Exhibit 10.2.2
THIS FIRST AMENDMENT AGREEMENT is made as of the 31st day of March, 0000
X X X X X X X:
MAXXCOM INC.
a corporation incorporated under the
laws of the Province of Ontario
("Maxxcom")
- and -
MAXXCOM INC.
a corporation incorporated under the
laws of the State of Delaware
("Maxxcom US")
AS BORROWERS
-AND -
MAXXCOM (NOVA SCOTIA) CORP.
MAXXCOM (USA) FINANCE COMPANY
MAXXCOM (USA) HOLDINGS INC.
1220777 ONTARIO LIMITED
NEWS CANADA INC.
1385544 ONTARIO LIMITED
MAXXCOM INTERACTIVE INC.
MACKENZIE MARKETING, INC.
MF+P ACQUISITION CO.
SMI ACQUISITION CO.
ACCENT ACQUISITION CO.
FMA ACQUISITION CO.
TC ACQUISITION INC.
ET ACQUISITION INC.
BZ ACQUISITION INC.
CDI ACQUISITION CO.
BRATSKEIR & COMPANY, INC.
CPB ACQUISITION INC.
CORMARK XXXXXXX COMMUNICATION SOLUTIONS (CANADA) INC.
XXXXXXXX & PARTNERS COMMUNICATIONS LTD.
XXXXXXX XXXX XXXXXX XXXXXXX INC.
STUDIOTYPE INC.
AS GUARANTORS
-AND-
THE BANK OF NOVA SCOTIA
a bank to which the Bank Act (Canada) applies,
in its capacity as administrative agent hereunder
AS ADMINISTRATIVE AGENT
-AND-
THE BANK OF NOVA SCOTIA
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
CANADIAN IMPERIAL BANK OF COMMERCE
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
BANK OF MONTREAL
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
THE TORONTO-DOMINION BANK
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
ROYAL BANK OF CANADA
a bank to which the Bank Act (Canada) applies,
in its capacity as a lender hereunder
- and -
THE BANK OF NOVA SCOTIA
by its Atlanta Agency,
in its capacity as a lender hereunder
- and -
CIBC INC.
a financial institution incorporated under the laws of the State of Delaware,
in its capacity as a lender hereunder
- and -
BANK OF MONTREAL
by its Chicago branch,
in its capacity as a lender hereunder
- and -
TORONTO DOMINION (TEXAS), INC.
a corporation incorporated under the laws of Delaware,
in its capacity as a lender hereunder
- and -
ROYAL BANK OF CANADA
by its Grand Cayman (North America No. 1) Branch,
in its capacity as a lender hereunder
AS LENDERS
RECITALS:
A. The Borrowers, certain of the Guarantors, the Agent and the Lenders
are parties to a Second Amended and Restated Credit Agreement dated
as of 11 July 2001 (the "Credit Agreement").
B. Since the date of the Credit Agreement, there have been changes to
various Restricted Parties, as follows:
(a) each of Xxxxxxxx & Partners Communications Ltd., Cormark
XxxXxxx Communication Solutions (Canada) Inc., Xxxxxxx Xxxx
Xxxxxx Xxxxxxx Inc. and Studiotype Inc. have become
Wholly-Owned Subsidiaries of Maxxcom; and
(b) effective 14 February 2002, Pavlika Xxxxxxxx Direct, LLC
changed its name to Xxxxxxxx Direct, L.L.C.
C. Maxxcom has undertaken a restructuring and recapitalization plan to
respond to difficult conditions in the advertising industry which
plan involves, inter alia, discontinuance of certain operations and
incurrence of various restructuring charges in relation thereto,
borrowing Cdn. $25,000,000 of additional subordinated indebtedness
from its majority shareholder, MDC Corporation Inc., and making a
rights offering.
D. 1220777 Ontario Limited proposes to sell all of the outstanding
Capital Stock held by it in News Canada Inc. and Maxxcom proposes to
sell the inter-company balance due by News Canada Inc. to Maxxcom.
E. Maxxcom has requested that the Lenders:
(a) exclude the financial results of the Discontinued Operations
from the determination of EBITDA for the purpose of
calculating the financial covenants set forth in Sections
7.2(a), (b) and (c) of the Credit Agreement, commencing with
calculations for the fiscal quarter ending 31 March 2002;
(b) exclude the Restructuring Charges from the determination of
EBITDA for the purpose of calculating the financial
covenants set forth in Sections 7.2(a), (b) and (c) of the
Credit Agreement, commencing with calculations for the
fiscal quarter ending 31 March 2002;
(c) agree to amend levels of the financial covenants set forth
in Sections 7.2 (b) and (c) of the Credit Agreement;
(d) exclude the amount of the MDC Subordinated Debt and the
Rights Offering from the calculation of the Net Worth Base;
(e) consent to the sale by 1220777 Ontario Limited of all of the
outstanding Capital Stock held by it in News Canada Inc. and
to the sale by Maxxcom of the inter-company balance due to
it from News Canada Inc. referred to above; and
(f) consent to certain other matters and make consequential
amendments as set forth herein.
F. The Lenders have agreed to such requests on the terms and conditions
set forth herein and the parties are entering into this First
Amendment Agreement to give effect thereto and to make the other
changes to the Credit Agreement reflected herein.
NOW THEREFORE in consideration of these premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
Section 1 - New Definitions
Section 1.1 of the Credit Agreement is amended by adding the
following definitions:
1.1.54.1 "Discontinued Operations" means the businesses and
operations of XxXxxxx Xxxxxx Communications Inc.,
Bang!Zoom LLC and E -Telligence LLC which have been
discontinued by Maxxcom.
1.1.72.1 "First Amendment Agreement" means the First
Amendment Agreement to this Agreement made as of 31
March 2002.
1.1.101.1 "MDC Intercreditor Agreement" means the
intercreditor agreement dated as of 31 March 2002
between MDC Corporation Inc., the Agent for and on
behalf of the Lenders, the Mezz Agent for and on
behalf of the Mezz Holders, and the Restricted
Parties.
1.1.101.2 "MDC Subordinated Debt" means the subordinated loan
made by MDC Corporation Inc. in favour of Maxxcom
as evidenced by a demand promissory note dated 7
May 2002 in the amount of Cdn. $25,000,000 which
bears interest at a rate of 2.5% per annum.
1.1.152.1 "Restructuring Charges" means the fees, costs,
expenses and charges relating to the
rationalization of Maxxcom and the other Restricted
Parties including without limitation the
termination of the Discontinued Operations,
including but not limited to, severance costs,
occupancy charges, acquisition costs and new
business costs, fixed asset and deferred charges
and fees for the termination of leases and other
commitments not in excess of Cdn. $14,200,000 and
incurred not later than 31 December 2001.
1.1.153.1 "Rights Offering" means the proposed offering to
holders of outstanding common shares of Maxxcom of
rights to subscribe for additional common shares of
Maxxcom at a price per share to be determined and
for gross proceeds of not less than Cdn.
$25,000,000 and up to Cdn. $33,000,000, or any
other equity infusion to Maxxcom agreed to between
Maxxcom and MDC Corporation Inc. in lieu thereof
yielding gross proceeds to Maxxcom of not less than
Cdn. $25,000,000.
Section 2 - Amended Definitions
Sections 1.1.31, 1.1.59, 1.1.79, 1.1.112, 1.1.118, 1.1.128, 1.1.132,
1.1.164, 1.1.177 and 1.1.181 of the Credit Agreement are deleted and replaced
with the following provisions:
1.1.31 "CanSubCos" means 1220777 Ontario Limited (an
Ontario corporation), News Canada Inc. (an Ontario
corporation), 656712 Ontario Limited (an Ontario
corporation), Accumark Promotions Group Inc. (an
Ontario corporation), Xxxxxxx Xxxx Xxxxxx Xxxxxxx
Inc. (an Ontario corporation), Xxxxx Xxxxx Group
Ltd. (an Ontario corporation), Cormark XxxXxxx
Communication Solutions (Canada) Inc. (an Ontario
corporation), Xxxxxx Xxxxxxx Communications Inc.
(an Ontario corporation), Veritas Communications
Inc. (an Ontario corporation), Integrated
Healthcare Communications, Inc. (an Ontario
corporation), Northstar Research Partners Inc. (an
Ontario corporation), 1385544 Ontario Limited (an
Ontario corporation), Maxxcom Interactive Inc. (an
Ontario corporation), Xxxxxxxx & Partners
Communications Ltd. (an Ontario corporation),
Studiotype Inc. (an Ontario corporation), and each
future direct or indirect Subsidiary of Maxxcom or
of any of the foregoing corporations incorporated
under or operating in any Canadian jurisdiction
from time to time and "CanSubCo" means any one of
them.
1.1.59 "EBITDA" means, with respect to any fiscal period
and any Person, the net income of such Person
determined in accordance with GAAP for such fiscal
period plus or minus, to the extent deducted or
added in determining such net income, without
duplication:
(a) income taxes paid or payable or refunds
received or receivable in respect of
income taxes;
(b) interest paid or payable or received or
receivable;
(c) extraordinary gains or losses;
(d) amortization, depreciation and other
non-cash expenses; and
(e) goodwill charges net of income taxes.
For greater certainty, when calculating EBITDA:
(f) for the purposes of determining the Total
Debt Ratio and the Senior Debt Ratio only,
the amount of income received or
receivable from Non-wholly-owned
Subsidiaries shall be excluded, other than
Qualifying Income, which Qualifying Income
shall have the effect of increasing
EBITDA, if a positive number, and to the
extent that Qualifying Income is a
negative number, EBITDA shall be decreased
by such amount;
(g) for the purposes of determining the Total
Debt Ratio, the Senior Debt Ratio and the
Interest Coverage Ratio, there shall be
excluded the EBITDA which would otherwise
be attributable to Accent Marketing
Services, L.L.C., the EBITDA which would
otherwise be attributable to any
Restricted Party which has incurred
Refinanced Intercorporate Debt and the
EBITDA which would otherwise be
attributable to 656712 Ontario Limited
after 31 March 2001 until the time that
its indebtedness to The Toronto-Dominion
Bank is replaced with Permitted
Intercorporate Debt;
(h) for the purposes of determining the Total
Debt Ratio, the Senior Debt Ratio and the
Interest Coverage Ratio as at 31 March
2002, 30 June 2002, 30 September 2002 and
31 December 2002, the financial results of
the Discontinued Operations shall be
excluded from the calculation of EBITDA;
and
(i) for the purposes of determining the Total
Debt Ratio, the Senior Debt Ratio and the
Interest Coverage Ratio as at 31 March
2002, 30 June 2002 and 30 September 2002,
the Restructuring Charges, to the extent
deducted in determining net income in the
calculation of EBITDA, shall be added to
EBITDA.
1.1.79 "Guarantors" means Maxxcom US, Maxxcom (Nova
Scotia) Corp., Maxxcom (USA) Finance Company,
Maxxcom (USA) Holdings Inc., 1220777 Ontario
Limited, News Canada Inc., 1385544 Ontario Limited,
Maxxcom Interactive Inc., Mackenzie Marketing,
Inc., MF + P Acquisition Co., SMI Acquisition Co.,
Accent Acquisition Co., FMA Acquisition Co., TC
Acquisition Inc., ET Acquisition Inc., BZ
Acquisition Inc., CDI Acquisition Co., Bratskeir &
Company, Inc., CPB Acquisition Inc., Cormark
XxxXxxx Communication Solutions (Canada) Inc.,
Xxxxxxxx & Partners Communications Ltd., Xxxxxxx
Xxxx Xxxxxx Xxxxxxx Inc., Studiotype Inc. and each
other Wholly-Owned Subsidiary of Maxxcom from time
to time and "Guarantor" means any one of them.
1.1.112 "Net Worth Base" shall, at 22 December 2000 be
deemed to be Cdn. $100,000,000, and thereafter
shall be calculated as the aggregate of Cdn.
$100,000,000 plus:
(a) any additional capital contributed by the
shareholders of Maxxcom if and to the
extent only that such additional capital
contributed gives rise to cash proceeds
but, for greater certainty, excluding the
amount of the MDC Subordinated Debt and
the proceeds of the Rights Offering up to
a maximum amount of Cdn. $25,000,000; and
(b) 50% of positive net income of Maxxcom on a
consolidated basis in each fiscal year of
Maxxcom;
each calculated on a cumulative basis for the
period from 22 December 2000 to the date of
calculation.
1.1.118 "Opcos" means Mackenzie Marketing, Inc. (a Delaware
corporation), Colle & XxXxx, Inc. (a Minnesota
corporation), Margeotes/Ferititta + Partners LLC (a
Delaware corporation), Source Marketing LLC (a New
York corporation), Accent Marketing Services,
L.L.C. (a Delaware corporation), Xxxxxxxx Xxxxxx
Xxxxx LLC (a Delaware corporation), Targetcom LLC
(a Delaware corporation), E-Telligence LLC (a
Delaware corporation), Bang!Zoom LLC (a Delaware
corporation), Xxxxxxxx Direct, LLC (a Delaware
corporation), Bratskeir & Company, Inc. (a Delaware
corporation), e-Source Drive to Web Marketing LLC
(a Delaware corporation), Xxxxxxx Xxxxxx & Bogusky
LLC (a Delaware corporation) and each other Person
in which a Controlling Interest is directly or
indirectly acquired by Maxxcom US from time to time
which is not an Acquireco and "Opco" means any one
of them.
1.1.128 "Permitted Indebtedness" means at any time (and
without duplication) the following Debt:
(a) the Obligations;
(b) other debts, liabilities and obligations
of any Restricted Party under any Credit
Document to which it is a party;
(c) the Mezz Obligations;
(d) the MDC Subordinated Debt;
(e) other debts, liabilities and obligations
of any Restricted Party under any Mezz
Credit Document to which it is a party;
(f) debts, liabilities and obligations secured
by Permitted Encumbrances;
(g) Permitted Subordinated Debt;
(h) Permitted Intercorporate Debt;
(i) Subordinated Shareholder Debt;
(j) Refinanced Intercorporate Debt;
(k) Unsecured Repurchase Indebtedness;
(l) Deferred Purchase Price Obligations;
(m) the indebtedness evidenced by a promissory
note dated 14 March 1997 in the principal
amount of Cdn. $500,000 made by 1220777
Ontario Limited to News Group Limited; and
(n) such other Debt as may be consented to in
writing from time to time by the Lenders
in accordance with Section 9.9.
1.1.132 "Permitted Payments" means:
(a) payments of the Obligations;
(b) payments in relation to the Mezz
Obligations to the extent permitted
hereunder and under the Mezz
Inter-Creditor Agreement;
(c) the payment of management fees, dividends
and other distributions in compliance with
any applicable Restricted Party
Shareholder Agreement by: (i) any Opco to
the Acquireco which is its Shareholder;
(ii) by any Opco which does not have an
Acquireco as its majority Shareholder, to
Maxxcom (USA) Holdings Inc. or to Maxxcom
US; (iii) by any CanSubCo to the
Restricted Party which is its majority
Shareholder or to Maxxcom; (iv) by Maxxcom
US to Maxxcom or to Maxxcom (Nova Scotia)
Corp.; (v) by either Xxxxx to the
Restricted Party which is its Shareholder
(or, as applicable, other holder of its
ownership interests) or to Maxxcom, (vi)
by Maxxcom (Nova Scotia) Corp. to Maxxcom,
(viii) by any Acquireco to the Restricted
Party which is its Shareholder or to
Maxxcom and (ix) by any Foreign Opco to
Interfocus Group Limited, any other
Restricted Party which is its immediate
parent, or Maxxcom;
(d) the payment by Maxxcom to MDC Corporation
Inc. of (i) fees in relation to provision
of administrative services and benefits by
MDC Corporation Inc. to Maxxcom, (ii) fees
in consideration of services provided by
MDC Corporation Inc. to Maxxcom as needed
in connection with mergers and
acquisitions advisory and other services
which are provided on arm's length
commercial terms and are approved by the
corporate governance committee of Maxxcom,
and (iii) interest accruing on the MDC
Subordinated Note at the rate of 2.5% per
annum, the aggregate of which amounts
shall not exceed Cdn. $180,000 in any
fiscal year of Maxxcom at any time when
there has not occurred an Event of Default
or a Pending Event of Default which is
continuing;
(e) the payment by Maxxcom to Nadal Financial
Corporation or any Affiliate thereof of
fees pursuant to a management services
agreement in relation to provisions of
certain financial advisory services by
Nadal Financial Corporation to Maxxcom not
in excess, in the aggregate, of Cdn.
$300,000 in any fiscal year of Maxxcom and
the reimbursement of reasonable expenses
incurred by Nadal Financial Corporation or
any Affiliate thereof incurred in relation
thereto at any time when there has not
occurred an Event of Default or a Pending
Event of Default which is continuing;
(f) [intentionally deleted]
(g) payments made by Maxxcom or another
Restricted Party to Amadeus Capital
Corporation to reimburse it for amounts
paid by Amadeus Capital Corporation to its
employee (and arm's length third parties
respecting his employment) currently
acting in the role of New York based
Senior Vice President, Corporate
Development for Maxxcom;
(h) the payment of any Earnout Payment or
other payment on account of Deferred
Purchase Price Obligations at any time
when there has not occurred an Event of
Default or a Pending Event of Default
which is continuing;
(i) any payment to a Minority Shareholder of a
Restricted Party by way of bonus, overhead
recovery, fees and/or dividends under and
in accordance with the applicable
Restricted Party Shareholder Agreement;
(j) prior to the occurrence of an Event of
Default or a Pending Event of Default
which is continuing, payments in respect
of Permitted Indebtedness in accordance
with the terms of the agreements or
documents creating or evidencing same;
(k) any payment on account of a Permitted
Acquisition at any time when there has not
occurred an Event of Default or a Pending
Event of Default which is continuing;
(l) operating expenses and trade payables in
the ordinary course of business;
(m) capital expenditures permitted hereunder;
and
(n) scheduled payments of interest on
Permitted Subordinated Debt (which, for
greater certainty, does not include the
Mezz Obligations), provided the portion of
the interest payable thereon in cash does
not exceed 8.0% per annum and provided no
such interest will be payable if any
Pending Event of Default or Event of
Default has occurred and is continuing or
would occur as a result of the payment
thereof (and subject to such other
limitations as may be specified in the
agreements referred to in clause (d) of
the definition of Permitted Subordinated
Debt).
1.1.164 "Senior Debt" means, at any time, the aggregate
(without duplication) of all amounts outstanding
under the Credit and all other funded indebtedness
for borrowed money of a person, ranking, or capable
of ranking, senior to or pari passu with
indebtedness under the Credit at such time which,
for greater certainty, includes such amounts for
Subsidiaries which are reflected in Maxxcom's
consolidated financial statements, but shall
exclude Permitted Indebtedness of Accent Marketing
Services, L.L.C. from time to time; provided
however, that for the purposes of calculating
Senior Debt as at 31 March 2002, the amount of
$25,000,000 shall be deducted from the amount which
would otherwise be calculated in accordance with
this Section 1.1.164.
1.1.177 "Total Debt" means, at any time, the aggregate
(without duplication) of all Debt of a person at
such time, but for greater certainty, shall not
include the MDC Subordinated Debt; provided
however, that for the purposes of calculating Total
Debt as at 31 March 2002, the amount of $25,000,000
shall be deducted from the amount which would
otherwise be calculated in accordance with this
Section 1.1.177.
1.1.181 "Unrestricted Parties" means each of Strategies
International America Inc. (a Delaware
corporation), Studio Pica Inc. (an Ontario
corporation), Sable Advertising Systems, Inc. (a
Minnesota corporation), Northstar Research Partners
U.S.A. Inc. (a Delaware corporation) and Northstar
Research Limited (a UK company) for so long as such
entity is not a Wholly-Owned Subsidiary of Maxxcom
and each other Person which, from time to time, in
compliance with this Agreement, is or becomes a
Non-wholly-owned Subsidiary of a Restricted Party
which itself is not directly or indirectly
wholly-owned by Maxxcom for so long as such Person
is not a Wholly-Owned Subsidiary of Maxxcom
provided that, for greater certainty, the foregoing
shall not include a Foreign Opco and "Unrestricted
Party" means any one of them.
Section 3 - Amendment to Interest Rates, Bankers' Acceptance Fees and L/C
Commissions
Section 2.4(a) of the Credit Agreement is deleted and replaced with
the following provision:
2.4 Interest Rates, Bankers' Acceptance Fees and L/C Commissions
(a) Interest rates, Bankers' Acceptance Fees and L/C
commissions in respect of Advances under the Credit (except as
otherwise noted) shall vary according to the Total Debt Ratio, as
follows:
- APPLICABLE MARGIN -
FOR:
(% per annum)
Bankers' Acceptance
Prime Rate and Fees and L/C
Total Debt Ratio Base Rate Advances LIBOR Advances Commissions Standby Fees
---------------- ------------------ -------------- ----------- -------------
greater than 5 to 1 2.75% 3.75% 3.75% 0.75%
greater than 4 to 1 and 2.375% 3.375% 3.375% 0.675%
less than or equal to 5
to 1
greater than 3 to 1 and 2.00% 3.00% 3.00% 0.625%
less than or equal to 4
to 1
greater than 2.5 to 1 but 1.50% 2.50% 2.50% 0.625%
less than or equal to 3
to 1
greater than 2 to 1 but 1.25% 2.25% 2.25% 0.50%
less than or equal to 2.5
to 1
greater than 1.5 to 1 but 1.00% 2.00% 2.00% 0.50%
less than or equal to 2
to 1
less than or equal to 1.5 0.75% 1.75% 1.75% 0.375%
to 1
All figures shown above represent per cent per annum and each such
figure, when applicable from time to time to Prime Rate Advances,
Base Rate Advances and LIBOR Advances, shall be referred to herein as
the "Applicable Margin". Interest on Prime Rate Advances shall be
Prime Rate plus the Applicable Margin as set forth above. Interest on
Base Rate Advances shall be, as applicable, the Alternate Base Rate
Canada or the U.S. Alternate Base rate plus the Applicable Margin as
set forth above. Interest on the LIBOR Advances shall be the LIBO
Rate for the applicable LIBOR Period plus the Applicable Margin as
set forth above. The Bankers' Acceptance Fee shall be as set forth
above. The interest payable on BA Equivalent Loans shall be
determined as contemplated by Section 5.12(b).
Section 4 - Amendment to Security
The Credit Agreement is amended to add the following provisions as
Section 3.3.1 thereof:
3.3.1 Acknowledgement re MDC Intercreditor Agreement
Each of the Borrowers and the Guarantors acknowledge that
they have actual notice of the terms of the MDC Intercreditor
Agreement, consent to the MDC Intercreditor Agreement and the terms
thereof and covenant with the Agent and each of the Lenders that they
will at all times during the continuance of the MDC Intercreditor
Agreement comply and act in accordance with the terms, provisions and
intent of that agreement. Each of the Borrowers and the Guarantors
also acknowledge that the terms and conditions of the MDC
Intercreditor Agreement are for the sole benefit of the Agent, the
Lenders, the Mezz Agent and the Mezz Holders and MDC Corporation Inc.
and that nothing in that agreement shall be construed as conferring
any rights upon any of the Borrowers, the Guarantors, any other
Restricted Party or any third party.
To the extent that any Payor (as defined in Section 3.3) or
MDC Corporation Inc. receives any monies, by realization on security
or otherwise, which it is required to pay over in whole or in part to
another party to the MDC Intercreditor Agreement pursuant to the
terms of the MDC Intercreditor Agreement, the debts, liabilities and
obligations of the Borrowers, the Guarantors and any other Restricted
Party to the Payor or MDC Corporation Inc. shall not be reduced and
discharged by receipt of such monies (except to the extent such
monies are subsequently paid by the Agent to a Payor or MDC
Corporation Inc.).
The terms of this Section shall survive the termination of
this Agreement and continue for the benefit of the Agent and the
Lenders so long as the MDC Intercreditor Agreement remains in effect.
Section 5 - Amendment to Financial Covenants
(a) Section 7.2(b) of the Credit Agreement is deleted and replaced with the
following provision:
7.2 (b) For each time period set forth below, Maxxcom
on a consolidated basis shall maintain a Senior
Debt Ratio of not more than the ratios set forth
below:
Period Ratio
------ -----
Up to and including 30 June 2002 3.00 to 1.0
From 1 July 2002 to 30 September 2002 3.25 to 1.0
From 1 October 2002 to 30 September 2003 2.50 to 1.0
From 1 October 2003 to 31 March 2004 2.25 to 1.0
Thereafter 2.00 to 1.0
(b) Section 7.2(c) of the Credit Agreement is deleted and replaced with the
following provision:
7.2 (c) For each time period set forth below, Maxxcom
on a consolidated basis shall maintain a Total Debt
Ratio of not more than the ratios set forth below:
Period Ratio
------ -----
As at 31 March 2002 5.50 to 1.0
From 1 April 2002 to 30 September 2002 6.25 to 1.0
From 1 October 2002 to 31 December 2002 5.50 to 1.0
From 1 January 2003 to 31 March 2003 5.75 to 1.0
From 1 April 2003 to 30 June 2003 5.50 to 1.0
From 1 July 2003 to 30 September 2003 5.25 to 1.0
From 1 October 2003 to 31 December 2003 4.75 to 1.0
From 1 January 2004 to 31 March 2004 4.50 to 1.0
From 1 April 2004 to 30 June 2004 4.25 to 1.0
From 1 July 2004 to 30 September 2004 3.75 to 1.0
From 1 October 2004 to 31 December 2004 3.50 to 1.0
Thereafter 3.00 to 1.0
Section 6 - Amendment to Negative Covenants
(a) Section 7.4(d) of the Credit Agreement is deleted and replaced with the
following provision:
7.4 (d) make any Investment in or acquisition of a
Person other than a Permitted Acquisition or an
acquisition of Capital Stock of Restricted Party
from a Minority Shareholder pursuant to the
applicable Restricted Party Shareholder Agreement
(herein, a "Minority Acquisition") or make a
Permitted Acquisition or a Minority Acquisition at
any time:
(i) when there has occurred an Event of
Default or Pending Event of Default which
is continuing;
(ii) unless the Senior Debt Ratio has, at such
time, been less than 2.25 to 1 for at
least two consecutive fiscal quarters,
except where the Permitted Acquisition is
funded solely from the proceeds of an
issuance of equity of Maxxcom;
(iii) when it has not provided an Acquisition
Certificate to the Agent at least 5 days
prior to entering into a definitive
purchase agreement (or other legally
binding purchase obligation) in respect
thereof, provided that no Acquisition
Certificate shall be required in the case
of a Permitted Acquisition (A) under
paragraphs (d) and (g) of the definition
thereof, and (B) which are Permitted
Non-Conforming Acquisitions described in
Section 1.1.131(a);
(iv) when (if obligated to do so hereunder) it
has not executed and delivered the
Acquisition Security or demonstrated to
the reasonable satisfaction of the Agent
that the Acquisition Security is available
to be provided concurrent with or
immediately following completion of the
proposed Permitted Acquisition and, if
applicable, that any Follow-Up Merger can
be successfully completed;
(v) when it has not obtained the consent of
the Majority Lenders (such consent not to
be unreasonably withheld) to the proposed
Permitted Acquisition if the consideration
payable in satisfaction of the purchase
price for such acquisition (other than
consideration consisting of shares of
Maxxcom or any acquired entity issued on
the closing of the transaction) exceeds
10% of the book value of the total
consolidated assets of Maxxcom as at the
date of Maxxcom's most recently completed
fiscal quarter;
(vi) that the Investment or acquisition would
not otherwise be permitted to be made
under the Mezz Debenture; or
(vii) if, in the case of the acquisition of an
American Entity, such entity would not be
Solvent after giving effect to the
acquisition and all related transactions;
(b) Section 7.4 of the Credit Agreement is further amended by adding the
following provision as Section 7.4(kk.1):
7.4(kk.1) make, permit or agree to any amendment,
modification, supplement, replacement or any other
change to the terms and conditions of the MDC
Subordinated Debt (or any documentation relating
thereto) or make or permit any payment whatsoever
on account of principal or any other amount under
or in connection with the MDC Subordinated Debt
(other than interest on the MDC Subordinated Debt
as permitted under Sections 7.4 (o) and 1.1.132 (d)
of the Credit Agreement and Section 3.2 of the MDC
Intercreditor Agreement), or purchase, repurchase,
retract, repay, prepay, acquire, redeem or
otherwise retire for value in any manner whatsoever
all or any part of the MDC Subordinated Debt;
provided nothing in here shall prohibit MDC
Corporation Inc. from setting off the principal
amount due on the MDC Subordinated Debt against the
subscription price of the rights or other equity
acquired by it pursuant to the Rights Offering;
Section 7 - Amendment to Agency Provision
Section 9.12 is deleted and replaced with the following provision:
9.12 Authorization of Inter-Creditor Agreements
Each of the Lenders hereby authorizes and directs the Agent
to execute and deliver the Mezz Inter-Creditor Agreement on its behalf
and agrees that the Mezz Inter-Creditor Agreement shall be binding on
it as if it was a party thereto. Each of the Lenders hereby authorizes
and directs the Agent to execute and deliver the MDC Intercreditor
Agreement on its behalf and agrees that the MDC Intercreditor
Agreement shall be binding on it as if it was a party thereto.
Section 8 - Amendment to Schedule T
Schedule T to the Credit Agreement is amended by changing the
reference in item 3 thereof from "...Section 1.1.132(f)..." to "...Section
1.1.132(d)...".
Section 9 - Consents
Subject to the terms and conditions hereof, the Lenders hereby:
(a) notwithstanding Sections 2.7(c)(ii) and (d) of the Credit
Agreement, agree that the proceeds of the MDC Subordinated
Debt, and of the Rights Offering, to the extent only of Cdn.
$25,000,000, shall not reduce the Credit Limit and, if
applicable, be required to be paid to the Agent in reduction
of outstanding Advances in excess of the Credit Limit as so
reduced, it being understood and agreed that any proceeds of
the Rights Offering in excess of Cdn. $25,000,000 shall
reduce the Credit Limit and are required to be applied in
accordance with the Credit Agreement;
(b) consent, for the purposes of Section 7.4(i) of the Credit
Agreement, to the sale of (i) 100% of the outstanding
Capital Stock of News Canada Inc. by 1220777 Ontario
Limited, and (ii) the inter-company balance due by News
Canada Inc. to Maxxcom, in each case to 2009371 Ontario Inc.
for a purchase price not less than Cdn. $3,000,000 on the
condition that Cdn. $3,000,000 is paid to the Agent, and the
Credit Limit is reduced by such amount, in accordance with
Section 2.7(b) of the Credit Agreement, and hereby direct
the Agent to release Security made by or in relation to News
Canada Inc. and such inter-company balance in favour of the
Agent upon completion of such sale;
(c) consent, for the purposes of Section 7.4(b) of the Credit
Agreement, to the incurrence of the MDC Subordinated Debt;
(d) consent, for the purposes of Section 7.4(ll) of the Credit
Agreement, to the amendments to the Mezz Debenture effected
by the First Amendment to Subordinated Debenture made as of
31 March 2002 between Maxxcom and the Mezz Agent; and
(e) consent to the discontinuance of the businesses and
operations of XxXxxxx Xxxxxx Communications Inc., Bang!Zoom
LLC and E-Telligence LLC.
Section 10 - Conditions Precedent to Effectiveness of this First Amendment
Agreement
This First Amendment Agreement and the consents contained herein
shall become binding on the Lenders only upon satisfaction of the following
conditions precedent:
(a) execution and delivery of this First Amendment Agreement by
each of the Borrowers and the Guarantors;
(b) execution and delivery of this First Amendment Agreement by
the Lenders in accordance with Section 9.9 of the Credit
Agreement;
(c) execution and delivery of the MDC Intercreditor Agreement by
all parties thereto, in form and substance satisfactory to
the Agent and the Lenders;
(d) evidence that the Mezz Agent and the Mezz Holders have, for
the purposes of the Mezz Debenture, consented to each of the
matters consented to in this First Amendment Agreement or
that such consent is not required under the Mezz Debenture
and the Agent being satisfied with the other amendments to
the Mezz Credit Documents made in that connection;
(e) no Event of Default or Pending Event of Default having
occurred and being continuing as at the date of satisfaction
of all of the foregoing conditions precedent;
(f) the Agent having received, for the account of each of the
consenting Lenders, an amendment fee equal to 0.625% of
their respective Proportionate Shares;
(g) the Agent having received all fees or other amounts owing to
it;
(h) the Agent having received the favourable opinion of Xxxxx
Xxxxxxx & Xxxxxxx LLP or Fogler, Xxxxxxxx LLP, Ontario
counsel to Maxxcom, in relation to the enforceability of
this First Amendment Agreement; and
(i) such corporate resolutions, incumbency and other
certificates of each of the Borrowers, the Guarantors and
the other Restricted Parties as the Agent may reasonably
request in connection with this First Amendment Agreement
and the transactions contemplated hereby.
Section 11 - Authorization of MDC Intercreditor Agreement
Each of the Lenders hereby authorizes and directs the Agent to
execute and deliver the MDC Intercreditor Agreement on its behalf and agrees
that the MDC Intercreditor Agreement shall be binding on it as if it was a
party thereto.
Section 12 - Authorization of MDC Intercreditor Agreement
Each of the Borrowers and the Guarantors acknowledge:
(a) that they have actual notice of the terms of the MDC
Intercreditor Agreement, consent to the MDC Intercreditor
Agreement and the terms and conditions thereof and covenant
with the Agent and each of the Lenders that they will at all
times during the continuance of the MDC Intercreditor
Agreement comply and act in accordance with the terms,
provisions and intent of that agreement; and
(b) the terms and conditions of the MDC Intercreditor Agreement
are for the sole benefit of the Agent, the Lenders, the Mezz
Agent, the Mezz Holders and MDC Corporation Inc. and that
nothing in the MDC Intercreditor Agreement shall be
construed as conferring any rights upon the Borrowers or the
Guarantors or any third party.
Section 13 - Continuing Effect of Credit Agreement
Except as amended by this First Amendment Agreement, the Credit
Agreement shall remain in full force and effect, without amendment, and is
hereby ratified and confirmed. Each of the Borrowers and the Guarantors
confirms that the guarantees and Security made or granted by it pursuant to
the Credit Agreement remains in full force and effect notwithstanding the
amendments and supplements to the Credit Agreement contained herein.
Section 14 - Counterparts and Facsimile
This First Amendment Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original and such counterparts together shall constitute one and the same
agreement. For the purposes of this Section, the delivery of a facsimile copy
of an executed counterpart of this First Amendment Agreement shall be deemed
to be valid execution and delivery thereof.
Section 15 - Governing Law
The parties agree that this First Amendment Agreement shall be
conclusively deemed to be a contract made under, and shall for all purposes be
governed by and construed in accordance with the laws of the Province of
Ontario and the laws of Canada applicable in the Province of Ontario.
Section 16 - Interpretation
Capitalized terms used herein, unless otherwise defined or indicated
herein, have the respective meanings ascribed thereto in the Credit Agreement.
This First Amendment Agreement and the Credit Agreement shall be read together
and have effect so far as practicable as though the provisions thereof and the
relevant provisions hereof are contained in one document.
IN WITNESS OF WHICH, the parties have executed this Agreement.
THE LENDERS
The Bank of Nova Scotia THE BANK OF NOVA SCOTIA
Scotia Capital
Corporate Banking-Industrial
Products By:
16th Floor -----------------------------
00 Xxxx Xxxxxx Xxxx X. X. Xxxxxx
Toronto, Ontario Director
M5H 1H1
By:
----------------------------
Attention: Managing Director X. X. Xxxxxx
Telecopier No. (000) 000-0000 Associate Director
Canadian Imperial Bank of Commerce CANADIAN IMPERIAL BANK OF COMMERCE
Canadian Credit Capital Markets
BCE Place, 0xx Xxxxx
000 Xxx Xxxxxx By:
Toronto, Ontario ----------------------------
X0X 0X0 X. XxXxxxxx
Managing Director
By:
-----------------------------
Attention: Managing Director Name:
Telecopier No. (000) 000-0000 Title
Bank of Montreal BANK OF MONTREAL
Media, Telecom & Technology
Corporate & Investment Banking
1, First Canadian Place By:
000 Xxxx Xxxxxx Xxxx ----------------------------
4th Floor Name:
Toronto, Ontario Title:
X0X 0X0
Attention: Managing Director
Telecopier No. (000) 000-0000
Royal Bank of Canada ROYAL BANK OF CANADA
00xx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxx Xxxxx
000 Xxx Xxxxxx By:
Xxxxxxx, Xxxxxxx ----------------------------
X0X 0X0 Name:
Title:
Attention: Senior Manager
Telecopier No. (000) 000-0000
The Toronto-Dominion Bank THE TORONTO-DOMINION BANK
00 Xxxx Xxxxxx Xxxx
0xx Xxxxx
Xxxxxxx-Xxxxxxxx Bank Tower By:
Xxxxxxx, Xxxxxxx -----------------------------
X0X 0X0 Name:
Title:
Attention: Vice President
Telecopier No. (000) 000-0000
The Bank of Nova Scotia THE BANK OF NOVA SCOTIA, by its
Suite 2200 Atlanta Agency
000 Xxxxxxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
00000 By:
-----------------------------
Name:
Title:
Attention: Senior Manager
Telecopier No. (000) 000-0000
CIBC Inc. CIBC INC.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx By:
10017 -----------------------------
Name:
Title:
(CIBC World Markets Corp.,
as agent for CIBC Inc.)
Attention: Executive Director
Telecopier No. (000) 000-0000
Bank of Montreal, by its Chicago branch BANK OF MONTREAL
Media, Telecom & Technology
Asset Portfolio Group
Investment & Corporate Banking By:
000 Xxxx Xxxxxx ------------------------------
15th Floor Name:
New York, New York Title:
10022
Attention: Managing Director
Telecopier No. (000) 000-0000
Royal Bank of Canada, ROYAL BANK OF CANADA, by its
by its Grand Cayman (North America Grand Cayman (North America No.
No. 1) Branch 1) Branch
x/x Xxx Xxxx Xxxxxx
Xxx Xxxxxxx Xxxxx
165 Broadway By:
New York, New York ----------------------------
10006-1404 Name:
Title:
Attention: Xx. Xxxxx Xxxxxxx
Telecopier No. (000) 000-0000
with a copy to:
Royal Bank of Canada
One Liberty Plaza
4th Floor
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
00000-0000
Attention: Xx. X.X. Xxxxxx
Telecopier No. (000) 000-0000
Toronto Dominion (Texas), Inc. TORONTO DOMINION (TEXAS), INC.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx
00000 By:
----------------------------
Name:
Title:
Attention: Vice-President
Telecopier No. (000) 000-0000
THE BORROWERS
Maxxcom Inc. MAXXCOM INC., an Ontario
00X Xxxxxxxx Xxxxxx xxxxxxxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
By:
----------------------------
X. Xxxxxx
Authorized Signing Officer
Attention: Chief Financial Officer
Telecopier No. (000) 000-0000
By:
----------------------------
X. Xxxxxxx
Authorized Signing Officer
Maxxcom Inc. MAXXCOM INC., a Delaware
c/o 00X Xxxxxxxx Xxxxxx corporation
Xxxxxxx, Xxxxxxx
X0X 0X0
By:
----------------------------
X. Xxxxxx
Authorized Signing Officer
Attention: The President
Telecopier No. (000) 000-0000 By:
-----------------------------
X. Xxxxxxx
Authorized Signing Officer
THE GUARANTORS
c/o Maxxcom Inc. MAXXCOM (NOVA SCOTIA) CORP
00X Xxxxxxxx Xxxxxx XXXXXXX (XXX) FINANCE
Toronto, Ontario COMPANY
M5R 2E3 MAXXCOM (USA) HOLDINGS INC.
1220777 ONTARIO LIMITED
NEWS CANADA INC.
1385544 ONTARIO LIMITED
MAXXCOM INTERACTIVE INC.
MF+P ACQUISITION CO.
SMI ACQUISITION CO.
ACCENT ACQUISITION CO.
FMA ACQUISITION CO.
Attention: Chief Financial Officer
Telecopier No. (000) 000-0000
By:
-----------------------------
X. Xxxxxxxx
Authorized Signing Officer
BRATSKEIR & COMPANY, INC.
CPB ACQUISITION INC.
CORMARK XXXXXXX
COMMUNICATION SOLUTIONS
(CANADA) INC.
XXXXXXXX & PARTNERS
COMMUNICATIONS LTD.
XXXXXXX XXXX XXXXXX XXXXXXX INC.
STUDIO TYPE INC.
By:
-----------------------------
X. Xxxxxxx
Authorized Signing Officer
MACKENZIE MARKETING, INC.
By:
----------------------------
X. Xxxxxx
Authorized Signing Officer
TC ACQUISITION INC.
ET ACQUISITION INC.
BZ ACQUISITION INC.
CDI ACQUISITION CO.
By:
---------------------------
X. Xxxxxxx
Authorized Signing Officer
THE AGENT
The Bank of Nova Scotia THE BANK OF NOVA SCOTIA,
Scotia Capital as Administrative Agent
Corporate Banking-Loan Syndications
00xx Xxxxx
00 Xxxx Xxxxxx Xxxx By:
Toronto, Ontario -----------------------------
M5H 1H1 X. X. Xxxxxxxx
Director
By:
-----------------------------
X. X. Xxxx
Associate Director
Attention: Managing Director
Telecopier No. (000) 000-0000
