-----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, U/MNCI6LW5MMbdu4v7p01mTHjshi59lH/IGSRXy7zsL8QkXik7EA78QdqCieJvXf og2/ZqHvEBJUYkGDwniW6Q== 0000950134-99-007406.txt : 19990816 0000950134-99-007406.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950134-99-007406 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 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: SEC FILE NUMBER: 001-15201 FILM NUMBER: 99689841 BUSINESS ADDRESS: STREET 1: 14911 QUORUM DRIVE CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 972-801-80 MAIL ADDRESS: STREET 1: 14911 QUORUM DRIVE STREET 2: SUITE 600 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1999 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, 1999 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) 14911 QUORUM DRIVE DALLAS, TEXAS 75240 (Address of principal executive offices, including zip code) (972) 801-8000 (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 Registrant's classes of Common Stock, as of the latest practicable date. Title Shares Outstanding as of July 31, 1999 ----------------------------- -------------------------------------- Common Stock, $ .01 par value 103,959,240 The Company's Common Stock is publicly traded on the Nasdaq Stock Market under the symbol "PAGE". ================================================================================ 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Index to Financial Statements
PAGE ---- Consolidated Balance Sheets as of December 31, 1998 and June 30, 1999 (Unaudited)............................ 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1998 and 1999 (Unaudited)...... 4 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1999 (Unaudited)................ 5 Notes to Consolidated Financial Statements...................................... 6
2 3 CONSOLIDATED BALANCE SHEETS (in thousands, except share information) (Unaudited)
DECEMBER 31, JUNE 30, 1998 1999 ----------- ----------- ASSETS Current assets: Cash and cash equivalents .................................................. $ 3,077 $ 11,343 Accounts receivable, less allowance for doubtful accounts ................................................. 84,440 67,523 Inventories ................................................................ 6,379 10,406 Prepaid expenses and other assets .......................................... 15,065 13,160 ----------- ----------- Total current assets .................................................. 108,961 102,432 Property, equipment, and leasehold improvements, at cost ........................ 1,452,870 1,488,508 Less accumulated depreciation .............................................. (547,599) (693,722) ----------- ----------- Net property, equipment, and leasehold improvements ................... 905,271 794,786 Other non-current assets, at cost ............................................... 629,372 609,070 Less accumulated amortization .............................................. (62,360) (73,022) ----------- ----------- Net other non-current assets .......................................... 567,012 536,048 ----------- ----------- $ 1,581,244 $ 1,433,266 =========== =========== LIABILITIES AND SHAREOWNERS' DEFICIT Current liabilities: Accounts payable ........................................................... $ 96,478 $ 92,883 Accrued expenses ........................................................... 49,692 41,715 Accrued interest ........................................................... 43,209 44,716 Accrued restructuring costs, current portion ............................... 8,256 13,306 Customer deposits .......................................................... 22,735 19,078 Deferred revenue ........................................................... 15,874 19,445 ----------- ----------- Total current liabilities ............................................. 236,244 231,143 ----------- ----------- Long-term obligations ........................................................... 1,815,137 1,864,142 Accrued restructuring costs, non-current portion ................................ 18,765 12,782 Minority interest ............................................................... 1,517 (70) Commitments and contingencies ................................................... -- -- Shareowners' deficit: Common Stock - $.01 par, authorized 250,000,000 shares; 103,640,554 and 103,959,140 shares issued and outstanding as of December 31, 1998 and June 30, 1999, respectively .............. 1,036 1,040 Paid-in capital ............................................................ 132,950 134,156 Accumulated other comprehensive income ..................................... 2,378 1,371 Accumulated deficit ........................................................ (626,783) (811,298) ----------- ----------- Total shareowners' deficit ........................................... (490,419) (674,731) ----------- ----------- $ 1,581,244 $ 1,433,266 =========== ===========
See accompanying notes 3 4 CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------- ---------------------- 1998 1999 1998 1999 --------- --------- --------- --------- Services, rent and maintenance revenues ........... $ 235,172 $ 231,635 $ 465,033 $ 473,503 Product sales ..................................... 29,329 22,930 55,218 44,622 --------- --------- --------- --------- Total revenues ............................... 264,501 254,565 520,251 518,125 Cost of products sold ............................. (23,161) (10,462) (44,264) (26,639) --------- --------- --------- --------- 241,340 244,103 475,987 491,486 Operating expenses: Services, rent and maintenance ............... 53,545 63,782 105,368 130,672 Selling ...................................... 23,546 21,962 45,036 45,992 General and administrative ................... 74,153 87,939 144,224 176,229 Depreciation and amortization ................ 70,293 128,668 144,161 195,548 Provision for asset impairment ............... -- -- -- 17,798 Restructuring charge ......................... -- -- 74,000 -- --------- --------- --------- --------- Total operating expenses ................ 221,537 302,351 512,789 566,239 --------- --------- --------- --------- Operating income (loss) ........................... 19,803 (58,248) (36,802) (74,753) Other income (expense): Interest expense ............................. (36,753) (37,770) (73,531) (73,801) Interest income .............................. 518 715 1,030 1,305 Minority interest ............................ 813 (8) 1,312 180 --------- --------- --------- --------- Total other income (expense) ............ (35,422) (37,063) (71,189) (72,316) --------- --------- --------- --------- Loss before cumulative effect of a change in accounting principle ......................... (15,619) (95,311) (107,991) (147,069) Cumulative effect of a change in accounting principle .................................... -- -- -- (37,446) --------- --------- --------- --------- Net loss .......................................... $ (15,619) $ (95,311) $(107,991) $(184,515) ========= ========= ========= ========= Net loss per share (basic and diluted): Loss before cumulative effect of a change in accounting principle ......................... $ (0.15) $ (0.92) $ (1.05) $ (1.42) Cumulative effect of a change in accounting principle .................................... -- -- -- (0.36) --------- --------- --------- --------- Net loss per share ................................ $ (0.15) $ (0.92) $ (1.05) $ (1.78) ========= ========= ========= =========
See accompanying notes 4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
SIX MONTHS ENDED JUNE 30, ---------------------- 1998 1999 --------- --------- Operating activities: Net loss ............................................................. $(107,991) $(184,515) Adjustments to reconcile net loss to net cash provided by operating activities: Provision for asset impairment ........................... -- 17,798 Cumulative effect of a change in accounting principle .... -- 37,446 Restructuring charge ..................................... 74,000 -- Depreciation ............................................. 130,146 186,545 Amortization ............................................. 14,015 9,003 Provision for doubtful accounts .......................... 9,201 12,630 Amortization of debt issuance costs ...................... 2,215 2,260 Minority interest ........................................ (1,312) (180) Other .................................................... 2,313 -- Changes in operating assets and liabilities: Accounts receivable ...................................... (3,201) 3,155 Inventories .............................................. 3,080 (4,194) Prepaid expenses and other assets ........................ 147 1,762 Accounts payable ......................................... (13,658) (1,947) Accrued expenses and accrued interest .................... 6,919 (6,160) Accrued restructuring costs .............................. (1,335) (933) Customer deposits and deferred revenue ................... 3,484 (12) --------- --------- Net cash provided by operating activities ................................. 118,023 72,658 --------- --------- Investing activities: Capital expenditures ................................................. (87,726) (105,956) Payments for spectrum licenses ....................................... (4,524) (2,546) Business acquisitions and joint venture investments .................. (3,500) -- Other, net ........................................................... 7,753 (6,749) --------- --------- Net cash used in investing activities ..................................... (87,997) (115,251) --------- --------- Financing activities: Borrowings of long-term obligations .................................. 123,349 144,637 Repayments of long-term obligations .................................. (148,618) (94,979) Proceeds from exercise of stock options .............................. 6,724 1,201 --------- --------- Net cash provided by (used in) financing activities ....................... (18,545) 50,859 --------- --------- Net increase in cash and cash equivalents ................................. 11,481 8,266 Cash and cash equivalents at beginning of period .......................... 2,924 3,077 --------- --------- Cash and cash equivalents at end of period ................................ $ 14,405 $ 11,343 ========= =========
See accompanying notes 5 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1999 (Unaudited) 1. THE COMPANY Paging Network, Inc. (the Company) is a provider of wireless messaging and information delivery services. The Company provides service in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, Canada, and Spain, including service in all of the largest 100 markets (in population) in the United States, and owns a minority interest in a wireless messaging company in Brazil. 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, except for the cumulative effect of a change in accounting principle discussed in Note 3, the provision for asset impairment discussed in Note 4, and the restructuring charge discussed in Note 5, 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, these financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The balance sheet as of December 31, 1998, has been derived from the audited financial statements as of 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, 1998. 3. ACCOUNTING CHANGES Effective April 1, 1999, the Company changed the depreciable lives for its subscriber devices and certain network equipment. The Company changed the depreciable lives of its subscriber devices from three years to two years and the depreciable life of certain of its network equipment from seven years to ten years. The changes resulted from a review by the Company of the historical usage periods of its subscriber device and its network equipment and the Company's expectations regarding future usage periods for subscriber devices considering current and projected technological advances. As a result of these changes, depreciation expense increased by approximately $69 million during the three months ended June 30, 1999. The Company adopted the provisions of Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" (SOP 98-5), effective January 1, 1999. SOP 98-5 requires the expensing of all start-up costs as incurred as well as writing off the remaining unamortized balance of capitalized start-up costs at the date of adoption of SOP 98-5. The impact of the Company's adoption of SOP 98-5 was a charge of $37 million representing the cumulative effect of a change in accounting principle to write-off all unamortized start-up costs as of January 1, 1999, and an increase in services, rent and maintenance expenses of $5 million and $10 million, respectively, for the three and six months ended June 30, 1999 and a decrease in depreciation and amortization expense of $1 million and $3 million, respectively, for the three and six months ended June 30, 1999. In March 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed For of Obtained for Internal Use" (SOP 98-1). SOP 98-1 requires the capitalization 6 7 of certain costs of developing or acquiring computer software for internal use. The Company adopted the provisions of SOP 98-1 effective January 1, 1999. The adoption of SOP 98-1 had an insignificant impact on the Company's results of operations or financial position as the Company's policy for accounting for the costs of developing or acquiring computer software for internal use is generally consistent with the provisions of SOP 98-1. 4. PROVISION FOR ASSET IMPAIRMENT The Company recorded a provision of $18 million during the quarter ended March 31, 1999, for the impairment of the assets of the Company's majority-owned Spanish subsidiaries in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. During the first quarter of 1999, the Company made the decision to narrow its focus to its North American operations and, as a result, made the decision to sell or otherwise dispose of its operations in Spain. As a result of this decision, the Company analyzed the estimated future cash flows expected to be generated from its Spanish operations and determined that they would not be sufficient to recover the net book value of the assets of the subsidiaries and, accordingly, recorded a provision to writedown the assets of the Spanish subsidiaries based on the estimated value of the Company's investment in its Spanish subsidiaries as of March 31, 1999. No cash costs have been incurred or are expected as a result of the provision for the impairment of the assets of the Company's Spanish subsidiaries. Effective April 1, 1999, the Company began accounting for its Spanish subsidiaries under the cost method due to the temporary nature of the investment. 5. RESTRUCTURING CHARGE In February 1998, the Company's Board of Directors approved a restructuring of the Company's domestic operations (the Restructuring). As part of the Restructuring, the Company is reorganizing its operations to expand its sales organization, eliminate local and redundant administrative operations, and consolidate certain key support functions. The Company expects to eliminate approximately 1,600 positions, net of positions added, through the consolidation of redundant administrative operations and certain key support functions located in offices throughout the country into central facilities (the Centers of Excellence). As a result of the Restructuring, the Company recorded a charge of $74 million, or $0.72 per share (basic and diluted), during the quarter ended March 31, 1998. The components of the charge included (in thousands): Write-down of property and equipment $ 38,900 Lease obligations and terminations 18,900 Severance and related benefits 12,700 Other 3,500 ---------- Total restructuring charge $ 74,000 ==========
The write-down of property and equipment relates to a non-cash charge to reduce the carrying amount of certain machinery and equipment, furniture and fixtures, and leasehold improvements, that the Company will not continue to utilize following the Restructuring, to their estimated net realizable value as of the date such assets are projected to be disposed of or abandoned by the Company, allowing for the recognition of normal depreciation expense on such assets through their projected disposal date. The net realizable value of these assets was determined based on management estimates, which considered such factors as the nature and age of the assets to be disposed of, the timing of the assets' disposal, and the method and potential costs of the disposal. Such estimates are subject to change. 7 8 The provision for lease obligations and terminations relates primarily to future lease commitments on local and regional office facilities that will be closed as part of the Restructuring. The charge represents future lease obligations, net of projected sublease income, on such leases past the dates the offices will be closed by the Company, or, for certain leases, the cost of terminating the leases prior to their scheduled expiration. Projected sublease income was based on management estimates, which are subject to change. Cash payments on the leases and lease terminations will occur over the remaining lease terms, the majority of which expire prior to 2003. Through the elimination of certain local and regional administrative operations and the consolidation of certain support functions, the Company expects to eliminate approximately 1,600 net positions, the majority of which are non-sales related positions in local and regional offices. As a result of eliminating these positions, the Company will involuntarily terminate an estimated 1,950 employees. The majority of the severance and benefits costs to be paid by the Company will be paid during 1999. During the fourth quarter of 1998, the Company identified additional furniture, fixtures, and equipment that will not be utilized following the Restructuring, resulting in an additional non-cash charge of $3 million. This charge was offset by reductions in the provisions for lease obligations and terminations and severance costs as a result of refinements to the Company's schedule for local and regional offices closures. Also as a result of the refinements to the office closing schedule, the Company adjusted, effective October 1, 1998, the depreciable lives of certain of the assets written down in the first quarter of 1998, resulting in a decrease in depreciation expense of approximately $5 million for the second quarter of 1999 and $10 million for the six months ended June 30, 1999. The Company's restructuring activity from January 1, 1999 through June 30, 1999 is as follows (in thousands):
Beginning Utilization of Reserve Remaining Reserve Cash Non-Cash Reserve --------- --------- --------- --------- Lease obligation costs............ $ 16,917 $ 471 $ -- $ 16,446 Severance costs................... 10,104 462 -- 9,642 --------- --------- --------- --------- Total....................... $ 27,021 $ 933 $ -- $ 26,088 ========= ========= ========= =========
6. LONG-TERM OBLIGATIONS As of June 30, 1999, the Company had $612 million of borrowings outstanding under its domestic $1 billion revolving credit agreement (the Credit Agreement). 7. INCOME TAX PROVISION No provision or benefit for income taxes has been made for the three and six months ended June 30, 1998 and 1999, as the deferred benefit from operating losses was offset by an increase in the valuation allowance. 8. 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 three months ended June 30, 1998 and 1999 were 103 million and 104 million, respectively. The number of shares used to compute per share amounts for the six months ended June 30, 1998 and 1999 were 103 million and 104 million, respectively. The average number of options to purchase shares of the Company's Common Stock during the three and six months ended June 30, 1998 were 8 million and 7 million, respectively, at exercise prices ranging from $2.67 per share to $25.50 per share. The average number of options to purchase shares of the Company's Common Stock during the three and six months ended June 30, 1999 were 10 million at exercise prices ranging from $2.73 per share to $25.50 per share. These stock options 8 9 were not included in the computation of diluted earnings per share because the effect of assuming their exercise would have been antidilutive. The Company has 275 million authorized shares, of which 250 million are Common Stock and 25 million are preferred stock. As of June 30, 1999, there were no preferred shares issued or outstanding. 9. COMPREHENSIVE LOSS Comprehensive loss for the three and six months ended June 30, 1998 and 1999, is as follows (in thousands):
Three Months Six Months ended June 30, Ended June 30, ------------------------ ------------------------- 1998 1999 1998 1999 --------- ---------- ---------- ---------- Net loss ......................................... $(15,619) $ (95,311) $ (107,991) $ (184,515) Foreign currency translation adjustments ......... 1,295 (166) 1,110 (1,007) -------- ---------- ---------- ---------- Total comprehensive loss ..................... $(14,324) $ (95,477) $ (106,881) $ (185,522) ======== ========== ========== ==========
10. STATEMENT OF CASH FLOWS INFORMATION Cash and cash equivalents include highly liquid debt instruments with an original maturity of three months or less. As of June 30, 1999, cash equivalents also include investments in money market instruments, which are carried at fair market value. Cash payments made for interest during both the six months ended June 30, 1998 and 1999, were approximately $70 million, net of interest capitalized during the six months ended June 30, 1998 and 1999 of $9 million and $11 million, respectively. There were no significant federal or state income taxes paid or refunded for the six months ended June 30, 1998 and 1999. 11. SEGMENT INFORMATION The Company has determined that it has two reportable segments, core operations and advanced messaging operations. The Company's basis for the segments relates to the types of products and services each segment provides. The core operating segment includes the traditional display and alphanumeric services, which are basic one-way services, and 1 1/2-way paging services. The advanced messaging operating segment includes the new two-way wireless messaging services, advanced wireless integration products, wireless software sales, consumer content, VoiceNow service, Iridium WorldPage, and other future advanced messaging products. 9 10 The following table presents certain information related to the Company's business segments for the three and six months ended June 30, 1998 and 1999.
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ------------------------ (IN THOUSANDS) 1998 1999 1998 1999 --------- --------- --------- --------- Net Revenues (1): Core (2) ............... $ 241,281 $ 240,721 $ 475,826 $ 485,231 Advanced Messaging .... 59 3,382 161 6,255 --------- --------- --------- --------- $ 241,340 $ 244,103 $ 475,987 $ 491,486 ========= ========= ========= ========= Operating income (loss): Core (2) ............... $ 25,223 $ (46,525) $ (26,575)(3) $ (54,246)(4) Advanced Messaging ..... (5,420) (11,723) (10,227) (20,507) --------- --------- --------- --------- $ 19,803 $ (58,248) $ (36,802) $ (74,753) ========= ========= ========= ========= Adjusted EBITDA (5): Core (2) ............... $ 91,933 $ 81,506 $ 184,096 $ 157,857 Advanced Messaging...... (1,837) (11,086) (2,737) (19,264) --------- --------- --------- --------- $ 90,096 $ 70,420 $ 181,359 $ 138,593 ========= ========= ========= ========= Free Cash Flow (6): Core (2) ............... $ 36,994 $ 33,614 $ 76,823 $ 62,167 Advanced Messaging ..... (27,610) (36,653) (55,691) (102,026) --------- --------- --------- --------- $ 9,384 $ (3,039) $ 21,132 $ (39,859) ========= ========= ========= =========
(1) Net Revenues are revenues from services, rent, and maintenance plus product sales less the cost of products sold. (2) The international operations of the Company currently consist entirely of core services and accordingly are included in the Company's core business segment. (3) Operating loss for the core business segment for the first six months of 1998 includes a restructuring charge of $74 million. See Note 5. (4) Operating loss for the core business segment for the first six months of 1999 includes a provision for asset impairment of $18 million. See Note 4. (5) Adjusted EBITDA is earnings before interest, income taxes, depreciation, amortization, minority interest, restructuring charge, provision for asset impairment, and cumulative effect of a change in accounting principle. (6) Free Cash Flow is Adjusted EBITDA less capital expenditures (excluding payments for spectrum licenses) and debt service. Adjusted EBITDA and Free Cash Flow are not measures defined in generally accepted accounting principles and should not be considered in isolation or as substitutes for measures of performance in accordance with generally accepted accounting principles. 10 11 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, including but not limited to future capital expenditures, future borrowings, performance and market acceptance of new products and services, impact of Year 2000 issues on the Company's operations, anticipated costs and expenses related to, and the timetable for, the remediation of Year 2000 issues, expected annual recurring performance improvements and cost savings as a result of a restructuring of the Company's domestic operations (the Restructuring), and sales productivity increases and incremental annual increases in revenues expected to result from the Restructuring together with associated price increases, 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 pricing pressures, growth rates, the introduction of products and services by competitors of the Company, the performance of the Company's vendors and independent contractors, third-party Year 2000 remediation plans, the introduction of competing technologies, the transition of the Company's regional office operations into centralized facilities (the Centers of Excellence) infrastructure, the construction, testing and placement of the Company's advanced messaging network into operation, and acceptance of the Company's products and services in the marketplace. INTRODUCTION Throughout this section the Company makes reference to earnings before interest, income taxes, depreciation, amortization, minority interest, restructuring charge, provision for asset impairment, and cumulative effect of a change in accounting principle (Adjusted EBITDA). EBITDA (earnings before interest, income taxes, depreciation, and amortization) is a key performance measure used in the wireless messaging industry and is one of the financial measures by which the Company's covenants are calculated under the agreements governing its debt obligations. EBITDA and Adjusted EBITDA are not measures defined in generally accepted accounting principles and should not be considered in isolation or as substitutes for measures of performance in accordance with generally accepted accounting principles. As of June 30, 1999, the Company has made significant progress toward its previously announced goal of creating a platform for long-term profitable growth. To achieve its objectives, the Company is aggressively implementing the Restructuring, which includes eliminating redundant administrative operations by consolidating certain key support functions. The Company also has made significant progress in the build-out of its advanced wireless network, which, when completed, will permit enhanced delivery of a broad portfolio of wireless information products and services. In April 1999, the Company completed a realignment of its sales and marketing organizations to more clearly align those groups with customers' needs and the Company's overall strategic direction. In June 1999, the Company announced the formation of a new wholly owned subsidiary, VAST Wireless Solutions, Inc., to accelerate the development and commercialization of business opportunities in three related areas: the Company's Internet-based wireless information content; its business solutions capabilities; and its wireless content gateway. Organizationally separating VAST Wireless Solutions from the Company's other subsidiaries is expected to enhance the groups' ability to focus on discrete opportunities and, potentially, different business models. RESULTS OF OPERATIONS Revenues from services, rent and maintenance plus product sales less the cost of products sold (Net Revenues) for the three-month period ended June 30, 1999, were $244 million, an increase of 1.1% over $241 million for the corresponding period of 1998. Net Revenues for the six months ended June 30, 1999, were $491 million, an increase of 3.3% over $476 million for the same period in 1998. Revenues from services, rent and 11 12 maintenance, which the Company considers its primary business, decreased 1.5% to $232 million for the three months ended June 30, 1999, compared to $235 million for the three months ended June 30, 1998. Services, rent and maintenance revenues for the six months ended June 30, 1999 increased 1.8% to $474 million, compared to $465 million for the six months ended June 30, 1998. Increases in average revenue per unit resulting from pricing initiatives and the changing mix of the Company's subscriber base toward higher revenue products and services were offset by the decrease in revenues associated with the net decrease in units in service during both the three and six months ended June 30, 1999 as described below. In an effort to increase the overall profitability of its services, the Company has increased its focus toward higher value products and services such as alphanumeric and nationwide paging. In addition, in an effort to reduce the number of customers using unprofitable services, the Company has instituted certain price initiatives, including setting appropriate minimum pricing levels for new business and selectively increasing pricing to existing customers using certain services. The Company expects these initiatives, along with sales productivity increases associated with the Company's Restructuring which will allow field sales personnel to focus solely on sales, to result in incremental annual revenues during 1999 and beyond. However, as a result of these actions, the Company experienced a net decrease in units in service during the first six months of 1999, a trend that began during the second half of 1998, and that the Company expects to continue throughout the third quarter of 1999. The number of units in service with subscribers at June 30, 1999 was 9,766,000, compared to 10,110,000 and 10,604,000 units in service with subscribers at December 31, 1998 and June 30, 1998, respectively. The average revenue per unit for the Company's core domestic operations increased to $7.84 and $7.94, respectively, for the three and six months ended June 30, 1999, compared to $7.44 and $7.40, respectively, for the corresponding periods of 1998. The Company is continuing to review its pricing structure for all of its services. Product sales decreased 21.8% to $23 million for the three months ended June 30, 1999, compared to $29 million for the same period in 1998. Product sales decreased 19.2% to $45 million for the six months ended June 30, 1999, compared to $55 million for the corresponding period of 1998. The decreases in product sales and corresponding decreases in cost of products sold from 1998 to 1999 resulted primarily from the Company's efforts to reduce the number of customers using unprofitable services through certain pricing initiatives, which resulted in a substantial decrease in sales through the Company's reseller channel. In addition, the decreases in cost of products sold from 1998 to 1999 also resulted from the decrease in the depreciable lives of the Company's subscriber devices from three years to two years, effective April 1, 1999. This change had the effect of increasing depreciation expense and thereby reducing the net book values of sold subscriber devices. Services, rent and maintenance expenses increased 19.1% to $64 million for the three months ended June 30, 1999, compared to $54 million for the three months ended June 30, 1998. Services, rent and maintenance expenses increased 24.0% to $131 million for the six months ended June 30, 1999, compared to $105 million for the six months ended June 30, 1998. The increases in services, rent and maintenance expenses were primarily attributable to the adoption of Statement of Position 98-5, Reporting on the Costs of Start-up Activities (SOP 98-5), effective January 1, 1999, which required the expensing of certain costs previously capitalized, increased contracted dispatch costs related to advanced messaging units placed in service during 1998 and the first six months of 1999, increased pager parts and repairs expense, and expenses associated with an increase in transmitter sites. The increases were partially offset by the decline in the Company's reserve for non-recoverable subscriber devices resulting from the change in the depreciable lives of its subscriber devices from three years to two years. Selling expenses decreased 6.7% to $22 million for the second quarter of 1999, compared to $24 million for the same period in 1998. Selling expenses increased 2.1% to $46 million for the first six months of 1999, compared to $45 million for the corresponding period of 1998. The decrease in selling expenses for the three months ended June 30, 1999 resulted primarily from a one-time adjustment to sales commissions expense during the second quarter of 1999 to better reflect the period in which the sales commissions were earned. As a result of this change, selling expenses decreased by $2 million during the three months ended June 30, 1999. In addition, the decrease in selling expenses for the second quarter of 1999 resulted from a lower amount of sales commissions incurred in conjunction with the net decrease in units in service with subscribers for the three month period ended June 30, 1999, as compared to the same period of 1998. The increase in selling expenses for the six months ended June 30, 1999 was primarily due to the initiation of marketing research, continued market development, and advertising expenses associated with the Company's promotion of its core and advanced messaging operations, including such costs related to its SurePage and Two-Way services. Marketing research, development costs, and advertising expenses associated with the Company's core and advanced messaging operations are expected to grow in future periods due to expanded promotion of these services. Partially offsetting the 12 13 increase in advertising costs for the six months ended June 30, 1999 was the decrease in sales commission expense as previously discussed. General and administrative expenses increased 18.6% to $88 million for the second quarter of 1999, compared to $74 million for the second quarter of 1998. General and administrative expenses increased 22.2% to $176 million for the first six months of 1999, compared to $144 million for the first six months of 1998. The increases in general and administrative expenses were primarily related to expenses associated with establishing the Company's Centers of Excellence, redundant operating costs associated with operating both its new Centers of Excellence infrastructure and its traditional decentralized infrastructure, and increased levels of contract labor utilized during the transition to the Centers of Excellence infrastructure. Such costs are expected to decrease in the fourth quarter of 1999 and in 2000 as the Company completes the transition to its Centers of Excellence. Depreciation and amortization expense increased 83.0% to $129 million for the three months ended June 30, 1999, compared to $70 million for the three months ended June 30, 1998. Depreciation and amortization expenses increased 35.6% to $196 million for the six months ended June 30, 1999, compared to $144 million for the six months ended June 30, 1998. The increases in depreciation and amortization expense resulted primarily from the Company's change in the depreciable lives of its subscriber devices and certain of its network equipment, effective April 1, 1999. The Company changed the depreciable lives of its subscriber devices from three years to two years and the depreciable life of certain of its network equipment from seven years to ten years. The changes resulted from a review by the Company of the historical usage periods of its subscriber devices and its network equipment and the Company's expectations regarding future usage periods for subscriber devices considering current and projected technological advances. As a result of these changes, depreciation expense increased by approximately $69 million during the three months ended June 30, 1999 and is expected to increase by approximately $10 million during the remainder of 1999. Depreciation and amortization expense was reduced during the three and six months ended June 30, 1999 by certain property and equipment becoming fully depreciated, certain non-current assets becoming fully amortized, and the write-off of start-up costs upon the adoption of SOP 98-5. The Company expects to commence depreciation and amortization on a majority of the assets related to its Centers of Excellence during the third quarter of 1999 and its advanced messaging operations towards the end of 1999, which together are expected to increase depreciation and amortization expense during the remainder of 1999 by approximately $7 million. The Company recorded a provision of $18 million during the quarter ended March 31, 1999, for the impairment of the assets of the Company's majority-owned Spanish subsidiaries. See further discussion in Note 4 to the Consolidated Financial Statements. The Company recorded a restructuring charge of $74 million during the quarter ended March 31, 1998, as a result of a Restructuring approved by the Company's Board of Directors in February 1998. See further discussion in Note 5 to the Consolidated Financial Statements. As a result of the above factors, Adjusted EBITDA decreased 21.8% to $70 million for the second quarter of 1999, compared to $90 million for the corresponding period of 1998. Adjusted EBITDA decreased 23.6% to $139 million for the first six months of 1999, compared to $181 million for the same period in 1998. Adjusted EBITDA and Adjusted EBITDA as a percentage of Net Revenues were negatively impacted by the Company's advanced messaging operations, the development and implementation of its Centers of Excellence, its international operations, and the adoption of SOP 98-5. Adjusted EBITDA and Adjusted EBITDA as a percentage of Net Revenues for the three and six months ended June 30, 1999 were positively impacted by $3 million as a result of the change in depreciable lives of subscriber devices as previously discussed. Interest expense, net of amounts capitalized, was relatively flat for the three and six months ended June 30, 1999, compared to the same periods in 1998. Interest expense, net of amounts capitalized, was $38 million for the second quarter of 1999, compared to $37 million for the second quarter of 1998. Interest expense, net of amounts capitalized, was $74 million for the six months ended June 30, 1999 and 1998. 13 14 The Company adopted the provisions of SOP 98-5 effective January 1, 1999 and recorded a charge of $37 million as a cumulative effect of a change in accounting principle to write-off all unamortized start-up costs as of January 1, 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's operations and expansion into new markets and product lines have required substantial capital investment for the development and installation of wireless communications systems and for the procurement of subscriber devices and related equipment. Furthermore, the Company is currently in the process of building an advanced messaging network over which it can deploy new enhanced messaging services and customized wireless information and completing the formation of its Centers of Excellence. Capital expenditures (excluding payments for spectrum licenses) were $106 million for the six months ended June 30, 1999, compared to $88 million for the corresponding period of 1998. The increase in capital expenditures in 1999 was primarily related to the Company's advanced messaging network and its Centers of Excellence. Capital expenditures related to the Company's buildout of its advanced messaging network were $32 million for the six months ended June 30, 1999, compared to $17 million for the corresponding period of 1998. Capital expenditures related to establishing the Company's Centers of Excellence, including new system implementations, were $17 million for the six months ended June 30, 1999, compared to $14 million for the same period of 1998. The amount of capital expenditures may fluctuate from quarter to quarter and on an annual basis due to several factors, including the variability of units in service with subscribers. Based on current expectations, the Company anticipates the total amount of capital expenditures to be approximately $200 million to $225 million in 1999. The Company expects during 1999 to substantially complete capital expenditures made in connection with the Company's expansion of its advanced messaging network and the establishment of its Centers of Excellence. With the substantial completion of these capital expenditures in 1999, the Company expects aggregate capital expenditures in 2000 to decrease as compared to 1999. For the first six months of 1999, capital expenditures were funded by net cash provided by operating activities of $73 million, as well as incremental borrowings. Net cash provided by operating activities decreased $45 million for the six months ended June 30, 1999, as compared to the same period of 1998. The decrease resulted primarily from an increase in net loss before restructuring charge, the provision for asset impairment, and the cumulative effect of a change in accounting principle. As of June 30, 1999, the Company had $612 million of borrowings under its $1.0 billion domestic revolving credit agreement (the Credit Agreement). As of August 2, 1999, this amount had increased to $664 million. Under the Company's debt agreements, the Company is able to borrow, provided it meets certain financial covenants, the lesser of $1 billion or an amount based primarily upon the Company's domestic EBITDA for the most recent fiscal quarter. For purpose of determining available borrowings under the Credit Agreement, domestic EBITDA is based on generally accepted accounting principles in existence as of December 31, 1995. As a result, certain items now expensed as a period cost under the provisions of SOP 98-5 and Emerging Issues Task Force Consensus 97-13 are added back to net loss in determining EBITDA, as defined in the Credit Agreement. Such add backs aggregated $9 million for the second quarter of 1999. As of June 30, 1999, based on certain provisions of the Company's senior notes, approximately $135 million was available for additional borrowings as of that date based on the Company's domestic EBITDA for the second quarter of 1999. The availability of additional borrowings in periods subsequent to June 30, 1999 is based upon the Company's domestic EBITDA for such future periods. The Company anticipates that, similar to the second quarter of 1999, domestic EBITDA will be negatively impacted during the third quarter of 1999 by (i.) expenses associated with establishing the Company's Centers of Excellence infrastructure while at the same time maintaining its traditional decentralized infrastructure, and (ii.) expenses related to the completion of the Company's advanced messaging network. The Company was in compliance with the covenants of its Credit Agreement at the end of the second quarter of 1999, and has implemented expense-control measures aimed at maintaining continued compliance. While no assurances can be given, the Company believes that, based on continuing expense control and stable sales levels, it will remain in compliance with the covenants of its Credit Agreement and have sufficient capital resources to complete the Centers of Excellence infrastructure and advanced messaging network and to make other planned capital expenditures. 14 15 The two credit agreements of the Company's Canadian subsidiaries, as amended on August 5, 1999, provide for total borrowings of approximately $75 million. As of June 30, 1999, approximately $50 million of borrowings were outstanding under the Canadian credit facilities. Additional borrowings are available under these facilities, provided such borrowings are either collateralized or certain financial covenants are met. The deficiency in Free Cash Flow, defined as Adjusted EBITDA less capital expenditures (excluding payments for spectrum licenses) and debt service, for the Company's consolidated operations for the three and six months ended June 30, 1999 was $3 million and $40 million, respectively. Free Cash Flow for the Company's consolidated operations for the three and six months ended June 30, 1998 was $9 million and $21 million, respectively. Free Cash Flow is not a measure defined in generally accepted accounting principles and should not be considered in isolation or as a substitute for a measure of performance in accordance with generally accepted accounting principles. The decline in Free Cash Flow for the three and six months ended June 30, 1999 was primarily the result of an increase in capital expenditures and a decrease in Adjusted EBITDA, as previously noted. YEAR 2000 READINESS DISCLOSURE Year 2000 issues affect virtually all companies and organizations throughout the world. Many existing computer programs were designed and developed to use and store only two digits to identify a calendar year, without considering the capability of properly recognizing the upcoming change in the century. If not corrected by January 1, 2000, the Company could potentially experience system failures or interruptions, such as a temporary inability to deliver paging transmissions, system generation of erroneous data, or other disruptions of normal business operations. The Company implemented a task force and developed a comprehensive plan to address Year 2000 issues, and continues to utilize both internal and external resources to evaluate and test its systems. The Company has developed an approach to address Year 2000 issues that includes phases for inventory of business processes and systems, assessment of Year 2000 risk, remediation, testing, implementation and evaluation. The Company has completed these phases for all critical business processes. The Company is in the process of evaluating the project documentation that represents the Year 2000 readiness of its application systems and embedded systems, such as its paging terminals and paging network. Furthermore, in connection with the Restructuring, the Company is currently in the process of replacing all of its core systems for its new Centers of Excellence. The Company has completed Year 2000 readiness assessment and testing on these systems. The Company anticipates its total cost associated with correcting Year 2000 problems, including the expenses necessary to remediate the Company's existing systems and costs related to the collection of third-party Year 2000 readiness information, to be approximately $4 million, of which approximately $3 million has been incurred as of June 30, 1999. In addition, in connection with the Restructuring, the Company is currently in the process of replacing all of its core systems for its new Centers of Excellence at an estimated cost of approximately $80 million to $100 million. The Company continues to work with Motorola, Inc., Glenayre Technologies, Inc., and other primary vendors that currently supply the Company with subscriber devices, wireless messaging terminals, and network facilities, to assess their Year 2000 readiness. The Company's primary vendors are making the preparations necessary for their products and services to be ready for the Year 2000. However, there can be no assurance that third parties, on which the Company's business relies, will successfully remediate their systems on a timely basis. The Company also relies on the provision of electrical power and telecommunications transmission services in the operation of its business. The Company has queried its primary electrical and telecommunications suppliers regarding Year 2000 compliance. Each supplier queried believes that it will be Year 2000 ready by the end of 1999. The Company has no means of confirming these statements, nor any ability to ensure Year 2000 compliance by these suppliers. The Company believes that although it may experience power and/or transmission outages 15 16 related to Year 2000 noncompliance, these outages will be limited in both scope and duration and will not have a material adverse effect on the Company's ability to operate nor on its results of operations. In addition, the possibility of power and/or transmission outages is being addressed in the contingency planning process described below. The Company is working with a globally recognized consulting firm to develop contingency plans to mitigate the impact of its potential system failures related to Year 2000 issues. The contingency plans will address the risk of potential failures related to internal software applications, embedded systems, infrastructure, and third-party systems (including electrical power and telecommunications transmission services). The contingency plans are in the final stages of completion and selected failure scenarios will be practiced during the third and fourth quarters of 1999 to validate the thoroughness of these plans. The Company believes it has met all project deliverables according to schedule based on management's review and verification of the project documentation. However, in particular due to the potential impact of third-party modification plans, there can be no assurance that these estimates and this timetable will be achieved, and actual results could differ materially from those anticipated. The Company's business, financial position, or results of operations could be materially adversely affected by the failure of its computer systems and applications, or those operated by third parties, to properly operate or manage dates beyond 1999. In addition, disruptions in the economy generally resulting from Year 2000 issues could materially adversely affect the Company. The amount of any potential liability or lost revenue cannot be estimated at this time. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. There have been no material changes from the information provided in Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 1998. 16 17 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 business, financial position, or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On May 19, 1999, the Company held its Annual Meeting of Shareowners, at which all of the matters listed below were approved. Mr. Jeffrey M. Cunningham was elected as a Class II Director for a three year term to expire in 2002 (94,612,017 voting for and 680,410 withholding authority). Mr. Robert J. Miller was elected as a Class II Director for a three year term to expire in 2002 (94,589,965 voting for and 702,462 withholding authority). Mr. Carl D. Thoma was elected as a Class II Director for a three year term to expire in 2002 (94,726,298 voting for and 566,129 withholding authority). As of the record date of March 19, 1999, there were 103,959,140 shares of the Company's Common Stock issued and outstanding and entitled to 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. 17 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 12, 1999 By: /s/ John P. Frazee, Jr. ------------------------------------- John P. Frazee, Jr. Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer) Date: August 12, 1999 By: /s/ Julian B. Castelli ------------------------------------- Julian B. Castelli Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 18 19 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- 3.1 Restated Certificate of Incorporation of the Registrant, as amended (1) 3.3 By-laws of the Registrant, as amended (11) 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 I of Article VIII of the Registrant's By-laws, as amended (11) 4.3 Form of Indenture (2) 4.4 Shareholder Rights Agreement (3) 4.5 First Amendment to the Shareholder Rights Agreement (11) 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 Form of Indemnification Agreement executed by recipients of options granted under the 1991 Stock Option Plan (1) 10.6 Form of First Amendment to Vesting Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan (1) 10.7 Form of First Amendment to Management Agreement executed by recipients of options granted under the 1982 Incentive Stock Option Plan (1) 10.8 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) 10.9 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)
19 20 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.10 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) 10.11 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) 10.12 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) 10.13 1997 Restricted Stock Plan, as approved by shareowners on May 22, 1997 (7) 10.14 Employment Agreement dated as of August 4, 1997 among the Registrant and John P. Frazee, Jr. (8) 10.15 First Amendment dated April 18, 1997 to the 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 (9) 10.16 First Amendment dated April 18, 1997 to the 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 (9) 10.17 1992 Director Compensation Plan, as amended and restated on April 22, 1998 (10) 10.18 Amended and Restated 1991 Stock Option Plan, as approved by shareowners on May 21, 1998 (10) 10.19 Letter dated May 26, 1998 regarding Second Amendments effective March 31, 1998 to the Loan Agreements dated as of June 5, 1996: (1) among Paging Network of Canada Inc., The Toronto-Dominion Bank, and such other financial institutions as become banks (2) among Madison Telecommunications Holdings, Inc., The Toronto-Dominion Bank, and such other financial institutions as become banks (10) 10.20 Forms of Stock Option Agreement executed by recipients of options granted under the 1991 Stock Option Plan (11) 10.21 Employee Stock Purchase Plan, as amended on December 16, 1998 (11) 10.22 Severance Pay Plan dated as of January 20, 1999 (11) 10.23 Form of Stock Option Agreement executed by recipients of options granted under the 1992 Director Compensation Plan (11) 10.24 Amended and Restated Loan Agreement dated August 5, 1999 among Paging Network of Canada Inc., The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of Canada, and such other financial institutions as become banks (12) 10.25 Amended and Restated Loan Agreement dated August 5, 1999 among Madison Telecommunications Holdings, Inc., The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of Canada, and such other financial institutions as become banks (12)
20 21
EXHIBIT NUMBER DESCRIPTION ------- ----------- 12 Ratio of Earnings to Fixed Charges for the three and six months ended June 30, 1998 and 1999 (12) 27 Financial Data Schedule (12)
------------------- (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 Report on Form 8-K on September 15, 1994. (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 ended December 31, 1995. (6) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996. (7) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997. (8) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quartley period ended September 30, 1997. (9) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. (10) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998. (11) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. (12) Filed herewith. EX-10.24 2 AMENDED & RESTATED LOAN AGREEMENT-PAGING NETWORK 1 EXHIBIT 10.24 AMENDED AND RESTATED LOAN AGREEMENT AMONG PAGING NETWORK OF CANADA INC. (THE "BORROWER"); THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, NATIONAL BANK OF CANADA AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT FOR THE BANKS (THE "AGENT") TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS .......................................................................................2 ARTICLE 2 CREDIT FACILITY...................................................................................20 SECTION 2.1 COMMITMENT.....................................................................................20 SECTION 2.2 UNCOLLATERALIZED PRIME RATE ADVANCES...........................................................20 SECTION 2.3 COLLATERALIZED ADVANCES........................................................................21 SECTION 2.4 NOTIFICATION OF BANKS; DISBURSEMENT............................................................23 SECTION 2.5 BANKERS' ACCEPTANCES...........................................................................24 SECTION 2.6 INTEREST; FEES.................................................................................27 SECTION 2.7 FEES...........................................................................................28 SECTION 2.8 MANDATORY COMMITMENT REDUCTIONS................................................................29 SECTION 2.9 OPTIONAL PREPAYMENTS; COMMITMENT REDUCTIONS...................................................30 SECTION 2.10 MANDATORY REPAYMENTS...........................................................................30 SECTION 2.11 EVIDENCE OF OBLIGATIONS; ACCOMMODATION ACCOUNTS................................................31 SECTION 2.12 MANNER OF PAYMENT..............................................................................31 SECTION 2.13 REIMBURSEMENT..................................................................................32 SECTION 2.14 PRO RATA TREATMENT.............................................................................33 ARTICLE 3 CONDITIONS PRECEDENT..............................................................................34 SECTION 3.1 CONDITIONS PRECEDENT TO AGREEMENT..............................................................34 SECTION 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS.....................................................36 ARTICLE 4 REPRESENTATIONS AND WARRANTIES....................................................................37 SECTION 4.1 REPRESENTATIONS AND WARRANTIES.................................................................37 SECTION 4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC................................................45 SECTION 4.3 NO REPRESENTATIONS BY BANKS....................................................................45 ARTICLE 5 GENERAL COVENANTS.................................................................................45 SECTION 5.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS..................................................45 SECTION 5.2 BUSINESS; COMPLIANCE WITH APPLICABLE LAW.......................................................46 SECTION 5.3 MAINTENANCE OF PROPERTIES......................................................................46 SECTION 5.4 ACCOUNTING METHODS AND FINANCIAL RECORDS.......................................................46 SECTION 5.5 INSURANCE......................................................................................46
2 - 2 - SECTION 5.6 PAYMENT OF TAXES AND CLAIMS....................................................................46 SECTION 5.7 COMPLIANCE WITH ERISA..........................................................................47 SECTION 5.8 VISITS AND INSPECTIONS.........................................................................48 SECTION 5.9 PAYMENT OF INDEBTEDNESS; ACCOMMODATIONS........................................................49 SECTION 5.10 USE OF PROCEEDS................................................................................49 SECTION 5.11 PROTECT SECURITY INTERESTS.....................................................................49 SECTION 5.12 ENVIRONMENTAL AUDITS...........................................................................49 SECTION 5.13 FURTHER ASSURANCES.............................................................................50 ARTICLE 6 INFORMATION COVENANTS.............................................................................50 SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION.................................................50 SECTION 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION....................................................51 SECTION 6.3 PERFORMANCE CERTIFICATES.......................................................................51 SECTION 6.4 COPIES OF OTHER REPORTS........................................................................52 SECTION 6.5 NOTICE OF LITIGATION AND OTHER MATTERS.........................................................52 SECTION 6.6 ENVIRONMENTAL REPORTING........................................................................53 ARTICLE 7 NEGATIVE COVENANTS................................................................................54 SECTION 7.1 INDEBTEDNESS OF THE BORROWER AND ITS SUBSIDIARIES..............................................54 SECTION 7.2 LIMITATION ON LIENS............................................................................55 SECTION 7.3 AMENDMENT AND WAIVER...........................................................................55 SECTION 7.4 LIQUIDATION, MERGER, OR DISPOSITION OF ASSETS..................................................55 SECTION 7.5 LIMITATION ON GUARANTIES.......................................................................56 SECTION 7.6 INVESTMENTS AND ACQUISITIONS...................................................................56 SECTION 7.7 RESTRICTED PAYMENTS AND PURCHASES..............................................................56 SECTION 7.8 LEVERAGE RATIO.................................................................................56 SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE.............................................57 SECTION 7.10 TOTAL DEBT PER SUBSCRIBER......................................................................57 SECTION 7.11 CAPITAL EXPENDITURES...........................................................................57 SECTION 7.12 MINIMUM REVENUE TEST...........................................................................58 SECTION 7.13 MINIMUM UNITS IN SERVICE.......................................................................58 SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST...............................................................58 SECTION 7.15 AFFILIATE TRANSACTIONS.........................................................................59 SECTION 7.16 REAL ESTATE....................................................................................59 SECTION 7.17 ERISA LIABILITIES..............................................................................59 ARTICLE 8 DEFAULT ..........................................................................................59 SECTION 8.1 EVENTS OF DEFAULT..............................................................................59 SECTION 8.2 REMEDIES.......................................................................................62 ARTICLE 9 THE AGENT ........................................................................................63 SECTION 9.1 APPOINTMENT AND AUTHORIZATION..................................................................63 SECTION 9.2 INTEREST HOLDERS...............................................................................63 SECTION 9.3 CONSULTATION WITH COUNSEL......................................................................64 SECTION 9.4 DOCUMENTS......................................................................................64 SECTION 9.5 AGENT AND AFFILIATES...........................................................................64 SECTION 9.6 RESPONSIBILITY OF THE AGENT....................................................................64 SECTION 9.7 SECURITY DOCUMENTS.............................................................................64 SECTION 9.8 ACTION BY THE AGENT............................................................................65 SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT..........................................................65
3 - 3 - SECTION 9.10 RESPONSIBILITY DISCLAIMED......................................................................66 SECTION 9.11 INDEMNIFICATION................................................................................66 SECTION 9.12 CREDIT DECISION................................................................................66 SECTION 9.13 SUCCESSOR AGENT................................................................................67 SECTION 9.14 DELEGATION OF DUTIES...........................................................................67 SECTION 9.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING..................................................67 ARTICLE 10 COMPUTATIONS AND INDEMNITIES......................................................................67 SECTION 10.1 INDEMNITY FOR CHANGE IN CIRCUMSTANCES..........................................................67 SECTION 10.2 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY........................................68 SECTION 10.3 TAXATION ON PAYMENTS...........................................................................69 SECTION 10.4 JUDGMENT CURRENCY..............................................................................70 SECTION 10.5 CLAIMS FOR INCREASED COSTS AND TAXES...........................................................71 ARTICLE 11 MISCELLANEOUS.....................................................................................71 SECTION 11.1 NOTICES........................................................................................71 SECTION 11.2 EXPENSES.......................................................................................73 SECTION 11.3 WAIVERS........................................................................................74 SECTION 11.4 RIGHT TO COMBINE AND SET-OFF...................................................................74 SECTION 11.5 ASSIGNMENT.....................................................................................75 SECTION 11.6 ACCOUNTING PRINCIPLES..........................................................................76 SECTION 11.7 COUNTERPARTS...................................................................................76 SECTION 11.8 GOVERNING LAW..................................................................................76 SECTION 11.9 SEVERABILITY...................................................................................77 SECTION 11.10 INTEREST.......................................................................................77 SECTION 11.11 TABLE OF CONTENTS AND HEADINGS.................................................................77 SECTION 11.12 AMENDMENT AND WAIVER...........................................................................78 SECTION 11.13 NON-MERGER.....................................................................................78 SECTION 11.14 OTHER RELATIONSHIPS............................................................................78 SECTION 11.15 DIRECTLY OR INDIRECTLY.........................................................................79 SECTION 11.16 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS.................................................79 SECTION 11.17 SENIOR DEBT....................................................................................79 SECTION 11.18 OBLIGATIONS SEVERAL............................................................................79 SECTION 11.19 CONFIDENTIALITY................................................................................79 SECTION 11.20 TIME OF THE ESSENCE............................................................................80 SECTION 11.21 THIRD PARTY BENEFICIARIES......................................................................80 SECTION 11.22 ENUREMENT......................................................................................80
EXHIBITS Exhibit A - Commitment Ratio Exhibit B - Form of Accommodation Notice Exhibit C - Form of Repayment Notice Exhibit D - Form of Borrower's Loan Certificate Exhibit E - Form of Subsidiary Loan Certificate Exhibit F - Form of Performance Certificate Exhibit G - Form of Assignment and Assumption Agreement 4 - 4 - SCHEDULES Schedule 1 - Licenses Schedule 2 - Security Documents Schedule 3 - Subsidiaries Schedule 4 - Agreements with Affiliates Schedule 5 - Year 2000 Plan 5 AMENDED AND RESTATED LOAN AGREEMENT DATED the 5th day of June, 1996, as AMENDED AND RESTATED as of the 5th day of August, 1999. A M O N G: PAGING NETWORK OF CANADA INC. (the "Borrower") - and - THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, NATIONAL BANK OF CANADA and such other financial institutions as become "Banks" hereunder (collectively, the "Banks") - and - THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT (the "Agent") WHEREAS: A. The Borrower, The Toronto-Dominion Bank, as a Bank, and the Agent, entered into a loan agreement made as of the 5th day of June, 1996; B. The loan agreement was amended pursuant to a first amendment to the loan agreement dated as of the 18th day of April, 1997; C. The Borrower, the Agent and the Banks wish to enter into this Agreement to incorporate the provisions of the amendment referred to in Recital B above, document certain additional amendments agreed upon among them, and restate the loan agreement, all upon the terms and conditions more particularly specified herein; NOW THEREFORE, the parties agree as follows: 6 - 2 - 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 notice substantially in the form of Exhibit B. "AGENT" shall mean The Toronto-Dominion Bank, in its capacity as Agent for the Banks or any successor Agent appointed pursuant to Section 9.13 of this Agreement. "AGENT'S OFFICE" shall mean the office of the Agent located at International Office Centre Toronto, Toronto Dominion Bank 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 Prime Rate 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 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 Amended and Restated 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, 7 - 3 - 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 Agent pursuant to the Deposit Agreement; and (b) $61,000,000, but only to the extent that the Minimum Permitted Collateral Amount is held on such date by the Agent pursuant to the Deposit Agreement and, in any event, the Available Commitment under this clause (b), less the Minimum Permitted Collateral Amount, shall not exceed $19,500,000; or (c) $67,500,000, but only to the extent that (i) the Minimum Permitted Collateral Amount is held on such date by the 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) for the two (2) most recently completed fiscal quarters, the Leverage Ratio is less than 6.0 to 1, or (B) (i) the aggregate number of Units in Service is greater than or equal to 245,000, and (ii) Gross Revenue for the Borrower Group on a combined basis is greater than or equal to $5,000,000 and, in any event, the Available Commitment under this clause (c), less the Minimum Permitted Collateral Amount, shall not exceed $26,000,000; or (d) $74,500,000, but only to the extent that (i) the Minimum Permitted Collateral Amount is held on such date by the 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) for the two (2) most recently completed fiscal quarters, 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 287,500, and (ii) Gross Revenue for the Borrower Group on a combined basis is greater than or equal to $5,500,000 8 - 4 - and, in any event, the Available Commitment under this clause (d), less the Minimum Permitted Collateral Amount, shall not exceed $33,000,000; or (e) $80,500,000, but only to the extent that (i) the Minimum Permitted Collateral Amount is held on such date by the 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) for the two (2) most recently completed fiscal quarters, the Leverage Ratio is less than 4.0 to 1, or (B) (i) the aggregate number of Units in Service is greater than or equal to 325,000, and (ii) Gross Revenue for the Borrower Group on a combined basis is greater than or equal to $7,250,000 and, in any event, the Available Commitment under this clause (e), less the Minimum Permitted Collateral Amount, shall not exceed $39,000,000; provided, however, that the Available Commitment shall not at anytime exceed the Commitment on such date; 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 to be purchased by a Bank pursuant to Section 2.5, the sum of (a) the discount rate per annum based on a year of 365 days which is equivalent to the rate quoted to the Borrower by such Bank as the such Bank'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 Paging Network of Canada Inc., a corporation incorporated under the laws of Canada. "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. 9 - 5 - "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. "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; 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. 10 - 6 - "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 $80,500,000 pursuant to the terms hereof, as such obligations may be reduced from time to time pursuant to the terms hereof. "COMMITMENT RATIO" shall mean, with respect to any Bank, the percentage equivalent of the ratio which such Bank's pro rata portion of the total Commitment bears to the aggregate amount of the Commitment (as each may be adjusted from time to time as provided herein); and "Commitment Ratios" shall mean the Commitment Ratios of all of the Banks with respect to the Commitment. As of the Restatement Date, the Commitment Ratio of each Bank is set forth on Exhibit A. "DEFAULT" shall mean any Event of Default, and any of the events specified in Section 8.1 hereof, regardless of whether there shall have occurred any passage of time or giving of notice, or both, that would be necessary in order to constitute such event an Event of Default. "DEFAULT RATE" shall mean a simple per annum interest rate equal to the sum of (a) the Prime Rate, plus (b) the Applicable Margin for Uncollateralized Prime Rate Advances, plus (c) two percent (2%). "DEPOSIT AGREEMENT" shall mean that certain Deposit Agreement dated as of April 18, 1997 between PNCHI and the Agent for the benefit of the Banks. "DEPOSIT AGREEMENT GUARANTY" shall mean that certain Guaranty in favour of the Agent for the benefit of the Banks, given by PNCHI on April 18, 1997. "DOLLAR" or "$" shall mean (except where specifically designated otherwise) lawful money of Canada. 11 - 7 - "DRAFT" shall mean, at any time, a blank depository bill within the meaning of the Depository Bills and Notes Act (Canada) or a blank bill of exchange within the meaning of the Bills of Exchange Act (Canada) 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 mean the requested date for a Drawing set forth in an Accommodation Notice. "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. "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 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 12 - 8 - 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, 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 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 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. "FREE 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 year, as determined in accordance with GAAP, Operating Cash Flow, less (i) the amounts actually paid during such period in respect of (A) Interest Expense, (B) income taxes, (C) payments on any Indebtedness for Money Borrowed falling within the definition of Total Debt (including any amounts actually paid in connection with reductions of the Commitment pursuant to Section 2.8(a)), (D) Capital Expenditures, and (ii) to the extent not included in the amounts calculated pursuant to (i) above, the amount of any automatic reduction in the Commitment made during such fiscal year in accordance with the provisions of Section 2.8(a). 13 - 9 - "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 Restatement 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. "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 14 - 10 - 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, and (b) 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. 15 - 11 - "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 Immaterial Site Specific Licenses) are listed as of the Restatement 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 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 corporation incorporated under the laws of Canada. "MADTEL HOLDINGS AGREEMENT" shall mean that certain Amended and Restated Loan Agreement dated as of even date herewith by and among MadTel Holdings, the Banks and the Agent. "MADTEL HOLDINGS OBLIGATIONS" shall mean the indebtedness, liabilities and obligations of MadTel Holdings to the Agent and the Banks under, or in connection with, the MadTel Holdings Agreement. "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 16 - 12 - 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 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 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 December 31, 2004, 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) $32,500,000 (or the Equivalent U.S. Dollar Amount), when the Available Commitment is $52,000,000; and (b) $37,500,000 (or the Equivalent U.S. Dollar Amount), when the Available Commitment is $57,000,000 or more, in each case plus $375,000 to be provided by, or on behalf of, the Borrower to the Agent quarterly in arrears on or prior to the last Business Day of each fiscal quarter to be held by or on deposit by the Agent as Permitted Collateral, commencing with the fiscal quarter beginning on July 1, 1999 and ending with the fiscal quarter beginning October 1, 2001, such that on January 1, 2002, if the Available Commitment is $60,750,000 or more, the Minimum Permitted Collateral Amount shall be no less than $41,250,000. "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. 17 - 13 - "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 Co-ordination 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 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 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 Agent may reasonably require. Operating Cash Flow attributable to any assets disposed of will be excluded in the determination of Operating Cash Flow as if the Assets so disposed of had been disposed of on the first day of such fiscal quarter. "PAGENET" shall mean Paging Network, Inc., a corporation incorporated under the laws of the State of Delaware. "PAYMENT DATE" shall mean the last day of any Interest Period. "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto. 18 - 14 - "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 Agent pursuant to the Deposit Agreement as collateral for the Deposit Agreement 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 Agent as security for the Obligations. "PERMITTED LIENS" shall mean, as applied to any Person: (a) Any Lien in favour of the 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, labourers 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; 19 - 15 - (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 (l) 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-1+ 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. 20 - 16 - "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. "PNCHI" shall mean Paging Network Canadian Holdings, Inc., a corporation incorporated under the laws of the State of Delaware. "PNII" shall mean Paging Network International, Inc., a corporation incorporated under the laws of the State of Delaware. "PNNV" shall mean Paging Network International Inc., N.V., a corporation incorporated under the laws of the Netherlands. "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 Prime Rate 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). "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. 21 - 17 - "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). "REPAYMENT NOTICE" means a notice substantially in the form of Exhibit C. "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. "RESTATEMENT DATE" shall mean August 5, 1999. "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; (c) any payment of principal of, or interest on, Indebtedness referred to in Section 7.1(g) or 7.1(h) hereof; and (d) 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 instalment 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 the Borrower and Madison Telecommunications Inc. as amended by Amendment No. 1 dated as of October 26, 1995. 22 - 18 - "SECURITY DOCUMENTS" means those agreements and other documents in favour of the 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 Agent for the benefit of itself and the Banks, or by the Banks themselves, as security for all or any portion of the Obligations. "SECURITY INTEREST" shall mean all Liens in favour of the Agent, for the benefit of itself and the Banks, or in favour of the Banks themselves, 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 Restatement 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, odour, 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. "THIRD PARTIES" shall mean third party suppliers and others on whom the operations of the business of the Borrower and/or its Subsidiaries is partly dependent for ordinary course operations which may affect the Borrower's or its Subsidiaries' ability to be Year 2000 Ready at and after January 1, 2000. "THIRD PARTY FACTORS" shall mean those factors beyond the control of the Borrower or its Subsidiaries and within the control of Third Parties. "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 of: (i) the aggregate principal amount of Collateralized Advances and Face Amount of 23 - 19 - Collateralized Bankers' Acceptances outstanding on such date, and (ii) the aggregate amount of Indebtedness permitted to be incurred in accordance with Sections 7.1(g) and 7.1(h) hereof outstanding on such date. "TOTAL SUBSCRIBERS" shall mean, as of any date, the aggregate number of subscribers for the Units in Service 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 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 PORTION OF THE COMMITMENT" shall mean, as of any date, that portion of the Available Commitment in excess of the Minimum Permitted Collateral Amount. "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, in respect of which the customer is obligated to make payments at regular intervals in amounts consistent with standard industry practice, 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. "YEAR 2000 READY" shall mean that, except as would not have individually or in the aggregate, a Materially Adverse Effect, the Year 2000 Systems used or relied upon by the Borrower or its Subsidiaries will function accurately and without material delay or interruption at 24 - 20 - all times before, on and after January 1, 2000 (including through February 29, 2000), without any change in the operations of such Year 2000 Systems associated with the advent of 2000 or the 21st century. "YEAR 2000 PLAN" shall mean the plan of the Borrower to ensure that the Year 2000 Systems are Year 2000 Ready in the form delivered to the Agent prior to the date hereof. "YEAR 2000 SYSTEMS" shall mean all computer hardware, software and files (including all operating systems, application software and related supporting data) and files owned, used, sold, leased or licensed by the Borrower or its Subsidiaries in connection with the operation of its business and all process controls, environmental controls, communications systems and any other support systems or equipment owned, used, sold, leased or licensed by the Borrower or its Subsidiaries, in the operation of its business which employs, stores or processes date/time information in electronic form. 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 exceeding, 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 Section 2.2, Section 2.3 and Section 2.5 hereof, respectively. Any notice given to the Agent in connection with a requested Accommodation hereunder shall be given to the 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 PRIME RATE ADVANCES. (a) Choice of Interest Rate, Etc. Any Uncollateralized Prime Rate Advance shall be made as an Uncollateralized Prime Rate Advance. (b) Manner of Borrowing. (i) Uncollateralized Prime Rate Advances. The Borrower shall give the Agent irrevocable written notice not later than 12:00 noon (Toronto time) at least one (1) Business Day prior to the date of any requested 25 - 21 - Uncollateralized Prime Rate Advance in the form of an Accommodation Notice, or telephonic notice followed immediately by an Accommodation Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with an Accommodation Notice shall not invalidate any notice so given if acted upon by the Agent. Upon receipt of such notice from the Borrower, the Agent shall promptly notify each Bank in writing of the contents thereof. (ii) Conversions of Uncollateralized Prime Rate Advances. On any Business Day, 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 an Accommodation Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), and (B) Collateralized Prime Rate Advances by giving the Accommodation Notice 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 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 be made as a Collateralized Prime Rate Advance. (b) Collateralized Prime Rate Advances. (i) Advances. The Borrower shall give the Agent irrevocable written notice not later than 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 an Accommodation Notice, or telephonic notice followed immediately by an Accommodation Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with an 26 - 22 - Accommodation Notice shall not invalidate any notice so given if acted upon by the Agent. Upon receipt of such notice from the Borrower, the Agent shall promptly notify each Bank in writing of the contents thereof. (ii) Conversions of Collateralized Prime Rate Advances. On any Business Day, 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 an Accommodation Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), and (B) Uncollateralized Prime Rate Advances by giving the Accommodation Notice 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 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) 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 Agent pursuant to the Deposit Agreement on such date, (i) an amount of Collateralized Advances up to the amount of such excess shall automatically be converted to an Uncollateralized Prime Rate 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 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. 27 - 23 - SECTION 2.4 NOTIFICATION OF BANKS; DISBURSEMENT. (a) Notification of Banks. Upon receipt of an Accommodation Notice, or a notice from the Borrower with respect to any outstanding Advance prior to the Payment Date for such Advance, the Agent shall promptly notify each Bank in writing 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 Agent at the Agent's Office, or at such account as the 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 Agent shall, subject to the satisfaction of the conditions set forth in Article 3 hereof, disburse the amounts made available to the 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 Toronto-Dominion Bank. (ii) Unless the 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 Agent such Bank's pro rata portion of such Advance, the Agent may assume that such Bank has made or will make such pro rata portion available to the Agent on the date of such Advance and the 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 Agent, such Bank agrees to repay to the 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 Agent, at the Prime Rate. (iii) If such Bank shall repay to the 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 Agent's demand therefor, the Agent shall notify the Borrower and the Borrower shall immediately pay such corresponding amount to the 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; 28 - 24 - (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, except that, if the face amount of a Bankers' Acceptance would not be equal to an integral multiple of $100,000, the face amount shall be increased or reduced by the Agent in its sole discretion, even if as a result of any such increase a Bank's Commitment Ratio would be exceeded. 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 Agent irrevocable written notice not later than 1:00 p.m. (Toronto time) at least two (2) Business Days prior to the date of the proposed Drawing in the form of an Accommodation Notice, or telephonic notice followed immediately by an Accommodation Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with an Accommodation Notice shall not invalidate any notice so given if acted upon by the Agent. Upon receipt of an Accommodation Notice, the 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 Accommodation Notice select an Interest Period for a Draft which ends after the Maturity Date or which conflicts with the repayments provided for in Section 2.8 or Section 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 29 - 25 - multiple of $100,000; (ii) shall be dated the date of the Drawing; and (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. 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 Accommodation; (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 Agent of the purchase price of all Bankers' Acceptances created hereunder on the Drawing Date for such Bankers' Acceptances. The 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 arithmetic 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 such Bank to the Agent and advised by the Agent to the Borrower and such purchase price shall be paid and satisfied by such Bank making payment to the Agent in the amount of such purchase price less the applicable Drawing Fee. The Agent shall disburse the amounts made available to the 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 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 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 30 - 26 - 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 an Accommodation Notice is given in accordance with Section 2.2 or Section 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 an Accommodation 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 an Accommodation Notice in accordance with Section 2.2 or Section 2.3 hereof (including in accordance with the period for notice set forth in Section 2.2 or Section 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 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 Section 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 Section 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 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 Agent so notifies the Borrower. Any Accommodation 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 Accommodation Notice requesting a Prime Rate Advance in the principal amount equal to the requested Face Amount in such Accommodation Notice. 31 - 27 - (j) Draft Forms. (i) Authorization Regarding Drafts. In order to facilitate the issuance of Bankers' Acceptances pursuant to this Agreement, the Borrower hereby authorizes each of the Banks to complete, sign and endorse Drafts on its behalf in hand-written form or by facsimile or mechanical signature or otherwise and, once completed, signed and endorsed to accept them as Bankers' Acceptances under this Agreement. Drafts so completed, signed, endorsed and negotiated on behalf of the Borrower by the Banks shall bind the Borrower as fully and effectively as if those acts were performed by an authorized officer of the Borrower. (ii) Safekeeping of Drafts. Any executed Drafts to be used for Bankers' Acceptances which are held by any Bank need only be held in safekeeping with the same degree of care as if they were that Bank's own property and that Bank was keeping them at a place at which they are to be held. The Borrower shall, by written notice to the Agent, designate the Persons authorized to give the Agent and each Bank instructions regarding the manner in which the Bankers' Acceptances are to be completed and the times at which they are to be issued. Neither the Agent nor the Banks or any of their respective directors, officers, employees or representatives shall be liable for any action taken or omitted to be taken by any of them under this Section except for their own gross negligence or wilful misconduct. 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. 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 32 - 28 - 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 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 Section 6.2 hereof, as the case may be, are furnished to the Agent and each Bank for such fiscal quarter, as follows:
COLLATERALIZED UNCOLLATERALIZED COLLATERALIZED PRIME RATE UNCOLLATERALIZED BANKERS' BANKERS' ACCEPTANCES ADVANCES PRIME RATE ADVANCE ACCEPTANCES LEVERAGE RATIO APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN - -------------------------------- -------------------- ----------------- ------------------ ----------------- A. Greater than or equal to 0.500% 0.00% 2.500% 4.000% 6.00:1 B. Greater than or equal to 0.500% 0.00% 1.500% 3.000% 4.00:1, but less than 6.00:1 C. Less than 4.00:1 0.500% 0.00% 0.500% 2.000%
Notwithstanding the foregoing, if the Borrower shall fail to timely deliver to the 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. 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 the Restatement Date until the Maturity Date at the rate of one percent (1.000%) per annum, and (ii) a commitment fee on the aggregate unborrowed unavailable balance of the Commitment, for each day from the Restatement Date 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 33 - 29 - 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. (a) Commencing March 31, 2002 and at the end of each fiscal quarter thereafter, the Uncollateralized Portion of the Commitment as in effect on March 30, 2002, shall be automatically and permanently reduced by the amounts set forth below:
QUARTERLY REDUCTION OF THE UNCOLLATERALIZED PORTION OF THE DATES OF COMMITMENT REDUCTION COMMITMENT IN EFFECT ON MARCH 30, 2002 ------------------------------------------------------ -------------------------------------- March 31, 2002, June 30, 2002, September 30, 2002 and December 31, 2002 $ 195,000.00 March 31, 2003, June 30, 2003, September 30, 2003 and December 31, 2003 $1,170,000.00 March 31, 2004, June 30, 2004 and September 30, 2004 $2,340,000.00 December 31, 2004 remainder
(b) Commencing with the fiscal year ending December 31, 1999, and for each fiscal year thereafter, concurrently with the delivery of the financial statements referred to in Section 6.1(b) in respect of the final quarter of each such fiscal year, the Uncollateralized Portion of the Commitment as in effect at the end of such fiscal year, shall be automatically and permanently reduced by an amount equal to 50% of the Borrower's Free Cash Flow for the immediately preceding fiscal year (provided that any such reduction shall be subject to adjustment based on the financial statements delivered in accordance with Section 6.2). The amount of any such reduction of the Uncollateralized Portion of the Commitment shall be applied to the reductions required under Section 2.8(a) in inverse order of maturity. 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 34 - 30 - 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 by giving the Agent at least three (3) Business Days' prior written notice of such prepayment, such notice to be in the form of a Repayment Notice. 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 Agent and the Banks at least three (3) Business Days' prior written notice thereof, such notice to be in the form of a Repayment Notice; 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). Any reduction of the Commitment effected pursuant to this Section 2.9(b) shall be applied pro rata as between the Uncollateralized Portion of the Commitment and the remaining portion of the Commitment. 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, provide the Agent with a Repayment Notice and 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 would require a prepayment of any Bankers' Acceptance, the Borrower shall make an interest-bearing deposit with the Agent in the Face Amount of such Bankers' Acceptances and hereby irrevocably authorizes and 35 - 31 - directs the 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 Agent. The failure of the Agent to correctly record any amount or date shall not, however, affect the obligation of the Borrower to pay amounts due hereunder to the 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 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 Agent at the Agent's Office, for the account of the Banks or the Agent, as the case may be, in lawful Canadian currency in immediately available funds. Any payment received by the Agent after 1:00 p.m. (Toronto time) shall be deemed received on the next Business Day. Receipt by the 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 Agent will promptly thereafter distribute the amount so received in like funds to such Bank. If the Agent shall not have received any payment from the Borrower as and when due, the Agent will promptly notify the Banks accordingly. 36 - 32 - (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 Agent with respect to the Obligations, the 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 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 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. (d) On the date of any Accommodation or the maturity thereof, including the date of any extension or conversation of any Accommodation (the "Transaction Date"), the Agent shall be entitled to net amounts payable in one currency on such Transaction Date by the Agent to a Bank against amounts payable in the same currency on such Transaction Date by such Bank to the Agent for the account of the Borrower. Similarly, on any Transaction Date, the Borrower hereby authorizes each Bank to net amounts payable in one currency on such date by such Bank to the Agent, for the account of the Borrower, against amounts payable in the same currency on such date by the Borrower to the Agent, for the account of such Bank, in accordance with the Agent's calculations made in accordance with the provisions of this Agreement. SECTION 2.13 REIMBURSEMENT. (a) Upon the earlier of demand or the Maturity Date, the Borrower shall pay to the Agent or the Banks such amount or amounts as will compensate the Agent or the Banks for any loss, cost or expense incurred by them 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 Agent's or Banks' rights hereunder in respect of such Bankers' Acceptance, including legal proceedings attempting to restrain the 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 wilful misconduct of the 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. 37 - 33 - (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 rateably 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 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 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 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 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 38 - 34 - under Interest Rate Hedge Agreements, pro rata on the basis of the amount of such Obligations; fifth, to damages incurred by the 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 effectiveness of this Agreement and the obligation of the Banks to make Accommodations hereunder are subject to the prior or contemporaneous fulfilment of each of the following conditions: (a) The Agent and the Banks shall have completed their due diligence investigation and examination of the Borrower's operation and affairs and shall have determined, in their sole discretion, acting reasonably, that the results of such investigation and examination are satisfactory, including, without limitation, in respect of matters relating to (i) current business plans, (ii) financial projections, and (iii) the operations of the Borrower Group on a consolidated basis; (b) The Agent and the Banks shall have received each of the following: (i) the loan certificate of the Borrower dated as of the Restatement Date, in substantially the form attached hereto as Exhibit D, 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 Restatement Date, or confirmation that there have been no amendments to such articles and by-laws since 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 Restatement 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, 39 - 35 - complete and correct copy of the Certificate and Articles of Incorporation and by-laws of such Person as in effect on the Restatement Date, or confirmation that there have been no amendments to such articles and by-laws since the Agreement Date, (B) 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, (C) a true, complete and correct copy of the corporate resolutions of such Person authorizing such Person to execute, deliver and perform the Loan Documents to which it is party and the transactions contemplated 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 such Person; (iii) duly executed acknowledgements and confirmations from the Borrower and any of its Affiliates that had previously granted security in connection with this Agreement prior to its amendment and restatement, that such security (A) remains in full force and effect, unamended, and (B) secures the obligations of the Borrower under this Agreement (it being acknowledged that no such document is required from Paging Network, Inc. because it has been released from any obligations it had in connection with security it previously delivered); (iv) evidence of the registration and continued 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 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) a legal opinion of Blake Cassels & Graydon, Canadian counsel to the Borrower and its Subsidiaries, addressed to each Bank and the Agent, and dated as of the Restatement Date; (vii) audited year-end financial statements of the Borrower and its Subsidiaries on a consolidated basis for the fiscal year ending December 31, 1998, and unaudited financial statements for the Borrower Group on a combined basis for the fiscal year ending December 31, 1998 and the fiscal quarter ending March 31, 1999, certified by (A) in the case of the audited statements, an independent auditor acceptable to the Agent, and (B) in the case of the unaudited statements, the Chief Financial Officer or the Chief Executive Officer of the Borrower; 40 - 36 - (viii) lien search results with respect to the Borrower and its Subsidiaries from appropriate jurisdictions; and (ix) all such other documents as the Agent or any Bank may reasonably request, certified by an appropriate governmental official or an Authorized Signatory if so requested. (c) The 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 Agent and the Banks shall have received a certificate of an Authorized Signatory so stating. (d) The Borrower shall certify to the 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. (e) There shall not exist as of the Restatement 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 Agent, could be expected to have a Materially Adverse Effect. (f) No event shall have occurred and no condition shall exist which, in the judgment of the Agent, has had or could be expected to have a Materially Adverse Effect. (g) The 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. (h) The Agent and the Banks shall have received all agreements entered into, in connection with the Business, by PageNet and Madison Venture Corporation and their respective Subsidiaries, which agreements shall be in form and substance satisfactory to the Agent and the Banks and shall each be collaterally assigned to the Agent for the benefit of the Banks. (i) The Agent and the Banks and their counsel shall have received payment of all fees due and payable on the Restatement Date. SECTOPM 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS. The obligation of the Banks to make any Accommodation hereunder is subject to the fulfilment of each of the following conditions immediately prior to or contemporaneously with such Accommodation satisfactory to the Majority Banks: 41 - 37 - (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 outstanding hereunder, the Agent shall have received a duly executed Accommodation Notice; (c) Each of the 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 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 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 SECTOPM 4.1 REPRESENTATIONS AND WARRANTIES. To induce each of the Banks to make Accommodations available hereunder, the Borrower hereby agrees, represents and warrants, upon the Restatement Date, and at all times thereafter as required pursuant to Section 3.2 and Section 4.2 hereof, in favour of the 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 42 - 38 - 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 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 Restatement 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 or causing the direction of the management and policies of each Subsidiary. 43 - 39 - (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 Subsidiaries has full legal right to mortgage, pledge, charge and assign to the Agent for the benefit of itself and the Banks the Collateral to the 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 44 - 40 - 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 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 Agent and the Banks financial information for the Borrower and its Subsidiaries, and the Borrower Group, all of which, together with other financial statements furnished to the Banks subsequent to the Restatement 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, or the Borrower Group, on a combined 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 45 - 41 - 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, 1998, 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 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 non-exempt "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 46 - 42 - 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 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 Restatement 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, 47 - 43 - officers or employees which the Borrower has not disclosed to the 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 Agent or any Bank, the Security Interest is a valid and perfected first priority security interest in the Collateral in favour of the 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 Restatement Date, any Indebtedness for Money Borrowed other than the Obligations hereunder. (u) Solvency. As of the Restatement 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 48 - 44 - 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 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) Material Agreements. 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. (y) Year 2000 Warranty. (i) The Borrower and its Subsidiaries have reviewed and assessed the potential impact of the Year 2000 issue on all areas of their critical businesses and operations (including those areas that may be affected by, or interfaced with, third party suppliers and clients); (ii) The Borrower and its Subsidiaries have prepared and are implementing a Year 2000 Plan, the particulars of which are appended hereto at Schedule 5, which schedule also accurately sets out the current status of activities under the Year 2000 Plan; (iii) Subject to Third Party Factors, the Year 2000 Systems of the Borrower and its Subsidiaries shall be Year 2000 Ready prior to December 31, 1999; (iv) The cost to the Borrower (on a consolidated basis) of completing the steps necessary for the Year 2000 Systems of the Borrower and its Subsidiaries to be Year 2000 Complaint will not result in a Default, and are not expected, in the reasonable opinion of the Borrower, to have a Materially Adverse Effect on the Borrower and its Subsidiaries, taken as a whole; provided that this representation and warranty shall not extend to any costs relating to steps to be taken by Third Parties to deal effectively with Third Party Factors; and 49 - 45 - (v) The Borrower and its Subsidiaries have taken reasonable commercial efforts, consistent with the importance of succeeding therein to the continued operation of the business of the Borrower and its Subsidiaries in the ordinary course, to assess, monitor and respond to the Third Party Factors in order to minimize the impact of Third Party Factors on the ability of the Borrower and its Subsidiaries to have their Year 2000 Systems Year 2000 Ready prior to December 31, 1999. 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 Restatement 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 Restatement 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 Agent, any investigation or inquiry by any Bank or the 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 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: 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. 50 - 46 - 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 acceptable to the Agent and the Banks, showing the 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 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 51 - 47 - 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 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 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 Labour 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 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 Agent's request therefor, such additional information concerning any such Employee Pension Plan as may be reasonably requested by the Agent or any Bank. (c) The Borrower will promptly notify the 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, 52 - 48 - any of its Subsidiaries or any of its ERISA Affiliates by the Internal Revenue Service or the Department of Labour 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 Agent and the Banks of any lien arising under Section 302(f) of ERISA in favour 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 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 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 53 - 49 - 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 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 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 Agent as a secured party or assignee, at all times take all action and supply the Agent with all information necessary to maintain the Liens provided for under the Security Documents and confer upon the Agent the security interests intended to be created thereby. SECTION 5.12 ENVIRONMENTAL AUDITS. Promptly if requested by the Agent: (i) if a Default has occurred and is continuing or the 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 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 54 - 50 - such environmental audits to the Agent; (ii) if the 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 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 Agent; and (iii) diligently remedy any material non-compliance with Environmental Laws revealed by any such audit. SECTION 5.13 FURTHER ASSURANCES. At its cost and expense, upon request of the Agent, the Borrower will duly execute and deliver or cause to be duly executed and delivered to the 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 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 Agent, at their respective offices: SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION. Within forty-five (45) days after the last day of each fiscal quarter of the Borrower during any fiscal year: (a) a copy of the balance sheets of (i) the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries, and (ii) the Borrower Group on a combined basis, in each case as at the end of such quarter and as of the end of the preceding fiscal year; and (b) the related statements of operations and the related statements of cash flows of (i) the Borrower on a consolidated basis with its Subsidiaries, and (ii) the Borrower Group on a combined basis, in each case for such quarter and for the elapsed portion of the year ended with the last day of such quarter, all of 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 (x) the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries, and (y) the Borrower Group on a combined basis, in each case as at the end of such quarter and the results of 55 - 51 - 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) a copy of the audited consolidated and consolidating (unconsolidated) balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal year and for the previous fiscal year and the related audited consolidated and consolidating (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 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; and (b) for the Borrower Group on a combined basis, a balance sheet as of the end of such fiscal year and for the previous fiscal year and the related statement of operations for such fiscal year and for the previous fiscal year, the related statements of cash flow and stockholders' equity for such fiscal year and for the previous fiscal year, which may be prepared on an unaudited basis, but must 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 Group as at the end of such fiscal year and the results of operations for such fiscal year, subject only to normal year-end and audit adjustments and the absence of footnotes. SECTION 6.3 PERFORMANCE CERTIFICATES. At the time the financial statements are furnished pursuant to Section 6.1 and Section 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 F 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 Section 7.8, Section 7.9, Section 7.10, Section 7.11, Section 7.12, Section 7.13 and Section 7.14 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 56 - 52 - 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 business prospects of the Borrower or any of its Subsidiaries, as the 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. (i) 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: (ii) 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; 57 - 53 - (iii) 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; (iv) any material amendment or change to the financial projections or annual budget provided to the Banks by the Borrower; (v) 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 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 (vi) 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 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. 58 - 54 - 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 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 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 Agent as security for the Obligations; (f) Capitalized Lease Obligations in an aggregate amount not to exceed $500,000 at any time outstanding; (g) Indebtedness of the Borrower to MadTel Holdings so long as (i) the Indebtedness is not secured by any Lien, (ii) the corresponding debt instruments are assigned to the Agent as security for the MadTel Holdings Obligations, and (iii) any such Indebtedness is fully postponed to the Obligations. In this regard, prior to incurring any such Indebtedness, the Agent shall receive a specific assignment of receivables from MadTel Holdings, which will include a postponement from MadTel Holdings, together with any additional documentation and opinions required by the Agent, all in form and substance satisfactory to the Agent, in its sole discretion; and (h) Indebtedness of the Borrower to PNII, PNNV or PNCHI so long as (i) the Borrower is a wholly-owned Subsidiary of PNII, PNNV or PNCHI, as the case may be, (ii) the Indebtedness is not secured by any Lien, (iii) the Agent receives a limited recourse guaranty from PNII, PNNV or PNCHI, as the case may be, (iv) 59 - 55 - the corresponding debt instruments are assigned to the Agent as security for the obligations of PNII, PNNV or PNCHI, as the case may be, under their respective guaranties, (v) any such Indebtedness is fully postponed to the Obligations, and (vi) the Agent shall have received any additional documentation and opinions which it deems appropriate in respect of, inter alia, corporate existence, and due authorization, execution, delivery and enforceability of the guaranties referred to in this Section 7.1(h). In this regard, prior to incurring any such Indebtedness, the Agent shall receive a limited recourse guaranty from the creditors referred to in this Section 7.1(h), which will include an assignment and postponement from such creditors, together with any additional documentation and opinions required by the Agent, all in form and substance satisfactory to the Agent, in its sole discretion. 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 Agent or any Bank or any of their rights or claims under any of the Loan Documents). 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. 60 - 56 - 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) distributions to PNII, PNNV or PNCHI so long as the Leverage Ratio is below 4.00 to 1 (both before and after giving effect to such distribution), and (b) payments of principal of any Indebtedness referred to in Section 7.1(g) hereof. SECTION 7.8 LEVERAGE RATIO. Commencing January 1, 2001, the Borrower shall not permit the Leverage Ratio to exceed the ratios set forth below during the periods indicated:
PERIOD RATIO --------------------------------------------------------- ------ January 1, 2001 through June 30, 2001 6.00:1 July 1, 2001 through September 30, 2001 5.00:1 October 1, 2001 through December 31, 2001 4.50:1 January 1, 2002 through March 31, 2002 4.00:1 April 1, 2002 and thereafter 3.50:1
61 -57- SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE. Commencing April 1, 2000, the Borrower shall not permit the ratio of Annualized Operating Cash Flow to Interest Expense for the Borrower Group on a combined basis to be less than the ratios set forth below for the periods indicated:
PERIOD RATIO ------------------------------------------- ------ April 1, 2000 through June 30, 2001 1.00:1 July 1, 2001 through June 30, 2002 1.25:1 July 1, 2002 and thereafter 1.50:1
Solely for purposes of calculating the ratio referred to in this Section 7.9, Interest Expense shall not include, as of any date, interest expense relating to that portion of the Commitment that is not the Uncollateralized Portion of the Commitment. 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 $150.00. SECTION 7.11 CAPITAL EXPENDITURES. The Borrower shall not permit the aggregate Capital Expenditures for the Borrower Group on a combined basis to exceed the following for the fiscal years indicated:
PERIOD RATIO ------------------------------------ ------ At December 31, 1999 $15,000,000.00 At December 31, 2000 $15,000,000.00 At December 31, 2001 $15,000,000.00 At December 31, 2002 and thereafter $10,000,000.00
No amount of unused Total Capital Expenditure availability may be carried forward from 1998 to 1999 or subsequent fiscal years. Commencing in 1999, 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) 15% of the Total Capital Expenditure availability shown above (exclusive of any carry forwards from prior periods) for such fiscal year, may be carried forward, in whole or in part, to subsequent fiscal years until fully utilized. 62 - 58 - SECTION 7.12 MINIMUM REVENUE TEST. Commencing March 31, 1999 and continuing for each fiscal quarter through the fiscal quarter ending December 31, 2001, 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 ------------------ ------------------- 03/31/99 $5,000,000 06/30/99 $5,000,000 09/30/99 $5,750,000 12/31/99 $6,250,000 03/31/00 $7,000,000 06/30/00 $7,000,000 09/30/00 $7,000,000 12/31/00 $7,000,000 03/31/01 $9,000,000 06/30/01 $9,000,000 09/30/01 $9,000,000 12/31/01 $9,000,000
SECTION 7.13 MINIMUM UNITS IN SERVICE. Commencing June 30, 1999 and continuing for each fiscal quarter through the fiscal quarter ending December 31, 2001, the Borrower shall not permit the minimum number of Units in Service to be less than the following for the fiscal quarters indicated:
MINIMUM UNITS QUARTER ENDING IN SERVICE ------------------ ------------------- 06/30/99 245,000 09/30/99 260,000 12/31/99 260,000 03/31/00 275,000 06/30/00 275,000 09/30/00 300,000 12/31/00 300,000 03/31/01 350,000 06/30/01 350,000 09/30/01 400,000 12/31/01 400,000
SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST Commencing September 30, 1999 and continuing for each fiscal quarter through the fiscal quarter ending December 31, 2001, the Borrower shall not permit the aggregate Operating Cash Flow for the Borrower Group on a combined basis to be less than the following for the fiscal quarters indicated: 63 - 59 -
MINIMUM OPERATING QUARTER ENDING CASH FLOW ------------------ --------------------- 09/30/99 $250,000 12/31/99 $575,000 03/31/00 $975,000 06/30/00 $975,000 09/30/00 $975,000 12/31/00 $975,000 03/31/01 $1,200,000 06/30/01 $1,200,000 09/30/01 $1,200,000 12/31/01 $1,200,000
SECTION 7.15 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 7.16 REAL ESTATE. Neither the Borrower nor any of its Subsidiaries shall purchase any Real Estate or enter into any sale/leaseback transaction. SECTION 7.17 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; 64 - 60 - (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 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 Section 5.2 or Section 5.10 or in Article 6 or Article 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 Agent pursuant to the Deposit Agreement, the failure to comply with Section 7.12, Section 7.13 or Section 7.14 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 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) 65 - 61 - 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 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 66 - 62 - 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 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 (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 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 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 Agent shall become and be enforceable. 67 - 63 - (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 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 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 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 Agent on behalf of the Banks, in connection therewith. (e) The rights and remedies of the Agent and the Banks hereunder shall be cumulative, and not exclusive. ARTICLE 9 THE 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 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 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 wilful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. SECTION 9.2 INTEREST HOLDERS. The Agent may treat each Bank, or the Person designated in the last notice filed with the 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 68 - 64 - in the last notice filed with the Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the Agent, shall have been filed with the Agent. SECTION 9.3 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel selected by it and shall not be liable to the Banks for any action taken or suffered by it in good faith in consultation with such counsel and in reasonable reliance on such consultations. SECTION 9.4 DOCUMENTS. The 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 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 AGENT AND AFFILIATES. With respect to the Commitment and the Accommodations, the Bank which is the Agent shall have the same rights and powers hereunder as any other Bank and the Agent and Affiliates of the 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 Agent and without any obligation to account therefor. SECTION 9.6 RESPONSIBILITY OF THE AGENT. The duties and obligations of the Agent under this Agreement are only those expressly set forth in this Agreement. The 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 Agent shall not be liable hereunder for any action taken or omitted to be taken except for its own gross negligence or wilful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. The 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 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 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. 69 - 65 - SECTION 9.8 ACTION BY THE AGENT. (a) The 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 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 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 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 wilful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. (b) The 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 Agent shall not be obligated to take any action which is contrary to Applicable Law or which would in the Agent's reasonable opinion subject the Agent to liability. SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT. In the event that the Agent or any Bank shall acquire actual knowledge, or shall have been notified, of any Default or Event of Default, the Agent or such Bank shall promptly notify the Banks and the Agent, as applicable (provided failure to give such notice shall not result in any liability on the part of such Bank or the Agent), and the 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 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) shall fail to request the 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 Agent or any Bank, the Agent may, but shall not be required to, take such action and assert such rights (other than rights under Section 8.2(a) or Section 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 Agent not to take such action or assert such right, in no event shall the Agent act contrary to such instructions. 70 - 66 - SECTION 9.10 RESPONSIBILITY DISCLAIMED. The Agent shall not be under any liability or responsibility whatsoever as 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 wilful misconduct of the 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 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 asserted against the 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 Agent under this Agreement or any other Loan Document, except that no Bank shall be liable to the Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the gross negligence or wilful misconduct of the 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 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 Agent or information provided by the Agent (other than information provided to the Agent by the Borrower and forwarded by the Agent to the Banks); and 71 - 67 - (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 AGENT. Subject to the appointment and acceptance of a successor Agent as provided below, the 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 Agent. If no successor Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Agent gave notice of resignation or the Majority Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor 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 acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, duties and obligations of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. After any retiring Agent's resignation or removal hereunder as 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 Agent. SECTION 9.14 DELEGATION OF DUTIES. The 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 AGENT CONCLUSIVE AND BINDING. Any determination to be made by the Agent on behalf of or with the approval of the Banks or the Majority Banks under this Agreement shall be made by the 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 Agent or any of the Banks with any direction, request or requirement (whether or not having the force of Applicable Law) 72 - 68 - of any Governmental Entity made or becoming effective after the date hereof, in either case shall have the effect of causing Loss to the Agent or any of the Banks by: (i) increasing the cost to the 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 capital, reserve or special deposit requirements in connection therewith); (ii) requiring the 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 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 Agent's or any Bank's income in general); or (iv) causing the 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 Agent or any of the Banks under this Agreement in respect of any Advance or Bankers' Acceptance; then the 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 Agent may specify to be necessary to compensate the Agent or any of the Banks for any such Loss incurred after the date of such notice. The 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 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 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 73 - 69 - 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 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 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. (f) 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. 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 Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and franchise taxes. If the Borrower 74 - 70 - shall be required by Law to deduct any Taxes from or in respect of any sum payable to the Agent or any Bank hereunder or pursuant to any of the Loan Documents, the sum payable to the 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 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 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 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 Agent or such Bank, the 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 Agent or such Bank under this Section 10.3(a); and (b) to indemnify and hold harmless the Agent and each Bank for the full amount of Taxes (excluding, in the case of the 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 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 Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and 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 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 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 co-operate with the Borrower, at the expense of the Borrower, in any dispute of such assessment. The 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 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 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 75 - 71 - rate of exchange used shall be that at which in accordance with normal banking procedures the 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 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 Agent of any sum adjudged to be so due or owing in such Other Currency, the 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 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 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 Agent or such Bank in the Original Currency, the 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 10.1 or Section 10.3 hereof (each such Bank being an "Affected Bank"), the Borrower may designate a replacement Canadian chartered bank reasonably acceptable to the 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 76 - 72 - 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 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. 14911 Quorum Drive Dallas, Texas 75240 Attn: Chief Financial Officer Telecopy No.: (972) 801-8973 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 Venture Corporation 1970 Alberta Street Vancouver, British Columbia V5Y 3X4 Attn: Mr. Bruce W. Aunger Telecopy No.: (604) 879-1483 John Schmidt, Esq. Mayer, Brown & Platt 190 South La Salle Street Chicago, Illinois 60603-3441 Telecopy No.: (312) 701-7711 77 - 73 - Blake Cassels & Graydon Commerce Court West 2800 - 199 Bay Street Toronto, Ontario M5L 1A9 Attn: Mr. Rob Granatstein Telecopy No.: (416) 863-2653 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 Agent, to it at: Toronto Dominion Bank Tower, 9th Floor Toronto Dominion Centre Toronto, Ontario M5K 1A2 Attn: Manager, Agency Telecopy No.: (416) 982-5535 (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 Repayment Notice shall be irrevocable and binding on the Borrower. With respect to any Accommodation Notice or Repayment Notice, the 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 or Repayment Notice. In the event of conflict between the Agent's record of the applicable terms of any Accommodation or repayment and such Accommodation Notice or Repayment Notice, as the case may be, the 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: (a) all reasonable and customary out-of-pocket expenses of the 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 78 - 74 - Advance is made), including, but not limited to, the reasonable fees and disbursements of counsel for the Agent; (b) all reasonable and customary out-of-pocket expenses of the 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 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 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 Agent and the Banks. SECTION 11.3 WAIVERS. The rights and remedies of the 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 Agent, the Majority Banks, or the Banks, or any of them, in exercising any right, shall operate as a waiver of such right. The 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 an Accommodation Notice. In the event the Banks decide to fund an Accommodation Notice 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 Accommodation Notice or preclude the Banks or the Agent from exercising any rights available under the Loan Documents or at law or equity. Any waiver or indulgence granted by the 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 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 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 Agent shall have 79 - 75 - made any demand under any of the Loan Documents and although such Obligations may be unmatured. The Agent or such Bank agrees promptly to notify the Borrower after any such combination or set-off and application made by the 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 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 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 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 prior written notice to the 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) 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 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. For greater certainty, the Agent shall have no obligation to communicate or have any involvement with any Participant. (d) Without limitation of its obligations hereunder, the Borrower shall, at its sole cost and expense, give such certificates, acknowledgements 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 G 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. 80 - 76 - (f) Any Bank shall deliver to the Agent an Assignment and Assumption Agreement substantially in the form of Exhibit G 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. Any such assignment and assumption shall become effective upon the consent of the Borrower if and to the extent required pursuant to Section 11.5(b) and the receipt by the Agent of an Assignment and Assumption Agreement executed by the assigning Bank and the Assignee. In no event shall such assignment and assumption become effective until such date as specified in the Assignment and Assumption Agreement (the "Effective Date") which shall be no earlier than five Business Days following receipt of an Assignment and Assumption Agreement by, and the payment of an administrative fee of $5,000 to, the Agent by the assigning Bank. On the Effective Date, 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 from 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 and assumption. 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 judgement or in any other manner provided by Applicable Law. 81 - 77 - 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 or 365 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 or 365 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 or 365; (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 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 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. 82 - 78 - 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 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 Section 2.6 or Section 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 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 Agent solely to any of the Banks may be made only by an instrument in writing signed by the 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 Restatement 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 Restatement 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 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. 83 - 79 - 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 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 Section 2.13, Section 10.1, Section 10.2, Section 10.3 and Section 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 Agent and each of the Banks hereunder are several, not joint. SECTION 11.19 CONFIDENTIALITY. The Banks and the Agent 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 and the Agent 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 or the Agent; 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 84 - 80 - legal process, the disclosing Bank or the Agent shall give notice of such disclosure to the Borrower and co-operate with the Borrower in any efforts to limit or restrict such disclosure. In no event shall any Bank or the Agent be obligated or required to return any materials furnished to it by the Borrower. The foregoing provisions shall not apply to a Bank or the Agent with respect to information that (i) is or becomes generally available to the public (other than through such Bank or the Agent), (ii) is already in the possession of such Bank or the Agent on a nonconfidential basis, or (iii) comes into the possession of such Bank or the Agent in a manner not known to such Bank or the Agent 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. 85 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: GARRY R. FITZGERALD ------------------------------------ Its: President and Chief Executive Officer ------------------------- AGENT: THE TORONTO-DOMINION BANK By: MICHAEL A. FREEMAN ------------------------------------ Its: Manager-Agency, Syndicated Loans ------------------------- BANKS THE TORONTO-DOMINION BANK ADDRESS: 9th Floor By: JOHN DAVID Toronto Dominion Bank Tower ------------------------------------ Toronto Dominion Centre Its: Manager Toronto, Ontario M5K 1A2 ------------------------- ADDRESS: 181 Bay Street By: KEN KLASSEN 8th Floor ------------------------------------ Toronto, Ontario Its: Assistant Vice President M5J 2S8 ------------------------- CANADIAN IMPERIAL BANK OF COMMERCE By: ANDREW WALLER ------------------------------------ Executive Director By: MAURO SPAGNOLO ----------------------------------- Director ADDRESS: NATIONAL BANK OF CANADA 150 York Street By: WILLIAM CROSSLAND Suite 200 ------------------------------------ Toronto, Ontario Its: Senior Manager M5H 3S5 ------------------------- By: WILLIAM WASSON ------------------------------------ Its: Manager ------------------------- 86 EXHIBIT A COMMITMENT RATIOS The Toronto-Dominion Bank 44.9541284% Canadian Imperial Bank of Commerce 32.1100917% National Bank of Canada 22.9357799%
87 EXHIBIT B ACCOMMODATION NOTICE 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 Amended and Restated Loan Agreement (as in effect on the date hereof, the "Loan Agreement"), dated as of August 5, 1999, among the various financial institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank, as Agent (the "Agent"), and the Borrower, hereby certifies to the Agent and the Banks that: 1. The Borrower hereby requests an Accommodation as follows: (a) Date -------------------- (b) Aggregate Amount of Accommodation: $ -------------------- (c) Type and Amount of Accommodation:
- -------------------------------------------------------------------------------- (i) COLLATERALIZED PRIME RATE AMOUNT CONVERTED FROM ADVANCE (IF APPLICABLE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- (ii) UNCOLLATERALIZED PRIME AMOUNT CONVERTED FROM RATE ADVANCE (IF APPLICABLE) - -------------------------------------------------------------------------------- $ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- (iii) COLLATERALIZED BANKERS' ACCEPTANCES - -------------------------------------------------------------------------------- CONVERTED FROM FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE) - -------------------------------------------------------------------------------- Cdn. $ Cdn. $ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
88 -2-
- -------------------------------------------------------------------------------- (iv) UNCOLLATERALIZED BANKERS' ACCEPTANCES - -------------------------------------------------------------------------------- CONVERTED FROM FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE) - -------------------------------------------------------------------------------- Cdn. $ Cdn. $ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
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 Accommodation Notice 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 Accommodation 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, 1998. 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 Accommodation 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 Accommodation Notice, as of _____ the day of _______________, ____. PAGING NETWORK OF CANADA INC., a Canada corporation By: -------------------------------------- Its: ------------------------------------- Schedule 1 - Wiring Instructions Schedule 2 - Compliance Calculations 89 EXHIBIT C FORM OF REPAYMENT NOTICE [DATE] TO: THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT (1) This Repayment Notice is delivered to you pursuant to Section o of that certain amended and restated loan agreement made as of August 5, 1999 among the undersigned as Borrower, the Banks named therein, and you, as amended or amended and restated from time to time (the "Loan Agreement"). All defined terms set forth in this Repayment Notice shall have the respective meanings set forth in the Loan Agreement. (2) We hereby give notice of a repayment as follows: (a) Date of Repayment: ------------------------------------------------------ (b) Accommodation Type: ----------------------------------------------------- (c) Principal Amount: ------------------------------------------------------- (d) Manner of Repayment (if applicable): ------------------------------------ (3) We hereby give notice of a cancellation or permanent reduction as follows: (a) Date of Reduction: ------------------------------------------------------ (b) Principal Amount: ------------------------------------------------------- DATED this _________ day of ____________________, 19[YEAR]. PAGING NETWORK OF CANADA INC. By: -------------------------------------- Its: ------------------------------------- 90 EXHIBIT D 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 Amended and Restated Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as bookrunner, arranger and administration agent (the "Agent), and The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of Canada and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the 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. 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 - ----------------------- --------------------------------- ---------------- - ----------------------- --------------------------------- ---------------- - ----------------------- --------------------------------- ---------------- - ----------------------- --------------------------------- ----------------
91 -2- 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 ________________, ____. 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 92 EXHIBIT E 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 Amended and Restated Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as bookrunner, arranger and administration agent (the "Agent), and The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of Canada and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the 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. 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 - ----------------------- --------------------------------- ---------------- - ----------------------- --------------------------------- ---------------- - ----------------------- --------------------------------- ---------------- - ----------------------- --------------------------------- ----------------
93 -2- 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 ________________, 1999. [___________________ 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 94 EXHIBIT F 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 Interest Expense (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) (g) Section 7.14 - Minimum Operating Cash Flow 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] 95 EXHIBIT G 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 bookrunner, arranger and administration agent (the "Agent"), are parties to a certain Amended and Restated Loan Agreement dated as of August 5, 1999 (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"). 2. Notice. Prior written notice of the assignment made herein has been given to the Agent. 3. Representations and Warranties. Each of the Assignor and the Assignee represents and warrants to the other, to the 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 96 -2- 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 fulfilment 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 Agent and hereby instructs the Borrower to make payments with respect to the Assigned Accommodations and the Assigned Commitment directly to the Agent for the benefit of the Assignee as provided in the Loan Agreement; provided, however, that the Borrower and the Agent shall be entitled to continue to deal solely and directly with the Assignor in connection with the interests so assigned until the Agent shall have received a copy of this Assignment and Assumption Agreement duly executed by the Assignor, the Assignee, the 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, 97 -3- 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. Effective Date. This Agreement will be effective on the date that is the later of: (i) the date hereof; and (ii) five Business Days following receipt of an executed copy of this Agreement by, and the payment of an administrative fee of $5,000 to, the Agent by the Assignor. 8. 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. 9. 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. 10. 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. 11. 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. IN WITNESS WHEREOF, the Assignor and Assignee have executed, sealed and delivered this Agreement as of the date first above written. [ASSIGNOR] By: -------------------------------------- Title: 98 -4- [ASSIGNEE] By: -------------------------------------- Title: The undersigned hereby acknowledge the assignment made herein. THE TORONTO-DOMINION BANK, as Agent By: -------------------------------- Title PAGING NETWORK OF CANADA INC., a Canada corporation By: -------------------------------- Title 99 SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT RELATING TO AMENDED AND RESTATED LOAN AGREEMENT AMONG PAGING NETWORK OF CANADA INC., THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" THEREUNDER, AND THE TORONTO-DOMINION BANK, AS AGENT DATED AS OF AUGUST 5, 1999 Item 1. Assignor's Commitment: $ ------------ Item 2. Assignor's Accommodations $ ------------ Item 3. Amount of Assigned Commitment $ ------------ Item 4. Amount of Assigned Accommodations $ ------------ Item 5. Applicable Lending Office of Assignee and Address for Notices under the Loan Agreement ---------------------------- ---------------------------- ---------------------------- ---------------------------- 100 NOTES TO SCHEDULE 1 1. Insert the dollar amount of Assignor's Commitment under the Commitment prior to assignment. 2. Insert the total amount of outstanding Accommodations of Assignor. 3. Insert the dollar amount of the Assignor's Commitment under the Commitment, including the outstanding Accommodations, being assigned. 4. Insert the total amount of the outstanding Accommodations of Assignor being assigned to Assignee. 5. Insert the name and address of the applicable lending office of the Assignee. 101 SCHEDULE 1 LICENSES (To Be Provided by the Borrower) 102 SCHEDULE 2 SECURITY DOCUMENTS 1. Debenture of the Borrower 2. Debenture Pledge Agreement of the Borrower 3. Collateral Hypothec of the Borrower 4. General Assignment of Book Debts of the Borrower 5. Guarantee of Paging Network Canadian Holdings, Inc. (re: securities pledge) 6. Securities Pledge Agreement by Paging Network Canadian Holdings, Inc. 7. Guaranty of Paging Network Canadian Holdings, Inc. (re: deposit agreement) 8. Deposit Agreement by Paging Network Canadian Holdings, Inc. 9. Guarantee of Paging Network Canadian Holdings, Inc. (with assignment of intercorporate debt and related liens) 10. Specific Assignment of Receivables by the Borrower 11. Security from the Borrower under Section 427 of the Bank Act 103 SCHEDULE 3 SUBSIDIARIES None 104 SCHEDULE 4 AGREEMENTS WITH AFFILIATES Madison Telecommunications Holdings Inc. Unanimous Shareholders' Agreement dated as of October 28, 1994, among Madison Venture Corporation, Paging Network, Inc. and Madison Telecommunications Holdings Inc. Amendment No. 1 to Unanimous Shareholders' Agreement dated as of October 26, 1995, among Madison Venture Corporation, Paging Network. Canadian Holdings, Inc., Madison Telecommunications Holdings Inc. and Paging Network, Inc. Network Co-ordination and Equipment Supply Agreement dated October 28, 1994, by and between Paging Network, Inc. and Madison Telecommunications Inc. Amendment No. 1 to Network Co-ordination and Equipment Supply Agreement dated October 26, 1995, by and between Paging. Network, Inc. and Madison Telecommunications Inc. Sales and Distribution Agreement dated October 28, 1994, by and between Madison Telecommunications Inc. and Paging Network of Canada Inc. Amendment No. 1 to Sales and Distribution Agreement dated October 26, 1995, by and between Madison Telecommunications Inc. and Paging Network of Canada Inc. 105 SCHEDULE 5 YEAR 2000 PLAN EX-10.25 3 AMENDED & RESTATED LOAN AGREEMENT-MADISON TELECOMM 1 EXHIBIT 10.25 AMENDED AND RESTATED LOAN AGREEMENT AMONG MADISON TELECOMMUNICATIONS HOLDINGS INC.(THE "BORROWER"); THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, NATIONAL BANK OF CANADA AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" HEREUNDER (COLLECTIVELY, THE "BANKS"); AND THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT FOR THE BANKS (THE "AGENT") TABLE OF CONTENTS
PAGE ARTICLE 1 DEFINITIONS.............................................................................................2 ARTICLE 2 CREDIT FACILITY........................................................................................19 SECTION 2.1 COMMITMENT............................................................................19 SECTION 2.2 UNCOLLATERALIZED PRIME RATE ADVANCES..................................................19 SECTION 2.3 COLLATERALIZED ADVANCES...............................................................20 SECTION 2.4 NOTIFICATION OF BANKS; DISBURSEMENT...................................................21 SECTION 2.5 BANKERS'ACCEPTANCES...................................................................23 SECTION 2.6 INTEREST; FEES........................................................................25 SECTION 2.7 FEES..................................................................................27 SECTION 2.8 MANDATORY COMMITMENT REDUCTIONS.......................................................27 SECTION 2.9 OPTIONAL PREPAYMENTS; COMMITMENT REDUCTIONS..........................................28 SECTION 2.10 MANDATORY REPAYMENTS..................................................................28 SECTION 2.11 EVIDENCE OF OBLIGATIONS; ACCOMMODATION ACCOUNTS.......................................29 SECTION 2.12 MANNER OF PAYMENT.....................................................................29 SECTION 2.13 REIMBURSEMENT.........................................................................30 SECTION 2.14 PRO RATA TREATMENT....................................................................31 ARTICLE 3 CONDITIONS PRECEDENT...................................................................................32 SECTION 3.1 CONDITIONS PRECEDENT TO AGREEMENT.....................................................32 SECTION 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS............................................34 ARTICLE 4 REPRESENTATIONS AND WARRANTIES.........................................................................35 SECTION 4.1 REPRESENTATIONS AND WARRANTIES........................................................35 SECTION 4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.......................................41 SECTION 4.3 NO REPRESENTATIONS BY BANKS...........................................................42 ARTICLE 5 GENERAL COVENANTS......................................................................................42 SECTION 5.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS.........................................42 SECTION 5.2 BUSINESS; COMPLIANCE WITH APPLICABLE LAW..............................................42 SECTION 5.3 MAINTENANCE OF PROPERTIES.............................................................42 SECTION 5.4 ACCOUNTING METHODS AND FINANCIAL RECORDS..............................................43
2 SECTION 5.5 INSURANCE.............................................................................43 SECTION 5.6 PAYMENT OF TAXES AND CLAIMS...........................................................43 SECTION 5.7 COMPLIANCE WITH ERISA.................................................................43 SECTION 5.8 VISITS AND INSPECTIONS................................................................45 SECTION 5.9 PAYMENT OF INDEBTEDNESS; ACCOMMODATIONS...............................................45 SECTION 5.10 USE OF PROCEEDS.......................................................................45 SECTION 5.11 PROTECT SECURITY INTERESTS............................................................46 SECTION 5.12 ENVIRONMENTAL AUDITS..................................................................46 SECTION 5.13 FURTHER ASSURANCES....................................................................46 ARTICLE 6 INFORMATION COVENANTS..................................................................................46 SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION........................................46 SECTION 6.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION...........................................47 SECTION 6.3 PERFORMANCE CERTIFICATES..............................................................47 SECTION 6.4 COPIES OF OTHER REPORTS...............................................................48 SECTION 6.5 NOTICE OF LITIGATION AND OTHER MATTERS................................................48 SECTION 6.6 ENVIRONMENTAL REPORTING...............................................................49 ARTICLE 7 NEGATIVE COVENANTS.....................................................................................50 SECTION 7.1 INDEBTEDNESS OF THE BORROWER AND ITS SUBSIDIARIES.....................................50 SECTION 7.2 LIMITATION ON LIENS...................................................................50 SECTION 7.3 AMENDMENT AND WAIVER..................................................................51 SECTION 7.4 LIQUIDATION, MERGER, OR DISPOSITION OF ASSETS.........................................51 SECTION 7.5 LIMITATION ON GUARANTIES..............................................................51 SECTION 7.6 INVESTMENTS AND ACQUISITIONS..........................................................51 SECTION 7.7 RESTRICTED PAYMENTS AND PURCHASES.....................................................51 SECTION 7.8 LEVERAGE RATIO........................................................................52 SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE....................................52 SECTION 7.10 TOTAL DEBT PER SUBSCRIBER.............................................................52 SECTION 7.11 CAPITAL EXPENDITURES..................................................................53 SECTION 7.12 MINIMUM REVENUE TEST..................................................................53 SECTION 7.13 MINIMUM UNITS IN SERVICE..............................................................54 SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST......................................................54 SECTION 7.15 AFFILIATE TRANSACTIONS................................................................54 SECTION 7.16 REAL ESTATE...........................................................................55 SECTION 7.17 ERISA LIABILITIES.....................................................................55 ARTICLE 8 DEFAULT................................................................................................55 SECTION 8.1 EVENTS OF DEFAULT.....................................................................55 SECTION 8.2 REMEDIES..............................................................................57 ARTICLE 9 THE AGENT..............................................................................................58 SECTION 9.1 APPOINTMENT AND AUTHORIZATION.........................................................58 SECTION 9.2 INTEREST HOLDERS......................................................................58 SECTION 9.3 CONSULTATION WITH COUNSEL.............................................................59 SECTION 9.4 DOCUMENTS.............................................................................59 SECTION 9.5 AGENT AND AFFILIATES..................................................................59 SECTION 9.6 RESPONSIBILITY OF THE AGENT...........................................................59 SECTION 9.7 SECURITY DOCUMENTS....................................................................59 SECTION 9.8 ACTION BY THE AGENT...................................................................60 SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT.................................................60 SECTION 9.10 RESPONSIBILITY DISCLAIMED.............................................................60 SECTION 9.11 INDEMNIFICATION.......................................................................61 SECTION 9.12 CREDIT DECISION.......................................................................61 SECTION 9.13 SUCCESSOR AGENT.......................................................................61 SECTION 9.14 DELEGATION OF DUTIES..................................................................62 SECTION 9.15 DETERMINATION BY AGENT CONCLUSIVE AND BINDING.........................................62
(ii) 3 ARTICLE 10 COMPUTATIONS AND INDEMNITIES..........................................................................62 SECTION 10.1 INDEMNITY FOR CHANGE IN CIRCUMSTANCES.................................................62 SECTION 10.2 INDEMNITY FOR TRANSACTIONAL AND ENVIRONMENTAL LIABILITY...............................63 SECTION 10.3 TAXATION ON PAYMENTS..................................................................64 SECTION 10.4 JUDGMENT CURRENCY.....................................................................65 SECTION 10.5 CLAIMS FOR INCREASED COSTS AND TAXES..................................................65 ARTICLE 11 MISCELLANEOUS.........................................................................................66 SECTION 11.1 NOTICES...............................................................................66 SECTION 11.2 EXPENSES..............................................................................68 SECTION 11.3 WAIVERS...............................................................................69 SECTION 11.4 RIGHT TO COMBINE AND SET-OFF..........................................................69 SECTION 11.5 ASSIGNMENT............................................................................69 SECTION 11.6 ACCOUNTING PRINCIPLES.................................................................70 SECTION 11.7 COUNTERPARTS..........................................................................71 SECTION 11.8 GOVERNING LAW.........................................................................71 SECTION 11.9 SEVERABILITY..........................................................................71 SECTION 11.10 INTEREST..............................................................................71 SECTION 11.11 TABLE OF CONTENTS AND HEADINGS........................................................72 SECTION 11.12 AMENDMENT AND WAIVER..................................................................72 SECTION 11.13 NON-MERGER............................................................................72 SECTION 11.14 OTHER RELATIONSHIPS...................................................................73 SECTION 11.15 DIRECTLY OR INDIRECTLY................................................................73 SECTION 11.16 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS........................................73 SECTION 11.17 SENIOR DEBT...........................................................................73 SECTION 11.18 OBLIGATIONS SEVERAL...................................................................73 SECTION 11.19 CONFIDENTIALITY.......................................................................73 SECTION 11.20 TIME OF THE ESSENCE...................................................................74 SECTION 11.21 THIRD PARTY BENEFICIARIES.............................................................74 SECTION 11.22 ENUREMENT.............................................................................74
(iii) 4 EXHIBITS Exhibit A - Commitment Ratio Exhibit B - Form of Accommodation Notice Exhibit C - Form of Repayment Notice Exhibit D - Form of Borrower's Loan Certificate Exhibit E - Form of Subsidiary Loan Certificate Exhibit F - Form of Performance Certificate Exhibit G - Form of Assignment and Assumption Agreement SCHEDULES Schedule 1 - Licenses Schedule 2 - Security Documents Schedule 3 - Subsidiaries Schedule 4 - Agreements with Affiliates Schedule 5 - Year 2000 Plan (iv) 5 AMENDED AND RESTATED LOAN AGREEMENT DATED the 5th day of June, 1996, as AMENDED AND RESTATED as of the 5th day of August, 1999. AMONG: MADISON TELECOMMUNICATIONS HOLDINGS INC. (the "Borrower") - and - THE TORONTO-DOMINION BANK, CANADIAN IMPERIAL BANK OF COMMERCE, NATIONAL BANK OF CANADA and such other financial institutions as become "Banks" hereunder (collectively, the "Banks") - and - THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT (the "Agent") WHEREAS: A. The Borrower, The Toronto-Dominion Bank, as a Bank, and the Agent, entered into a loan agreement made as of the 5th day of June, 1996; B. The loan agreement was amended pursuant to a first amendment to the loan agreement dated as of the 18th day of April, 1997; C. The Borrower, the Agent and the Banks wish to enter into this Agreement to incorporate the provisions of the amendment referred to in Recital B above, document certain additional amendments agreed upon among them, and restate the loan agreement, all upon the terms and conditions more particularly specified herein; NOW THEREFORE, the parties agree as follows: 6 - 2 - 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 notice substantially in the form of Exhibit B. "AGENT" shall mean The Toronto-Dominion Bank, in its capacity as Agent for the Banks or any successor Agent appointed pursuant to Section 9.13 of this Agreement. "AGENT'S OFFICE" shall mean the office of the Agent located at International Office Centre Toronto, Toronto Dominion Bank 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 Prime Rate 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 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 Amended and Restated 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 7 - 3 - 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 Agent pursuant to the Deposit Agreement; and (b) $25,500,000, but only to the extent that the Minimum Permitted Collateral Amount is held on such date by the Agent pursuant to the Deposit Agreement; or (c) $28,500,000, but only to the extent that (i) the Minimum Permitted Collateral Amount is held on such date by the 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) for the two (2) most recently completed fiscal quarters, the Leverage Ratio is less than 6.0 to 1, or (B) (i) the aggregate number of Units in Service is greater than or equal to 245,000, and (ii) Gross Revenue for the Borrower Group on a combined basis is greater than or equal to $5,000,000; provided, however, that the Available Commitment shall not at anytime exceed the Commitment on such date; 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 to be purchased by a Bank pursuant to Section 2.5(e), the sum of (a) the 8 - 4 - discount rate per annum based on a year of 365 days which is equivalent to the rate quoted to the Borrower by such Bank as such Bank'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 corporation incorporated under the laws of Canada. "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. "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 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 9 - 5 - 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 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; 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 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 $28,500,000 pursuant to the terms hereof, as such obligations may be reduced from time to time pursuant to the terms hereof. "COMMITMENT RATIO" shall mean, with respect to any Bank, the percentage equivalent of the ratio which such Bank's pro rata portion of the total Commitment bears to the aggregate 10 - 6 - amount of the Commitment (as each may be adjusted from time to time as provided herein); and "Commitment Ratios" shall mean the Commitment Ratios of all of the Banks with respect to the Commitment. As of the Restatement Date, the Commitment Ratio of each Bank is as set forth on Exhibit A. "DEFAULT" shall mean any Event of Default, and any of the events specified in Section 8.1 hereof, regardless of whether there shall have occurred any passage of time or giving of notice, or both, that would be necessary in order to constitute such event an Event of Default. "DEFAULT RATE" shall mean a simple per annum interest rate equal to the sum of (a) the Prime Rate, PLUS (b) the Applicable Margin for Uncollateralized Prime Rate Advances, PLUS (c) two percent (2%). "DEPOSIT AGREEMENT" shall mean, collectively, that certain Deposit Agreement dated as of April 18, 1997 between PNCHI and the Agent for the benefit of the Banks, the Deposit Agreement dated June 5, 1996 between Madison Venture Corporation and the Agent for the benefit of the Banks and any other Deposit Agreement entered into by the Agent after the Restatement Date. "DEPOSIT AGREEMENT GUARANTY" shall mean that certain Guaranty in favour of the Agent for the benefit of the Banks, given by PNCHI on April 18, 1997. "DOLLAR" or "$" shall mean (except where specifically designated otherwise) lawful money of Canada. "DRAFT" shall mean, at any time, a blank depository bill within the meaning of the Depository Bills and Notes Act (Canada) or a blank bill of exchange within the meaning of the Bills of Exchange Act (Canada) 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 mean the requested date for a Drawing set forth in an Accommodation Notice. "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. "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 Agent. 11 - 7 - "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. "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 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 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. 12 - 8 - "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. "FREE 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 year, as determined in accordance with GAAP, Operating Cash Flow, less (i) the amounts actually paid during such period in respect of (A) Interest Expense, (B) income taxes, (C) payments on any Indebtedness for Money Borrowed falling within the definition of Total Debt (including any amounts actually paid in connection with reductions of the Commitment pursuant to Section 2.8 (a)), (D) Capital Expenditures, and (ii) to the extent not included in the amounts calculated pursuant to (i) above, the amount of any automatic reduction in the Commitment made during such fiscal year in accordance with the provisions of Section 2.8 (a). "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 Restatement 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. "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. 13 - 9 - "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. "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, and (b) in connection with any Bankers' 14 - 10 - 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 $3,500,000 issued in favour of the 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 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 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 Immaterial Site Specific Licenses) are listed as of the Restatement 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 Agent and the Banks, or any of them, on the other hand, and all other 15 - 11 - 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)(iv) 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 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 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 December 31, 2004, 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 $17,500,000 (or the Equivalent U.S. Dollar Amount). "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. 16 - 12 - "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 Co-ordination 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 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 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 Agent may reasonably require. Operating Cash Flow attributable to any assets disposed of will be excluded in the determination of Operating Cash Flow as if the Assets so disposed of had been disposed of on the first day of such fiscal quarter. "PAGENET" shall mean Paging Network, Inc., a corporation incorporated under the laws of the State of Delaware. "PAGENET CANADA" shall mean Paging Network of Canada Inc., a Canada corporation. "PAGENET CANADA AGREEMENT" shall mean that certain Amended and Restated Loan Agreement dated as of even date herewith by and among Paging Network of Canada Inc., the Banks and the Agent. 17 - 13 - "PAGENET CANADA OBLIGATIONS" shall mean the indebtedness, liabilities and obligations of PageNet Canada to the Agent and the Banks under, or in connection with, the PageNet Canada Agreement. "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 Agent pursuant to the Deposit Agreement as collateral for the Deposit Agreement 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 Agent as security for the Obligations. "PERMITTED LIENS" shall mean, as applied to any Person: (a) Any Lien in favour of the 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, labourers 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; 18 - 14 - (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 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 (l) Any Liens resulting from the deposit of cash or securities in connection with contracts, tenders or expropriation proceedings, or to secure surety or appeal 19 - 15 - 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-1+ 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. "PNCHI" shall mean Paging Network Canadian Holdings, Inc., a corporation incorporated under the laws of the State of Delaware. "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 Prime Rate 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). "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. 20 - 16 - "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). "REPAYMENT NOTICE" means a notice substantially in the form of Exhibit C. "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. "RESTATEMENT DATE" shall mean August 5, 1999. "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; (c) any payment of principal of, or interest on, Indebtedness referred to in Section 7.1 (g) hereof; and (d) 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 instalment 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 favour of the Agent for the benefit of itself and the Banks described in Schedule 2, as such documents may be 21 - 17 - amended or supplemented from time to time, and any other agreement or instrument which may from time to time be held by the Agent for the benefit of itself and the Banks, or by the Banks themselves, as security for all or any portion of the Obligations. "SECURITY INTEREST" shall mean all Liens in favour of the Agent, for the benefit of itself and the Banks, or in favour of the Banks themselves, 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 Restatement 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, odour, 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. "THIRD PARTIES" shall mean third party suppliers and others on whom the operations of the business of the Borrower and/or its Subsidiaries is partly dependent for ordinary course operations which may affect the Borrower's or its Subsidiaries' ability to be Year 2000 Ready at and after January 1, 2000. "THIRD PARTY FACTORS" shall mean those factors beyond the control of the Borrower or its Subsidiaries and within the control of Third Parties. "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 of: (i) the aggregate principal amount of Collateralized Advances and Face Amount of Collateralized Bankers' Acceptances outstanding on such date, and (ii) the aggregate amount of Indebtedness permitted to be incurred in accordance with Section 7.1 (g) hereof outstanding on such date. 22 - 18 - "TOTAL SUBSCRIBERS" shall mean, as of any date, the aggregate number of subscribers for the Units in Service 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 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 PORTION OF THE COMMITMENT" shall mean, as of any date, that portion of the Available Commitment in excess of the Minimum Permitted Collateral Amount. "UNCOLLATERALIZED PRIME RATE ADVANCE" shall mean an Uncollateralized Prime Rate 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, in respect of which the customer is obligated to make payments at regular intervals in amounts consistent with standard industry practice, 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. "YEAR 2000 READY" shall mean that, except as would not have individually or in the aggregate, a Materially Adverse Effect, the Year 2000 Systems used or relied upon by the Borrower or its Subsidiaries will function accurately and without material delay or interruption at all times before, on and after January 1, 2000 (including through February 29, 2000), without any change in the operations of such Year 2000 Systems associated with the advent of 2000 or the 21st century. "YEAR 2000 PLAN" shall mean the plan of the Borrower to ensure that the Year 2000 Systems are Year 2000 Ready in the form delivered to the Agent prior to the date hereof. 23 - 19 - "YEAR 2000 SYSTEMS" shall mean all computer hardware, software and files (including all operating systems, application software and related supporting data) and files owned, used, sold, leased or licensed by the Borrower or its Subsidiaries in connection with the operation of its business and all process controls, environmental controls, communications systems and any other support systems or equipment owned, used, sold, leased or licensed by the Borrower or its Subsidiaries, in the operation of its business which employs, stores or processes date/time information in electronic form. 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 exceeding, 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 Agent in connection with a requested Accommodation hereunder shall be given to the 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 PRIME RATE ADVANCES. (a) CHOICE OF INTEREST RATE, ETC. Any Uncollateralized Prime Rate Advance shall be made as an Uncollateralized Prime Rate Advance. (b) MANNER OF BORROWING. (i) UNCOLLATERALIZED PRIME RATE ADVANCES. The Borrower shall give the Agent irrevocable written notice no later than 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 an Accommodation Notice, or telephonic notice followed immediately by an Accommodation Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with an Accommodation Notice shall not invalidate any notice so given if acted upon by the Agent. Upon receipt of such notice from the Borrower, the Agent shall promptly notify each Bank in writing of the contents thereof. 24 - 20 - (ii) CONVERSIONS OF UNCOLLATERALIZED PRIME RATE ADVANCES. On any Business Day, 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 an Accommodation Notice in accordance with Section 2.5 hereof (including in accordance with the period for notice set forth in Section 2.5(b) hereof), and (B) Collateralized Prime Rate Advances by giving the Accommodation Notice 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, 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 be made as a Collateralized Prime Rate Advance. (b) COLLATERALIZED PRIME RATE ADVANCES. (i) ADVANCES. The Borrower shall give the Agent irrevocable written notice not later than 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 an Accommodation Notice, or telephonic notice followed immediately by an Accommodation Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with an Accommodation Notice shall not invalidate any notice so given if acted upon by the Agent. Upon receipt of such notice from the Borrower, the Agent shall promptly notify each Bank in writing of the contents thereof. (ii) CONVERSIONS OF COLLATERALIZED PRIME RATE ADVANCES. On any Business Day, 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 an Accommodation Notice in accordance with Section 2.5 hereof (including 25 - 21 - in accordance with the period for notice set forth in Section 2.5(b) hereof), and (C) Uncollateralized Prime Rate Advances by giving the Accommodation Notice 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 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) 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 sum of the Equivalent Canadian Dollar Amount of Permitted Collateral held by the 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 shall automatically be converted to an Uncollateralized Prime Rate 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 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 an Accommodation Notice, or a notice from the Borrower with respect to any outstanding Advance prior to the Payment Date for such Advance, the Agent shall promptly notify each Bank in writing 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 Agent at the Agent's Office, or at such account as the 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. 26 - 22 - (i) Prior to 2:00 p.m. (Toronto time) on the date of an Advance hereunder, the Agent shall, subject to the satisfaction of the conditions set forth in Article 3 hereof, disburse the amounts made available to the 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 Toronto-Dominion Bank. (ii) Unless the 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 Agent such Bank's pro rata portion of such Advance, the Agent may assume that such Bank has made or will make such pro rata portion available to the Agent on the date of such Advance and the 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 Agent, such Bank agrees to repay to the 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 Agent, at the Prime Rate. (iii) If such Bank shall repay to the 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 Agent's demand therefor, the Agent shall notify the Borrower and the Borrower shall immediately pay such corresponding amount to the 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 27 - 23 - 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, except that, if the fact amount of a Bankers' Acceptance would not be equal to any integral multiple of $100,000, the fact amount shall be increased or reduced by the Agent in its sole discretion, even if as a result of any such increase a Bank's Commitment Ratio would be exceeded. 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 Agent irrevocable written notice not later than 1:00 p.m. (Toronto time) at least two (2) Business Days prior to the date of the proposed Drawing in the form of an Accommodation Notice, or telephonic notice followed immediately by an Accommodation Notice; provided, however, that the Borrower's failure to confirm any telephonic notice with an Accommodation Notice shall not invalidate any notice so given if acted upon by the Agent. Upon receipt of an Accommodation Notice, the 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 Accommodation 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; and (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. 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 Accommodation 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 Agent of the purchase price of all Bankers' Acceptances created hereunder on the Drawing Date for such Bankers' Acceptances. The 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 28 - 24 - a discount rate which is an arithmetic 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 such Bank to the Agent and advised by the Agent to the Borrower and such purchase price shall be paid and satisfied by such Bank making payment to the Agent in the amount of such purchase price less the applicable Drawing Fee. The Agent shall disburse the amounts made available to the 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 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 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 an Accommodation Notice is given in accordance with Section 2.2 or Section 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 an Accommodation 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 an Accommodation Notice in accordance with Section 2.2 or Section 2.3 hereof (including in accordance with the period for notice set forth in Section 2.2 or Section 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 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 Section 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 29 - 25 - or Section 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 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 Agent so notifies the Borrower. Any Accommodation 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 an Accommodation Notice requesting a Prime Rate Advance in the principal amount equal to the requested Face Amount in such Accommodation Notice. (j) DRAFT FORMS. (i) Authorization Regarding Drafts. In order to facilitate the issuance of Bankers' Acceptances pursuant to this Agreement, the Borrower hereby authorizes each of the Banks to complete, sign and endorse Drafts on its behalf in handwritten form or by facsimile or mechanical signature or otherwise and, once completed, signed and endorsed to accept them as Bankers' Acceptances under this Agreement. Drafts so completed, signed, endorsed and negotiated on behalf of the Borrower by the Banks shall bind the Borrower as fully and effectively as if those acts were performed by an authorized officer of the Borrower. (ii) Safekeeping of Drafts. Any executed Drafts to be used for Bankers' Acceptances which are held by any Bank need only be held in safekeeping with the same degree of care as if they were that Bank's own property and that Bank was keeping them at a place at which they are to be held. The Borrower shall, by written notice to the Agent, designate the Persons authorized to give the Agent and each Bank instructions regarding the manner in which the Bankers' Acceptances are to be completed and the times at which they are to be issued. Neither the Agent nor the Banks or any of their respective directors, officers, employees or representatives shall be liable for any action taken or omitted to be taken by any of them under this Section except for their own gross negligence or wilful misconduct. 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 30 - 26 - Uncollateralized Prime Rate Advances then outstanding shall also be due and payable on the Maturity Date. (b) INTEREST ON COLLATERALIZED 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 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 Agent and each Bank for such fiscal quarter, as follows:
COLLATERALIZED UNCOLLATERALIZED COLLATERALIZED PRIME RATE UNCOLLATERALIZED BANKERS' BANKERS' ACCEPTANCES ADVANCES PRIME RATE ADVANCE ACCEPTANCES LEVERAGE RATIO APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE MARGIN - ---------------------------------- ----------------------- ------------------ -------------------- ------------------- A. Greater than or equal to 0.500% 0.00% 2.500% 4.000% 6.00:1 B. Greater than or equal to 0.500% 0.00% 1.500% 3.000% 4.00:1, but less than 6.00:1 C. Less than 4.00:1 0.500% 0.00% 0.500% 2.000%
Notwithstanding the foregoing, if the Borrower shall fail timely to deliver to the 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. 31 - 27 - 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 the Restatement Date until the Maturity Date at the rate of one percent (1.000%) per annum and (ii) a commitment fee on the aggregate unborrowed unavailable balance of the Commitment, for each day from the Restatement Date to 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 (a) Commencing March 31, 2002 and at the end of each fiscal quarter thereafter, the Uncollateralized Portion of the Commitment as in effect on March 30, 2002, shall be automatically and permanently reduced by the amounts set forth below:
QUARTERLY REDUCTION OF THE UNCOLLATERALIZED PORTION OF THE COMMITMENT IN EFFECT ON DATES OF COMMITMENT REDUCTION MARCH 30, 2002 ----------------------------------------------------- --------------------------- March 31, 2002, June 30, 2002, September 30, 2002 and $55,000.00 December 31, 2002 March 31, 2003, June 30, 2003, September 30, 2003 and $330,000.00 December 31, 2003 March 31, 2004, June 30, 2004 and September 30, 2004 $660,000.00 December 31, 2004 remainder
(b) Commencing with the fiscal year ending December 31, 1999, and for each fiscal year thereafter, concurrently with the delivery of the financial statements referred to in Section 6.1 (b) in respect of the final quarter of each such fiscal year, the Uncollateralized Portion of the Commitment as in effect at the end of such fiscal year, shall be automatically and permanently reduced by an amount equal to 50% of the Borrower's Free Cash Flow for the immediately preceding fiscal year (provided that any such reduction shall be subject to adjustment based on the financial statements delivered in accordance with Section 6.2 . The amount of any such 32 - 28 - reduction of the Uncollateralized Portion of the Commitment shall be applied to the reductions required under Section 2.8 (a) in inverse order of maturity. 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 by giving the Agent at least three (3) Business Days' prior written notice, of such prepayment, such notice to be in the form of a Repayment Notice. 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 Agent and the Banks at least three (3) Business Days' prior written notice thereof, such notice to be in the form of a Repayment Notice; 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). Any reduction of the Commitment effected pursuant to this Section 2.9 (b) shall be applied pro rata as between the Uncollateralized Portion of the Commitment and the remaining portion of the Commitment. 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, provide the Agent with a Repayment Notice and 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 would require a prepayment of any Bankers' Acceptance, the Borrower shall make an interest-bearing deposit with the Agent the Face 33 - 29 - Amount of such Bankers' Acceptances and hereby irrevocably authorizes and directs the 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 Agent. The failure of the Agent to correctly record any amount or date shall not, however, affect the obligation of the Borrower to pay amounts due hereunder to the 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 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 Agent at the Agent's Office, for the account of the Banks or the Agent, as the case may be, in lawful Canadian currency in immediately available funds. Any payment received by the Agent after 1:00 p.m. (Toronto time) shall be deemed received on the next Business Day. Receipt by the 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 Agent will promptly thereafter distribute the amount so received in like funds to such Bank. If the Agent shall not have received any payment from the Borrower as and when due, the 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 Agent with respect to the Obligations, the 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 Agent and the Banks, or any of them; (ii) to the payment of interest then 34 - 30 - 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 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. (d) On the date of any Accommodation or the maturity thereof, including the date of any extension or conversation of any Accommodation (the "Transaction Date" ), the Agent shall be entitled to net amounts payable in one currency on such Transaction Date by the Agent to a Bank against amounts payable in the same currency on such Transaction Date by such Bank to the Agent for the account of the Borrower. Similarly, on any Transaction Date, the Borrower hereby authorizes each Bank to net amounts payable in one currency on such date by such Bank to the Agent, for the account of the Borrower, against amounts payable in the same currency on such date by the Borrower to the Agent, for the account of such Bank, in accordance with the Agent's calculations made in accordance with the provisions of this Agreement. SECTION 2.13 REIMBURSEMENT. (a) Upon the earlier of demand or the Maturity Date, the Borrower shall pay to the Agent or the Banks such amount or amounts as will compensate the Agent or the Banks for any loss, cost or expense incurred by them 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 Agent's or Banks' rights hereunder in respect of such Bankers' Acceptance, including legal proceedings attempting to restrain the 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 wilful misconduct of the 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. 35 - 31 - 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 rateably 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 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 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 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 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 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. 36 - 32 - ARTICLE 3 CONDITIONS PRECEDENT SECTION 3.1 CONDITIONS PRECEDENT TO AGREEMENT The effectiveness of this Agreement and the obligation of the Banks to make Accommodations hereunder are subject to the prior or contemporaneous fulfilment of each of the following conditions: (a) The Agent and the Banks shall have completed their due diligence investigation and examination of the Borrower's operation and affairs and shall have determined, in their sole discretion, acting reasonably, that the results of such investigation and examination are satisfactory, including, without limitation, in respect of matters relating to (i) current business plans, (ii) financial projections, and (iii) the operations of the Borrower Group on a consolidated basis; (b) The Agent and the Banks shall have received each of the following: (i) the loan certificate of the Borrower dated as of the Restatement Date, in substantially the form attached hereto as Exhibit D, 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 Restatement Date, or confirmation that there have been no amendments to such articles and by-laws since 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 Restatement 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 such Person as in effect on the Restatement Date, or confirmation that there have been no amendments to such articles and by-laws since the Agreement Date, (B) 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 37 - 33 - qualify to do business, (C) a true, complete and correct copy of the corporate resolutions of such Person authorizing such Person to execute, deliver and perform the Loan Documents to which it is party and the transactions contemplated 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 such Person; (iii) duly executed acknowledgements and confirmations from the Borrower and any of its Affiliates that had previously granted security in connection with this Agreement prior to its amendment and restatement, that such security (A) remains in full force and effect, unamended, and (B) secures the obligations of the Borrower under this Agreement (it being acknowledged that no such document is required from Paging Network, Inc. because it has been released from any obligations it had in connection with security it previously delivered); (iv) evidence of the registration and continued 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 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) a legal opinion of Blake Cassels & Graydon, Canadian counsel to the Borrower and its Subsidiaries, addressed to each Bank and the Agent, and dated as of the Restatement Date; (vii) audited year-end financial statements of the Borrower and its Subsidiaries on a consolidated basis for the fiscal year ending December 31, 1998, and unaudited financial statements for the Borrower Group on a combined basis for the fiscal year ending December 31, 1998 and the fiscal quarter ending March 31, 1999, certified by (A) in the case of the audited statements, an independent auditor acceptable to the Agent, and (B) in the case of the unaudited statements, 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 Agent or any Bank may reasonably request, certified by an appropriate governmental official or an Authorized Signatory if so requested. (c) The 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 38 - 34 - 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 Agent and the Banks shall have received a certificate of an Authorized Signatory so stating. (d) The Borrower shall certify to the 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. (e) There shall not exist as of the Restatement 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 Agent, could be expected to have a Materially Adverse Effect. (f) No event shall have occurred and no condition shall exist which, in the judgment of the Agent, has had or could be expected to have a Materially Adverse Effect. (g) The 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. (h) The Agent and the Banks shall have received all agreements entered into, in connection with the Business, by PageNet and Madison Venture Corporation and their respective Subsidiaries, which agreements shall be in form and substance satisfactory to the Agent and the Banks and shall each be collaterally assigned to the Agent for the benefit of the Banks. (i) The Agent and the Banks and their counsel shall have received payment of all fees due and payable on the Restatement Date. SECTION 3.2 CONDITIONS PRECEDENT TO ALL ACCOMMODATIONS The obligation of the Banks to make any Accommodation hereunder is subject to the fulfilment 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 outstanding hereunder, the Agent shall have received a duly executed Accommodation Notice; 39 - 35 - (c) Each of the 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 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 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 Agent and each of the Banks to make Accommodations available hereunder, the Borrower hereby agrees, represents and warrants, upon the Restatement Date, and at all times thereafter as required pursuant to Sections 3.2 and 4.2 hereof, in favour of the 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 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 40 - 36 - 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 Restatement 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 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 41 - 37 - 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 Subsidiaries has full legal right to mortgage, pledge, charge and assign to the Agent for the benefit of itself and the Banks the Collateral to the 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 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 42 - 38 - 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 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 Restatement 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, 1998, 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 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 non-exempt "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 43 - 39 - 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 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 Restatement 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 Agent in writing and which could be expected to have a Materially Adverse Effect. 44 - 40 - (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 Agent or any Bank, the Security Interest is a valid and perfected first priority security interest in the Collateral in favour of the 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 Restatement Date, and after giving effect to the initial Accommodations hereunder on the Restatement Date, any Indebtedness for Money Borrowed other than the Obligations hereunder. (u) Solvency. As of the Restatement 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 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 45 - 41 - 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) Material Agreements. 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. (y) Year 2000 Warranty. (i) The Borrower and its Subsidiaries have reviewed and assessed the potential impact of the Year 2000 issue on all areas of their critical businesses and operations (including those areas that may be affected by, or interfaced with, third party suppliers and clients); (ii) The Borrower and its Subsidiaries have prepared and are implementing a Year 2000 Plan, the particulars of which are appended hereto at Schedule 5, which schedule also accurately sets out the current status of activities under the Year 2000 Plan; (iii) Subject to Third Party Factors, the Year 2000 Systems of the Borrower and its Subsidiaries shall be Year 2000 Ready prior to December 31, 1999; (iv) The cost to the Borrower (on a consolidated basis) of completing the steps necessary for the Year 2000 Systems of the Borrower and its Subsidiaries to be Year 2000 Complaint will not result in a Default, and are not expected, in the reasonable opinion of the Borrower, to have a Materially Adverse Effect on the Borrower and its Subsidiaries, taken as a whole; provided that this representation and warranty shall not extend to any costs relating to steps to be taken by Third Parties to deal effectively with Third Party Factors; and (v) The Borrower and its Subsidiaries have taken reasonable commercial efforts, consistent with the importance of succeeding therein to the continued operation of the business of the Borrower and its Subsidiaries in the ordinary course, to assess, monitor and respond to the Third Party Factors in order to minimize the impact of Third Party Factors on the ability of the Borrower and its Subsidiaries to have their Year 2000 Systems Year 2000 Ready prior to December 31, 1999. 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 Restatement Date and on the date of each Accommodation except to the extent previously 46 - 42 - fulfilled in accordance with the terms hereof and to the extent relating specifically to the Restatement 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 Agent, any investigation or inquiry by any Bank or the 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 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: 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. 47 - 43 - 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 acceptable to the Agent and the Banks, showing the 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 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 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, 48 - 44 - 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 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 Labour 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 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 Agent's request therefor, such additional information concerning any such Employee Pension Plan as may be reasonably requested by the Agent or any Bank. (c) The Borrower will promptly notify the 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 Labour 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 Agent and the Banks of any lien arising under Section 302(f) of ERISA in favour 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 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; 49 - 45 - (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 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 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 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). 50 - 46 - 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 Agent as a secured party or assignee, at all times take all action and supply the Agent with all information necessary to maintain the Liens provided for under the Security Documents and confer upon the Agent the security interests intended to be created thereby. SECTION 5.12 ENVIRONMENTAL AUDITS Promptly if requested by the Agent: (i) if a Default has occurred and is continuing or the 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 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 Agent; (ii) if the 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 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 Agent; and (iii) diligently remedy any material non-compliance with Environmental Laws revealed by any such audit. SECTION 5.13 FURTHER ASSURANCES At its cost and expense, upon request of the Agent, the Borrower will duly execute and deliver or cause to be duly executed and delivered to the 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 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 Agent, at their respective offices: SECTION 6.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION Within forty-five (45) days after the last day of each fiscal quarter of the Borrower during any fiscal year: 51 - 47 - (a) a copy of the balance sheets of (i) the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries, and (ii) the Borrower Group on a combined basis, in each case as at the end of such quarter and as of the end of the preceding fiscal year; and (b) the related statements of operations and the related statements of cash flows of (i) the Borrower on a consolidated basis with its Subsidiaries, and (ii) the Borrower Group on a combined basis, in each case for such quarter and for the elapsed portion of the year ended with the last day of such quarter, all of 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 (x) the Borrower on a consolidated and consolidating (unconsolidated) basis with its Subsidiaries, and (y) the Borrower Group on a combined basis, in each case 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) a copy of the audited consolidated and consolidating (unconsolidated) balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal year and for the previous fiscal year and the related audited consolidated and consolidating (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 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; and (b) for the Borrower Group on a combined basis, a balance sheet as of the end of such fiscal year and for the previous fiscal year and the related statement of operations for such fiscal year and for the previous fiscal year, the related statements of cash flow and stockholders' equity for such fiscal year and for the previous fiscal year, which may be prepared on an unaudited basis, but must 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 Group as at the end of such fiscal year and the results of operations for such fiscal year, subject only to normal year-end and audit adjustments and the absence of footnotes. SECTION 6.3 PERFORMANCE CERTIFICATES At the time the financial statements are furnished pursuant to Section 6.1 and Section 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 F hereto: 52 - 48 - (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 Section 7.8 , Section 7.9 , Section 7.10 , Section 7.11 , Section 7.12 , Section 7.13 and Section 7.14 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 business prospects of the Borrower or any of its Subsidiaries, as the 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: (a) 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 53 - 49 - 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; (b) 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; (c) any material amendment or change to the financial projections or annual budget provided to the Banks by the Borrower; (d) 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 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 (e) 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 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. 54 - 50 - 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 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 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 Agent as security for the Obligations; (f) Capitalized Lease Obligations in an aggregate amount not to exceed $500,000 at any time outstanding; and (g) Indebtedness of the Borrower to PageNet Canada so long as (i) the Indebtedness is not secured by any Lien, (ii) the corresponding debt instruments are assigned to the Agent as security for the PageNet Canada Obligations, and (iii) any such Indebtedness is fully postponed to the Obligations. In this regard, prior to incurring any such Indebtedness, the Agent shall receive a specific assignment of receivables from PageNet Canada, which will include a postponement from PageNet Canada, together with any additional documentation and opinions required by the Agent, all in form and substance satisfactory to the Agent, in its sole discretion. 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. 55 - 51 - 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 Agent or any Bank or any of their rights or claims under any of the Loan Documents). 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 56 - 52 - no Default hereunder then exists or would be caused thereby the Borrower may make (a) distributions to Paging Network International, Inc., Paging Network International Inc., N.V., PNCHI or Madison Venture Corporation so long as the Leverage Ratio is below 4.00 to 1 (both before and after giving effect to such distribution), and (b) payments of principal of any Indebtedness referred to in Section 7.1(g) hereof. SECTION 7.8 LEVERAGE RATIO Commencing January 1, 2001, the Borrower shall not permit the Leverage Ratio to exceed the ratios set forth below during the periods indicated:
PERIOD RATIO ----------------------------------------- ------ January 1, 2001 through June 30, 2001 6.00:1 July 1, 2001 through September 30, 2001 5.00:1 October 1, 2001 through December 31, 2001 4.50:1 January 1, 2002 through March 31, 2002 4.00:1 April 1, 2002 and thereafter 3.50:1
SECTION 7.9 ANNUALIZED OPERATING CASH FLOW TO INTEREST EXPENSE. Commencing April 1, 2000, the Borrower shall not permit the ratio of Annualized Operating Cash Flow to Interest Expense for the Borrower Group on a combined basis to be less than the ratios set forth below for the periods indicated:
PERIOD RATIO ----------------------------------------- ------ April 1, 2000 through June 30, 2001 1.00:1 July 1, 2001 through June 30, 2002 1.25:1 July 1, 2002 and thereafter 1.50:1
Solely for purposes of calculating the ratio referred to in this Section 7.9 , Interest Expense shall not include, as of any date, interest expense relating to that portion of the Commitment that is not the Uncollateralized Portion of the Commitment. 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 $150.00. 57 - 53 - SECTION 7.11 CAPITAL EXPENDITURES. The Borrower shall not permit the aggregate Capital Expenditures for the Borrower Group on a combined basis to exceed the following for the fiscal years indicated:
PERIOD TOTAL CAPITAL EXPENDITURES ------------------------------------- -------------------------- At December 31, 1999 $15,000,000.00 At December 31, 2000 $15,000,000.00 At December 31, 2001 $15,000,000.00 At December 31, 2002 and thereafter $10,000,000.00
No amount of unused Total Capital Expenditure availability may be carried forward from 1998 to 1999 or subsequent fiscal years. Commencing in 1999, 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) 15% of the Total Capital Expenditure availability shown above (exclusive of any carry forwards from prior periods) for such fiscal year, may be carried forward, in whole or in part, to subsequent fiscal years until fully utilized. SECTION 7.12 MINIMUM REVENUE TEST. Commencing March 31, 1999 and continuing for each fiscal quarter through the fiscal quarter ending December 31, 2001, 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 -------------- --------------- 03/31/99 $5,000,000 06/30/99 $5,000,000 09/30/99 $5,750,000 12/31/99 $6,250,000 03/31/00 $7,000,000 06/30/00 $7,000,000 09/30/00 $7,000,000 12/31/00 $7,000,000 03/31/01 $9,000,000 06/30/01 $9,000,000 09/30/01 $9,000,000 12/31/01 $9,000,000
58 - 54 - SECTION 7.13 MINIMUM UNITS IN SERVICE. Commencing June 30, 1999 and continuing for each fiscal quarter through the fiscal quarter ending December 31, 2001, the Borrower shall not permit the minimum number of Units in Service to be less than the following for the fiscal quarters indicated:
MINIMUM UNITS QUARTER ENDING IN SERVICE -------------- ---------- 06/30/99 245,000 09/30/99 260,000 12/31/99 260,000 03/31/00 275,000 06/30/00 275,000 09/30/00 300,000 12/31/00 300,000 03/31/01 350,000 06/30/01 350,000 09/30/01 400,000 12/31/01 400,000
SECTION 7.14 MINIMUM OPERATING CASH FLOW TEST Commencing September 30, 1999 and continuing for each fiscal quarter through the fiscal quarter ending December 31, 2001, the Borrower shall not permit the aggregate Operating Cash Flow for the Borrower Group on a combined basis to be less than the following for the fiscal quarters indicated:
QUARTER ENDING MINIMUM OPERATING CASH FLOW -------------- --------------------------- 09/30/99 $ 250,000 12/31/99 $ 575,000 03/31/00 $ 975,000 06/30/00 $ 975,000 09/30/00 $ 975,000 12/31/00 $ 975,000 03/31/01 $1,200,000 06/30/01 $1,200,000 09/30/01 $1,200,000 12/31/01 $1,200,000
SECTION 7.15 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. 59 - 55 - SECTION 7.16 REAL ESTATE Neither the Borrower nor any of its Subsidiaries shall purchase any Real Estate or enter into any sale/leaseback transaction. SECTION 7.17 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; (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 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 Section 5.2 or Section 5.10 or in Article 6 or Article 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 Agent pursuant to the Deposit Agreement and the Letter of Credit, the failure to comply with Section 7.12 , Section 7.13 or Section 7.14 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; 60 - 56 - (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 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 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; 61 - 57 - (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 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 (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 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 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 62 - 58 - 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 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 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 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 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 Agent on behalf of the Banks, in connection therewith. (e) The rights and remedies of the Agent and the Banks hereunder shall be cumulative, and not exclusive. ARTICLE 9 THE 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 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 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 wilful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. SECTION 9.2 INTEREST HOLDERS The Agent may treat each Bank, or the Person designated in the last notice filed with the Agent, as the holder of all of the interests of such Bank in its pro rata portion of the 63 - 59 - Accommodations until written notice of transfer, signed by such Bank (or the Person designated in the last notice filed with the Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the Agent, shall have been filed with the Agent. SECTION 9.3 CONSULTATION WITH COUNSEL The Agent may consult with legal counsel selected by it and shall not be liable to the Banks for any action taken or suffered by it in good faith in consultation with such counsel and in reasonable reliance on such consultations. SECTION 9.4 DOCUMENTS The 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 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 AGENT AND AFFILIATES With respect to the Commitment and the Accommodations, the Bank which is the Agent shall have the same rights and powers hereunder as any other Bank and the Agent and Affiliates of the 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 Agent and without any obligation to account therefor. SECTION 9.6 RESPONSIBILITY OF THE AGENT The duties and obligations of the Agent under this Agreement are only those expressly set forth in this Agreement. The 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 Agent shall not be liable hereunder for any action taken or omitted to be taken except for its own gross negligence or wilful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. The 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 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 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. 64 - 60 - SECTION 9.8 ACTION BY THE AGENT. (a) The 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 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 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 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 wilful misconduct as determined by a final, non-appealable judicial order of a court of competent jurisdiction. (b) The 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 Agent shall not be obligated to take any action which is contrary to Applicable Law or which would in the Agent's reasonable opinion subject the Agent to liability. SECTION 9.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT In the event that the Agent or any Bank shall acquire actual knowledge, or shall have been notified, of any Default or Event of Default, the Agent or such Bank shall promptly notify the Banks and the Agent, as applicable (provided failure to give such notice shall not result in any liability on the part of such Bank or the Agent), and the 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 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) shall fail to request the 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 Agent or any Bank, the 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 Agent not to take such action or assert such right, in no event shall the Agent act contrary to such instructions. SECTION 9.10 RESPONSIBILITY DISCLAIMED The Agent shall not be under any liability or responsibility whatsoever as 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; 65 - 61 - (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 wilful misconduct of the 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 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 asserted against the 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 Agent under this Agreement or any other Loan Document, except that no Bank shall be liable to the Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the gross negligence or wilful misconduct of the 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 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 Agent or information provided by the Agent (other than information provided to the Agent by the Borrower and forwarded by the 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 AGENT Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving fifteen (15) days prior written notice thereof to the 66 - 62 - 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 Agent. If no successor Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Agent gave notice of resignation or the Majority Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor 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 acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, duties and obligations of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. After any retiring Agent's resignation or removal hereunder as 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 Agent. SECTION 9.14 DELEGATION OF DUTIES The 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 AGENT CONCLUSIVE AND BINDING Any determination to be made by the Agent on behalf of or with the approval of the Banks or the Majority Banks under this Agreement shall be made by the 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 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 Agent or any of the Banks by: (a) increasing the cost to the 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 capital, reserve or special deposit requirements in connection therewith); (b) requiring the 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; 67 - 63 - (c) reducing any amount payable to the 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 Agent's or any Bank's income in general); or (d) causing the 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 Agent or any of the Banks under this Agreement in respect of any Advance or Bankers' Acceptance; then the 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 Agent may specify to be necessary to compensate the Agent or any of the Banks for any such Loss incurred after the date of such notice. The 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 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 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. 68 - 64 - (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 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 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. 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 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 Agent or any Bank hereunder or pursuant to any of the Loan Documents, the sum payable to the 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 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 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 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 Agent or such Bank, the 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 Agent or such Bank under this Section 10.3(a); and (b) to indemnify and hold harmless the Agent and each Bank for the full amount of Taxes (excluding, in the case of the 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 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 Agent, or any Bank, taxes imposed on its income or capital taxes or receipts and franchise 69 - 65 - 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 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 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 co-operate with the Borrower, at the expense of the Borrower, in any dispute of such assessment. The 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 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 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 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 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 Agent of any sum adjudged to be so due or owing in such Other Currency, the 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 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 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 Agent or such Bank in the Original Currency, the 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 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, 70 - 66 - 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 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 Venture Corporation 1970 Alberta Street Vancouver, British Columbia V5Y 3X4 Attn: Mr. Bruce W. Aunger Telecopy No.: (604) 879-1483 71 - 67 - 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. 14911 Quorum Drive Dallas, Texas 75240 Attn: Chief Financial Officer Telecopy No.: (972) 801-8973 Paging Network of Canada, Inc. 3250 Bloor Street, West Suite 700 Toronto, Ontario Canada M8X 2X9 Attn: President Telecopy No.: (416) 207-4321 John Schmidt, Esq. Mayer, Brown & Platt 190 South La Salle Street Chicago, Illinois 60603-3441 Telecopy No.: (312) 701-7711 Blake Cassels & Graydon Commerce Court West 2800 - 199 Bay Street Toronto, Ontario M5L 1A9 Attn: Mr. Rob Granatstein Telecopy No.: (416) 863-2653 72 - 68 - (ii) If to the Agent, to it at: Toronto Dominion Bank Tower, 9th Floor Toronto Dominion Centre Toronto, Ontario M5K 1A2 Attn: Manager, Agency Telecopy No.: (416) 982-5535 (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 Repayment Notice shall be irrevocable and binding on the Borrower. With respect to any Accommodation Notice or Repayment Notice, the 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 or Repayment Notice. In the event of conflict between the Agent's record of the applicable terms of any Accommodation or repayment and such Accommodation Notice or Repayment Notice, as the case may be, the 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: (a) all reasonable and customary out-of-pocket expenses of the 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 Agent; (b) all reasonable and customary out-of-pocket expenses of the 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 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 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 Agent and the Banks. 73 - 69 - SECTION 11.3 WAIVERS The rights and remedies of the 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 Agent, the Majority Banks, or the Banks, or any of them, in exercising any right, shall operate as a waiver of such right. The 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 an Accommodation Notice. In the event the Banks decide to fund an Accommodation Notice 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 Accommodation Notice or preclude the Banks or the Agent from exercising any rights available under the Loan Documents or at law or equity. Any waiver or indulgence granted by the 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 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 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 Agent shall have made any demand under any of the Loan Documents and although such Obligations may be unmatured. The Agent or such Bank agrees promptly to notify the Borrower after any such combination or set-off and application made by the 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 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 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 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 prior written notice to the 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; 74 - 70 - 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 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. For greater certainty, the Agent shall have no obligation to communicate or have any involvement with any Participant. (d) Without limitation of its obligations hereunder, the Borrower shall, at its sole cost and expense, give such certificates, acknowledgements 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 G 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 Agent an Assignment and Assumption Agreement substantially in the form of Exhibit G 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. Any such assignment and assumption shall become effective upon the consent of the Borrower if and to the extent required pursuant to Section 11.5(b) and the receipt by the Agent of an Assignment and Assumption Agreement executed by the assigning Bank and the Assignee. In no event shall such assignment and assumption become effective until such date as specified in the Assignment and Assumption Agreement (the "Effective Date") which shall be no earlier than five Business Days following receipt of an Assignment and Assumption Agreement by, and the payment of an administrative fee of $5,000 to, the Agent by the assigning Bank. On the Effective Date, 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 from 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 and assumption. 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. 75 - 71 - 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 or 365 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 or 365 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 or 365; (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 76 - 72 - section, such payment, collection or demand shall be deemed to have been made by mutual mistake of the Borrower and the 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 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 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 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 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 Agent solely to any of the Banks may be made only by an instrument in writing signed by the 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 Restatement Date and the making of any Accommodation, and notwithstanding such closing or Accommodation, or any investigation made by or on behalf 77 - 73 - of any party, shall continue in full force and effect. Neither the Restatement 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 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. 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 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 Agent and each of the Banks hereunder are several, not joint. SECTION 11.19 CONFIDENTIALITY The Banks and the Agent 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 and the Agent 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 78 - 74 - 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 or the Agent; 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 or the Agent shall give notice of such disclosure to the Borrower and co-operate 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 or the Agent with respect to information that (i) is or becomes generally available to the public (other than through such Bank or the Agent), (ii) is already in the possession of such Bank or the Agent on a nonconfidential basis, or (iii) comes into the possession of such Bank or the Agent in a manner not known to such Bank or the Agent 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. 79 - 75 - 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: GARRY R. FITZGERALD ----------------------------- Its: Director -------------------- AGENT: THE TORONTO-DOMINION BANK By: MICHAEL A. FREEMAN ----------------------------- Its: Manager-Agency, Syndicated Loans -------------------- BANKS: ADDRESS: THE TORONTO-DOMINION BANK 9th Floor By: JOHN DAVID Toronto Dominion Bank Tower ----------------------------- Toronto Dominion Centre Its: Manager Toronto, Ontario M5K 1A2 -------------------- By: KEN KLASSEN ----------------------------- Its: Assistant Vice President ------------------------ ADDRESS: CANADIAN IMPERIAL BANK OF COMMERCE 161 Bay Street By: ANDREW WALLER 8th Floor ----------------------------- Toronto, Ontario Executive Director M5J 2S8 By: MAURO SPAGNOLO ----------------------------- Director ADDRESS: NATIONAL BANK OF CANADA 150 York Street By: WILLIAM CROSSLAND Suite 200 ----------------------------- Toronto, Ontario Its: Senior Manager M5H 3S5 -------------------- By: WILLIAM WASSON ----------------------------- Its: Manager -------------------- 80 EXHIBIT A COMMITMENT RATIOS The Toronto-Dominion Bank 44.9541284% Canadian Imperial Bank of Commerce 32.1100917% National Bank of Canada 22.9357799%
81 EXHIBIT B ACCOMMODATION NOTICE 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 Amended and Restated Loan Agreement (as in effect on the date hereof, the "Loan Agreement"), dated as of August 5, 1999, among the various financial institutions which are party thereto (the "Banks"), The Toronto-Dominion Bank, as Agent (the "Agent"), and the Borrower, hereby certifies to the Agent and the Banks that: 1. The Borrower hereby requests an Advance as follows: (a) Date -------------------------- (b) Aggregate Amount of Accommodation: $ -------------------------- (c) Type and Amount of Accommodation:
(i) COLLATERALIZED PRIME RATE AMOUNT CONVERTED FROM ADVANCE (IF APPLICABLE) - ---------------------------------------- -------------------------------------- -------------------------------------- $ - ---------------------------------------- -------------------------------------- -------------------------------------- - ---------------------------------------- -------------------------------------- --------------------------------------
(ii) UNCOLLATERALIZED PRIME AMOUNT CONVERTED FROM RATE ADVANCE (IF APPLICABLE) - ---------------------------------------- -------------------------------------- -------------------------------------- $ - ---------------------------------------- -------------------------------------- -------------------------------------- - ---------------------------------------- -------------------------------------- --------------------------------------
(iii) COLLATERALIZED BANKERS' ACCEPTANCES - ------------------------------- ---------------------------- ---------------------------- ---------------------------- CONVERTED FROM FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE) - ------------------------------- ---------------------------- ---------------------------- ---------------------------- Cdn. $ Cdn. $ - ------------------------------- ---------------------------- ---------------------------- ---------------------------- - ------------------------------- ---------------------------- ---------------------------- ---------------------------- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
82 - 2 -
(iv) UNCOLLATERALIZED BANKERS'ACCEPTANCES - ------------------------------- ---------------------------- ---------------------------- ---------------------------- CONVERTED FROM FACE AMOUNT TERM IN MONTHS ROLLOVER AMOUNT (IF APPLICABLE) - ------------------------------- ---------------------------- ---------------------------- ---------------------------- Cdn. $ Cdn. $ - ------------------------------- ---------------------------- ---------------------------- ---------------------------- - ------------------------------- ---------------------------- ---------------------------- ---------------------------- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
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 Accommodation Notice 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 Accommodation 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, 1998. 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 Accommodation 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 Accommodation Notice, as of the __ day of ____. MADISON TELECOMMUNICATIONS HOLDINGS INC., a Canada corporation By: -------------------------------------- Its: ---------------------------------- Schedule 1 - Wiring Instructions Schedule 2 - Compliance Calculations 83 EXHIBIT C FORM OF REPAYMENT NOTICE [DATE] TO: THE TORONTO-DOMINION BANK, AS BOOKRUNNER, ARRANGER AND ADMINISTRATION AGENT 1. This Repayment Notice is delivered to you pursuant to Section o of that certain amended and restated loan agreement made as of August 5, 1999 among the undersigned as Borrower, the Banks named therein, and you, as amended or amended and restated from time to time (the "Loan Agreement"). All defined terms set forth in this Repayment Notice shall have the respective meanings set forth in the Loan Agreement. 2. We hereby give notice of a repayment as follows: a) Date of Repayment: ________________________________________________ b) Accommodation Type: _______________________________________________ c) Principal Amount: _________________________________________________ d) Manner of Repayment (if applicable): ______________________________ 3. We hereby give notice of a cancellation or permanent reduction as follows: (a) Date of Reduction: _______________________________________________ (b) Principal Amount: ________________________________________________ DATED this _________ day of ____________________, 19[YEAR]. MADISON TELECOMMUNICATIONS HOLDINGS INC. By: -------------------------------------- Its: -------------------------------------- 84 EXHIBIT D 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 Amended and Restated Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as bookrunner, arranger and administration agent (the "Agent), and The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of Canada and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the 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. 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 - ----------------------------------- ------------------------------------ ------------------------------------ - ----------------------------------- ------------------------------------ ------------------------------------ - ----------------------------------- ------------------------------------ ------------------------------------ - ----------------------------------- ------------------------------------ ------------------------------------
85 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 1999. 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 86 EXHIBIT E 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 Madison Telecommunications Holdings Inc., a Canada corporation (the "Borrower") by the Banks under that certain Amended and Restated Loan Agreement of even date herewith (the "Loan Agreement") by and among the Borrower, The Toronto-Dominion Bank, as bookrunner, arranger and administration agent (the "Agent), and The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of Canada and such other financial institutions as become "Banks" thereunder (collectively, the "Banks"), the undersigned hereby further certifies to the 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. 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 - ----------------------------------- ------------------------------------ ------------------------------------ - ----------------------------------- ------------------------------------ ------------------------------------ - ----------------------------------- ------------------------------------ ------------------------------------ - ----------------------------------- ------------------------------------ ------------------------------------
87 -2- 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 [ ], 1999. [[ ], a Canada corporation By: ----------------------------------- Name: Title: 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 88 EXHIBIT F 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 Interest Expense (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) (g) Section 7.14 - Minimum Operating Cash Flow 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. 89 -2- 4. All capitalized terms not otherwise defined herein are used herein as defined in the Loan Agreement. Date: -------------------------- ----------------------------------- [OFFICER] [TITLE] 90 EXHIBIT G 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 bookrunner, arranger and administration agent (the "Agent"), are parties to a certain Amended and Restated Loan Agreement dated as of August 5, 1999 (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"). 2. Notice. Prior written notice of the assignment made herein has been provided to the Agent. 3. Representations and Warranties. Each of the Assignor and the Assignee represents and warrants to the other, to the 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 91 -2- 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 fulfilment 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 Agent and hereby instructs the Borrower to make payments with respect to the Assigned Accommodations and the Assigned Commitment directly to the Agent for the benefit of the Assignee as provided in the Loan Agreement; provided, however, that the Borrower and the Agent shall be entitled to continue to deal solely and directly with the Assignor in connection with the interests so assigned until the Agent shall have received a copy of this Assignment and Assumption Agreement duly executed by the Assignor, the Assignee, the 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 92 -3- 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. Effective Date. This Agreement will be effective on the date that is the later of: (i) the date hereof; and (ii) five Business Days following receipt of an executed copy of this Agreement by, and the payment of an administrative fee of $5,000 to, the Agent by the Assignor. 8. 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. 9. 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. 10. 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. 11. 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. 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: 93 -4- The undersigned hereby acknowledge the assignment made herein. THE TORONTO-DOMINION BANK, as Agent By: --------------------------------- Title: MADISON TELECOMMUNICATIONS HOLDINGS INC., a Canada corporation By: --------------------------------- Title: 94 SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT RELATING TO AMENDED AND RESTATED LOAN AGREEMENT AMONG MADISON TELECOMMUNICATIONS HOLDINGS INC., THE TORONTO-DOMINION BANK AND SUCH OTHER FINANCIAL INSTITUTIONS AS BECOME "BANKS" THEREUNDER, AND THE TORONTO-DOMINION BANK, AS AGENT DATED AS OF AUGUST 5, 1999 Item 1. Assignor's Commitment: $[ ] Item 2. Assignor's Accommodations $[ ] Item 3. Amount of Assigned Commitment $[ ] Item 4. Amount of Assigned Accommodations $[ ] Item 5. Applicable Lending Office of Assignee and Address for Notices under the Loan Agreement
-------------------------------- -------------------------------- -------------------------------- -------------------------------- 95 Notes to Schedule 1 1. Insert the dollar amount of Assignor's Commitment under the Commitment prior to assignment. 2. Insert the total amount of outstanding Accommodations of Assignor. 3. Insert the dollar amount of the Assignor's Commitment under the Commitment, including the outstanding Accommodations, being assigned. 4. Insert the total amount of the outstanding Accommodations of Assignor being assigned to Assignee. 5. Insert the name and address of the applicable lending office of the Assignee. 96 SCHEDULE 1 LICENSES 1. Industry Canada letter to Madison Telecommunications Inc. dated October 26, 1995 re: national paging frequency 929.2875Mhz. 2. Industry Canada letter to Madison Telecommunications Inc. dated October 27, 1995 re: 50Khz paired channel of 901.525Mhz/940.525Mhz. 97 SCHEDULE 2 SECURITY DOCUMENTS 1. Debenture of the Borrower 2. Debenture Pledge Agreement of the Borrower 3. Collateral Hypothec of the Borrower 4. General Assignment of Book Debts of the Borrower 5. Securities Pledge Agreement by the Borrower with respect to the Stock of Madison Telecommunications Inc. 6. Security from the Borrower under Section 427 of the Bank Act 7. Specific Assignment of Receivables by the Borrower 8. Guarantee of Madison Telecommunications Inc. 9. Debenture of Madison Telecommunications Inc. 10. Debenture Pledge Agreement of Madison Telecommunications Inc. 11. Collateral Hypothec of Madison Telecommunications Inc. 12. General Assignment of Book Debts of Madison Telecommunications Inc. 13. Security from Madison Telecommunications Inc. under Section 427 of the Bank Act 14. Guarantee of Paging Network Canadian Holdings, Inc. (re: securities pledge) 15. Securities Pledge Agreement by Paging Network Canadian Holdings, Inc. 16. Guaranty of Paging Network Canadian Holdings, Inc. (re: deposit agreement) 17. Deposit Agreement by Paging Network Canadian Holdings, Inc. 18. Guarantee of Madison Venture Corporation 19. Deposit Agreement by Madison Venture Corporation 20. Securities Pledge Agreement by Madison Venture Corporation 21. Letter of Credit from Madison Venture Corporation 98 SCHEDULE 3 SUBSIDIARIES Madison Telecommunications, Inc., a Canada corporation 99 SCHEDULE 4 AGREEMENTS WITH AFFILIATES Madison Telecommunications Holdings Inc. Unanimous Shareholders' Agreement dated as of October 28, 1994, among Madison Venture Corporation, Paging Network, Inc. and Madison Telecommunications Holdings Inc. Amendment No. 1 to Unanimous Shareholders' Agreement dated as of October 26, 1995, among Madison Venture Corporation, Paging Network. Canadian Holdings, Inc., Madison Telecommunications Holdings Inc. and Paging Network, Inc. Network Co-ordination and Equipment Supply Agreement dated October 28, 1994, by and between Paging Network, Inc. and Madison Telecommunications Inc. Amendment No. 1 to Network Co-ordination and Equipment Supply Agreement dated October 26, 1995, by and between Paging. Network, Inc. and Madison Telecommunications Inc. Sales and Distribution Agreement dated October 28, 1994, by and between Madison Telecommunications Inc. and Paging Network of Canada Inc. Amendment No. 1 to Sales and Distribution Agreement dated October 26, 1995, by and between Madison Telecommunications Inc. and Paging Network of Canada Inc. 100 SCHEDULE 5 YEAR 2000 PLAN EX-12 4 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (in thousands) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------- ---------------------- 1998 1999 1998 1999 --------- --------- --------- --------- Earnings: Loss before cumulative effect of a change in accounting principle ............................... $ (15,619) $ (95,311) $(107,991) $(147,069) Fixed charges, less interest capitalized ............... 43,119 46,203 86,421 90,156 --------- --------- --------- --------- Earnings ............................................ $ 27,500 $ (49,108) $ (21,570) $ (56,913) ========= ========= ========= ========= Fixed charges: Interest expense, including interest capitalized ........ $ 40,347 $ 42,120 $ 80,592 $ 82,619 Amortization of deferred financing costs ................ 1,103 1,143 2,215 2,260 Interest portion of rental expense ...................... 6,366 8,433 12,890 16,355 --------- --------- --------- --------- Fixed charges ....................................... $ 47,816 $ 51,696 $ 95,697 $ 101,234 ========= ========= ========= ========= Ratio of earnings to fixed charges ......................... -- -- -- -- ========= ========= ========= ========= Deficiency of earnings available to cover fixed charges ....................................... $ (20,316) $(100,804) $(117,267) $(158,147) ========= ========= ========= =========
EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1999 APR-1-1999 JUN-30-1999 11,343 0 79,841 12,318 10,406 102,432 1,488,508 (693,722) 1,433,266 231,143 1,864,142 0 0 1,040 (675,771) 1,433,266 22,930 254,565 10,462 302,351 37,063 6,624 37,770 (95,311) 0 (95,311) 0 0 0 (95,311) (0.92) (0.92)
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