U or Regulation X (12 CFR Part 224, as amended) or any other regulation of the Board of Governors of the Federal Reserve System or to violate, or be inconsistent with, the Securities Exchange Act of 1934, as amended, in each case as in effect now or as the same may hereafter be in effect. (o) Governmental Regulation. Neither the Borrower nor any of its Subsidiaries is required to obtain any consent, approval, authorization, permit or license (excluding Immaterial Site Specific Licenses) which has not already been obtained from, or effect any filing or registration which has not already been effected with, any Governmental Entity in connection with the execution and delivery of this Agreement or any other Loan Document. Neither the Borrower nor any of its Subsidiaries is required to obtain any consent, approval, authorization, permit or license (excluding Immaterial Site Specific Licenses) which has not already been obtained from, or effect any filing or registration which has not already been effected with, any Governmental Entity in connection with the performance, in -50- 59 accordance with their respective terms, of this Agreement or any other Loan Document. (p) Absence of Default, Etc. Neither the Borrower nor any of its Subsidiaries is subject to, or a party to, any charter or by-law restriction, any Applicable Law, any Claim, any contract or instrument, a Lien or any other restriction of any kind or character which would prevent the consummation of the transactions contemplated by this Agreement or compliance by the Borrower or such Subsidiary with the terms, conditions and provisions hereof or of any Loan Document to which it is a party or the continued operation of the business on or after the date hereof on substantially the same basis as operated to the date hereof in each case. Neither the Borrower nor any of its Subsidiaries is a party to or bound by any contract or agreement continuing after the Agreement Date, or bound by any Applicable Law, the performance of which or the compliance with which, as applicable, could have a Materially Adverse Effect or result in the loss of any License. (q) Accuracy and Completeness of Information. None of: (i) this Agreement, (ii) any of the Loan Documents, or (iii) any certificate or statement in writing which has been supplied by or on behalf of the Borrower or its Subsidiaries or by any of the directors, officers or employees of the Borrower or its Subsidiaries in connection with the transactions contemplated hereby or by any of the Loan Documents contained any untrue statement of a material fact, or omitted any statement of a material fact, necessary in order to make the statements contained herein or therein not materially misleading at the time it was furnished. There is no material fact known to the Borrower or its Subsidiaries or any of their directors, officers or employees which the Borrower has not disclosed to the Administrative Agent in writing and which could be expected to have a Materially Adverse Effect. (r) Agreements with Affiliates. Except for (1) agreements or arrangements set forth on Schedule 4 and (2) agreements or arrangements with Affiliates wherein the Borrower or one or more of its Subsidiaries provides services to such Affiliates on terms no less advantageous to the Borrower or such Subsidiary than would be the case if such transaction had been effected with a non-Affiliate, neither the Borrower nor any of its Subsidiaries has (i) any agreements or arrangements of any kind with any Affiliate or (ii) any management or consulting agreements of any kind with any Affiliate. (s) Priority. Except as a result of the action or inaction of the Administrative Agent or any Bank, the Security Interest is a valid and perfected first priority security -51- 60 interest in the Collateral in favor of the Administrative Agent, for the benefit of itself and the Banks, securing, in accordance with the terms of the Security Documents, the Obligations, and the Collateral is subject to no Liens other than Permitted Liens. The Liens created by the Security Documents are enforceable as security for the Obligations in accordance with their terms with respect to the Collateral subject, as to enforcement of remedies, to the following qualifications: (i) an order of specific performance and an injunction are discretionary remedies and, in particular, may not be available where damages are considered an adequate remedy at law, and (ii) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors' rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower or any of its Subsidiaries, as the case may be). (t) Indebtedness. Neither the Borrower nor any of its Subsidiaries has outstanding, as of the Agreement Date, and after giving effect to the initial Accommodations hereunder on the Agreement Date, any Indebtedness for Money Borrowed other than the Obligations hereunder. (u) Solvency. As of the Agreement Date after the closing of the PageNet Canada Agreement, and after giving effect to the transactions contemplated by the Loan Documents, the Borrower and its Subsidiaries were and continue to be able to pay their liabilities as they become due. (v) Books and Records. All books and records of the Borrower and its Subsidiaries have been fully, properly and accurately kept and completed in accordance with GAAP and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. (w) Environmental Liabilities. Neither the Borrower nor any of its Subsidiaries has incurred or is incurring any material liability pursuant to any Environmental Law, including any material Environmental Liabilities and Costs. To the best knowledge of the Borrower, there is no past or present fact, condition or circumstance relating to the Business, or the Real Estate, the Leasehold Real Estate and the Assets currently or formerly owned or leased by or under the charge, management or control of the Borrower or any of its Subsidiaries (the "Affected Properties") that could reasonably be expected to result in any material liability or material potential liability under any Environmental Laws. Neither the Borrower nor any of its Subsidiaries has received an Environmental Notice pursuant to, or raising concerns in respect of, any material liability pursuant to any Environmental Laws and to the best of the knowledge of the -52- 61 Borrower, there are no reasonable grounds which would give rise to the issuance of any Environmental Notice concerning material liability pursuant to any Environmental Law. To the best knowledge of the Borrower, there are no Hazardous Substances at, in, or under the Affected Properties at levels or concentrations in excess of levels or concentrations set out in Environmental Laws. Neither the Borrower nor, to the best of the knowledge of the Borrower, any of its directors or officers has ever: (i) been convicted of any offense for non-compliance with any Environmental Laws; (ii) been fined or otherwise penalized for non-compliance with Environmental Laws; or (iii) settled any prosecution in respect thereof short of conviction. (x) The Transponder Lease Agreement, the Network and Equipment Agreement and the Sales and Distribution Agreement represent the only material agreements of the Borrower and its Subsidiaries. Section 4.2 Survival of Representations and Warranties, etc. All representations and warranties made under this Agreement and any other Loan Document shall be deemed to be made, and shall be true and correct, at and as of the Agreement Date and on the date of each Accommodation except to the extent previously fulfilled in accordance with the terms hereof and to the extent relating specifically to the Agreement Date. All representations and warranties made under this Agreement and the other Loan Documents shall survive, and not be waived by, the execution hereof by the Banks and the Administrative Agent, any investigation or inquiry by any Bank or the Administrative Agent, or the making of any Advance under this Agreement. Section 4.3 No Representations by Banks. No representation, warranty or other statement made by the Administrative Agent or any one or more of the Banks in respect of the Commitment or any Accommodation made hereunder shall be binding on such Person unless made by it in writing. ARTICLE 5 General Covenants So long as any of the Obligations is outstanding and unpaid or the Banks have any Commitment hereunder (whether or not the conditions to borrowing have been or can be fulfilled), and unless the Majority Banks, or such greater number of Banks as may be expressly provided herein, shall otherwise consent in writing: -53- 62 Section 5.1 Preservation of Existence and Similar Matters. The Borrower will, and will cause each of its Subsidiaries to: (a) preserve and maintain its existence, and its material rights, franchises, licenses and privileges in the jurisdiction of its incorporation, including, without limiting the foregoing, the Licenses and all other Necessary Authorizations; and (b) qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization. Section 5.2 Business; Compliance with Applicable Law. The Borrower will, and will cause each of its Subsidiaries to, (a) comply in all material respects with the requirements of all material Applicable Law, including, without limitation, all Environmental Laws, and (b) engage solely in the Business. Section 5.3 Maintenance of Properties. The Borrower will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in the ordinary course of business in good repair, working order and condition (reasonable wear and tear excepted) all properties used in their respective businesses (whether owned or held under lease), other than obsolete equipment or unused assets, and from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, betterments and improvements thereto. Section 5.4 Accounting Methods and Financial Records. The Borrower will, and will cause each of its Subsidiaries on a consolidated and consolidating basis to, maintain a system of accounting established and administered in accordance with GAAP, keep adequate records and books of account in which complete entries will be made in accordance with GAAP and reflecting all transactions required to be reflected by GAAP, and keep accurate and complete records of their respective properties and assets. The Borrower and its Subsidiaries will maintain a fiscal year ending on December 31. Section 5.5 Insurance. The Borrower will, and will cause each of its Subsidiaries to: (a) Maintain in respect of itself, and each of its Subsidiaries, or cause each of its Subsidiaries to maintain directly: (i) in respect of the Collateral, adequate insurance coverage at all times with financially sound and reputable insurers in such forms and amounts and against such risks -54- 63 acceptable to the Administrative Agent, showing the Administrative Agent as an additional named insured and loss payee; and (ii) in respect of itself and its Assets (other than the Collateral), adequate insurance coverage at all times with financially sound and reputable insurers in such forms and amounts and against such risks as are reasonable for the business operations that are carried on by it from time to time. (b) Require that each insurance policy provide for at least thirty (30) days' prior written notice to the Administrative Agent of any termination of or proposed cancellation or nonrenewal of such policy. Section 5.6 Payment of Taxes and Claims. The Borrower will, and will cause each of its Subsidiaries to, pay and discharge, before the same shall become delinquent: (i) all Taxes, assessments and governmental charges or levies or Claims imposed upon it or upon any of its Assets; and (ii) all lawful Claims which, if unpaid, might by Applicable Law become a Lien upon its Assets, in each case except for any such Tax, assessment, charge, levy or Claim which would result in a Lien which is a Permitted Lien. The Borrower will, and will cause each of its Subsidiaries to, timely file all information returns required by any Governmental Entity. Section 5.7 Compliance with ERISA. (a) The Borrower shall, and shall cause its Subsidiaries to avoid any "accumulated funding deficiency" within the meaning of Section 412(a) of the Code with respect to any Employee Pension Plan, whether or not waived, and will otherwise comply in all material respects with the requirements of the Code and ERISA with respect to the operation of all Plans. (b) The Borrower shall furnish to the Administrative Agent and the Banks (i) within thirty (30) days after any officer of the Borrower obtains knowledge that a "prohibited transaction" (within the meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to any Plan of the Borrower or its ERISA Affiliates, including its Subsidiaries, which could subject the Borrower or any of its ERISA Affiliates to the tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the Code which tax or penalty, individually or in the aggregate, would have a Materially Adverse Effect, that any Reportable Event has occurred with respect to any Employee Pension Plan of the Borrower or any of its ERISA Affiliates or that PBGC has instituted or will institute proceedings under Title IV of ERISA to terminate any Employee Pension Plan of the Borrower or any of its ERISA Affiliates or to appoint a trustee to administer any Employee Pension Plan of the -55- 64 Borrower or any of its ERISA Affiliates, a statement setting forth the details as to such prohibited transaction, Reportable Event or termination or appointment proceedings and the action which it (or any other Employee Pension Plan sponsor if other than the Borrower) proposes to take with respect thereto, together with a copy of the notice of such Reportable Event given to PBGC if a copy of such notice is available to the Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) promptly after receipt thereof, a copy of any notice the Borrower, any of its Subsidiaries or any of its ERISA Affiliates or the sponsor of any Plan receives from PBGC, or the Internal Revenue service or the Department of Labor which sets forth or proposes any action or determination with respect to such Plan which could have a Materially Adverse Effect, (iii) promptly upon the Administrative Agent's request therefor, any annual report filed pursuant to ERISA in connection with each Employee Pension Plan maintained by the Borrower or any of its ERISA Affiliates, including the Subsidiaries, and (iv) promptly upon the Administrative Agent's request therefor, such additional information concerning any such Employee Pension Plan as may be reasonably requested by the Administrative Agent or any Bank. (c) The Borrower will promptly notify the Administrative Agent and the Banks of any excise taxes which have been assessed or which the Borrower, any of its Subsidiaries or any of its ERISA Affiliates has reason to believe may be assessed against the Borrower, any of its Subsidiaries or any of its ERISA Affiliates by the Internal Revenue Service or the Department of Labor with respect to any Plan of the Borrower or its ERISA Affiliates, including its Subsidiaries which, individually or in the aggregate, could have a Materially Adverse Effect. (d) Within the time required for notice to the PBGC under Section 302(f)(4)(A) of ERISA, the Borrower will notify the Administrative Agent and the Banks of any lien arising under Section 302(f) of ERISA in favor of any Plan of the Borrower or its ERISA Affiliates, including its Subsidiaries. (e) The Borrower will not, and will not permit any of its subsidiaries or any of its ERISA Affiliates to take any of the following actions or permit any of the following events to occur if such action or event together with all other such actions or events would subject the Borrower, any of its Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or other liabilities which would have a Materially Adverse Effect: (i) engage in any transaction in connection with which the Borrower or any of its Subsidiaries would be subject to either a civil penalty assessed pursuant to -56- 65 Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code; (ii) terminate any Employee Pension Plan in a manner, or take any other action, which would result in any liability of the Borrower, any of its Subsidiaries or any ERISA Affiliate to the PBGC, other than for payment of PBGC premiums; (iii) fail to make full payment when due of all amounts which, under the provisions of any Employee Pension Plan, the Borrower, any of its Subsidiaries or any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency within the meaning of Section 412(a) of the Code, whether or not waived, with respect to any Employee Pension Plan; or (iv) permit the present value of all benefit liabilities under all Employee Pension Plans which are subject to Title IV of ERISA to exceed the present value of the assets of such Plans allocable to such benefit liabilities (within the meaning of Section 4041 of ERISA), except as may be permitted under actuarial funding standards adopted in accordance with Section 412 of the Code. Section 5.8 Visits and Inspections. The Borrower will, and will cause each of its Subsidiaries to, permit representatives of the Administrative Agent and any of the Banks, upon reasonable notice, to (i) visit and inspect the properties of the Borrower or any of its Subsidiaries during business hours, (ii) inspect and make extracts from and copies of their respective books and records, and (iii) discuss with their respective principal officers their respective businesses, assets, liabilities, financial positions, results of operations and business prospects. The Borrower and each of its Subsidiaries will also permit representatives of the Administrative Agent and any of the Banks to discuss with their respective accountants the Borrower's and the Borrower's Subsidiaries' businesses, assets, liabilities, financial positions, results of operations and business prospects. Section 5.9 Payment of Indebtedness; Accommodations. Subject to any provisions herein or in any other Loan Document, the Borrower will, and will cause each of its Subsidiaries to, pay any and all of their respective Indebtedness prior to its becoming delinquent or having any late fees assessed or to the extent of trade payables of such Persons otherwise in accordance with-ordinary business practices customary for the wireless messaging industry, other than amounts diligently disputed in -57- 66 good faith and for which adequate reserves have been set aside in accordance with GAAP. Section 5.10 Use of Proceeds. The Borrower will use the aggregate proceeds of all Advances under the Accommodations directly or indirectly: (a) to fund Capital Expenditures associated with the Business and the ongoing need for wireless messaging units for its Canadian wireless messaging system; (b) for working capital needs and other general corporate purposes of the Borrower which do not otherwise conflict with this Section 5.10 (including, without limitation, the payment of fees and expenses incurred in connection with the execution and delivery of this Agreement and the other Loan Documents and payments permitted under Section 7.7 hereof). No proceeds of Advances hereunder shall be used for the purchase or carrying or the extension of credit for the purpose of purchasing or carrying, any Margin Stock. Section 5.11 Protect Security Interests. Except for the filing of renewal statements and the making of other filings by the Administrative Agent as a secured party or assignee, at all times take all action and supply the Administrative Agent with all information necessary to maintain the Liens provided for under the Security Documents and confer upon the Administrative Agent the security interests intended to be created thereby. Section 5.12 Environmental Audits. Promptly if requested by the Administrative Agent: (i) if a Default has occurred and is continuing or the Administrative Agent or the Majority Banks have a reasonable good faith commercial concern as to the financial condition of the Borrower, conduct environmental audits having a scope acceptable to the Administrative Agent with respect to the potential liability under applicable Environmental Laws of the Borrower and its Subsidiaries, their respective Real Estate or other Assets, and the Business, such environmental audits to be conducted by the Environmental Auditor, and provide copies of such environmental audits to the Administrative Agent; (ii) if the Administrative Agent or the Majority Banks have a good faith concern that there is a material non-compliance by the Borrower or any of its Subsidiaries with Environmental Laws, conduct such environmental audit concerning alleged material non-compliance as the Administrative Agent or such Majority Banks may require, such audits to be conducted by the Environmental Auditor, and provide copies of such environmental audits to the Administrative Agent; and (iii) diligently remedy any material non-compliance with Environmental Laws revealed by any such audit. -58- 67 Section 5.13 Further Assurances. At its cost and expense, upon request of the Administrative Agent, the Borrower will duly execute and deliver or cause to be duly executed and delivered to the Administrative Agent such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Administrative Agent to carry out more effectively the provisions and purposes of the Loan Documents. ARTICLE 6 Information Covenants So long as any of the Obligations is outstanding and unpaid or the Banks have any Commitment hereunder (whether or not the conditions to borrowing have been or can be fulfilled) and unless the Majority Banks shall otherwise consent in writing, the Borrower will furnish or cause to be furnished to each Bank and the Administrative Agent, at their respective offices: Section 6.1 Quarterly Financial Statements and Information. Within forty-five (45) days after the last day of each of the first three (3) fiscal quarters of the Borrower during any fiscal year, a copy of the balance sheets of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as at the end of such quarter and as of the end of the preceding fiscal year, and the related statements of operations and the related statements of cash flows of the Borrower on a consolidated basis with its Subsidiaries for such quarter and for the elapsed portion of the year ended with the last day of such quarter, which shall set forth in comparative form such figures as at the end of and for such quarter and appropriate prior period, shall provide consolidated and consolidating (unconsolidated) figures with respect to any acquisitions consummated during such quarter, and shall be certified by the chief financial officer of the Borrower to have been prepared in accordance with GAAP and to present fairly in all material respects the financial position of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as at the end of such quarter and the results of operations for such quarter, and for the elapsed portion of the year ended with the last day of such quarter, subject only to normal year-end and audit adjustments and the absence of footnotes. Section 6.2 Annual Financial Statements and Information. Within ninety (90) days after the end of each fiscal year of the Borrower, a copy of the audited consolidated and consolidating (unconsolidated) balance sheets of the Borrower and its -59- 68 Subsidiaries as of the end of such fiscal year and the related audited unconsolidated statements of operations for such fiscal year and for the previous fiscal year, the related audited consolidated and consolidating (unconsolidated) statements of cash flow and stockholders' equity for such fiscal year and for the previous fiscal year, which shall be accompanied by an opinion of Ernst & Young or such other independent auditor acceptable to the Administrative Agent, certified to have been prepared in accordance with GAAP and to present fairly in all material respects the financial position of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as at the end of such fiscal year. Section 6.3 Performance Certificates. At the time the financial statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of the president or chief financial officer of the Borrower as to its financial performance, in substantially the form of Exhibit G hereto: (a) setting forth as and at the end of such quarter or fiscal year, as the case may be, the arithmetical calculations required to establish (i) any adjustment to the Applicable Margins, as provided for in Section 2.6(d) hereof, and (ii) whether or not the Borrower was in compliance with the requirements of Sections 7.8, 7.9, 7.10, 7.11, 7.12 and 7.13 hereof; and (b) stating that no Default has occurred as at the end of such quarter or fiscal year, as the case may be, or, if a Default has occurred, disclosing each such Default and its nature, when it occurred, whether it is continuing and the steps being taken by the Borrower with respect to such Default. Section 6.4 Copies of Other Reports. (a) Promptly upon receipt thereof, copies of all material reports, if any, submitted to the Borrower by the Borrower's independent auditors regarding the Borrower, including, without limitation, any management report prepared in connection with the annual audit referred to in Section 6.2 hereof. (b) Promptly upon receipt thereof, copies of any material adverse notice or report regarding any License from any Governmental Entity. (c) From time to time and promptly upon each request, such data, certificates, reports, statements, documents or further information regarding the business, assets, liabilities, financial position, projections, results of operations or -60- 69 business prospects of the Borrower or any of its Subsidiaries, as the Administrative Agent or any Bank may reasonably request. (d) Promptly upon request but not more frequently than annually, certificates of insurance indicating that the requirements of Section 5.5 hereof remain satisfied for such fiscal year, together with copies of any new or replacement insurance policies obtained during such year. (e) Within sixty (60) days after each fiscal year end, the annual budget for the Borrower and its Subsidiaries, including forecasts of the income statement and a cash flow statement for such fiscal year, on a quarter by quarter basis. (f) Promptly after the sending thereof, copies of all statements, reports and other information which the Borrower or any of its Subsidiaries sends to security holders of the Borrower generally or files with the Ontario Securities Commission or any other securities commission or stock exchange. Section 6.5 Notice of Litigation and Other Matters. Notice specifying the nature and status of any of the following events, promptly, but in any event not later than fifteen (15) days after the occurrence of any of the following events becomes known to the Borrower: (i) the commencement of all material proceedings and investigations by or before any Governmental Entity particular to the Borrower and/or any of its Subsidiaries and all actions and proceedings in any court or before any arbitrator against, or to the extent known to the Borrower, in any other way relating materially adversely to the Borrower or any Subsidiary of the Borrower, or any of their respective properties, assets or businesses or any License; (ii) any material adverse change with respect to the business, assets, liabilities, financial position, results of operations or business prospects of the Borrower or any Subsidiary of the Borrower other than changes in the ordinary course of business which have not had and would not reasonably be expected to have a Materially Adverse Effect; (iii) any material amendment or change to the financial projections or annual budget provided to the Banks by the Borrower; (iv) any Default or the occurrence or non-occurrence of any event (A) which constitutes, or which with the passage of time or giving of notice or both would constitute a default by the Borrower or any Subsidiary of -61- 70 the Borrower under any material agreement other than this Agreement and the other Loan Documents to which the Borrower or any subsidiary of the Borrower is party or by which any of their respective properties may be bound, or (B) which could have a Materially Adverse Effect, giving in each case the details thereof and specifying the action proposed to be taken with respect thereto; and (v) the occurrence of any Reportable Event or a "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan of the Borrower or any of its ERISA Affiliates or the institution or threatened institution by PBGC of proceedings under ERISA to terminate or to partially terminate any such Plan or the commencement or threatened commencement of any litigation regarding any such Plan or naming it or the trustee of any such Plan with respect to such Plan or any action taken by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate of the Borrower to withdraw or partially withdraw from any Plan or to terminate any Plan, to the extent any of the foregoing would have, individually or in the aggregate, a Materially Adverse Effect. Section 6.6 Environmental Reporting. Promptly, and in any event within fifteen (15) days of becoming aware of its existence, notify the Administrative Agent in writing of any notice or other state of affairs (providing details of any actions taken by the Borrower in response) which could reasonably be expected to give rise to: (i) Environmental Liabilities and Costs of $500,000 or more; or (ii) any violation of Environmental Laws involving the possible imposition of a fine of $500,000 or more or the shutting down of any facility forming part of the Business for a period in excess of 24 hours; and (iii) any facts or circumstances which could reasonably be expected to give rise to (x) Environmental Liabilities and Costs of $500,000 or more, or (y) any violation of Environmental Laws involving the possible imposition of a fine of $500,000 or more or the shutting down of any facility forming part of the Assets for a period in excess of 24 hours. ARTICLE 7 Negative Covenants So long as any of the obligations is outstanding and unpaid or the Banks have any Commitment hereunder (whether or not the conditions to borrowing have been or can be fulfilled) and unless the Majority Banks, or such greater number of Banks as may be -62- 71 expressly provided herein, shall otherwise give their prior consent in writing: Section 7.1 Indebtedness of the Borrower and its Subsidiaries. The Borrower shall not, and shall not permit any of its Subsidiaries to, create, assume, incur or otherwise become or remain obligated in respect of, or permit to be outstanding, any Indebtedness except: (a) the Obligations (other than the Obligations described in Section 7.1(c) below); (b) Indebtedness secured by Permitted Liens; (c) obligations under Interest Rate Hedge Agreements having a notional principal amount of not more than fifty percent (50%) of the Accommodations in the aggregate outstanding at any time; (d) Indebtedness of the Borrower or any of its wholly-owned subsidiaries to any other wholly-owned Subsidiary of the Borrower so long as the corresponding debt instruments are pledged to the Administrative Agent as security for the Obligations; (e) Indebtedness of any of wholly-owned Subsidiaries of the Borrower to the Borrower so long as the corresponding debt instruments are pledged to the Administrative Agent as security for the obligations; and (f) Capitalized Lease Obligations in an aggregate amount not to exceed $500,000 at any time outstanding. Section 7.2 Limitation on Liens. The Borrower shall not, and shall not permit any of its Subsidiaries to, create, assume, incur or permit to exist or to be created, assumed, incurred or permitted to exist, directly or indirectly, any Lien on any of its properties or assets, whether now owned or hereafter acquired, except for Permitted Liens. Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any amendment of, or agree to or accept or consent to any waiver of any of the provisions of its articles or certificate of incorporation or partnership agreement or by-laws, as appropriate (other than immaterial amendments relating to corporate governance which could not reasonably be expected to have an adverse effect on the Administrative Agent or any Bank or any of their rights or claims under any of the Loan Documents) -63- 72 Section 7.4 Liquidation, Merger, or Disposition of Assets. (a) Disposition of Assets. The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time sell, exchange, lease, abandon, or otherwise dispose of any Assets (other than Assets disposed of in the ordinary course of business) without the prior written consent of all the Banks. (b) Liquidation or Merger. The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time liquidate or dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up, or enter into any merger, other than (i) a merger or consolidation among the Borrower and one or more of its Subsidiaries, provided the Borrower is the surviving corporation, or (ii) a merger between or among two or more Subsidiaries of the Borrower, or (iii) in connection with an acquisition permitted hereunder effected by a merger in which the Borrower or, in a merger in which the Borrower is not a party, a Subsidiary of the Borrower is the surviving corporation. Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time Guaranty, assume, be obligated with respect to, or permit to be outstanding any Guaranty of, any obligation of any other Person other than (a) a guaranty by endorsement of negotiable instruments for collection in the ordinary course of business, (b) obligations under agreements of the Borrower or any of its Subsidiaries entered into in connection with leases of real property or the acquisition of services, supplies and equipment in the ordinary course of business of the Borrower or any of its subsidiaries, or (c) Guaranties of Indebtedness incurred as permitted pursuant to Section 7.1 hereof. Section 7.6 Investments and Acquisitions. The Borrower shall not, and shall not permit any of its subsidiaries to, directly or indirectly, (a) make any loan or advance, or otherwise acquire for consideration evidences of Indebtedness, Capital Stock or other securities of any Person or other assets or property other than (i) assets or property in the ordinary course of business or (ii) Permitted Investments; or (b) except with the consent of the Majority Banks, make any acquisition. Section 7.7 Restricted Payments and Purchases. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly declare or make any Restricted Payment or Restricted Purchase, except that so long as no Default hereunder then exists or would be caused thereby the Borrower may make (a) payments to Paging Network, Inc. for reimbursement of start-up expenses in an aggregate amount of not more than United -64- 73 States Dollars $8,600,000 and (b) distributions to Paging Network, Inc. and Madison Venture Corporation so long as the Leverage Ratio is below 4.00 to 1 (both before and after giving effect to such distribution). Section 7.8 Leverage Ratio. Commencing April 1, 1998, the Borrower shall not permit the Leverage Ratio to exceed the ratios set forth below during the periods indicated:
Period Ratio ------ ------ April 1, 1998 through June 30, 1998 6.00:1 July 1, 1998 through September 30, 1998 5.00:1 October 1, 1998 through December 31, 1998 4.00:1 January 1, 1999 through March 31, 1999 3.00:1 April 1, 1999 and thereafter 2.50:1.
Section 7.9 Annualized Operating Cash Flow to Pro Forma Debt Service. Commencing October 1, 1998, the Borrower shall not permit the ratio of Annualized Operating Cash Flow to Pro Forma Debt Service for the Borrower Group on a combined basis to be less than the ratios set forth below for the periods indicated:
Period Ratio ------ ------ October 1, 1998 through September 30, 2001 1.25:1 October 1, 2001 and thereafter 1.50:1
Section 7.10 Total Debt Per Subscriber. The Borrower shall not at any time permit the Total Debt for the Borrower Group on a combined basis divided by Total Subscribers to be greater than or equal to $275.00. Section 7.11 Capital Expenditures. Commencing with the year in which the Available Commitment exceeds the Minimum Permitted Collateral Amount, the Borrower shall not permit the aggregate Capital Expenditures for the Borrower Group on a -65- 74 combined basis to exceed the following for the fiscal years indicated:
Total Capital Period Expenditures ------ --------------- At December 31, 1996 $45,000,000.00 At December 31, 1997 $20,000,000.00 At December 31, 1998 and thereafter $17,500,000.00
To the extent not used in 1996, an amount equal to the unused Total Capital Expenditure availability may be carried forward to 1997. Thereafter, to the extent not used in any fiscal year, an amount equal to the lesser of (a) the unused Total Capital Expenditure availability (exclusive of any carry forwards from prior periods) for such fiscal year and (b) 10% of the Total Capital Expenditure availability shown above (exclusive of any carry forwards from prior periods) for such fiscal year, may be carried forward to the next succeeding fiscal year. Section 7.12 Minimum Revenue Test. Commencing December 31, 1996 and continuing for each fiscal quarter through the fiscal quarter ending June 30, 1998, the Borrower shall not permit the aggregate Gross Revenue for the Borrower Group on a combined basis to be less than the following for the fiscal quarters indicated:
Quarter Ending Minimum Revenue -------------- --------------- 12/31/96 $1,770,000 03/31/97 $2,800,000 06/30/97 $3,860,000 09/30/97 $4,960,000 12/31/97 $6,100,000 03/31/98 $7,270,000 06/30/98 $8,490,000
Section 7.13 Minimum Units in Service. Commencing December 31, 1996 and continuing for each fiscal quarter through the fiscal quarter ending June 30, 1998, the Borrower shall not -66- 75 permit the minimum number of Units in Service to be less than the following for the fiscal quarters indicated:
Minimum Pagers Quarter Ending In Service -------------- -------------- 12/31/96 42,200 03/31/97 63,800 06/30/97 86,400 09/30/97 110,200 12/31/97 135,200 03/31/98 161,400 06/30/98 188,900
Section 7.14 Affiliate Transactions. Except for those agreements described in Schedule 4 hereto, the Borrower shall not, and shall not permit any of its Subsidiaries to, at any time engage in any transaction with an Affiliate, or make an assignment or other transfer of any of its properties or assets to any Affiliate, on terms less advantageous to the Borrower or such Subsidiary than would be the case if such transaction had been effected with a non- Affiliate. Section 7.15 Real Estate. Neither the Borrower nor any of its Subsidiaries shall purchase any Real Estate or enter into any sale/leaseback transaction. Section 7.16 ERISA Liabilities. The Borrower shall not, and shall cause each of its ERISA Affiliates not to enter into any Multiemployer Plan. ARTICLE 8 Default Section 8.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of Applicable Law or pursuant to any judgment or order of any court or any order, rule or regulation of any Person: (a) Any representation or warranty made under this Agreement or any other Loan Document shall prove incorrect or misleading in any material respect when made or deemed to be made pursuant to Section 4.2 hereof; -67- 76 (b) The Borrower shall default in the payment of: (i) any interest under any of the Loan Documents or fees or other amounts payable to the Banks and the Administrative Agent under any of the Loan Documents, or any of them, when due and such default is not cured within three (3) Business Days after the occurrence thereof; or (ii) any principal under any of the Loan Documents when due; (c) The Borrower shall default in the performance or observance of any agreement or covenant contained in Sections 5.2 or 5.10 or in Articles 6 or 7 hereof; provided however, that on any date on which the aggregate of Accommodations outstanding hereunder is less than the aggregate amount of the Equivalent Canadian Dollar Amount of Permitted Collateral held by the Administrative Agent pursuant to the Deposit Agreement and the Letter of Credit, the failure to comply with Section 7.12 or 7.13 hereof shall not constitute a default hereunder until any such failure has continued for a period of two (2) consecutive complete calendar quarters; (d) The Borrower shall default in the performance or observance of any other agreement or covenant contained in this Agreement not specifically referred to elsewhere in this Section 8.1 or there shall occur any default in the performance or observance of any agreement or covenant contained in any of the Loan Documents (other than this Agreement or as otherwise provided in Section 8.1 of this Agreement) by the Borrower, any of its Subsidiaries, or any other obligor thereunder, and such default shall not be cured within a period of thirty (30) days from the date on which the Borrower becomes aware of or receives notice of such default; (e) The Borrower or any of its Subsidiaries shall: (i) become insolvent or generally not pay its debts as such debts become due; (ii) admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; (iii) file a notice of intention to file a proposal under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors; (iv) have instituted against it any proceeding, which proceeding continues undismissed or unstayed for a period of sixty (60) consecutive days or any of the actions sought in such proceeding (including the entry of an order for relief against it or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Assets) shall occur, or institute any proceeding seeking: (A) to adjudicate it a bankrupt or insolvent; (B) any liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts -68- 77 under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors; or (C) the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Assets; or (v) take any corporate action to authorize any of the foregoing actions; (f) A notice is sent to or received by the Borrower or any of its Subsidiaries from any creditor with respect to the intention of such creditor to enforce security on: (i) any of the Collateral; or (ii) any Assets of the Borrower or any of its Subsidiaries (other than the Collateral) unless such notice is being contested in good faith by appropriate legal proceedings and such notice does not involve any immediate danger of the sale, forfeiture or loss of any of the Assets of the Borrower or any of its Subsidiaries (other than the Collateral) that are the subject of such notice; (g) A judgment or order for the payment of money not covered by insurance shall be entered by any court against the Borrower or any of the Borrower's Subsidiaries for the payment of money which exceeds singly or in the aggregate with other such judgments, $500,000, or a warrant of attachment or execution or similar process shall be issued or levied against property of the Borrower or any of the Borrower's Subsidiaries which, together with all other such property of the Borrower or any of the Borrower's Subsidiaries subject to other such process, exceeds in value $500,000 in the aggregate, and if, within thirty (30) days after the entry, issue or levy thereof, such judgment, warrant or process shall not have been paid or discharged or stayed pending appeal or removed to bond, or if, commenced and not stayed, after the expiration of any such stay, such judgment, warrant or process shall not have been paid or discharged or removed to bond; (h) There shall be at any time any "accumulated funding deficiency," as defined in ERISA or in Section 412 of the Code, with respect to any Plan maintained by the Borrower or any ERISA Affiliate, or to which the Borrower or any ERISA Affiliate has any liabilities, or any trust created thereunder; or a trustee shall be appointed by a United States District Court to administer any Employee Pension Plan; or PBGC shall institute proceedings to terminate any Employee Pension Plan; or the Borrower or any ERISA Affiliate shall incur any liability to PBGC in connection with the termination of any Employee Pension Plan; or any Plan or trust created under any Plan of the Borrower or any ERISA Affiliate shall engage in a "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 -69- 78 of the Code) which would subject the Borrower or any Subsidiary to any tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; (i) There shall occur (i) any default which entitles the holders to accelerate the maturity thereof under any document, instrument or agreement relating to any Indebtedness of any member of the Borrower Group having an aggregate principal amount exceeding $1,000,000; or (ii) any default which entitles the holders to terminate any Interest Rate Hedge Agreement having a notional principal amount of $1,000,000 or more; (j) One or more Licenses shall be terminated or revoked, substantially adversely modified or no longer available to the Borrower such that the Borrower and its Subsidiaries are no longer able to operate the related wireless messaging system or portions thereof and retain the revenue received therefrom, if any, or any such License shall fail to be renewed at the stated expiration thereof such that the Borrower and its Subsidiaries are no longer able to operate the related wireless messaging system or portions thereof and retain the revenue received therefrom, if any, and, in either case, there shall be a loss of revenue of the Borrower or any of its Subsidiaries as a direct or indirect result thereof which loss of revenues could reasonably be expected to have a Materially Adverse Effect; (k) Any Loan Document or any material provision thereof, shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by the Borrower or any of the Borrower's Subsidiaries or any shareholder, or by any governmental authority having jurisdiction over the Borrower or any of the Borrower's Subsidiaries or any shareholder, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or the Borrower or any of the Borrower's Subsidiaries shall deny that it has any liability or obligation for the payment of principal or interest purported to be created under any Loan Document; (l) Subject only to Permitted Liens, any Security Document shall for any reason (other than as a result of the action or inaction of the Administrative Agent or any Bank), fail or cease to create a valid and perfected and first-priority Lien on or Security Interest in any portion of the Collateral purported to be covered thereby; (m) Any Change Event shall occur or exist; or -70- 79 (n) There shall occur any default by the Borrower or any Subsidiary of the Borrower under or a cancellation of, in any case without contemporaneous replacement, any Transponder Lease Agreement, the Network and Equipment Agreement or the Sales and Distribution Agreement which default is not cured within any applicable cure period and which default would be reasonably likely to have a Materially Adverse Effect. Section 8.2 Remedies. (a) If an Event of Default specified in Section 8.1 hereof (other than an Event of Default under Section 8.1(e) hereof) shall have occurred and shall be continuing, the Administrative Agent, at the request of the Majority Banks subject to Section 9.8(a) hereof, shall (i) terminate the Commitment, and/or (ii) declare the principal of and interest on the Accommodations and all other amounts owed to the Banks and the Administrative Agent under this Agreement and any other Loan Documents to be forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or any other Loan Document to the contrary notwithstanding, and the Commitment shall thereupon forthwith terminate, and/or (iii) the security constituted by the Security Documents and any other security now or hereafter held by the Administrative Agent shall become and be enforceable. (b) Upon the occurrence and continuance of an Event of Default specified in Section 8.1(e) hereof, all principal, interest and other amounts due hereunder and under the Loan Documents, and all other obligations, shall thereupon and concurrently therewith become due and payable and the Commitment shall forthwith terminate and the principal amount of the Accommodations outstanding hereunder shall bear interest at the Default Rate, all without any action by the Administrative Agent or the Banks, or the Majority Banks, or any of them, and without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or in the other Loan Documents to the contrary notwithstanding. (c) Upon acceleration of the obligations, as provided in subsection (a) or (b) of this Section 8.2, the Administrative Agent and the Banks shall have all of the post-default rights granted to them, or any of them, as applicable, under the Loan Documents and under Applicable Law. (d) Upon acceleration of the obligations, as provided in subsection (a) or (b) of this Section 8.2, the Administrative -71- 80 Agent, upon request of the Majority Banks, shall have the right to the appointment of a receiver for the properties and assets of the Borrower and its Subsidiaries, and the Borrower, for itself and on behalf of its Subsidiaries, hereby consents to such rights and such appointment and hereby waives any objection the Borrower or any Subsidiary may have thereto or the right to have a bond or other security posted by the Administrative Agent on behalf of the Banks, in connection therewith. (e) The rights and remedies of the Administrative Agent and the Banks hereunder shall be cumulative, and not exclusive. ARTICLE 9 The Administrative Agent Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably appoints and authorizes, and hereby agrees that it will require any transferee of any of its interest in its pro rata portion of the Accommodations irrevocably to appoint and authorize, the Administrative Agent to take such actions as its agent on its behalf and to exercise such powers hereunder and under the other Loan Documents as are delegated by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Neither the Administrative Agent nor any of its directors, officers, employees, agents or counsel, shall be liable to the Banks for any action taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. Section 9.2 Interest Holders. The Administrative Agent may treat each Bank, or the Person designated in the last notice filed with the Administrative Agent, as the holder of all of the interests of such Bank in its pro rata portion of the Accommodations until written notice of transfer, signed by such Bank (or the Person designated in the last notice filed with the Administrative Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the Administrative Agent, shall have been filed with the Administrative Agent. Section 9.3 Consultation with Counsel. The Administrative Agent may consult with legal counsel selected by it and shall not be liable to the Banks for any action taken or -72- 81 suffered by it in good faith in consultation with such counsel and in reasonable reliance on such consultations. Section 9.4 Documents. The Administrative Agent shall be under no duty to examine, inquire into, or pass upon the validity, effectiveness or genuineness of this Agreement, any other Loan Document, or any instrument, document or communication furnished pursuant hereto or in connection herewith, and the Administrative Agent shall be entitled to assume that they are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be. Section 9.5 Administrative Agent and Affiliates. With respect to the Commitment and the Accommodations, the Bank which is the Administrative Agent shall have the same rights and powers hereunder as any other Bank and the Administrative Agent and Affiliates of the Administrative Agent may accept deposits from, lend money to and generally engage in any kind of business with the Borrower, any of its Subsidiaries or any Affiliates of, or Persons doing business with, the Borrower, as if they were not affiliated with the Administrative Agent and without any obligation to account therefor. Section 9.6 Responsibility of the Administrative Agent. The duties and obligations of the Administrative, Agent under this Agreement are only those expressly set forth in this Agreement. The Administrative Agent shall be entitled to assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge, or has been notified in writing by the Borrower, of such fact, or has been notified by a Bank in writing that such Bank considers that a Default or an Event of Default has occurred and is continuing, and such Bank shall specify in detail the nature thereof in writing. The Administrative Agent shall not be liable hereunder for any action taken or omitted to be taken except for its own gross negligence or willful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. The Administrative Agent shall provide each Bank with copies of such documents received from the Borrower as such Bank may reasonably request. Section 9.7 Security Documents. The Administrative Agent is hereby authorized to act on behalf of the Banks, in its own capacity and through other agents and sub-agents appointed by it, under the Security Documents, provided that the Administrative Agent shall not agree to the release of any Collateral, or any property encumbered by any mortgage, pledge or security interest, except in compliance with Section 11.12 hereof. -73- 82 Section 9.8 Action by the Administrative Agent. (a) The Administrative Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, and with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, this Agreement or any other Loan Document, unless the Administrative Agent shall have been instructed by the Majority Banks (or, where expressly required, all the Banks) to exercise or refrain from exercising such rights or to take or refrain from taking such action; provided that the Administrative Agent shall not exercise any rights under Section 8.2(a) of this Agreement without the request of the Majority Banks (or, where expressly required, all the Banks) unless time is of the essence. The Administrative Agent shall incur no liability to the Banks under or in respect of this Agreement with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment or which may seem to it to be necessary or desirable in the circumstances, except for its gross negligence or willful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. (b) The Administrative Agent shall not be liable to the Banks or to any Bank or the Borrower or any of its Subsidiaries in acting or refraining from acting under this Agreement or any other Loan Document in accordance with the instructions of the Majority Banks (or, where expressly required, all the Banks), and any action taken or failure to act pursuant to such instructions shall be binding on all Banks. The Administrative Agent shall not be obligated to take any action which is contrary to Applicable Law or which would in the Administrative Agent's reasonable opinion subject the Administrative Agent to liability. Section 9.9 Notice of Default or Event of Default. In the event that the Administrative Agent or any Bank shall acquire actual knowledge, or shall have been notified, of any Default or Event of Default, the Administrative Agent or such Bank shall promptly notify the Banks and the Administrative Agent, as applicable (provided failure to give such notice shall not result in any liability on the part of such Bank or the Administrative Agent), and the Administrative Agent shall take such action and assert such rights under this Agreement and the other Loan Documents as the Majority Banks shall request in writing, and the Administrative Agent shall not be subject to any liability by reason of its acting pursuant to any such request. If the Majority Banks (or, where expressly required, all the Banks) -74- 83 shall fail to request the Administrative Agent to take action or to assert rights under this Agreement or any other Loan Documents in respect of any Default or Event of Default within ten (10) days after their receipt of the notice of any Default or Event of Default from the Administrative Agent or any Bank, the Administrative Agent may, but shall not be required to, take such action and assert such rights (other than rights under Sections 8.2(a) or 11.12 of this Agreement) as it deems in its discretion to be advisable for the protection of the Banks, except that, if the Majority Banks have instructed the Administrative Agent not to take such action or assert such right, in no event shall the Administrative Agent act contrary to such instructions. Section 9.10 Responsibility Disclaimed. The Administrative Agent shall not be under any liability or responsibility whatsoever as Administrative Agent: (a) To the Borrower or any other Person as a consequence of any failure or delay in performance by or any breach by, any Bank or Banks of any of its or their obligations under this Agreement or any of the other Loan Documents; (b) To any Bank or Banks, as a consequence of any failure or delay in performance by, or any breach by, (i) the Borrower of any of its obligations under this Agreement or any other Loan Document, or (ii) the Borrower, any Subsidiary of the Borrower or any other obligor under any other Loan Document; (c) To any Bank or Banks, for any statements, representations or warranties in this Agreement or any other Loan Document, or any information provided pursuant to this Agreement, or any other Loan Document, or for the validity, effectiveness, enforceability or sufficiency of this Agreement or any other Loan Document; or (d) To any Person for any act or omission other than that arising from gross negligence or willful misconduct of the Administrative Agent as determined by a final, non-appealable judicial order of a court of competent jurisdiction. Section 9.11 Indemnification. The Banks agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower) pro rata according to their respective Commitment Ratios, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including fees and expenses of experts, agents, consultants and counsel), or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or -75- 84 asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Administrative Agent under this Agreement or any other Loan Document, except that no Bank shall be liable to the Administrative Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the gross negligence or willful misconduct of the Administrative Agent as determined by a final, non-appealable judicial order of a court of competent jurisdiction. Section 9.12 Credit Decision. Each Bank represents and warrants to each other and to the Administrative Agent that: (a) In making its decision to enter into this Agreement and to make its pro rata portion of the Accommodations it has independently taken whatever steps it considers necessary to evaluate the financial condition and affairs of the Borrower and that it has made an independent credit judgment, and that it has not relied upon the Administrative Agent or information provided by the Administrative Agent (other than information provided to the Administrative Agent by the Borrower and forwarded by the Administrative Agent to the Banks); and (b) So long as any portion of the Accommodations remains outstanding or such Bank has an obligation to make its pro rata portion of Advances hereunder, it will continue to make its own independent evaluation of the Collateral and of the financial condition and affairs of the Borrower. Section 9.13 Successor Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by giving fifteen (15) days prior written notice thereof to the Banks and the Borrower and may be removed at any time for cause by the Majority Banks. Upon any such resignation or removal, the Majority Banks, and prior to the occurrence of a Default with the consent of the Borrower not to be unreasonably withheld, shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gave notice of resignation or the Majority Banks' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Banks-, appoint a successor Administrative Agent which shall be any Person organized under the laws of Canada which has combined capital and reserves in excess of $250,000,000. Upon the -76- 85 acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, duties and obligations of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent the provisions of this Article shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent. Section 9.14 Delegation of Duties. The Administrative Agent may execute any of its duties under the Loan Documents by or through agents or attorneys selected by it using reasonable care, and shall be entitled to rely upon advice of counsel concerning all matters pertaining to such duties. Section 9.15 Determination by Administrative Agent Conclusive and Binding. Any determination to be made by the Administrative Agent on behalf of or with the approval of the Banks or the Majority Banks under this Agreement shall be made by the Administrative Agent in good faith and, if so made, shall be binding on the Banks, absent manifest error. ARTICLE 10 Computations and Indemnities Section 10.1 Indemnity for Change in Circumstances. If with respect to the Banks: (a) any change in Applicable Law, or any change in the interpretation or application by any Governmental Entity of any Applicable Law occurring or becoming effective after the date hereof; or (b) any compliance by the Administrative Agent or any of the Banks with any direction, request or requirement (whether or not having the force of Applicable Law) of any Governmental Entity made or becoming effective after the date hereof, in either case shall have the effect of causing Loss to the Administrative Agent or any of the Banks by: (i) increasing the cost to the Administrative Agent or any of the Banks of performing its obligations under this Agreement or in respect of any Advance or Bankers' Acceptance (including the costs of maintaining any -77- 86 capital, reserve or special deposit requirements in connection therewith); (ii) requiring the Administrative Agent or any of the Banks to maintain or allocate any capital or additional capital or affecting its allocation of capital in respect of its obligations under this Agreement or in respect of any Advances or Bankers' Acceptances; (iii) reducing any amount payable to the Administrative Agent or any of the Banks under this Agreement or in respect of any Advance or Bankers' Acceptance by any amount it deems material (other than a reduction resulting from a higher rate of income tax or other special tax relating to the Administrative Agent's or any Bank's income in general); or (iv) causing the Administrative Agent or any of the Banks to make any payment or to forgo any return on, or calculated by reference to, any amount received or receivable by the Administrative Agent or any of the Banks under this Agreement in respect of any Advance or Bankers' Acceptance; then the Administrative Agent may give notice to the Borrower specifying the nature of the event giving rise to such Loss and the Borrower shall, within thirty (30) days or, if earlier, on the Maturity Date, pay such amounts as the Administrative Agent may specify to be necessary to compensate the Administrative Agent or any of the Banks for any such Loss incurred after the date of such notice. The Administrative Agent or any Bank claiming compensation under this Section 10.1 shall provide the Borrower with a written certificate setting forth the additional amount or amounts to be paid to it hereunder and calculations therefor in reasonable detail. Such certificate shall be presumptively correct absent manifest error. In determining such amount, such Person may use any reasonable averaging and attribution methods which are consistently applied to similarly situated borrowers of such Person. Section 10.2 Indemnity for Transactional and Environmental Liability. (a) The Borrower hereby agrees to indemnify, exonerate and hold the Administrative Agent and each Bank and each of their respective officers, directors, employees, agents and other representatives (collectively, the "Indemnified Parties") free and harmless from and against any and all claims, demands, actions, causes of action, suits, losses, costs (including all documentary, recording, filing, mortgage or stamp -78- 87 taxes or duties), charges, liabilities and damages, and expenses in connection therewith (irrespective of whether such Indemnified Party is a party to the action for which such indemnification hereunder is sought), and including reasonable legal fees and disbursements (collectively, in this Section 10.2 (a), the "Indemnified Liabilities") paid, incurred or suffered by, or asserted against, the Indemnified Parties or any of them or, with respect to, or as a direct or indirect result of: (i) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Accommodation obtained hereunder; or (ii) the execution, delivery, performance or enforcement of this Agreement or any other Loan Document, except for such Indemnified Liabilities that a court of competent jurisdiction determines by a final non-appealable order are on account of the relevant Indemnified Party's gross negligence or wilful misconduct. (b) Without limiting the generality of the indemnity set out in Section 10.2(a) hereof, the Borrower hereby further agrees to indemnify, exonerate and hold the Indemnified Parties free and harmless from and against any and all claims, demands, actions, causes of action, suits, losses, costs, charges, liabilities and damages, and expenses in connection therewith, including reasonable legal fees and disbursements (collectively, in this Section 10.2(b), the "Indemnified Liabilities") paid, incurred or suffered by, or asserted against, the Indemnified Parties or any of them for, with respect to, or as a direct or indirect result of any Environmental Liabilities and Costs. (c) All obligations provided for in this Section 10.2 shall not be reduced or impaired by any investigation made by or on behalf of the Administrative Agent or any of the Banks. (d) The Borrower hereby agrees that, for the purposes of effectively allocating the risk of loss placed on the Borrower by this Section 10.2, the Administrative Agent and each of the Banks shall be deemed to be acting as the agent or trustee on behalf of and for the benefit of its officers, directors and agents. (e) If, for any reason, the obligations of the Borrower pursuant to this Section 10.2 shall be unenforceable, the Borrower agrees to make the maximum contribution to the payment and satisfaction of each obligation that is permissible under Applicable Law, except to the extent that a court of competent jurisdiction determines by a final non-appealable order such obligations arose on account of the gross negligence or wilful misconduct of any Indemnified Party. -79- 88 Section 10.3 Taxation on Payments. The Borrower hereby agrees: (a) that any and all payments made by the Borrower under or pursuant to any of the Loan Documents shall be made without set-off or counterclaim and free and clear of, and without deduction for, any and all present or future Taxes, levies, imposts, deductions, charges, fees, duties or withholding or other charges of any nature imposed by any taxing authority, and all liabilities with respect thereto, imposed by any jurisdiction as a consequence or result of any action taken by the Borrower, including the making of any payment under or pursuant to any of the Loan Documents, excluding, in the case of the Administrative Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and franchise taxes. If the Borrower shall be required by Law to deduct any Taxes from or in respect of any sum payable to the Administrative Agent or any Bank hereunder or pursuant to any of the Loan Documents, the sum payable to the Administrative Agent or such Bank, as the case may be, shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 10.3) the Administrative Agent or such Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made. If a Tax credit is received by the Administrative Agent or such Bank for any Taxes deducted or withheld by the Borrower in accordance with this Section 10.3(a) and in respect of which additional amounts have been paid by the Borrower under this Section 10.3(a), then, to the extent such Tax credit is reasonably identified by the Administrative Agent or such Bank as being related to the additional amounts paid by the Borrower under this Section 10.3(a) and has been received and utilized by the Administrative Agent or such Bank, the Administrative Agent or such Bank shall pay to the Borrower an amount equal to such Tax credit; provided that such amount shall not exceed the additional amounts paid by the Borrower to the Administrative Agent or such Bank under this Section 10.3(a); and (b) to indemnify and hold harmless the Administrative Agent and each Bank for the full amount of Taxes (excluding, in the case of the Administrative Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and franchise taxes) and for any incremental Taxes due to the Borrower's failure to remit to the Administrative Agent and the Banks the required receipts or other required documentary evidence of payment of such Taxes or due to the Borrower's failure to pay any Taxes (excluding, in the case of the Administrative Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and -80- 89 franchise taxes) when due to the appropriate taxing authority (including any Taxes imposed by any taxing authority on amounts payable under this Section 10.3) paid by the Administrative Agent or any Bank and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally assessed. The Administrative Agent or any Bank shall promptly notify the Borrower of such payment and, if such payment was made pursuant to an incorrect or illegal assessment, shall reasonably cooperate with the Borrower, at the expense of the Borrower, in any dispute of such assessment. The Administrative Agent or any Bank claiming compensation under this Section 10.3 shall provide the Borrower with a written certificate setting forth the additional amount or amounts to be paid to it hereunder and calculations therefor in reasonable detail. Such certificate shall be presumptively correct absent manifest error. Payment pursuant to this indemnification shall be made within thirty (30) days from the date the Administrative Agent or such Bank makes written demand therefor or if earlier, on the Maturity Date. Section 10.4 Judgement Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert any sum due, or owing hereunder or under any other Loan Document to the Administrative Agent or any one or more of the Banks in any currency (the "Original Currency") into another currency (the "Other Currency"), the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the original Currency with the Other Currency on the Business Day preceding that on which final judgment is granted. The obligations of the Borrower in respect of any sum due in the Original Currency from it to the Administrative Agent or any one or more of the Banks under any of the Loan Documents shall, notwithstanding any judgement in any Other Currency, be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due or owing in such other Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Original Currency with such Other Currency. If the amount of the Original Currency so purchased is less than the sum originally due or owing to the Administrative Agent or any one or more of the Banks in the Original Currency, the Borrower shall, as a separate obligation and notwithstanding any such judgement, indemnify the Administrative Agent or such Bank against such Loss, and if the amount of the Original Currency so purchased exceeds the sum originally due or owing to the Administrative -81- 90 Agent or such Bank in the Original Currency, the Administrative Agent or such Bank shall remit such excess to the Borrower. Section 10.5 Claims for Increased Costs and Taxes. Prior to the occurrence of a Default in the event that any Bank shall have notified the Borrower that it is entitled to claim compensation pursuant to Section 10.01 or 10.3 hereof (each such Bank being an "Affected Bank"), the Borrower may designate a replacement Canadian chartered bank reasonably acceptable to the Administrative Agent (a "Replacement Bank") to assume the Commitment and the obligations of any such Affected Bank hereunder, and to purchase the outstanding Accommodations of such Affected Bank and such Affected Bank's rights hereunder and with respect thereto, without recourse upon, or warranty by, or expense to, such Affected Bank, for a purchase price equal to the outstanding principal amount of the Accommodations of such Affected Bank plus all interest accrued and unpaid thereon and all other amounts owing to such Affected Bank hereunder and upon such assumption and purchase by the Replacement Bank, such Replacement Bank shall be deemed to be a "Bank" for purposes of this Agreement and such Affected Bank shall cease to be a "Bank" for purposes of this Agreement and shall no longer have any obligations or rights hereunder (other than any obligations or rights which according to this Agreement shall survive the termination of the Commitment). Article 11 Miscellaneous Section 11.1 Notices. (a) Except as otherwise expressly provided herein, all notices and other communications under this Agreement and the other Loan Documents (unless otherwise specifically stated therein) shall be in writing and shall be personally delivered to an officer or other responsible employee of the addressee or sent by facsimile, charges prepaid, at or to the applicable addresses or facsimile numbers, as the case may be, set forth in this Section 11.1. Any communication which is personally delivered as aforesaid shall be deemed to have been validly and effectively given on the date of such delivery if such date is a Business Day and such delivery was made during normal business hours of the recipient; otherwise, it shall be deemed to have been validly and effectively given on the Business Day next following such date of delivery. Any communication which is transmitted by facsimile as aforesaid shall be deemed to have been validly and effectively -82- 91 given on the date of transmission if such date is a Business Day and such transmission was made during normal business hours of the recipient; otherwise, it shall be deemed to have been validly and effectively given on the Business Day next following such date of transmission. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses: (i) If to the Borrower, to it at: Madison Telecommunications Holdings, Inc. c/o Madison Ventures Corporation 1970 Alberta Street Vancouver, British Columbia V5Y 3X4 Attn: Mr. Bruce W. Aunger Telecopy No.: (604) 879-1483 with a copy to: Blake, Cassels & Graydon 1700-1030 West George Street Vancouver, BC V6E2Y3 Attn: Anne M. Stewart, Q.C. Telecopy No.: (604) 631-3309 Paging Network of Canada Inc. c/o Paging Network, Inc. 4965 Preston Park Boulevard Suite 500 Plano, Texas 75093 Attn: Mr. Robert Thompson Telecopy No.: (214) 985-6551 Paging Network of Canada, Inc. 3250 Bloor Street, West Suite 700 Toronto, Ontario Canada M8X 2X9 Attn: President Telecopy No.: (416) 207-4321 Roger Feldman, Esq. Bingham, Dana & Gould 150 Federal Street Boston, Massachusetts 02110 Telecopy No.: (617) 951-8736 -83- 92 McCarthy Tetrault 275 Sparks Street Suite 1000 Ottawa Ontario KlR 7X9 Canada Attn: Anthony H.A. Keenleyside, Esq. Telecopy No.: (613) 563-9386 If to the Administrative Agent, to it at: Toronto Dominion Tower, 8th Floor Toronto Dominion Centre Toronto, Ontario M5K lA2 Attn: Manager, Agency Telecopy No.: (416) 982-5535 with a copy to: The Toronto-Dominion Bank Communications Finance 31 West 52nd Street New York, New York 10019-6101 Attn: Mr. David E. Oliver Telecopy No.: (212) 262-1928 If to the Banks, to them at the addresses set forth beside their names on the signature pages hereof. (b) Each Accommodation Notice and any notice of a prepayment shall be irrevocable and binding on the Borrower. With respect to any Accommodation Notice, the Administrative Agent may act upon the basis of telephonic notice believed by it reasonably and in good faith to be from the Borrower prior to receipt of an Accommodation Notice. In the event of conflict between the Administrative Agent's record of the applicable terms of any Accommodation and such Accommodation Notice, the Administrative Agent's record shall prevail. (c) Any party hereto may change the address to which notices shall be directed under this Section 11.1 by giving five (5) days' prior written notice of such change to the other parties. Section 11.2 Expenses. The Borrower will promptly pay, or reimburse: -84- 93 (a) all reasonable and customary out-of-pocket expenses of the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents, and the transactions contemplated hereunder and thereunder and the making of the initial Advance hereunder (whether or not such Advance is made), including, but not limited to, the reasonable fees and disbursements of counsel for the Administrative Agent; (b) all reasonable and customary out-of-pocket expenses of the Administrative Agent in connection with the restructuring and "work out" of the transactions contemplated in this Agreement or the other Loan Documents, and the preparation, negotiation, execution and delivery of any waiver, amendment or consent by the Administrative Agent and the Banks, or any of them, relating to this Agreement or the other Loan Documents, including, but not limited to, the fees and disbursements of any experts, agents or consultants and of counsel for the Administrative Agent; and (c) all reasonable and customary out-of-pocket costs and expenses of obtaining performance under this Agreement or the other Loan Documents and all out-of-pocket costs and expenses of collection if an Event of Default occurs in the payment of the Obligations, which in each case shall include reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent and the Banks. Section 11.3 Waivers. The rights and remedies of the Administrative Agent and the Banks under this Agreement and the other Loan Documents shall be cumulative and not exclusive of any rights or remedies which they would otherwise have. No failure or delay by the Administrative Agent, the Majority Banks, or the Banks, or any of them, in exercising any right, shall operate as a waiver of such right. The Administrative Agent and the Banks expressly reserve the right to require strict compliance with the terms of this Agreement and the other Loan Documents in connection with any future funding of a Request for Advance. In the event the Banks decide to fund a Request for Advance at a time when the Borrower is not in strict compliance with the terms of this Agreement and the other Loan Documents, such decision by the Banks shall not be deemed to constitute an undertaking by the Banks to fund any further Request for Advance or preclude the Banks or the Administrative Agent from exercising any rights available under the Loan Documents or at law or equity. Any waiver or indulgence granted by the Administrative Agent, the Banks, or the Majority Banks, or any of them, shall not constitute a modification of this Agreement or any other Loan -85- 94 Document, except to the extent expressly provided in such waiver or indulgence, or constitute a course of dealing at variance with the terms of this Agreement or any other Loan Document such as to require further notice of their intent to require strict adherence to the terms of this Agreement or any other Loan Document in the future. Section 11.4 Right to Combine and Set-Off. Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent or any one or more of the Banks is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to combine, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Administrative Agent or such Bank to or for the credit or the account of the Borrower with or against any and all of the Obligations of the Borrower now or hereafter existing under any of the Loan Documents, irrespective of whether or not the Administrative Agent shall have made any demand under any of the Loan Documents and although such Obligations may be unmatured. The Administrative Agent or such Bank agrees promptly to notify the Borrower after any such combination or set-off and application made by the Administrative Agent or such Bank provided that the failure to give such notice shall not affect the validity of such combination or set-off and application. The rights of the Administrative Agent and the Banks under this Section are in addition to other rights and remedies (including, without limitation, other rights of combination and set-off) which the Administrative Agent or the Banks may have. Section 11.5 Assignment. (a) The Borrower may not assign or transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of each Bank and the Administrative Agent. (b) Any Bank may, without the consent of the Borrower grant participations in all or any part of the Commitment to one or more Persons (each a "Participant"). Any Bank may, with the consent of the Administrative Agent, and, prior to the occurrence and continuance of a Default, with the consent of the Borrower (which consent is not to be unreasonably withheld or delayed), assign all or any part of its respective interest in the Commitment to one or more Persons; provided that prior to the occurrence and continuance of a Default (i) such Person is a resident of Canada for the purpose of the Income Tax Act (Canada) -86- 95 or (ii) such assignment will not cause the Borrower to incur any increased costs pursuant to Section 10.3 hereof (each an "Assignee"). (c) The Administrative Agent or any Bank may deliver a copy of any financial statement or any other information relating to the prospects, business, Assets or condition (financial or otherwise) of the Borrower or any of its Subsidiaries which may be furnished to it under this Agreement or otherwise to any Participant or Assignee or any prospective Participant or Assignee; provided that each such delivery is made on the understanding that the information contained therein is confidential in nature. (d) Without limitation of its obligations hereunder, the Borrower shall, at its sole cost and expense, give such certificates, acknowledgments and other further assurances in respect of this Agreement and the Commitment as any Bank may reasonably require in connection with any participation or assignment pursuant to this Section. (e) Except in the case of an Assignee which has delivered an Assignment and Assumption Agreement substantially in the form of Exhibit H hereto, prior to the occurrence of a Default or an Event of Default, a Bank granting a participation or making an assignment shall act on behalf of all of its Participants and Assignees in all dealings with the Borrower in respect hereof. (f) Any Bank shall deliver to the Borrower an agreement substantially in the form of Exhibit H hereto by which any Assignee of such Bank assumes the obligations and agrees to be bound by all the terms and conditions of this Agreement, all as if such Assignee had been an original party hereto. Upon any such assignment and such assumption of the obligations of a Bank by an Assignee, the assigning Bank and the Borrower shall be mutually released from their respective obligations to each other hereunder to the extent of such assignment and assumption and shall thenceforth have no liability or obligations to each other to such extent, except in respect of matters which shall have arisen prior to such assignment. (g) An administrative fee of $5,000 shall be payable to the Administrative Agent by the assigning Bank at the time of any assignment hereunder. Section 11.6 Accounting Principles. All accounting terms used herein without definition shall be used as defined under -87- 96 GAAP. GAAP shall be applied on a basis consistent with prior fiscal years of the Borrower. Section 11.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Section 11.8 Governing Law. This Agreement and all Loan Documents shall be governed by and interpreted in accordance with the Applicable Laws of the Province of Ontario and the Applicable Laws of Canada applicable therein which apply to contracts made and to be performed entirely in Ontario; provided that any Loan Document stated to be governed by and interpreted in accordance with the laws of any other jurisdiction shall be governed by and interpreted in accordance with the laws of such jurisdiction. The parties hereby irrevocably attorn and submit to the non-exclusive jurisdiction of the courts of Ontario with respect to any matter arising under or related to this Agreement or any Loan Document; provided that, with respect to any other Loan Document stated to be governed by the laws of any other jurisdiction, the parties agree to attorn and submit to the non-exclusive jurisdiction of the courts of such other jurisdiction. The Borrower agrees that final judgment in such suit, action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by Applicable Law. Section 11.9 Severability. If any provision of this Agreement or any Loan Document is, or becomes, illegal, invalid or unenforceable, such provision shall be severed from this Agreement or such Loan Document and be ineffective to the extent of such illegality, invalidity or unenforceability. The remaining provisions hereof or thereof shall be unaffected by such provision and shall continue to be valid and enforceable. Section 11.10 Interest. (a) For purposes of the Interest Act (Canada): (i) whenever any interest or fee under this Agreement is calculated using a rate based on a year of 360 days, such rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is calculated ends, and (z) divided by 360; (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; and (iii) the -88- 97 rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. (b) Notwithstanding any provision to the contrary contained in this Agreement, in no event shall the aggregate "interest" (as defined in Section 347 of the Criminal Code, Revised Statutes of Canada, 1985, c.46 as the same may be amended, replaced or re-enacted from time to time) payable under this Agreement exceed the maximum amount of interest on the "Credit advanced" (as defined in that section) under this Agreement lawfully permitted under that section and, if any payment, collection or demand pursuant to this Agreement in respect of "interest" (as defined in that section) is determined to be contrary to the provisions of that section, such payment, collection or demand shall be deemed to have been made by mutual mistake of the Borrower and the Administrative Agent and the Banks and the amount of such payment or collection shall be refunded to the Borrower. For purposes of this Agreement, the effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles over the term of the Credit Facilities are outstanding on the basis of annual compounding of the lawfully permitted rate of interest and, in the event of dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Administrative Agent will be conclusive for the purposes of such determination absent manifest error. Section 11.11 Table of Contents and Headings. The Table of Contents and the headings of the various subdivisions used in this Agreement are for convenience only and shall not in any way modify or amend any of the terms or provisions hereof, nor be used in connection with the interpretation of any provision hereof. Section 11.12 Amendment and Waiver. Neither this Agreement nor any other Loan Document nor any term hereof or thereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by the Majority Banks and the Administrative Agent and, in the case of an amendment, by the Borrower, except that in the event of (a) any increase in the amount of the Commitment, (b) any delay or extension in the terms of repayment of the Accommodations or any mandatory reductions in the Commitment provided in Sections 2.6 or 2.8 hereof or amend the provisions of this Agreement dealing with the types of Accommodations available hereunder, (c) any reduction in principal, interest or fees due hereunder (without a corresponding payment by the Borrower in the amount of such reduction) or postponement or subordination of the payment -89- 98 thereof without a corresponding payment by the Borrower, (d) any release of any portion of the Collateral for the Accommodations, except in connection with a merger, sale or other disposition otherwise permitted hereunder (in which case such release shall require no further approval by the Banks), (e) any waiver of any Default due to the failure by the Borrower to pay any sum due to any of the Banks hereunder, (f) any release or amendment of any Security Document except in connection with a merger, sale or other disposition otherwise permitted hereunder (in which case, such release or amendment shall require no further approval by the Banks), or (g) any amendment of this Section 11.12, or the definitions of Majority Banks or Permitted Collateral, or of any Section herein to the extent that such Section requires action by all Banks, any amendment or waiver or consent may be made only by an instrument in writing signed by each of the Banks and the Administrative Agent and, in the case of an amendment, by the Borrower. Any amendment to any provision hereunder governing the rights, obligations, or liabilities of the Administrative Agent solely to any of the Banks may be made only by an instrument in writing signed by the Administrative Agent and by each of the Banks. Section 11.13 Non-Merger. Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties of the parties contained in this Agreement and the other Loan Documents shall not merge on and shall survive the Agreement Date and the making of any Accommodation, and notwithstanding such closing or Accommodation, or any investigation made by or on behalf of any party, shall continue in full force and effect. Neither the Agreement Date nor the making of any Accommodation shall prejudice any right of one party against any other party in respect of anything done or omitted hereunder or under any of the other Loan Documents or in respect of any right to damages or other remedies. Section 11.14 Other Relationships. No relationship created hereunder or under any other Loan Document shall in any way affect the ability of the Administrative Agent and each Bank to enter into or maintain business relationships with the Borrower or any of its Affiliates beyond the relationships specifically contemplated by this Agreement and the other Loan Documents. Section 11.15 Directly or Indirectly. If any provision in this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, whether or not expressly specified in such provision. -90- 99 Section 11.16 Reliance on and Survival of Various Provisions. All covenants, agreements, statements, representations and warranties made herein or in any certificate delivered pursuant hereto (i) shall be deemed to have been relied upon by the Administrative Agent and each of the Banks notwithstanding any investigation heretofore or hereafter made by them, and (ii) shall survive the execution and delivery of this Agreement and shall continue in full force and effect so long as any Obligation is outstanding and unpaid. Any right to indemnification hereunder, including, without limitation, rights pursuant to Sections 2.13, 10.1, 10.2, 10.3 and 11.2 hereof, shall survive the termination of this Agreement and the payment and performance of all Obligations for a period of three (3) years thereafter. Section 11.17 Senior Debt. The Obligations are secured by the Security Documents and are intended by the parties hereto to be senior in right of payment to all other Indebtedness of the Borrower. Section 11.18 Obligations Several. The obligations of the Administrative Agent and each of the Banks hereunder are several, not joint. Section 11.19 Confidentiality. The Banks shall hold all non-public, proprietary or confidential information (which has been identified as such by the Borrower) obtained pursuant to the requirements of this Agreement in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices; provided, however, the Banks may make disclosure of any such information to such of their examiners, Affiliates, outside auditors, counsel, consultants, appraisers and other professional advisors as may be reasonably necessary in connection with this Agreement or as reasonably required by any proposed participant or assignee or as required or requested by any Governmental Entity or representative thereof or in connection with the enforcement hereof or of any other Loan Document or related document or pursuant to legal process or with respect to any litigation between or among the Borrower and any of the Banks; provided, however, that, as a condition to receipt of any such information, each such Affiliate, auditor, counsel, consultant, appraiser, professional advisor, proposed participant or assignee shall agree in writing to treat all such information as confidential; and provided, further, that prior to any such disclosure to any unrelated entity outside the ordinary course of business or pursuant to legal process, the disclosing Bank shall give notice of such disclosure to the Borrower and cooperate with -91- 100 the Borrower in any efforts to limit or restrict such disclosure. In no event shall any Bank be obligated or required to return any materials furnished to it by the Borrower. The foregoing provisions shall not apply to a Bank with respect to information that (i) is or becomes generally available to the public (other than through such Bank), (ii) is already in the possession of such Bank on a nonconfidential basis, or (iii) comes into the possession of such Bank in a manner not known to such Bank to involve a breach of a duty of confidentiality owing to the Borrower. Section 11.20 Time of the Essence. Time shall be of the essence of this Agreement. Section 11.21 Third Party Beneficiaries. Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person, other than the parties hereto and the Persons contemplated in Section 10.2 hereof, and no Person, other than the parties hereto and the Persons contemplated in Section 10.2 hereof, shall be entitled to rely on the provisions hereof in any action, suit, proceeding, hearing or other forum. Section 11.22 Enurement. This Agreement shall enure to the benefit of and be binding upon the parties hereto and any Person becoming a party to this Agreement through the procedure set out in Section 11.5 hereof. This Agreement shall be binding upon any assigns and enure to the benefit of any permitted assigns. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -92- 101 IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused it to be executed under seal by their duly authorized officers, all as of the day and year first above written. BORROWER: MADISON TELECOMMUNICATIONS HOLDINGS INC., a Canada corporation By: /s/ [ILLEGIBLE] ---------------------------------------- Its: VICE PRESIDENT FINANCE AND DIRECTOR ----------------------------------- ADMINISTRATIVE AGENT: THE TORONTO-DOMINION BANK By: /s/ [ILLEGIBLE] ---------------------------------------- Its: Manager-Agency ----------------------------------- BANK: ADDRESS: THE TORONTO-DOMINION BANK 8th Floor By: /s/ [ILLEGIBLE] Toronto Dominion Tower ---------------------------------------- Toronto Dominion Centre Its: Manager-Communications Finance Toronto, Ontario M5K lA2 ----------------------------------- MADISON TELECOMMUNICATIONS HOLDINGS, INC. LOAN AGREEMENT SIGNATURE PAGE 1 102 EXHIBIT A FORM OF DRAFT BANKERS' ACCEPTANCE 103 EXHIBIT A FORM OF DRAFT BANKERS' ACCEPTANCE B.A.: ------------------------------- DUE DATE: --------------------------- - ------------------------ ------------------------ ------------------------ TERM IN DAYS BRANCH DOMICILE ISSUE DATE ON________________ WITHOUT GRACE, FOR VALUE RECEIVED, PAY TO THE ORDER OF THE UNDERSIGNED, THE SUM OF $_______________ DOLLARS ---- ---- ---- TO: [INSERT NAME OF PURCHASER] - ------------------------------- ------------------------------- Signature - ------------------------------- ------------------------------- Signature 104 EXHIBIT B FORM OF DRAWING NOTICE 105 EXHIBIT B FORM OF DRAWING NOTICE The undersigned, Madison Telecommunications Holdings Inc., a Canada corporation (the "Borrower"), acting by and through _______________, the duly elected and qualified _______________ of the Borrower, in connection with that certain Loan Agreement (as in effect on the date hereof, the "Loan Agreement"), dated as of June 5, 1996, among the various financial institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent"), and the Borrower, hereby certifies to the Administrative Agent and the Banks that: 1. The Borrower, pursuant to Section 2.5(b) of the Loan Agreement, hereby requests a Drawing under the Loan Agreement, and in that connection sets forth below the information relating to such Drawing (the "Proposed Drawing") as required by Section 2.5(b) of the Loan Agreement: (i) The Business Day of Proposed Drawing is ____________, 19__. (ii) The aggregate Face Amount of Drafts to be accepted is [insert amount in Canadian dollars]. (iii) The contract maturity date for such Drafts is ___ days). (iv) The Proposed Drawing shall be a [Collateralized/Uncollateralized] Bankers' Acceptance. After giving effect to the Proposed Drawing, $________ which is the Equivalent Canadian Dollar Amount of the Permitted Collateral, and which represents the Minimum Permitted Collateral Amount is on deposit with the Administrative Agent pursuant to the Deposit Agreement and the Letter of Credit. After giving effect to the Proposed Drawing, the Applicable Margin for such Drawing shall be: __________. The proceeds of the Proposed Drawing should be wired as set forth on Schedule 1 attached hereto. The foregoing instructions shall be irrevocable. 2. All of the representations and warranties of the Borrower made under the Loan Agreement (including, without limitation, all representations and warranties with respect to the Borrower's Subsidiaries) and the other Loan Documents, which, pursuant to Section 4.2 of the Loan Agreement or otherwise, are made on the date hereof, are as of the date hereof, and will be as of the date of such Proposed Drawing, true and correct in all material respects both before and after giving effect to the application of the proceeds of the Proposed Drawing in connection 106 with which this Drawing Notice is given, and after giving effect to any updates to information provided to the Banks in accordance with the terms of such representations and warranties. 3. There does not exist, as of this date, and there will not exist after giving effect to the Proposed Drawing requested in this Drawing Notice, any Default under the Loan Agreement. 4. All Necessary Authorizations have been obtained or made, are in full force and effect and are not subject to any pending or threatened reversal or cancellation. 5. There has occurred no event having, or which could be reasonably expected to have, a Materially Adverse Effect since December 31, 1995. 6. All other conditions precedent to the Proposed Drawing requested hereby set forth in Section 3.2 of the Loan Agreement have been satisfied. Capitalized terms used in this Drawing Notice and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, the Borrower, acting through an Authorized Signatory, has signed this Drawing Notice, as of the ___ day of ___________________, _____. MADISON TELECOMMUNICATIONS HOLDINGS INC., a Canada corporation By: ------------------------------------- Its: -------------------------------- Schedule 1 - Wiring Instructions Schedule 2 - Compliance Calculations B-2 107 EXHIBIT C FORM OF REQUEST FOR ADVANCE 108 EXHIBIT C FORM OF REQUEST FOR ADVANCE Madison Telecommunications Holdings Inc., a Canada corporation (the "Borrower"), acting by and through _______________, the duly elected and qualified _______________ of the Borrower, in connection with that certain Loan Agreement (as in effect on the date hereof, the "Loan Agreement"), dated as of June 5, 1996, among the various financial institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent"), and the Borrower, hereby certifies to the Administrative Agent and the Banks that: 1. The Borrower, pursuant to Section [2.2(b)/2.3(b)/2.3(c)] of the Loan Agreement, hereby requests a [Collateralized/Uncollateralized Prime Rate Advance][Cost of Funds Rate Advance] (the "Proposed Advance") in the amount of $__________ to be made on _____________ ___, ____, under the Commitment. After giving effect to the Proposed Advance, $__________ which is the Equivalent Canadian Dollar Amount of the Permitted Collateral, and which represents the Minimum Permitted Collateral Amount, is on deposit with the Administrative Agent pursuant to the Deposit Agreement and the Letter of Credit. After giving effect to the Proposed Advance, the Applicable Margin for such Advance shall be: __________. The proceeds of the Proposed Advance should be wired as set forth on Schedule 1 attached hereto. [The Interest Period for the Proposed Advance shall be ___ month(s).] The foregoing instructions shall be irrevocable. 2. All of the representations and warranties of the Borrower made under the Loan Agreement (including, without limitation, all representations and warranties with respect to the Borrower's Subsidiaries) and the other Loan Documents, which, pursuant to Section 4.2 of the Loan Agreement or otherwise, are made on the date hereof, are as of the date hereof, and will be as of the date of such Advance, true and correct in all material respects both before and after giving effect to the application of the proceeds of the Advance in connection with which this Request for Advance is given, and after giving effect to any updates to information provided to the Banks in accordance with the terms of the representations and warranties. 3. There does not exist, as of this date, and there will not exist after giving effect to the Advance requested in this Request for Advance, any Default under the Loan Agreement. 4. All Necessary Authorizations have been obtained or made, are in full force and effect and are not subject to any pending or threatened reversal or cancellation. 109 5. There has occurred no event having, or which could be reasonably expected to have, a Materially Adverse Effect since December 31, 1995. 6. All other conditions precedent to the Advance requested hereby set forth in Section 3.2 of the Loan Agreement have been satisfied. Capitalized terms used in this Request for Advance and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, the Borrower, acting through an Authorized Signatory, has signed this Request for Advance, as of the ____ day of ______________, ____. MADISON TELECOMMUNICATIONS HOLDINGS INC., a Canada corporation By: -------------------------------- Its: ---------------------------- Schedule 1 - Wiring Instructions Schedule 2 - Compliance Calculations C-2 110 EXHIBIT D FORM OF ACCEPTANCE 111 EXHIBIT D FORM OF ACCEPTANCE FOR: [INSERT NAME OF BANK] BRANCH MANAGER OFFICER IN CHARGE OF OPERATIONS 112 EXHIBIT E FORM OF BORROWER'S LOAN CERTIFICATE 113 EXHIBIT E FORM OF BORROWER'S LOAN CERTIFICATE The undersigned, who is the __________________ of Madison Telecommunications Holdings Inc., a Canada corporation (the "Borrower"), does hereby certify on behalf of the Borrower that he is the duly elected and qualified _______________ of the Borrower and an Authorized Signatory of the Borrower. In connection with the making of certain Accommodations to the Borrower by the Banks under that certain Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent), and The Toronto-Dominion Bank and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the Administrative Agent and the Banks on behalf of the Borrower that: 1. Attached hereto as Exhibit A is a true, complete, and correct copy of the Certificate and Articles of Incorporation of the Borrower, certified by appropriate government officials of the jurisdiction of incorporation of the Borrower, as in full force and effect on the date hereof. 2. Attached hereto as Exhibit B is a true, complete and correct copy of the By-Laws of the Borrower, together with all amendments thereto, as in full force and effect on the date hereof. 3. Attached hereto as Exhibit C is a true, complete and correct copy of the resolutions of the Board of Directors of the Borrower authorizing the execution of the Loan Agreement, each other Loan Document to which the Borrower is a party, and the creation and assumption, by the Borrower, of the Obligations. 4. Attached hereto as Exhibit D are true, complete, and correct copies of certificates of good standing for the Borrower from appropriate government officials of the jurisdiction of incorporation of the Borrower and for each other jurisdiction in which the Borrower carries on business. The Borrower has, from the dates of such certificates to the date hereof, remained in good standing under the laws of such jurisdiction. 5. Attached hereto as Exhibit E are true, complete and correct copies of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of the Borrower. 114 6. The following persons are the Authorized Signatories of the Borrower, each of such persons having been duly elected, and set forth opposite their respective names below are their respective genuine signatures: NAME SIGNATURE DATE ------------ ------------------- ------------------ ------------ ------------------- ------------------ ------------ ------------------- ------------------ Capitalized terms used herein and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, I have signed this Certificate on the ______ day of ____________________________ 1996. MADISON TELECOMMUNICATIONS HOLDINGS INC., a Canada corporation By: ------------------------------- Name: -------------------------- Title: ------------------------- EXHIBITS: Exhibit A - Certificate and Articles of Incorporation Exhibit B - By-Laws Exhibit C - Authorizing Resolutions Exhibit D - Certificates of Good Standing Exhibit E - Shareholder's Agreements or Voting Trust Agreements E-2 115 EXHIBIT F FORM OF SUBSIDIARY LOAN CERTIFICATE 116 EXHIBIT F FORM OF SUBSIDIARY LOAN CERTIFICATE The undersigned, who is the __________________ of ____________________, a __________________ [corporation] [partnership] (the "Subsidiary"), does hereby certify on behalf of the Subsidiary that he is the duly elected and qualified __________________ of [_________________ , the ________________ of [____________________, the ___________________ of] the Subsidiary and an Authorized Signatory. In connection with the making of certain Accommodations to Madison Telecommunications Holdings Inc., a Canada corporation (the "Borrower") by the Banks under that certain Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent), and The Toronto-Dominion Bank and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the Administrative Agent and the Banks on behalf of the Subsidiary that: 1. Attached hereto as Exhibit A is a true, complete, and correct copy of the Certificate and Articles of Incorporation of the Subsidiary, certified by appropriate government officials of the jurisdiction of incorporation of the Subsidiary, as in full force and effect on the date hereof. 2. Attached hereto as Exhibit B is a true, complete and correct copy of the By-Laws of the subsidiary, together with all amendments thereto, as in full force and effect on the date hereof. 3. Attached hereto as Exhibit C is a true, complete and correct copy of the resolutions of the Board of Directors of the Subsidiary authorizing the execution of each Loan Document to which the Subsidiary is a party. 4. Attached hereto as Exhibit D are true, complete, and correct copies of certificates of good standing for the Subsidiary from appropriate government officials of the jurisdiction of incorporation of the Subsidiary and for each other jurisdiction in which the Subsidiary carries on business. The Subsidiary has, from the dates of such certificates to the date hereof, remained in good standing under the laws of such jurisdiction. 5. Attached hereto as Exhibit E are true, complete and correct copies of any shareholders' agreements or voting trust agreements in effect with respect to the Capital Stock of the Subsidiary. 117 6. The following persons are the Authorized Signatories of the Subsidiary, each of such persons having been duly elected, and set forth opposite their respective names below are their respective genuine signatures: NAME SIGNATURE DATE - ------------------------- ------------------------- ------------------------ - ------------------------- ------------------------- ------------------------ - ------------------------- ------------------------- ------------------------ Capitalized terms used herein and not otherwise defined are used as defined in the Loan Agreement. IN WITNESS WHEREOF, I have signed this Certificate this ______ day of ____________________ , 1996. [___________________________ , a ________________________ partnership, through its General Partner:] ____________________________ , a _________________________ corporation By: ---------------------------------- Its: ---------------------------------- EXHIBITS: Exhibit A - Certificate and Articles of Incorporation/Partnership Exhibit B - By-Laws/Partnership Agreement Exhibit C - Authorizing Resolutions Exhibit D - Certificates of Good Standing Exhibit E - Shareholder's Agreements or Voting Trust Agreements F-2 118 EXHIBIT G FORM OF PERFORMANCE CERTIFICATE 119 EXHIBIT G FORM OF PERFORMANCE CERTIFICATE The undersigned, who is the _____________________ of Madison Telecommunications Holdings Inc., a Canada corporation (the "Borrower"), does hereby certify on behalf of the Borrower that he is the duly elected and qualified __________________ of the Borrower and an Authorized Signatory of the Borrower. 1. [WITH RESPECT TO QUARTERLY STATEMENTS: The accompanying unaudited financial statements of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as of [DATE] and for the quarterly accounting period ended [DATE] are complete and correct and present fairly, in accordance with GAAP, the financial condition of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries, and the results of operations for such quarter, and for the elapsed portion of the fiscal year ended with the last day of such quarter, in each case on the basis presented and subject only to normal year-end adjustments and the absence of footnotes.] [WITH RESPECT TO FISCAL YEAR STATEMENTS: The accompanying audited financial statements of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as of [DATE] and for the fiscal year ended [DATE], and for the previous fiscal year, are complete and correct and present fairly, in accordance with GAAP, the financial condition of the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries as of the end of such period, and the results of operations for such fiscal year, and for the previous fiscal year.] 2. Attached hereto are arithmetical calculations required to establish (i) any adjustment to the Applicable Margins, as provided for in Section 2.6(d) of the Loan Agreement, and (ii) whether or not the Borrower was in compliance with the requirements of the following Sections of the Loan Agreement: (a) Section 7.8 - Leverage Ratio (b) Section 7.9 - Annualized Operating Cash Flow to Pro Forma Debt Service (c) Section 7.10 - Total Debt Per Subscriber (d) Section 7.11 - Capital Expenditures (e) Section 7.12 - Minimum Revenue Test (f) Section 7.13 - Minimum Units in Service (including a breakdown by each category set forth in the definition of Units in Service) 120 3. Based on an examination sufficient to enable me to make an informed statement, no Default exists at the end of such quarter or fiscal year, as applicable. 4. All capitalized terms not otherwise defined herein are used herein as defined in the Loan Agreement. Date: --------------------------- ------------------------------------ [OFFICER) [TITLE] G-2 121 EXHIBIT H FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT 122 EXHIBIT H FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement is made and entered into as of _____________, ____, by and between _______________ (the "Assignor"), and _______________ (the "Assignee"). Recitals A. Madison Telecommunications Holdings Inc., a Canada corporation (the "Borrower"), the Assignor (together with any other Person which becomes a 'Bank' under the Loan Agreement, as such term is hereinafter defined, the "Banks") and The Toronto-Dominion Bank, as administrative agent (the "Administrative Agent"), are parties to a certain Loan Agreement dated as of June 5, 1996 (the "Loan Agreement"). Pursuant to the Loan Agreement, the Banks have agreed to make Accommodations to the Borrower pro rata in an aggregate original principal amount of the Commitment, as such amount may be reduced from time to time pursuant to the Loan Agreement. The Assignor's pro rata portion of the Commitment is the amount specified in Item 1 of Schedule 1 hereto (the "Assignor's Commitment"). The aggregate principal amount of the outstanding Accommodations made by the Assignor to the Borrower under the Commitment pursuant to the Assignor's Commitment is specified in Item 2 of Schedule 1 hereto (the "Assignor's Accommodations"). All capitalized terms not otherwise defined herein are used herein as defined in the Loan Agreement. B. The Assignor wishes to sell and assign to the Assignee, and the Assignee wishes to purchase and assume from the Assignor, (i) the portion of the Assignor's Commitment specified in Item 3 of Schedule 1 hereto ("Assigned Commitment"), and (ii) the portion of the Assignor's Accommodations under the Commitment specified in Item 4 of Schedule 1 hereto (the "Assigned Accommodations"). The parties agree as follows: 1. Assignment. Subject to the terms and conditions set forth herein, the Assignor hereby sells and assigns to the Assignee, and the Assignee purchases and assumes from the Assignor, without recourse and except as provided in Section 3(a) hereof, without representation or warranty to the Assignor, on the date set forth above (the "Assignment Date") (a) all right, title, and interest of the Assignor to the Assigned Accommodations and (b) all obligations of the Assignor under the Loan Agreement with respect to the Assigned Commitment. As full consideration for the sale of the Assigned Accommodations and the Assigned Commitment, the Assignee shall pay to the Assignor on 123 the Assignment Date such amount as shall have been agreed to between the Assignor and the Assignee (the "Purchase Price"). 2. Consents. The Administrative Agent [and the Borrower] hereby consent[s] to the assignment made herein. (Note: Borrower consent only required prior to a Default.] 3. Representations and Warranties. Each of the Assignor and the Assignee represents and warrants to the other, to the Administrative Agent and to the Borrower (a) that (i) it has full power and legal right to execute and deliver this Agreement and to perform the provisions of this Agreement; (ii) the execution, delivery, and performance of this Agreement have been authorized by all necessary action, corporate or otherwise, on its part and do not violate any provisions of its charter or by-laws or any contractual obligations or requirement of law binding on it; and (iii) this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms subject, as to enforcement of remedies, to the following qualifications: (A) an order of specific performance and an injunction are discretionary remedies and, in particular, may not be available where damages are considered an adequate remedy at law, and (B) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors' rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Assignee or the Assignor, as the case may be), and (b) that its purchase of the Assigned Accommodations and the Assigned Commitment does not constitute a "prohibited transaction" as defined in Section 4.1(m) of the Loan Agreement. 4. Condition Precedent. The obligations of the Assignor and the Assignee hereunder shall be subject to the fulfillment of the condition that (a) the Assignor shall have received payment in full of the Purchase Price and (b) the Assignor and the Assignee shall have complied with other applicable provisions of Section 11.5 of the Loan Agreement. 5. Notice of Assignment. The Assignor hereby gives notice of the assignment and assumption of the Assigned Accommodations and the Assigned Commitment to the Administrative Agent and hereby instructs the Borrower to make payments with respect to the Assigned Accommodations and the Assigned Commitment directly to the Administrative Agent for the benefit of the Assignee as provided in the Loan Agreement; provided, however, that the Borrower and the Administrative Agent shall be entitled to continue to deal solely and directly with the Assignor in connection with the interests so assigned until the Administrative Agent shall have received a copy of this Assignment and Assumption Agreement duly executed by the H-2 124 Assignor, the Assignee, the Administrative Agent, and, if applicable, the Borrower, and shall have received the assignment fee described in Section 11.5 of the Loan Agreement. From and after the Assignment Date, the Assignee shall be deemed to be a party to the Loan Agreement and, to the extent that rights and obligations thereunder shall have been assigned to Assignee as provided herein, shall have the rights and obligations of a Bank under the Loan Agreement. After the Assignment Date, and with respect to all such amounts accrued from the Assignment Date, (a) all interest, principal, fees, and other amounts that would otherwise be payable to the Assignor in respect of the Assigned Accommodations and the Assigned Commitment shall be paid to the Assignee, (b) if the Assignor receives any payment on account of the Assigned Accommodations or the Assigned Commitment that is payable to the Assignee, the Assignor shall promptly deliver such payment to the Assignee, and (c) if the Assignee receives any payment in respect of Obligations of the Borrower accrued prior to the Assignment Date, then Assignee shall pay over the same to Assignor. 6. Independent Investigation. The Assignee acknowledges that it is purchasing the Assigned Accommodations and the Assigned Commitment from the Assignor without recourse and, except as provided in Section 3(a) hereof, without representation or warranty. The Assignee further acknowledges that it has made its own independent investigation and credit evaluation of the Borrower in connection with its purchase of the Assigned Accommodations and the Assigned Commitment and has received copies of all Loan Documents that it has requested. Except for the representations or warranties set forth in Section 3(a), the Assignee acknowledges that it is not relying on any representation or warranty of the Assignor, expressed or implied, including without limitation, any representation or warranty relating to the legality, validity, genuineness, enforceability, collectibility, interest rate, repayment schedule, or accrual status of the Assigned Accommodations or the Assigned Commitment, the legality, validity, genuineness, or enforceability of the Loan Agreement, or any other Loan Document referred to in or delivered pursuant to the Loan Agreement, or the financial condition or creditworthiness of the Borrower. The Assignor has not acted and will not be acting as either the representative, agent or trustee of the Assignee with respect to matters arising out of or relating to the Loan Agreement or this Agreement. From and after the Assignment Date, the Assignor shall have no rights or obligations with respect to the Assigned Accommodations or the Assigned Commitment. 7. Method of Payment. All payments to be made by the Assignor or the Assignee party hereunder shall be in funds available at the place of payment on the same day and shall be H-3 125 made by wire transfer to the account designated by the party to receive payment. 8. Integration. This Agreement shall supersede any prior agreement or understanding between the parties (other than the Loan Agreement or other Loan Documents) as to the subject matter hereof. 9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon the parties, their successors and assigns. 10. Governing Law. This Agreement shall be governed by, and construed in accordance with, the Applicable Laws of the Province of Ontario and the Applicable Laws of Canada applicable therein which apply to contracts to be performed entirely in Ontario. H-4 126 IN WITNESS WHEREOF, the Assignor and Assignee have executed, sealed and delivered this Agreement as of the date first above written. [ASSIGNOR] By: ------------------------------------- Title: ----------------------------------- [ASSIGNEE] By: ------------------------------------- Title: ----------------------------------- ASSIGNMENT AND ASSUMPTION AGREEMENT SIGNATURE PAGE 1 127 Consented to by: THE TORONTO-DOMINION BANK, as Administrative Agent By: ---------------------------------- Title: -------------------------------- MADISON TELECOMMUNICATIONS HOLDINGS INC., a Canada corporation By: ---------------------------------- Title: -------------------------------- ASSIGNMENT AND ASSUMPTION AGREEMENT SIGNATURE PAGE 2 EX-12 5 RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 PAGING NETWORK, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended Six Months Ended June 30, June 30, -------------------- ------------------ 1996 1995 1996 1995 -------- -------- ------- -------- Earnings: Net loss............................... $(18,532) $(16,169) $(30,638) $(22,990) Fixed charges.......................... 34,916 30,531 69,494 51,487 Earnings............................. -------- -------- -------- -------- $ 16,384 $ 14,362 $ 38,856 $ 28,497 ======== ======== ======== ======== Fixed charges: Interest expense....................... $ 28,754 $ 25,836 $ 57,321 $ 42,407 Amortization of deferred financing costs................................ 1,284 1,032 2,567 1,978 Interest portion of rental expense.............................. 4,878 3,663 9,606 7,102 -------- -------- -------- -------- Fixed charges........................ $ 34,916 $ 30,531 $ 69,494 $ 51,487 ======== ======== ======== ======== Ratio of earnings to fixed charges....... - - - - ======== ======== ======== ======== Deficiency of earnings available to cover fixed charges.......................... $(18,532) $(16,169) $(30,638) $(22,990) ======== ======== ======== ========
EX-27 6 FINANICAL DATA SCHEDULE
5 1000 3-MOS DEC-31-1995 APR-01-1996 JUN-30-1996 34,333 0 48,337 4,621 32,264 117,765 993,283 272,129 1,218,022 131,739 1,195,516 0 0 1,025 (110,258) 1,218,022 5,019 199,179 27,124 161,068 29,519 2,825 30,038 (18,532) 0 (18,532) 0 0 0 (18,532) (0.18) (0.18)
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