AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Amendment No. 1 to Credit Agreement (this "Amendment") is entered
into as of September 30, 1996 by and among PRONET INC., a Delaware corporation
(the "Borrower"), each of the Subsidiaries listed on the signature pages
hereto, THE FIRST NATIONAL BANK OF CHICAGO, individually and as agent
("Agent"), and the other financial institutions signatory hereto.
RECITALS
A. The Borrower, the Agent and the Lenders are party to that certain
Second Amended and Restated Credit Agreement dated as of June 14, 1996 (as from
time to time amended, supplemented or otherwise modified, the "Credit
Agreement"; capitalized terms used but not otherwise defined herein have the
respective meanings ascribed thereto in the Credit Agreement).
B. Certain Subsidiaries of the Borrower have each guaranteed the
Obligations of the Borrower under the Credit Agreement.
C. The Borrower has recently disclosed certain financial information to
the Agent and the Lenders relating to the impact on the Borrower's financial
condition of certain price-reduction incentive arrangements entered into by the
Borrower with resellers of its Paging Services, as more fully detailed in Annex
A prepared by the Company and attached hereto ("Annex A").
D. As of the date hereof, certain shareholders who purchased common
stock of the Borrower pursuant to a common stock offering consummated by the
Borrower on May 30, 1996 (the "Offering") have instituted various litigation
(collectively, the "Shareholder Litigation") against the Borrower and other
defendants seeking unspecified damages on behalf of all purchasers of the
Borrower's common stock pursuant to the Offering, which Shareholder Litigation
is more fully described in Annex A.
E. Pursuant to Section 4.2(ii) of the Credit Agreement, the Borrower is
required, in connection with any Advance thereunder, to affirm that the
representations and warranties contained in Article V of the Credit Agreement
are true and correct as of the Borrowing Date with respect to such Advance.
F. As a result of the financial information and other matters disclosed
in Annex A, including without limitation the Shareholder Litigation (i) the
Borrower is not able to so affirm the representation and warranty set forth in
the first sentence of Section 5.7 of the Credit Agreement or to confirm the
Borrower's ongoing ability to comply with the financial covenants set forth in
the Credit Agreement, and (ii) the Lenders do not, as of the date hereof, have
sufficient information to determine whether the Borrower is able to so affirm
the representation and warranty set forth in Section
5.5 of the Credit Agreement. As a consequence, since the occurrence of the
events outlined above, the Borrower has been required to obtain waivers from
the Required Lenders of the conditions precedent set forth in Section 4.2 of
the Credit Agreement to each Advance on each Borrowing Date.
G. The Borrower, the Agent and the Lenders wish to amend the Credit
Agreement on the terms and conditions set forth below in order to (a) address
the uncertainty arising from the existence of the Shareholder Litigation, (b)
avoid the need for repeated waivers of the conditions precedent set forth in
Section 4.2 of the Credit Agreement in connection with each Advance requested
under the Credit Agreement during the pendency of the Shareholder Litigation,
and (c) effect other modifications to the Credit Agreement as described
herein.
Now, therefore, in consideration of the mutual execution hereof and other
good and valuable consideration, the parties hereto agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT. Upon the "First Amendment
Effective Date" (as defined below), the Credit Agreement shall be amended as
follows:
(a) ARTICLE I of the Credit Agreement is amended by inserting
the following additional defined terms in proper alphabetical order:
"'First Amendment' means that certain Amendment No. 1
to Credit Agreement dated as of September 30, 1996 by and among
the Borrower, the Agent and the Lenders.
'First Amendment Effective Date' has the meaning
assigned to such term in the First Amendment.
'Georgialina Acquisition' means the Acquisition of all
of the stock of Georgialina Communication Company and all of
the assets of Tele-Page, Inc. by Contact Communications Inc.,
pursuant to the Stock Purchase Agreement among Georgialina
Communication Company, Tele-Page, Inc., Xxxxxxx X. Xxxxxxxx,
Xxxx Xxxxxxxx and Contact Communications Inc. dated as of June
5, 1996 (as such agreement may be amended, modified or
supplemented, so long as any such amendment, modification or
supplement shall have been consented to by (a) the Agent, in the
case of any amendments, modifications or supplements which are
not materially disadvantageous to the Lenders, or (b) the
Required Lenders, in all other cases).
'Litigation Liabilities' means, in respect of the
Shareholder Litigation, any amounts which Borrower has paid, or
has become legally obligated to pay, as the case may be, in
connection with any such Shareholder Litigation, whether
pursuant to a final,
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nonappealable judgment, a judgment which is not stayed or appealed,
a negotiated settlement, or otherwise, but excluding attorneys fees
and disbursements.
'PacWest Acquisition' means, collectively: (a) the
merger of Pac-West Telecomm, Inc. into Borrower pursuant to the
Merger Agreement dated April 25, 1996 among Pac-West Telecomm,
Inc., Xxxx X. XxXxx, Xxxxxxx X. Xxxx, Bay Alarm Company and
Borrower; (b) the Acquisition of Strategic Products Corporation
by Borrower pursuant to the Stock Purchase Agreement among
Strategic Products Corporation, Xxxx X. XxXxx, Xxxxx Xxxxxxx and
Borrower dated April 25, 1996; and (c) concurrently with or
subsequent to the consummation of the transactions described in
(a) and (b) above, the transfer by Borrower to Contact
Communications Inc. of the assets of Pac-West Telecomm, Inc. and
Strategic Products Corporation acquired pursuant to the
transactions described in (a) and (b) above (PROVIDED that the
Merger Agreement and the Stock Purchase Agreement described in
(a) and (b) above may be amended, modified or supplemented, so
long as any such amendments, modifications or supplements shall
have been consented to by (a) the Agent, in the case of any
amendments, modifications or supplements which are not
materially disadvantageous to the Lenders, or (b) the Required
Lenders, in all other cases).
"'Shareholder Litigation' means the litigation
described on Schedule "4" hereto, together with any additional
litigation which may be commenced against the Borrower alleging
or based upon substantially the same set of facts, and setting
forth substantially the same causes of action, as the litigation
described in Schedule "4" as of the First Amendment Effective
Date."
(b) The definition of "Interest Expense" in Article I is
amended in its entirety to read as follows:
"'Interest Expense' means, for any period of
calculation, all interest, whether paid in cash or accrued as a
liability, on Indebtedness during such period (including imputed
interest on Capitalized Lease Obligations), all calculated for
such period for the Borrower and its Subsidiaries on a
consolidated basis in accordance with Agreement Accounting
Principles consistently applied."
(c) The definition of "Permitted Acquisition" in ARTICLE I is
amended in its entirety to read as follows:
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"'Permitted Acquisition' means, at any time of
determination, any Acquisition by the Borrower or any Subsidiary
of a business or entity (other than a PCS Entity) deriving at
least 80% of its net revenues from Paging Services with respect
to which each of the following requirements is then met:
(i) Such Acquisition has been approved and
recommended by the board of directors of the entity to
be acquired;
(ii) (a) the aggregate consideration, including,
without limitation, the purchase price therefor and any
assumption of debt (other than accounts payable and
deferred revenue obligations arising in the ordinary course
of business) for such Acquisition (singly or together with
a group of related Acquisitions (but specifically excluding
the PacWest Acquisition and the Georgialina Acquisition))
is equal to or less than $20,000,000 individually (or
$40,000,000 in the aggregate for all such Permitted
Acquisitions from and after the First Amendment Effective
Date) and, prior to giving effect to such Acquisition, the
Total Leverage Ratio is equal to or less than 5.00:1.00 or
(b) the Borrower has obtained the prior written consent of
the Required Lenders to such Acquisition and such
Acquisition is consummated on terms and conditions
satisfactory to the Required Lenders;
(iii) The Borrower, such Subsidiary and/or
the entity to be acquired, as appropriate, shall have
furnished to the Agent, no later than five (5)
Business Days following the consummation of such
Acquisition, such documents as shall be required
pursuant to Section 2.19; and
(iv) Prior to and after giving effect to such
Acquisition, no Default or Unmatured Default shall
exist.
Notwithstanding the foregoing, the PacWest Acquisition and the
Georgialina Acquisition shall each constitute a Permitted Acquisition
so long as the criteria set forth in clauses (i), (iii) and (iv)
above are satisfied at the time such Acquisitions are consummated, or
within five (5) Business Days thereafter, as applicable."
(d) The definition of "Pro Forma Interest Expense" in ARTICLE I
is amended in its entirety to read as follows:
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"'Pro Forma Interest Expense' means, as at any date of
determination, the product of (i) average Indebtedness
outstanding for the first four complete consecutive fiscal
quarters ending after such date of determination times (ii) the
weighted average of the interest rates on Indebtedness in effect
on such date of determination, all calculated for the Borrower
and its Subsidiaries on a consolidated basis in accordance with
Agreement Accounting Principles consistently applied."
(e) The definition of "Subordinated Indebtedness" in ARTICLE I
is amended in its entirety to read as follows:
"'Subordinated Indebtedness' of a Person means,
collectively, (i) with respect to the Borrower, the 1995 Senior
Subordinated Indebtedness and (ii) with respect to the Borrower
or any other Person, any other Indebtedness (the incurrence or
issuance of which has been consented to by the Required Lenders,
in the case of the Borrower) of such Person which is
subordinated in right of payment to the Secured Obligations
pursuant to a written agreement in form and substance
satisfactory to the Required Lenders."
(f) The definition of "Total Leverage Ratio" in ARTICLE I is
amended in its entirety to read as follows:
"'Total Leverage Ratio' means, as at any date of
determination thereof, the ratio of (i) (a) all Indebtedness
(including Subordinated Indebtedness) outstanding as at such
date of determination minus (b) so long as, on such date of
determination, no Default or Unmatured Default shall exist and
no Advances shall be outstanding hereunder, cash on hand in
excess of $1,000,000 to (ii) Annualized Operating Cash Flow as
at such date of determination, all calculated for the Borrower
and its Subsidiaries on a consolidated basis in accordance with
Agreement Accounting Principles consistently applied."
(g) Subsections (iii), (iv) and (v) of SECTION 2.2 are amended
in their entirety to read as follows:
"(iii) Concurrently with the consummation of any
Significant Sale by the Borrower or any of its Subsidiaries
(which Significant Sale shall have been consented to by the
Required Lenders) or on such later date as the Required
Lenders shall specify, the Borrower shall make a mandatory
payment on the Advances outstanding in such
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amount as the Required Lenders shall specify not in excess of
100% (or, in the case of a Significant Sale of non-paging
assets, 50%) of the Net Cash Proceeds realized by the Borrower
or such Subsidiary from such Significant Sale, such payment to
be applied as specified in clause (1) or clause (2), as
applicable, of Section 2.2(vi)(b), PROVIDED that the foregoing
mandatory payment shall not be required in connection with any
Significant Sale if specifically waived in writing by the
Required Lenders prior to the consummation of such sale.
(iv) Concurrently with the incurrence or issuance of
any Subordinated Indebtedness of the Borrower (which
incurrence or issuance shall have been consented to by the
Required Lenders) or on such later date as the Required
Lenders shall specify, the Borrower shall make a mandatory
payment on the Advances outstanding in such amount as the
Required Lenders shall specify not in excess of 100% of the
Net Cash Proceeds realized by the Borrower or such
Subsidiary from such incurrence or issuance, such payment
to be applied as specified in clause (1) or clause (2), as
applicable, of Section 2.2(vi)(c); PROVIDED that the
foregoing mandatory payment shall not be required (1) if,
after giving effect to the issuance or incurrence of such
Subordinated Indebtedness, the Total Leverage Ratio,
calculated on a PRO FORMA basis as of the date of such
issuance or incurrence, is equal to or less than 4.5:1.0,
or (2) if specifically waived in writing by the Required
Lenders prior to the issuance or incurrence of such
Subordinated Indebtedness.
(v) On the Reduction Date in respect of any Equity
Issuance or on such later date as the Required Lenders
shall specify, the Borrower shall make a mandatory payment
on the Advances outstanding in an amount equal to the
Reduction Amount in respect of such Equity Issuance (or
such lesser amount as the Required Lenders shall specify),
such payment to be applied as specified in Section
2.2(vi)(a)(1), in the case of any Reduction Date occurring
prior to the Facility B Revolving Credit Termination Date,
or as specified in Section 2.2(vi)(a)(2), in the case of
any Reduction Date occurring from and after the Facility B
Revolving Credit Termination Date. Notwithstanding
anything in this Agreement to the contrary (x) the Borrower
agrees that, promptly upon receipt thereof, the Net Cash
Proceeds realized from any Equity Issuance will be used by
the Borrower first (before being used for any other
purpose)
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to cure any breach of Section 6.4.2 or Default resulting
therefrom which may exist at the time of the realization of
such Net Cash Proceeds; and (y) the mandatory payment pursuant
to this Section 2.2(v) shall not be required (1) if, after
giving effect to such Equity Issuance, the Total Leverage
Ratio, calculated on a pro forma basis as of the date of such
issuance, is equal to or less than 4.5:1.0, or (2) if
specifically waived in writing by the Required Lenders prior
to the applicable Reduction Date."
(h) The Applicable Margin table set forth in SECTION 2.4(ii) is
amended in its entirety to read as follows:
Applicable Margin Applicable Margin
"Total for Floating for Eurodollar
Leverage Ratio Rate Advances Advances
-------------- ----------------- -----------------
Greater than
5.75:1.0 1.50% 2.75%
Less than or
equal to 5.75:1.0
but greater than
5.5:1.0 1.25% 2.50%
Less than or
equal to 5.5:1.0
but greater than
5.0:1.0 1.125% 2.375%
Less than or equal
to 5.0:1.0 but greater
than 4.5:1.0 1.00% 2.25%
Less than or equal
to 4.5:1.0 but greater
than 4.0:1.0 .75% 2.00%
Less than or equal
to 4.0:1.0 but greater
than 3.5:1.0 .50% 1.75%
Less than or equal
to 3.5:1.0 but greater
than 3.0:1.0 .25% 1.50%
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Less than or equal
to 3.0:1.0 but greater
than 2.5:1.0 0% 1.25%
Less than or equal
to 2.5:1.0 0% 1.00%"
(i) The third sentence of SECTION 2.15 is amended in its
entirety to read as follows:
"Each Lender shall notify the Agent, not later than eleven
months after receipt of notice from the Borrower pursuant to
Section 6.1(x) in respect of any Equity Issuance, as to whether
or not such Lender elects to approve a mandatory payment in
respect of such Equity Issuance pursuant to Section 2.2(v) of
less than 100% of the applicable Reduction Amount and, if so,
the minimum acceptable prepayment percentage."
(j) SECTION 4.2 is amended by inserting a new clause (v) as
follows:
"(v) The Borrower has delivered a certificate to the Agent,
on behalf of the Lenders, certifying that no portion of
such Advance shall be used to pay Litigation Liabilities
in excess of the amount set forth in the notice referred to
in Sections 5.5 and 5.7 (or, if applicable, the amount set
forth in the letter agreement referred to in Section
6.24)."
(k) SECTION 5.5 is amended in its entirety to read as follows:
"5.5. MATERIAL ADVERSE CHANGE. Since December 31,
1995, there has been no change in the business, Property,
prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect,
PROVIDED that the Shareholder Litigation shall not be deemed to
constitute an event having a Material Adverse Effect unless the
aggregate Litigation Liabilities which the Borrower has paid, or
has become legally obligated to pay, in connection therewith
(excluding any portion thereof actually paid or payable by any
insurance carrier pursuant to any D&O insurance policies) exceed
in the aggregate the amount set forth in that certain notice
dated as of the First Amendment Effective Date delivered by the
Agent to the Borrower and its Subsidiaries (as from time to time
replaced or superceded by any subsequent notice given by the
Agent, on behalf of the Lenders, to the Borrower and its
Subsidiaries) or, if
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applicable, the amount set forth in the letter agreement referred
to in Section 6.24 (which notice and agreement shall each be
expressly subject to the terms of Section 9.16)."
(l) Section 5.7 is amended in its entirety to read as follows:
"5.7. LITIGATION AND CONTINGENT OBLIGATIONS.
Except as set forth on Schedule "3" hereto, there is no
litigation, arbitration, governmental investigation, proceeding
or inquiry pending or, to the knowledge of any of their
officers, threatened against or affecting the Borrower or any of
its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect. Other than any liability incident to
the Shareholder Litigation or the matters disclosed on Schedule
"3", the Borrower has no material contingent obligations not
provided for or disclosed in the financial statements referred
to in Section 5.4, or in other public documents filed by
Borrower with the Securities and Exchange Commission (so long as
copies of such other public documents have been delivered to the
Lenders by the Borrower promptly upon the filing thereof in
accordance with Section 6.1(ix)). Notwithstanding the
foregoing, the Shareholder Litigation shall not be deemed to
constitute litigation which could reasonably be expected to have
a Material Adverse Effect unless the aggregate Litigation
Liabilities which the Borrower has paid, or has become legally
obligated to pay, in connection therewith (excluding any portion
thereof actually paid or payable by any insurance carrier
pursuant to any D&O insurance policies) exceed in the aggregate
the amount set forth in that certain notice dated as of the
First Amendment Effective Date delivered by the Agent to the
Borrower and its Subsidiaries (as from time to time replaced or
superceded by any subsequent notice given by the Agent, on
behalf of the Lenders, to the Borrower and its Subsidiaries) or,
if applicable, the amount set forth in the letter agreement
referred to in Section 6.24 (which notice and agreement shall
each be expressly subject to the terms of Section 9.16)."
(m) SECTION 6.1 is amended by inserting clause (xiii) as
follows:
"(xiii) Written reports with respect to the status of
the Shareholder Litigation, which reports shall be delivered as
soon as possible and in any event within three (3) Business Days
following the occurrence of any material development or other
change in the status of any such litigation."
(n) SECTION 6.4.1 is amended in its entirety to read as
follows:
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"6.4.1. TOTAL LEVERAGE RATIO: The Borrower and its
Subsidiaries will maintain, on a consolidated basis as at the
last day of each fiscal quarter ending during the periods set
forth below, a Total Leverage Ratio not greater than the ratio
set forth below opposite each such period:
Period Ratio
------- -----
First Amendment Effective 5.75:1.00
Date through 6/30/97
7/1/97 through 12/31/97 5.50:1.00
1/1/98 through 6/30/98 5.00:1.00
7/1/98 through 12/31/98 4.50:1.00
1/1/99 through 6/30/99 4.00:1.00
7/1/99 through 12/31/99 3.50:1.00
1/1/00 and thereafter 3.00:1.00
Notwithstanding the foregoing, if the PacWest Acquisition
and the Georgialina Acquisitions are completed prior to
September 30, 1996, the Total Leverage Ratio for the period
from the First Amendment Effective Date through September 29,
1996 shall be 5.90:1.00."
(o) SECTION 6.4.3 is amended in its entirety to read as
follows:
"6.4.3. PRO FORMA DEBT SERVICE RATIO: The Borrower
and its Subsidiaries will maintain, on a consolidated basis as
at the last day of each fiscal quarter, a Pro Forma Debt Service
ratio not less than the ratio set forth below opposite each such
period:
Period Ratio
------------------------ ---------
Amendment Effective Date 1.25:1.00
through 9/30/96
10/1/96 through 12/31/96 1.40:1.00
1/1/97 and thereafter 1.50:1.00"
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(p) SECTION 6.11 is amended in its entirety to read as follows:
"6.11. DIVIDENDS. The Borrower will not, nor will
it permit any Subsidiary to, declare or pay any dividends on its
capital stock (other than dividends payable in its own capital
stock) or redeem, repurchase or otherwise acquire or retire any
of its capital stock at any time outstanding, except (i)
dividends declared and paid by any Subsidiary to the Borrower or
to a Wholly-Owned Subsidiary, and (ii) so long as no Default or
Unmatured Default has occurred and is continuing or will result
therefrom, redemptions by the Borrower of any capital stock
issued as payment of all or any portion of the deferred purchase
price for any Permitted Acquisition (other than the Acquisition
of the assets of Carrier Paging Systems, Inc.)."
(q) SECTION 6.17(x) is amended in its entirety to read as
follows:
"(x) That certain PCS Investment in an aggregate amount of
$100,000 made by Borrower in PageLink, Inc. prior
to the First Amendment Effective Date, and other PCS
Investments, so long as the Required Lenders have given
prior written consent to such other PCS Investments and
such PCS Investments are made pursuant to terms and
conditions satisfactory to the Required Lenders."
(r) SECTION 6.17(xii) is amended in its entirety to read as
follows:
"(x) Acquisitions of assets related to, or a business or entity
engaged in, lines of business other than Paging Services,
so long as the Required Lenders have given prior written
consent to such other lines of business and to such
Acquisition, and such Acquisition is consummated pursuant
to terms and conditions satisfactory to the Required
Lenders."
(s) SECTION 6.19(ix) is amended in its entirety to read as
follows:
"(ix) Claims in respect of escrowed funds deposited in connection
with any Permitted Acquisition."
(t) SECTION 6.22 is amended in its entirety to read as follows:
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"6.22. SUBORDINATED INDEBTEDNESS. The Borrower
will not, and will not permit any Subsidiary to, make any
amendment or modification to the indenture, note or other
agreement evidencing or governing any Subordinated Indebtedness,
or directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise
acquire, any Subordinated Indebtedness."
(u) ARTICLE 6 is amended by inserting a new Section 6.24 as
follows:
6.24. LETTER AGREEMENT. If requested by Agent or any
Lender at any time from and after the First Amendment Effective
Date, Borrower shall, and shall cause each of its Subsidiaries
to, execute and deliver that certain letter agreement in the
form attached as Exhibit "A" to the First Amendment.
(v) SECTION 8.2(iii) is amended in its entirety to read as
follows:
"(iii) Extend the Facility B Revolving Credit
Termination Date or the Facility Termination Date, or
reduce the amount or extend the payment date for, the
mandatory payments required under Section 2.2 (provided
that the foregoing shall not be construed as requiring the
consent of all Lenders to waive or delay any mandatory
payment under Section 2.2(iii), (iv) or (v), which waiver
or consent to delay shall be effective if consented to by
the Required Lenders), or increase the amount of any
Commitment of any Lender hereunder, or permit the Borrower
or any Subsidiary to assign its rights under any
Transaction Document."
(w) SECTION 10.1 is amended by inserting the following as the
last sentence of such section:
"Each of the Lenders further authorizes the Agent to
execute and deliver on behalf of such Lender (a) that certain
notice to the Borrower and its Subsidiaries dated as of the
First Amendment Effective Date referred to in Sections 5.5 and
5.7 hereof, and (b) if applicable, the letter agreement referred
to in Section 6.24 (which notice and agreement shall each be
binding on such Lender and shall be expressly subject to the
terms of Section 9.16)."
(x) SECTION 12.2.2 is amended in its entirety to read as
follows:
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"12.2.2. VOTING RIGHTS. Each Lender shall retain the
sole right to approve, without the consent of any Participant,
any amendment, modification or waiver of any provision of the
Transaction Documents, other than any amendment, modification or
waiver with respect to any Loan or Commitment in which such
Participant has an interest which forgives principal, interest
or fees or reduces the interest rate or fees payable with
respect to any such Loan or Commitment, postpones any date fixed
for any regularly-scheduled payment of principal (including,
without limitation, any payment of principal required to be made
pursuant to Section 2.2 (i) or (ii), or, if not waived or
delayed by the Required Lenders, Section 2.2 (iii), (iv) or (v))
of, or interest or fees on, any such Loan or Commitment,
releases any guarantor of any such Loan or releases any
substantial portion of the collateral, if any, securing any such
Loan."
(y) In order to reflect the Commitments of each of the Lenders
as of the First Amendment Effective Date, the respective amounts of the
Facility A Commitment and Facility B Commitment of each of the Lenders set
forth on the signature pages to the Credit Agreement are hereby deleted in
their entirety and shall be replaced with the respective amounts of such
Commitments of each such Lender set forth on the signature pages to this
First Amendment.
(z) The calculation of the Total Leverage Ratio set forth in
Schedule I to Exhibit "C" is amended by deleting, in item (i) thereof, the
phrase "(including Subordinated Indebtedness other than any portion of the
principal of the 1996 Senior Subordinated Indebtedness held in the
Teletouch Escrow)" and inserting the phrase "(including Subordinated
Indebtedness)" in substitution therefor.
(aa) Schedule "4" to the Credit Agreement is deleted in its
entirety and is replaced by Schedule "4" attached to this Amendment.
2. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants that:
(a) The execution, delivery and performance by the Borrower of this
Amendment have been duly authorized by all necessary corporate action
and this Amendment is a legal, valid and binding obligation of the
Borrower enforceable against it in accordance with its terms, except
as the enforcement thereof may be subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law);
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(b) After giving effect to this Amendment, each of the
representations and warranties contained in the Credit Agreement is
true and correct in all material respects on and as of the date
hereof as if made on the date hereof; and
(c) After giving effect to this Amendment, no Default or Unmatured
Default has occurred and is continuing.
3. CONDITIONS PRECEDENT. The First Amendment Effective Date shall
not occur, and this Amendment shall be of no force and effect, until the Agent
shall have received duly executed copies (including sufficient copies for each
of the Lenders) of each of the following:
(a) This Amendment, executed by the Borrower, each of the
Subsidiaries listed on the signature pages hereto and each of the
Lenders.
(b) A certificate from the Secretary or an Assistant Secretary of
the Borrower and each Subsidiary stating that there have been no
changes to the respective Certificates of Incorporation or Bylaws of
such Person since the Restructuring Date.
(c) A written opinion of Xxxxxx and Xxxxx, L.L.P., special counsel
for the Borrower and its Subsidiaries, addressed to the Lenders in
substantially the form of Exhibit "B" to this Amendment.
(d) Facility A Notes and Facility B Notes payable to the order of
each of the Lenders based on each such Lender's Commitments after
giving effect to this Amendment.
(e) Evidence satisfactory to the Lenders and their respective
counsel that the Borrower shall have made all filings and
registrations and obtained all Authorizations, if any, which are or
may be required prerequisites to the validity, enforceability or non-
voidability of this Amendment.
(f) The Borrower shall have paid such fees as shall be payable to
the Agent and to First Chicago Capital Markets, Inc. on or prior to
the First Amendment Effective Date pursuant to the amended and
restated letter agreement dated September 30, 1996.
(g) The Borrower and its Subsidiaries shall have acknowledged, in
writing, receipt of that certain notice dated as of the First
Amendment Effective Date delivered by the Agent, on behalf of the
Lenders, to the Borrower and its Subsidiaries in respect of the
Shareholder Litigation.
(h) Such other documents as any Lender or its counsel may have
reasonably requested.
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The date on which each of the foregoing conditions precedent has been met is
referred to herein as the "First Amendment Effective Date". Notwithstanding
the foregoing, in the event the First Amendment Effective Date has not occurred
on or before October 31, 1996, this Amendment shall not become operative and
shall be of no force or effect.
4. REAFFIRMATION OF GUARANTIES. The Subsidiaries listed on the
signature pages hereto (a) consent to the terms and provisions of this
Amendment, (b) reaffirm their obligations under the Subsidiary Guaranty, and
(c) confirm that the Subsidiary Guaranty and the Subsidiary Security Agreement
remains in full force and effect with respect to the Credit Agreement
notwithstanding the amendments provided for herein.
5. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
(a) Except as specifically amended above, the Credit Agreement and the
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of the Agent or any Lender
under the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document, except as specifically
set forth herein. Upon the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of similar import shall mean and be a reference to the Credit Agreement
as amended hereby. Without limitation of the foregoing: (i) the notice
referred to in Sections 5.5 and 5.7 of the Credit Agreement (as amended hereby)
is limited to the express circumstances described in the recitals hereto
(including Annex A) and is further limited solely to the Borrower's ability to
remake and reaffirm the representations and warranties set forth in Sections
5.5 and 5.7 during the pendency of the Shareholder Litigation; and (ii) nothing
contained herein shall be construed as, or shall constitute, a waiver of any
other condition precedent or any other term or requirement under the Credit
Agreement or any of the other Transaction Documents, including without
limitation (A) any other requirement that representations or warranties under
the Credit Agreement be remade or reaffirmed at any time, or (B) any Default or
Unmatured Default that may at any time occur or be continuing, even if such
Default or Unmatured Default arises as a result of the payment of Litigation
Liabilities in an amount less than the amount set forth in the notice referred
to in Sections 5.5 and 5.7 of the Credit Agreement (or, if applicable, the
amount set forth in the letter agreement referred to in Section 6.24 of the
Credit Agreement).
6. COSTS AND EXPENSES.
(a) The Borrowers hereby affirm their obligation under Section 9.7 of the
Credit Agreement to reimburse the Agent for all reasonable costs, internal
charges and out-of-pocket expenses paid or incurred by the Agent in connection
with the preparation,
-15-
negotiation, execution and delivery of this Amendment, including but not
limited to the attorneys' fees and time charges of attorneys for the Agent
with respect thereto.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
8. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purposes.
9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.
-16-
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date and year first above written.
PRONET INC.
By:
-----------------------------------
Xxx Xxxxxxxx
Senior Vice President
BEEPERS TO GO, INC.
CONTACT COMMUNICATIONS OF
MASSACHUSETTS, INC.
CONTACT COMMUNICATIONS OF
PENNSYLVANIA, INC.
CONTACT COMMUNICATIONS, INC.
ELECTRONIC TRACKING SYSTEMS, INC.
PROFESSIONAL COMMUNICATIONS
SYSTEMS, INC.
THE MESSAGE EXPRESS, INC.
CONTACT COMMUNICATIONS INC.
METROPOLITAN HOUSTON PAGING
SERVICES, INC.
A. G. R. ELECTRONICS, INC.
PRONET SUBSIDIARY, INC.
By:
-----------------------------------
Xxx Xxxxxxxx
Vice President - Finance of each of
the foregoing corporations
COMMITMENTS
Facility A Commitment: THE FIRST NATIONAL BANK OF CHICAGO,
$10,833,333.00 Individually and as Agent
By:
-----------------------------------
Facility B Commitment: C. Xxxx Xxxxxxx
$54,166,667.00 Vice President
-17-
Facility A Commitment: XXXXX FARGO BANK (TEXAS),
$5,833,333.67 NATIONAL ASSOCIATION
Facility B Commitment: By:
$29,166,666.33 Print Name:
Title:
Facility A Commitment: UNION BANK OF CALIFORNIA, N.A.
$4,166,666.67
By:
----------------------------------
Facility B Commitment: Print Name:
$20,833,333.33 Title:
Facility A Commitment: XXXXXX COMMERCIAL PAPER INC.
$4,166,666.67 By:
Print Name:
Facility B Commitment: Title:
$20,833,333.33
-18-
EXHIBIT "A" TO FIRST AMENDMENT
________________, 199_
ProNet Inc.
000 Xxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Xx. Xxx Xxxxxxxx
Senior Vice President
Each of the Subsidiaries listed
on the signature page hereto
RE: LETTER AGREEMENT--SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Gentlemen/Ladies:
Reference is made to that certain Second Amended and Restated Credit
Agreement dated as of June 14, 1996 (as amended from time to time, the
"Credit Agreement") among ProNet Inc. (the "Borrower"), The First National
Bank of Chicago, individually and as agent (the "Agent") and the other
lenders (the "Lenders") party thereto. Capitalized terms used but not
otherwise defined herein have the respective meanings ascribed thereto in the
Credit Agreement. This letter agreement constitutes the letter agreeement
referred to in Section 6.24 of the Credit Agreement.
By execution of this letter agreement, the Borrower and its Subsidiaries
and the Agent, on behalf of the Lenders hereby agree that, for purposes of
Sections 5.5 and 5.7 of the Credit Agreement, the maximum aggregate
Litigation Liabilities which the Borrower may pay, or become legally
obligated to pay, in connection with the Shareholder Litigation (excluding
any portion thereof actually paid or payable by any insurance carrier
pursuant to any D&O insurance policies) without causing a breach of the
representations and warranties set forth in Sections 5.5 and 5.7 is
$____________; [INSERT AMOUNT IN EFFECT AS OF THE DATE OF THIS LETTER
AGREEMENT PURSUANT TO THE MOST RECENT NOTICE DELIVERED PURSUANT TO SECTIONS
5.5 AND 5.7] PROVIDED that the Agent and the Lenders reserve the right in
their sole discretion to decrease such amount if such decrease is deemed to
be warranted based on the financial condition or results of operations of the
Borrower. Any determination to effect any such decrease shall be evidenced
by the execution and delivery of a subsequent letter agreement among the
Agent, on behalf of the Lenders, the Borrower and its Subsidiaries. The
parties hereto further agree that the amount set forth above has been
determined based on the Lenders' credit analysis of the Borrower and its
Subsidiaries in light of the circumstances outlined in the First Amendment
and does not represent, and should not be construed as, an assessment or
judgment by the Borrower and its Subsidiaries or the Lenders as to the merits
or likely outcome of the Shareholder Litigation.
This letter agreement supersedes any and all prior versions hereof or
thereof related to the subject matter hereof. This letter agreement may only
be amended by a writing signed by all parties hereto. IF THIS LETTER
AGREEMENT, OR ANY ACT, OMISSION OR EVENT HEREUNDER OR THEREUNDER, BECOMES THE
SUBJECT OF A DISPUTE, THE BORROWER, ITS SUBSIDIARIES, THE AGENT AND THE LENDERS
EACH HEREBY WAIVE TRIAL BY JURY. THIS LETTER AGREEMENT SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
Sincerely,
THE FIRST NATIONAL BANK OF CHICAGO,
INDIVIDUALLY AND AS AGENT
By:
Title:
ACCEPTED AND AGREED TO this
____ day of __________, 199_ by
PRONET INC.
By: ______________________________
Xxx Xxxxxxxx, Senior Vice President
ACCEPTED AND AGREED TO this
____ day of ____________, 199_ by
BEEPERS TO GO, INC.
CONTACT COMMUNICATIONS OF MASSACHUSETTS, INC.
CONTACT COMMUNICATIONS OF PENNSYLVANIA, INC.
CONTACT COMMUNICATIONS, INC.
ELECTRONIC TRACKING SYSTEMS, INC.
PROFESSIONAL COMMUNICATIONS SYSTEMS, INC.
THE MESSAGE EXPRESS, INC.
CONTACT COMMUNICATIONS INC.
METROPOLITAN HOUSTON PAGING SERVICES, INC.
A. G. R. ELECTRONICS, INC.
PRONET SUBSIDIARY, INC.
By: ________________________________
Xxx Xxxxxxxx
Vice President--Finance of each of the
foregoing corporations
-2-
EXHIBIT "B" TO FIRST AMENDMENT
OPINION OF COUNSEL
See Attached
-3-
SCHEDULE "4"
SHAREHOLDER LITIGATION
See Attached
-4-
ANNEX A
See Attached
-5-
