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EXHIBIT 10.22
FIRST AMENDMENT TO THE LOAN AGREEMENT
DATED as of the 18th day of April, 1997.
A M O N G:
MADISON TELECOMMUNICATIONS
HOLDINGS INC.
(the "Borrower")
-and-
THE TORONTO-DOMINION BANK, as
administrative agent
(the "Administrative Agent")
-and-
THE TORONTO-DOMINION BANK and such
other financial institutions as become "Banks"
under the Loan Agreement
(collectively, the "Banks")
WHEREAS the Borrower, the Administrative Agent and the Banks entered into
a loan agreement dated as of the 5th day of June, 1996 (the "Loan Agreement")
pursuant to which the Banks agreed to establish credit facilities in favour of
the Borrower;
AND WHEREAS the Borrower, the Administrative Agent and the Banks have
agreed that the Loan Agreement shall be amended, all as more particularly set
forth herein;
NOW THEREFORE, the parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms. Unless there is something in the subject matter or context
inconsistent therewith, all defined terms in the Loan Agreement shall have the
same meaning
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in this Agreement and all conventions of interpretation established in the Loan
Agreement shall have the same effect in this Agreement.
1.2 GOVERNING LAW. This Agreement 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.
ARTICLE 2
AMENDMENTS
2.1 AMENDMENT TO ARTICLE 1. Section 1 of the Loan Agreement is amended by:
(a) the addition, in the appropriate alphabetical order, of the following
definitions:
"DEPOSIT AGREEMENT GUARANTY" shall mean that certain Guaranty in
favour of the Administrative Agent for the benefit of the Banks, given
by PNCHI on April 18, 1997.
"PAGENET CANADA OBLIGATIONS" shall mean the indebtedness, liabilities
and obligations of PageNet Canada to the Administrative Agent and the
Banks under, or in connection with, the PageNet Canada Agreement.
"PNCHI" shall mean Paging Network Canadian Holdings, Inc., a Delaware
corporation.
"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.
(b) the deletion of the definitions of "AVAILABLE COMMITMENT",
"COMMITMENT", "DEPOSIT AGREEMENT", "LETTER OF CREDIT", "MATURITY
DATE", "MINIMUM PERMITTED COLLATERAL AMOUNT", "PERMITTED COLLATERAL",
"RESTRICTED PAYMENT", "TOTAL DEBT", "TOTAL SUBSCRIBERS" and "UNITS IN
SERVICE", and by the substitution therefor, in the appropriate
alphabetical order, of the following:
"AVAILABLE COMMITMENT" shall mean, as of any date, the greater of:
(a) the Equivalent Canadian Dollar Amount of the aggregate amount of
Permitted Collateral held on such date by the Administrative
Agent pursuant to the Deposit Agreement; and
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(b) $22,500,000, but only to the extent that (i) the Minimum Permitted
Collateral Amount is held on such date by the Administrative Agent
pursuant to the Deposit Agreement, and (ii) as of the end of the most
recently completed fiscal quarter for which financial statements have
been delivered pursuant to Sections 6.1 or 6.2, as applicable, hereof,
either (A) for the two (2) most recently completed fiscal quarters,
the Leverage Ratio is less than 7.0 to 1, or (B) (i) the aggregate
number of Units in Service is greater than or equal to 50,000, and
(ii) Gross Revenue for the Borrower Group on a combined basis is
greater than or equal to $1,600,000; or
(c) $25,500,000, but only to the extent that (i) the Minimum Permitted
Collateral Amount is held on such date by the Administrative Agent
pursuant to the Deposit Agreement, and (ii) as of the end of the most
recently completed fiscal quarter for which financial statements have
been delivered pursuant to Sections 6.1 or 6.2, as applicable, hereof,
either (A) 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 120,000, and
(ii) Gross Revenue for the Borrower Group on a combined basis is
greater than or equal to $3,750,000; or
(d) $30,000,000, but only to the extent that (i) the Minimum Permitted
Collateral Amount is held on such date by the Administrative Agent
pursuant to the Deposit Agreement, and (ii) as of the end of the most
recently completed fiscal quarter for which financial statements have
been delivered pursuant to Sections 6.1 or 6.2, as applicable, hereof,
either (A) 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 180,000, 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
promulgate 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.
"COMMITMENT" shall mean the several obligations of the Banks to make
Accommodations to the Borrower pro rata, in accordance with their
respective
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Commitment Ratios, in an aggregate amount of up to
$30,000,000 pursuant to the terms hereof, as such obligations
may be reduced from time to time pursuant to the terms
hereof.
"DEPOSIT AGREEMENT" shall mean, collectively, that certain
Deposit Agreement dated as of April 18, 1997 between PNCHI
and the Administrative Agent for the benefit of the Banks,
the Deposit Agreement dated June 5, 1996 between Madison
Venture Corporation and the Administrative Agent for the
benefit of the Banks and any other Deposit Agreement entered
into by the Administrative Agent after the Agreement Date.
"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 Administrative Agent for
the benefit of the Banks and all renewals thereof and
substitutions therefor, all of which shall be in form and
substance satisfactory to the Administrative Agent.
"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) prior to April 1, 2001, $17,500,000 (or the
Equivalent U.S. Dollar Amount) and (b) on or after April 1,
2001, the lesser of (i) $17,500,000 (or the Equivalent U.S.
Dollar Amount), and (ii) the product of (A) 58.333334% times
(B) the Commitment as of such date.
"PERMITTED COLLATERAL" shall mean (a) the Letter of Credit
(or the proceeds thereof in Dollars if such Letter of Credit
is drawn), (b) U.S. Dollars, (c) marketable, direct
obligations of the United States of America maturing within
ninety (90) days of the date of purchase, or (d) other
collateral acceptable to the Banks at any time and from time
to time held by or on deposit with the Administrative Agent
pursuant to the Deposit Agreement as collateral for the
Deposit Agreement Guaranty.
"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
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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.
"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.
"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.
"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.
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2.2 Amendments to Article 2. Article 2 of the Loan Agreement is amended by:
(a) the deletion of Section 2.8 and the substitution therefor of the
following:
"Section 2.8 Mandatory Commitment Reductions. Commencing March
31, 2001 and at the end of each fiscal quarter thereafter, the
Uncollateralized Portion of the Commitment as in effect on March
30, 2001, shall be automatically and permanently reduced by the
percentages set forth below:
Quarterly Percentage
Reduction of the
Uncollateralized Portion of
the Commitment in Effect
Dates of Commitment Reduction on March 30, 2001
----------------------------- ---------------------------
March 31, 2001, June 30, 2001, September 30, 2.500%
2001 and December 31, 2001
March 31, 2002, June 30, 2002, September 30, 7.500%
2002 and December 31, 2002
March 31, 2003, June 30, 2003, September 30, 7.500%
2003 and December 31, 2003
March 31, 2004, June 30, 2004, September 30, 7.500%
2004 and December 31, 2004
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.
(b) the deletion of the reference to "June 30, 1999" in the
nineteenth line of Section 2.9(b) and the substitution therefor
of "March 31, 2001".
2.3 Amendments to Article 6. Article 6 of the Loan Agreement is amended by:
(a) the deletion of Section 6.1 and the substitution therefor of the
following:
"Section 6.1 Quarterly Financial Statements and Information.
Within forty-five (45) days after the last day of each of the
first three (3) fiscal quarters of the Borrower during any fiscal
year:
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(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 audit
adjustments and the absence of footnotes."
(b) the deletion of Section 6.2 and the substitution therefor of the
following:
"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 Administrative Agent, certified to have been
prepared in accordance with GAAP and to present fairly in all
material respects the financial position of the Borrower on a
consolidated and consolidating (unconsolidated) basis with its
Subsidiaries as at the end of such fiscal year; and
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(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."
2.4 AMENDMENTS TO ARTICLE 7. Article 7 of the Loan Agreement is amended by:
(a) the deletion from Section 7.1(e) of the word "and" at the end of
Section 7.1(e); the deletion of the period (".") at the end of
Section 7.1(f) and the substitution therefor of the word "and";
and the addition of Section 7.1(g), as follows:
"(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
Administrative 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 Administrative 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 Administrative Agent, all in
form and substance satisfactory to the Administrative
Agent, in its sole discretion."
(b) the deletion of Section 7.7 and the substitution therefor of the
following:
"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 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."
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(c) the deletion of Section 7.8 and the substitution therefor of the
following:
"Section 7.8 Leverage Ratio. Commencing July 1, 1999, the
Borrower shall not permit the Leverage Ratio to exceed the ratios
set forth below during the periods indicated:
Period Ratio
------ -----
July 1, 1999 through 6.00:1
December 31, 1999
January 1, 2000 through 5.00:1
June 30, 2000
July 1, 2000 through 4.00:1
December 31, 2000
January 1, 2001 through 3.00:1
June 30, 2001
July 1, 2001 and thereafter 2.50:1"
(d) the deletion of Section 7.9 and the substitution therefor of the
following:
"Section 7.9 Annualized Operating Cash Flow to Pro Forma Debt
Service. Commencing January 1, 2000, the Borrower shall not
permit the ratio of Annualized Operating Cash Flow to Pro Forma
Debt Service for the Borrower Group on a combined basis to be
less than the ratios set forth below for the periods indicated:
Period Ratio
------ -----
January 1, 2000 through 1.25:1
June 30, 2002
July 1, 2002 and thereafter 1.50:1"
(e) the deletion of Section 7.10 and the substitution therefor of the
following:
"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 $175.00."
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(f) the deletion of Section 7.11 and the substitution therefor of the
following:
"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, 1996 $45,000,000.00
At December 31, 1997 $22,000,000.00
At December 31, 1998 $19,000,000.00
and thereafter
No amount of unused Total Capital Expenditure availability may be
carried forward from 1996 to 1997 or subsequent fiscal years.
Commencing in 1997, 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."
(g) the deletion of Section 7.12 and the substitution therefor of the
following:
"Section 7.12 Minimum Revenue Test. Commencing March 31, 1997 and
continuing for each fiscal quarter through the fiscal quarter
ending June 30, 1999, 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
-------------- ---------------
03/31/97 $1,380,000
06/30/97 $1,930,000
09/30/97 $2,550,000
12/31/97 $3,360,000
03/31/98 $4,040,000
06/30/98 $4,620,000
09/30/98 $5,440,000
12/31/98 $6,130,000
03/31/99 $6,860,000
06/30/99 $7,550,000"
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(g) the deletion of Section 7.13 and the substitution therefor of the
following:
"Section 7.13 Minimum Units in Service. Commencing March 31, 1997
and continuing for each fiscal quarter through the fiscal quarter
ending June 30, 1999, 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
-------------- -------------
03/31/97 45,000
06/30/97 62,000
09/30/97 80,000
12/31/97 100,000
03/31/98 120,000
06/30/98 147,000
09/30/98 173,000
12/31/98 200,000
03/31/99 234,000
06/30/99 274,000"
ARTICLE 3
CONDITIONS PRECEDENT
Without limiting the application of Article 3 of the Loan
Agreement, the effectiveness of this Agreement is subject to the prior or
contemporaneous fulfilment of each of the following conditions:
(a) the transfer of certain Permitted Collateral from PageNet to
PNCHI and the receipt by the Administrative Agent of
documentation confirming such transfer;
(b) the replacement of the PageNet Guaranty with the Deposit
Agreement Guaranty;
(c) the execution and delivery of the Deposit Agreement by PNCHI;
(d) PageNet Canada shall execute a specific assignment of receivables
(including a postponement) in favour of the Administrative Agent,
in respect of any present and future Indebtedness of the Borrower
to PageNet Canada contemplated by Section 7.1(g) of the Loan
Agreement;
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(e) the delivery of legal opinions of (i) Xxxxxxx, Xxxx & Xxxxx, LLP,
counsel to PNCHI, in respect of, inter alia, the authorization,
execution and delivery of the Deposit Agreement Guaranty and the
Deposit Agreement, (ii) Powell, Goldstein, Xxxxxx & Xxxxxx, in respect
of the enforceability of the Deposit Agreement Guaranty and the
Deposit Agreement; and (iii) XxXxxxxx Xxxxxxxx, counsel to the
Borrower, in respect of, inter alia, the authorization, execution,
delivery and enforceability of the specific assignment of receivables
referred to in Section 3(d) above, all in form and substance
satisfactory to each Bank and the Administrative Agent; and
(f) the Administrative Agent and each Bank shall have received payment
of all fees due and payable in connection with the execution of this
Agreement.
ARTICLE 4
MISCELLANEOUS
4.1 CONFIRMATION
Except as hereinbefore provided, the parties hereto confirm the terms and
conditions of the Loan Agreement and acknowledge that the Loan Agreement as
amended hereby is in full force and effect.
4.2 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of such separate counterparts shall
together constitute one and the same original.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date first above written.
BORROWER: MADISON TELECOMMUNICATIONS
HOLDINGS INC.
Per: /s/ XXXXX AUNGRE
----------------------------
(Authorized Signing Officer)
Per: /s/ X. XXXXXX
----------------------------
(Authorized Signing Officer)
ADMINISTRATIVE AGENT: THE TORONTO-DOMINION BANK
Per: /s/ X. XXXXXXXX
----------------------------
(Authorized Signing Officer)
Per:
----------------------------
(Authorized Signing Officer)
BANK: THE TORONTO-DOMINION BANK
Per: /s/ XXX XXXXXXX
----------------------------
(Authorized Signing Officer)
Per: /s/ XXXXXX XXXXXX
----------------------------
(Authorized Signing Officer)
