Exhibit 10.89
RW ACQUISITION, L.L.C.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
June 2, 2000
Xxxxxx X. Xxxxx
Chief Executive Officer
Airadigm Communications, Inc.
XX Xxx 000
Xxxxxx Xxxxx, XX 00000
Re: Working Capital Financing
Dear Xxx:
This letter relates to the Asset Purchase Agreement (the "Agreement"),
as supplemented, dated June 2, 2000, between Airadigm Communications,
Inc. ("Airadigm" or "Debtor") and RW Acquisition, L.L.C. ("RW" or the
"Buyer"), contemplating the acquisition (the "Transaction") of
substantially all of Airadigm's assets.
The Agreement provides in Section 2.4 that RW intends to provide, or
cause its designee to provide, Airadigm with a working capital loan
(the "Working Capital Loan"). References in this letter to RW may be
deemed to refer to RW's designee, but RW will remain liable for all
obligations hereunder. This letter of intent ("Working Capital LOI")
sets forth our understanding concerning the terms and conditions upon
which RW will provide the Working Capital Loan, and will serve as the
basis for the preparation of a definitive agreement.
The principal terms of our agreement are as follows:
1. Amount of Advances. Commencing on the later of June 1, 2000
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and the date of receipt of any necessary court approval, and
continuing on the first of each succeeding month until RW's obligation
to make Advances has terminated pursuant to Section 2 below (the
"Termination of Advances"), RW will advance to Airadigm the sum of six
hundred thousand dollars ($600,000) (subject to increase pursuant to
section 4 of the Construction Management Agreement entered into
concurrently herewith between Airadigm and
Xxxxxx X. Xxxxx
June 6, 2000
Page 2
TeleCorp Communications, Inc.) in immediately available funds (the
"Advances") to be used to meet Airadigm's working capital needs in
accordance with the budget attached hereto as Exhibit A and made a
part hereof (the "Budget"). Airadigm shall provide RW with updates of
the Budget each week during the term of this Agreement. Airadigm shall
not make expenditures in excess of the amounts set forth in the Budget
without the prior written consent of RW. To the extent that Airadigm
proposes working capital requirements in any month in excess of
$600,000, RW shall have the right to direct where the proceeds of the
Working Capital Loan shall be applied.
2. Termination of Advances. RW shall continue to make Advances
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until the earlier of (i) the closing of the Transaction, (ii) the
termination of the Agreement as provided for therein, or (iii)
delivery by one party to the other of a notice that the advances will
cease (a "Cessation Notice"). A Cessation Notice may be delivered by
either party to the other at any time if the FCC denies or dismisses
the FCC Petition. A Cessation Notice may be delivered by RW to
Airadigm at any time (i) after four Advances have been made, if the
FCC has not by the date of such notice granted or denied or dismissed
the FCC Petition, (ii) if Airadigm terminates the management agreement
entered into between Airadigm and an affiliate of RW concurrently
herewith pursuant to section 3(c) thereof, or (iii) if Airadigm makes
expenditures in excess of the amounts set forth in the Budget without
the prior written consent of RW.
3. Use of Proceeds. The Working Capital Loan proceeds shall be
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used only to pay ordinary and reasonable working capital requirements,
consistent with prior practice and in accordance with the Budget.
4. Interest Rate. Interest shall accrue on the unpaid principal
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balance at a rate per annum equal to eleven percent (11%). Interest
shall be calculated on the basis of actual days elapsed, and shall
accrue quarterly, commencing on July 3, 2000, and continuing on the
first business day of each succeeding October, January, April and July
thereafter.
5. Payments. No payments shall be due until maturity. Interest
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shall be added to the principal amount on the date that it accrues.
6. Maturity Date. The principal amount of the Working Capital
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Loan and accrued but unpaid interest thereon shall be due and payable
in full on the earlier of: (i) the closing of the Transaction, (ii)
180 days after the Termination of Advances.
Xxxxxx X. Xxxxx
June 6, 2000
Page 3
7. Collateral. The Collateral shall be the same property, assets
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and interests identified as collateral under the Debtor-in-Possession
Loan provided by Ericsson to Airadigm (the "Ericsson DIP").
8. Lien Priority; Subordination. RW's security interest shall be
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a lien junior in priority only to the lien created by the Ericsson DIP
and to the prepetition liens of Ericsson and OEDA; provided, however,
that Ericsson and OEDA shall agree to subordinate their right of
payment under the Ericsson DIP in favor of RW for repayment of the
Working Capital Loan under all circumstances, including but not
limited to upon liquidation. In addition, pursuant to 11 U.S.C.
Sections 364(c)(1) and 507(b), the Working Capital Loan shall have
priority over all other administrative expenses except Chapter 11
attorney's fees and Chapter 11 employee claims up to an aggregate
amount equal to $500,000, but including those that may be incurred in
a subsequent Chapter 7 case; provided, however, that RW's
superpriority administrative claim hereunder shall be pari passu with
the superpriority administrative claim created pursuant to the
Ericsson DIP. RW's Collateral shall be protected against any surcharge
under 11 U.S.C. Section 506(c), without the express written consent of
the Buyer.
9. Conditions Precedent. RW's provision of the Working Capital
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Loan shall be subject to the following:
9.1 Airadigm and RW shall have executed the Agreement.
9.2 Airadigm and RW shall have executed a definitive Debtor-In-
Possession Loan Agreement and related documentation that shall
embody the terms set forth herein and contain customary
representations, warranties, covenants and conditions such as
those contained in the Ericsson DIP.
9.3 The Bankruptcy Court shall have approved the Working Capital
LOI without material modification and authorized Airadigm to make
the borrowings contemplated by its terms.
10. Defaults. In addition to the customary default provisions,
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the Working Capital Loan shall be in default if Airadigm shall file an
application for assignment or transfer of control of its business or
its licenses other than as provided in the Plan or if the Agreement is
terminated due to a breach by Airadigm.
Xxxxxx X. Xxxxx
June 6, 2000
Page 4
11. Governing Law. To the extent the matter set forth in this
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Working Capital LOI is governed by state law, it shall be governed by
and shall be construed in accordance with the laws of the State of New
York, without reference to choice of law provisions thereof. The
parties hereto submit to the jurisdiction of the Bankruptcy Court in
which Airadigm's Chapter 11 case is currently pending.
12. Letter of intent. Airadigm and RW recognize that Airadigm
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cannot enter into a binding agreement for Debtor-In-Possession
financing without Court approval and that this Working Capital LOI and
the transaction and documentation contemplated by it is subject to and
contingent on Bankruptcy Court approval. Airadigm and RW covenant and
agree that they shall use all commercially reasonable efforts to
obtain court approval of the terms and conditions of this Working
Capital LOI, making such non-material modifications as the Court may
require in an effort to preserve the bargain intended to be struck by
the parties.
13. Counterparts. This Working Capital LOI may be executed in
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any number of counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one in the same instrument. Facsimile signatures are
acceptable.
14. Notices. Notices shall be given to the same parties as
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identified in Section 10.3 of the Agreement.
If the foregoing accurately sets forth our understanding, we request
that you evidence your approval by signing the copy of this letter and
returning it to the undersigned.
Xxxxxx X. Xxxxx
June 6, 2000
Page 4
Sincerely,
RW ACQUISITION, L.L.C.
By
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Its
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ACCEPTED AND AGREED TO this _____ of May, 2000.
AIRADIGM COMMUNICATIONS, INC.
By
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Its
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