Exhibit 9
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made and entered into
effective as of August 12, 2002, by and between: (i) AMRO INTERNATIONAL, S.A.,
the holder of the "Subordinated Indebtedness" (as that term is defined below)
(the "Subordinated Obligee"); and (ii) FINOVA CAPITAL CORPORATION, a Delaware
corporation ("Finova").
Background Information:
A. Aquis Communications Group, Inc., a Delaware corporation ("Company"),
and Subordinated Obligee have entered into an Agreement, dated as of the date
hereof (the "Securities Exchange Agreement"), providing for the restructuring of
the Company's unsecured debenture to Subordinated Obligee in the amount of
$2,000,000 (said Securities Exchange Agreement, as it is now or hereafter may be
amended, restated, replaced, refinanced or otherwise modified from time to time,
herein called the "Subordinated Agreement"). Pursuant to the Subordinated
Agreement, (i) the Company has issued a certain 10% Promissory Note, dated as of
the date hereof, payable to the order of Subordinated Obligee in the amount of
$1,000,000 (together with any further amendments or modifications thereto and
all replacements, increases, transfers, exchanges and substitutions thereof and
any and all instruments issued to evidence such debt by the Company to
Subordinated Obligee, herein called the "Subordinated Note"), and (ii) the
Company has issued certain shares of the Company's Series A Convertible
Preferred Stock, $.01 par value per share (the "Convertible Preferred Stock"),
which shall be convertible into a certain shares of the Company's Common Stock
representing 9.9% of the fully diluted Common Stock of the Company upon the
closing of the transactions contemplated by the Securities Exchange Agreement,
and (iii) all Common Stock Purchase Warrants previously issued to Subordinated
Obligee are cancelled. The Subordinated Agreement and the Subordinated Note are
collectively called herein the "Subordinated Documents".
B. Aquis Wireless Communications, Inc., a Delaware corporation and a wholly
owned subsidiary of Company (the "Borrower") and Finova have entered into a
Second Amended and Restated Loan Agreement, dated as of the date hereof (the
"Loan Agreement"), providing for the restructuring (the "Restructuring") of the
Borrower's indebtedness of approximately $31.5 million (including without
limitation principal, interest, default interest and fees) to Finova (the
"Finova Debt"), pursuant to that certain Amended and Restated Loan Agreement,
dated January 31, 2000, by and between the Borrower and Finova (said Loan
Agreement, as it is now or hereafter may be amended, restated, replaced,
refinanced or otherwise modified from time to time, herein call the "Senior
Agreement"; all capitalized terms used herein not otherwise defined shall have
the meanings given to such terms in the Senior Agreement) and certain
obligations of the Borrower to Finova under that certain Master Lease Agreement,
between the Borrower and Finova. Pursuant to the Senior Agreement, the Existing
Principal Balance and the Existing Lease Balance have been consolidated and
restructured as Loan consisting of (i) a loan in the aggregate principal amount
of $7,000,000 (the "Tranche A Loan") and (ii) a loan in the amount of $2,000,000
(the "Tranche B Loan") (collectively, the Tranche A Loan and the Tranche B Loan
called the "Senior Notes"), and (iii) all other principal amounts of the
Existing Principal Balance and Existing Lease Balance other than that amount
restructured as the Senior Notes are converted into shares of the Company's
Convertible Preferred Stock in
accordance with the terms and conditions of the Restructuring Agreement and the
other Restructuring Transaction Documents. The Senior Agreement and the Senior
Notes, together with all other Loan Instruments (as defined in the Loan
Agreement), are collectively called herein the "Senior Documents."
C. The Company and Borrower are required, as a condition precedent to the
consummation of the Restructuring to cause Subordinated Obligee to execute and
deliver this Agreement pursuant to which Subordinated Obligee agrees, inter
alia, to subordinate the payment and priority of all indebtedness,
distributions, dividends and obligations of the Company owed to Subordinated
Obligee pursuant to the Subordinated Documents to the payment and priority of
the Senior Obligations pursuant to the Senior Documents, all upon terms and
conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce Finova, now
or from time to time hereafter, to consummate the Restructuring and to maintain
financial accommodations to or for the benefit of the Borrower pursuant to the
Senior Documents, Subordinated Obligee agrees as follows:
1. Definitions. In addition to other terms defined herein, as used in
this Agreement, the following terms shall have the meanings set forth below:
"Acceleration Event" means an acceleration of the maturity of the
principal amount of the Senior Obligations (or any portion thereof) prior to its
scheduled maturity date, whether by exercise by Senior Creditor of a right so to
do or automatically pursuant to the terms of the Senior Documents, or a failure
to pay such Senior Obligations at scheduled maturity.
"Collateral" shall mean all property, and interests in property, of
the Company, Borrower and each Obligor, whether tangible or intangible, real or
personal, now existing or hereafter existing, including, without limitation, all
products and proceeds of such property, or interests in property, including
insurance proceeds including, without limitation, the Collateral as defined in
the Loan Agreement and all other Senior Documents.
"Default" and "Event of Default" shall have the meanings given to such
terms in the Senior Agreement.
"Enforcement Action" means and includes, any seizure, repossession,
foreclosure, forced liquidation, public or private sale, preparation for sale,
exercise of setoff right, direct collection (in respect of receivables), and
other, similar action which pursuant to agreement or applicable law, may be
taken with respect to Collateral in order to enforce any Lien thereon or
otherwise realize upon the value thereof.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance (including, but
not limited to easements, rights of way and the like), lien (statutory or
other), security agreement or transfer intended as security including, without
limitation, any conditional sale or other title retention agreement, the
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interest of a lessor under a capital lease or any financing lease having
substantially the same economic effect as any of the foregoing.
"Obligor" means all Subsidiaries and Affiliates of the Company and/or
Borrower, and any Person at any time or from time to time primarily or
secondarily liable with the Company in respect of the payment of any of the
Senior Obligations.
"Permitted Junior Securities" shall have the meaning given to such
term in Section 6 below.
"Plan" shall have the meaning given to such term in Section 7 below.
"Senior Obligations" means (a) any and all indebtedness, obligations
and liabilities owing by the Company, Borrower or any other Obligor to Finova,
arising under or pursuant to the Senior Documents, whether now existing or
hereafter arising or acquired outright, conditionally, or as collateral security
(whether as reimbursement payments, principal, interest or otherwise, whether
due or not due, direct, indirect, absolute or contingent and whether or not
evidenced by any note, instrument, reimbursement agreement or writing), whether
such indebtedness, liabilities and obligations are from time to time or at any
time reduced and thereafter increased or extinguished and thereafter
re-incurred, and without any limitation as to the amount or terms thereof,
including principal of and interest (including interest at the rate provided for
in the Senior Documents or other agreement governing or evidencing the Senior
Obligations, both before and after the institution of any bankruptcy,
receivership, insolvency or similar proceeding, even if the claim for such
interest is not allowed pursuant to the provisions of applicable law) on the
Senior Notes, all other extensions of credit under or in connection with the
Senior Agreement, if any, or any other agreements governing or evidencing the
Senior Obligations and all fees, expenses, reimbursements, indemnities and other
amounts payable under the Senior Agreement or other agreement governing or
evidencing the Senior Obligations (including without limitation attorneys' fees
and expenses incurred by Finova, whenever incurred, and including without
limitation, if incurred in proceedings against the Company or any Obligor, the
Subordinated Obligee or any other party), and (b) all renewals, deferrals,
amendments, increases, modifications, supplements, extensions, refundings, or
refinancings of any of the indebtedness, obligations or liabilities described in
clause (a), including any evidences of indebtedness issued in exchange therefor,
and all other present and future indebtedness for money borrowed or owed to
Finova under the Senior Documents.
"Senior Creditor" means and includes Finova, the successors and
assigns of such Person, and any other holder from time to time of any Senior
Obligations.
"Subordinated Indebtedness" means any and all indebtedness,
obligations, rights to receive principal, interest, dividends and distributions,
reimbursement obligations and liabilities, fees, expenses, and any and all
indemnities or guaranties of any nature whatsoever, evidenced by, arising under,
pursuant to or in connection with the Subordinated Agreement, including any such
evidenced by the Subordinated Note or any other of the Subordinated Documents
owing or to be performed by the Company, Borrower or any other Obligor, or
owing, paid or to be performed by any other Person for the benefit of the
Company, Borrower or any
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other Obligor whether now existing or hereafter arising or acquired outright,
conditionally, or as collateral security, to Subordinated Obligee (whether as
principal, interest, dividends or distributions or otherwise, whether due or not
due, direct, indirect, absolute or contingent and whether or not evidenced by
any note, instrument, certificate or writing), including, without limitation any
obligation to pay expenses, attorneys' fees, monitoring fees, collection fees
and indemnities.
2. Subordination. Subject to Section 30 below, the payment and
performance of the Subordinated Indebtedness is hereby subordinated in right of
payment to the prior payment in full of the Senior Obligations and, except as
specifically set forth in Sections 4 and 6 below, Subordinated Obligee will not
ask, demand, xxx for, take or receive from or on behalf of the Company, Borrower
or any Obligor (by way of payment, loan, setoff, guaranty or in any other
manner), and whether from the Company, Borrower or any Obligor, the whole or any
part of the Subordinated Indebtedness (whether the Subordinated Indebtedness
shall have become payable at maturity, by acceleration or otherwise), including,
without limitation, the taking of any negotiable instrument evidencing any
Subordinated Obligation.
3. Liens. (a) Notwithstanding (i) the order, timing or manner of its
creation, attachment or perfection, or (ii) the recording of any financing
statement, mortgage or other, similar instrument in regard thereto, or (iii) any
conflicting terms, covenants or conditions set forth in any of the Subordinated
Documents, or (iv) any other matter whatsoever, all Liens held, received or
claimed by or on behalf of Finova, or any of them, in any Collateral, whether
now or hereafter existing, shall be prior and superior, in all respects, to any
Lien (if any) held, received or claimed by or on behalf of Subordinated Obligee
in any Collateral, whether now or hereafter existing.
(b) The relative Lien priorities set forth in subsection (a) above
shall not be altered or otherwise affected by any amendment, modification,
supplement, extension, renewal, restatement or refinancing of any Senior
Obligations or any Subordinated Indebtedness; nor by any action (or inaction)
which any Senior Creditor or Subordinated Obligee may take (or omit to take) in
respect of any Collateral.
(c) The foregoing provisions of this Section are intended solely to
govern the respective Lien priorities of any Senior Creditor and Subordinated
Obligee, and shall not be construed to impose on any Senior Creditor any duties
or obligations in respect of the disposition of proceeds of any Enforcement
Action which would conflict with prior perfected Liens in any Collateral in
favor of any other Person.
(d) The Subordinated Obligee shall not contest the validity,
perfection, priority or enforceability of any Lien granted to any Senior
Creditor in respect of any Collateral; and the terms of this Section shall
continue to govern the relative Lien priorities of the parties hereto in respect
of Collateral even if all or portions of the Senior Obligations or any Liens of
any Senior Creditor are avoided, disallowed, set aside or otherwise invalidated
in any judicial proceeding or otherwise.
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(e) As between any Senior Creditor and Subordinated Obligee, Senior
Creditor shall have the sole and exclusive right to manage, perform and take all
Enforcement Actions with respect to the Collateral and to exercise and enforce
all privileges and rights thereunder according to their discretion, including,
without limitation, the sole and exclusive right to enforce or settle insurance
claims, take or retake control or possession of the Collateral and to hold,
prepare for sale, process, sell, lease, dispose of, or liquidate the Collateral.
In connection therewith, Subordinated Obligee waives any and all rights to
affect the method or challenge the appropriateness of any Enforcement Action by
any Senior Creditor.
(f) Notwithstanding anything to the contrary contained in any of the
Subordinated Documents, only Senior Creditor shall have the right to restrict or
permit, or approve or disapprove, the sale, transfer or other disposition of any
Collateral. Subordinated Obligee will, immediately upon the request of Finova,
release or otherwise terminate its Liens (if any) upon the Collateral, to the
extent such Collateral is sold or otherwise disposed of either by Senior
Creditor or by Company (or any Obligor) with the consent of Finova, and
Subordinated Obligee will immediately deliver such release documents as Senior
Creditor may require in connection therewith.
(g) Nothing contained in this Section is intended, or shall be
construed, to permit Subordinated Obligee to have any Lien in any Collateral
unless, pursuant to the terms of the Senior Agreement, the creation (or
retention) of such Lien by Subordinated Obligee is expressly permitted at the
time such Lien is created (or retained). Subordinated Obligee agrees that, as of
the date hereof, no Lien has been granted, and there is no effective Lien, by
Company, Borrower or any other Obligor in favor of Subordinated Obligee and that
the Subordinated Indebtedness is unsecured.
4. Enforcement Rights. (a) Subordinated Obligee shall have no right to
accelerate or enforce any claim with respect to the Subordinated Indebtedness,
or otherwise to take any action, including any Enforcement Action, either
judicially or through self-help or otherwise (including without limitation the
institution of bankruptcy or insolvency proceedings with respect to the Company
or any Obligor), against the Company or any Obligor or its property without
Finova's prior written consent.
(b) Notwithstanding the limitations in subdivision (a) above,
Subordinated Obligee may take the following actions to the extent permitted in
the Subordinated Documents:
(i) Subordinated Obligee may, with prior written notice to
Finova, seek equitable relief to cause the Company or any Obligor to
perform its obligations under the Subordinated Documents, to the
extent not in contravention or breach of this Agreement or any of the
Senior Documents.
(ii) Upon an Acceleration Event, or a failure to pay the Senior
Obligations in full at maturity, Subordinated Obligee may accelerate
the Subordinated Indebtedness.
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(iii) Upon the bankruptcy or insolvency of any of the Company or
any Obligor, Subordinated Obligee may file as appropriate proofs of
claim.
5. Subordinated Indebtedness Owed Only to the Subordinated Obligee.
Subordinated Obligee warrants and represents that it has not previously assigned
any interest in its Subordinated Indebtedness, that no other party owns an
interest in its Subordinated Indebtedness other than itself (whether as joint
holders of the Subordinated Indebtedness, participants or otherwise) and that
its entire Subordinated Indebtedness are owing only to it; and covenants that
its entire Subordinated Indebtedness shall continue to be owing only to it
unless assigned in accordance with, and subject to, the terms of this Agreement.
6. Finova's Priority Claim in Bankruptcy. In the event that any
distribution, division, or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of the Company or any Obligor, or the proceeds thereof, to the creditors of the
Company or any Obligor or readjustment of the obligations and indebtedness of
the Company or any Obligor, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding involving the readjustment of all or any part of the Senior
Obligations or the Subordinated Indebtedness, or the application of the assets
of the Company or any Obligor to the payment or liquidation thereof, or upon the
dissolution or other winding up of the Company's or any Obligor's business, or
upon the sale of all or substantially all of the Company's or any Obligor's
assets, then, and in any such event, (a) Senior Creditor shall be entitled to
receive payment in full of any and all of the Senior Obligations then owing
prior to the payment of all or any part of the Subordinated Indebtedness, and
(b) any payment or distribution of any kind or character, whether in cash,
securities or other property, including without limitation adequate protection
payments, which shall be payable or deliverable upon or with respect to any or
all of the Subordinated Indebtedness shall be paid or delivered directly to
Senior Creditor for application on any of the Senior Obligations, due or not
due, until such Senior Obligations shall have first been fully paid and
satisfied. Notwithstanding any statute, including the Bankruptcy Code (as
hereinafter defined), any rule of law or bankruptcy proceeding to the contrary,
the right of Senior Creditor hereunder to have all of the Senior Obligations
paid and satisfied in full prior to the payment of any of the Subordinated
Indebtedness shall include, without limitation, the right of Senior Creditor to
be paid in full all interest accruing on the Senior Obligations due to them
after the filing of any petition by or against the Company or any Obligor in
connection with any bankruptcy or similar proceeding or any other proceeding
referred to in this Section, prior to the payment of any amounts in respect of
the Subordinated Indebtedness, including any interest due to Subordinated
Obligee accruing after such date. Notwithstanding the foregoing, in connection
with a Plan (as defined in Section 7 below), Subordinated Obligee may receive
debt or equity securities of the Company or any Obligor (or any successor
entity) provided for by such Plan that are subordinated to the Senior
Obligations at least to the same extent that the Subordinated Documents, and the
obligations arising thereunder, are subordinated to the Senior Obligations
pursuant to this Agreement (including at least the same subordination and
limitations on rights of action imposed hereunder); provided, however, that if a
new (successor entity) results from such Plan, such successor entity shall have
assumed all Senior Obligations, not paid in full in cash in connection with such
Plan, (such debt or equity securities being "Permitted
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Junior Securities"); provided, further, however, that if Subordinated Obligee
makes an investment constituting new value in the Company or any Obligor,
Subordinated Obligee may receive securities representing equity interests or
indebtedness solely in consideration of such investment so long as such
securities received solely constitute Permitted Junior Securities.
7. Grant of Authority to Finova; Voting of Proofs of Claim. In the event of
the occurrence of any bankruptcy or insolvency event described in Section 6
above, if Subordinated Obligee does not act within ten (10) days prior to the
last date for filing claims, the Senior Creditor is hereby irrevocably
authorized and empowered to make and present for and on behalf of Subordinated
Obligee such proofs of claims against the Company or, as the case may be, any
Obligor on account of the Subordinated Indebtedness as Senior Creditor may deem
expedient or proper. Whether proofs of claim with respect to the Subordinated
Indebtedness are made and presented by Finova or Subordinated Obligee,
Subordinated Obligee does hereby irrevocably authorize Senior Creditor to vote,
and does hereby assign and transfer to Senior Creditor all rights to vote, any
and all claims in such proceedings related to the Subordinated Indebtedness,
including without limitation with respect to expressing consent or disapproval
to any plan of reorganization (a "Plan") or other matter put to the Company's or
any Obligor's creditors for approval, if Subordinated Obligee does not act
within ten (10) days prior to the last day for voting or other forms of
approval; and, in any event, Subordinated Obligee agrees not to cast any such
vote or give any such approval which, if given, would cause any of the terms of
subordination as between Finova and Subordinated Obligee set forth herein to be
contravened. In all events, Senior Creditor shall have authority to receive and
collect any and all dividends or other payments, distributions or disbursements
made in any such proceedings in whatever form the same may be paid or issued and
to apply the same on account of any of the Senior Obligations, subject to the
last sentence of Section 6 above. To the extent that payments or distributions
are made in property other than cash, the Subordinated Obligee authorizes Senior
Creditor to sell such property to such buyers and on such terms as Senior
Creditor shall determine, subject to the last sentence of Section 6 above. The
Subordinated Obligee will execute and deliver to Senior Creditor such powers of
attorney, assignments and other instruments or documents, including notes and
stock certificates (together with such assignments or endorsements as Senior
Creditor shall deem necessary), as may be requested from time to time by Senior
Creditor in order to enable Senior Creditor to exercise any and all rights
granted hereunder including the right to collect and receive any and all
payments and distributions which may be payable or deliverable at any time upon
or with respect to the Subordinated Indebtedness (subject to the last sentence
of Section 6), all for Finova's own benefit. Following the termination of this
Agreement, Senior Creditor will remit to Subordinated Obligee to the extent of
the Subordinated Obligee's interest therein, all dividends or other payments or
distributions paid to and held by Senior Creditor in excess of the Senior
Obligations.
8. Payments Received by the Subordinated Obligee. Except for Permitted
Junior Securities, should any payment or distribution or security or
reimbursement or dividend or instrument or proceeds thereof (including without
limitation due to, or paid in accordance with, insurance policies, whether
policies upon assets of the Company or any Obligor, key-man policies upon
officers, employees or directors of the Company or any Obligor, or any other
policies) be received by Subordinated Obligee upon or with respect to the
Subordinated
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Indebtedness or any other obligations of the Company or any Obligor to
Subordinated Obligee, Subordinated Obligee shall receive and hold the same in
trust, as trustee, for the benefit of Finova, and shall forthwith deliver the
same to Senior Creditor in precisely the form received (except for the
endorsement or assignment of Subordinated Obligee where necessary), for
application on any of the Senior Obligations, due or not due, and, until so
delivered, the same shall be held in trust by Subordinated Obligee as the
property of Finova. In the event of the failure of Subordinated Obligee to make
any such endorsement or assignment to Finova, Finova, or any of its officers or
employees, is hereby irrevocably authorized to make the same.
9. Instrument Legend. Any instrument evidencing any of the Subordinated
Indebtedness, or any portion thereof, will, on the date hereof or, if issued
hereafter, not later than the earlier of the issue thereof or the first transfer
of any interest therein, be inscribed with a legend conspicuously indicating
that payment thereof (and security therefor, if any) is subordinated to the
claims of Senior Creditor pursuant to the terms of this Agreement, in
substantially the following form:
"The indebtedness evidenced by this instrument (and security therefor,
if any should in the future exist) is subordinated to the prior payment in
full and priority of the Senior Obligations (as defined in the
Subordination Agreement hereinafter referred to) pursuant to, and to the
extent provided in the Subordination Agreement, dated as of August 12,
2002, made by the payee hereunder in favor of Senior Creditor as defined
therein."
A copy of any instrument evidencing any of the Subordinated Indebtedness, or any
portion thereof will be delivered to Senior Creditor on the date of its
execution or within five Business Days thereafter.
10. Further Actions. Subordinated Obligee will, with no charge to Finova,
and at any time and from time to time, promptly execute and deliver all further
instruments, financing statements and documents, and take all further action,
that may be reasonably necessary or desirable, or that Senior Creditor may
reasonably request, in order to protect, establish or maintain any right,
priority or interest granted or purported to be granted hereby or to enable
Senior Creditor to enforce the rights and remedies afforded to them hereunder.
11. Reimbursements for Expenses and Borrowings from Company; Assignment of
Claims. Subordinated Obligee will not, directly or indirectly, accept or receive
the benefit of any remuneration or reimbursement for expenses from or on behalf
of the Company or any Obligor, and will not assign or transfer to others any
claim Subordinated Obligee has or may have against the Company or any Obligor,
unless such assignment or transfer is made expressly subject to the terms of
this Agreement.
12. Continuing Nature of Subordination. All rights and interests of Senior
Creditor hereunder, and all agreements and obligations of Subordinated Obligee
under this Agreement, shall remain in full force and effect irrespective of:
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(a) any lack of validity or enforceability of the Senior Documents or
the Senior Obligations, or any Lien purported to be created thereby;
(b) any change in the time, manner, amount or place of payment of, or
any other term of, all or any of the Senior Obligations, or any other amendment,
increase, modification or supplement to, or renewal, extension, waiver or
termination of, or any consent to departure from, or any other action or
omission in respect of, the Senior Documents;
(c) any failure of any Lien purported to be created by the Senior
Documents to be created, to attach to property of the Company or any Obligor, or
to be perfected, or any lapse in priority of such Lien;
(d) any exchange, release, sale, surrender, or non-perfection, in
whole or in part, of any collateral now or hereafter existing, or any release or
amendment or waiver of or consent to departure from any guaranty, for all or any
of the Senior Obligations;
(e) any exercise or failure to exercise any right, power or remedy
under or in respect of the Senior Documents or the Senior Obligations;
(f) any action or failure to act, or default by, either of
Subordinated Obligee under this Agreement, the Subordinated Documents, or any
other agreement or document; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a discharge of Subordinated Obligee or a subordinated creditor;
in each case, whether or not Subordinated Obligee shall have had notice or
knowledge of any of the foregoing and whether or not they shall have consented
or objected thereto. Subject to Section 30 below, this Agreement shall be
effective and may not be terminated or otherwise revoked by Subordinated Obligee
until the Senior Obligations shall have been fully discharged by full and final
indefeasible payment and all financing arrangements between the Company and
Senior Creditor constituting Senior Obligations have been terminated. This is a
continuing agreement of subordination and Senior Creditor may continue, at any
time or from time to time and without notice to Subordinated Obligee, to extend
or increase credit or other financial accommodations and loan monies to or for
the benefit of the Company on the faith hereof.
13. Subordinated Obligee's Waivers. All of the Senior Obligations shall be
deemed to have been made or incurred in reliance upon this Agreement.
Subordinated Obligee expressly waive promptness, diligence, all notice of the
acceptance by Senior Creditor of the subordination and other provisions of this
Agreement and all other notices, not specifically required pursuant to the terms
of this Agreement or required by applicable law, whatsoever and any requirement
that Senior Creditor protect, secure, perfect or insure any Lien on any
Collateral or exhaust any right or take any action against the Company or any
other Person or any Collateral, and Subordinated Obligee expressly waives
reliance by Senior Creditor upon the subordination and other agreements as
herein provided. Subordinated Obligee agrees that Senior Creditor has made no
warranties or representations with respect to the due execution, legality,
validity, completeness or enforceability of the Senior Documents or other
agreements governing or evidencing the Senior
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Obligations, or the collectability of the Senior Obligations, or as to the
creation, attachment, perfection or priority of any Lien purported to be created
by the Senior Documents, that Senior Creditor shall be entitled to manage and
supervise its loans and credit facilities to the Company in accordance with
applicable law and Finova's usual practices, modified from time to time as they
deem appropriate under the circumstances, without regard to the existence of any
rights that Subordinated Obligee may now or hereafter have in or to any of the
assets of the Company, and that Senior Creditor shall have no liability to
Subordinated Obligee for, and, to the fullest extent permitted by law,
Subordinated Obligee waives any claim which it may now or hereafter have against
Senior Creditor arising out of, any and all actions which Finova, acting in a
commercially reasonable manner, take or omit to take (including actions with
respect to the creation, perfection or continuation of Liens in any Collateral
and other security, for the Senior Obligations, actions with respect to the
occurrence of an event of default or default under the Senior Documents, or
other agreements governing or evidencing the Senior Obligations, actions with
respect to the foreclosure upon, sale, release, or depreciation of, or failure
to realize upon, any of the collateral and actions with respect to the
collection of any claim for all or any part of the Senior Obligations from any
account debtor, guarantor or any other party), with respect to the Senior
Documents or other agreements governing or evidencing the Senior Obligations or
any other agreement related thereto or to the collection of the Senior
Obligations or the valuation, use, protection or release of any collateral
and/or other security for the Senior Obligations.
14. Certain Bankruptcy Issues. If the Company or the Company's estates
becomes the subject of proceedings under Title 11 of the United States Code (11
U.S.C. (S) 101 et seq.), as amended, (the "Bankruptcy Code"), and if Senior
Creditor desires to permit the use of cash collateral or to provide financing to
the Company under either Section 363 or Section 364 of the Bankruptcy Code, the
Subordinated Obligee agrees that adequate notice of such financing to the
Subordinated Obligee shall have been provided if the Subordinated Obligee
receives written notice in accordance with the Bankruptcy Code. All allocations
of payments between Senior Creditor and Subordinated Obligee made hereunder
shall continue to be made after the filing of a petition under the Bankruptcy
Code on the same basis that the payments were to be allocated prior to the date
of such filing. Subordinated Obligee waives any claim it may now or hereafter
have arising out of Finova's election, in any proceeding instituted under
Chapter 11 of the Bankruptcy Code, of the application of Section 1111(b)(2) of
the Bankruptcy Code, and/or any borrowing or grant of a security interest under
Section 364 of the Bankruptcy Code by the Company, as debtor-in-possession. To
the extent that Senior Creditor receives payments on, or proceeds of collateral
for, the Senior Obligations which are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law, or equitable cause, then, to the extent of such payment or proceeds
received, the Senior Obligations, or part thereof, intended to be satisfied
shall be revived and continue in full force and effect as if such payments or
proceeds had not been received by Finova.
15. Restrictions on Subordinated Obligee. Notwithstanding anything
contained in any agreement, instrument or document executed and delivered in
connection with the Subordinated Indebtedness to the contrary, and without
limitation of the restrictions on and obligations of
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Subordinated Obligee set forth in this Agreement, Subordinated Obligee shall
not, without the prior written consent of Finova, do any of the following:
(a) amend, modify, supplement or waive, or agree to any amendment,
modification, supplement or waiver of or to, the Subordinated Indebtedness or
the Subordinated Documents if such amendment, modification or supplement: (i)
amends or affects the interest rate, principal amount, financial covenants,
aggregate amount due, maturity, terms of payment or stated events of default of
the Subordinated Indebtedness; (ii) adds or modifies (adversely to Company or
any Obligor) any material covenant of Company or any Obligor under the
Subordinated Documents; or (iii) provides any Collateral for, or modifies the
rights or remedies of Subordinated Obligee upon default on, the Subordinated
Indebtedness. In all events, Subordinated Obligee will provide Senior Creditor
with a copy of each amendment, waiver modification or supplement to the
Subordinated Documents within ten (10) days after execution thereof; or
(b) except as expressly permitted by Section 4 hereof, accelerate the
maturity of all or any portion of the Subordinated Indebtedness, or take any
action towards collection of all or any portion of the Subordinated Note or
enforcement of any rights, powers or remedies under the Subordinated Documents
or other agreements entered into pursuant thereto, or applicable law, upon the
occurrence of any event of default under and as defined in any of the
Subordinated Documents or any event which, with the passage of time, or giving
of notice, or both, would constitute such a default.
16. Subordinated Indebtedness Unimpaired. Nothing contained herein shall
impair, as between the Company (or any Obligor) and Subordinated Obligee, the
obligation of the Company (or any Obligor), which is absolute and unconditional,
to pay or deliver to Subordinated Obligee the Subordinated Indebtedness, as and
when the same shall become due and payable in accordance with the terms thereof,
subject to the rights of Senior Creditor hereunder.
17. No Finova's Waivers. No waiver shall be deemed to be made by Finova or
Subordinated Obligee of any of their respective rights hereunder, unless the
same shall be in writing signed by Senior Creditor or Subordinated Obligee,
respectively, and each waiver, if any, shall be a waiver only with respect to
the specific instance involved and shall in no way impair the rights of Senior
Creditor or the obligations of the Subordinated Obligee to Finova, or the rights
of Subordinated Obligee, in any other respect at any other time.
18. Information Concerning Financial Condition of the Company and
Obligors. Subordinated Obligee hereby assumes responsibility for keeping itself
informed of the financial condition of the Company, Borrower and each other
Obligor and of all other circumstances bearing upon the risk of nonpayment of
the Senior Obligations and/or Subordinated Indebtedness that diligent inquiry
would reveal, and Subordinated Obligee hereby agrees that Senior Creditor shall
have no duty to advise the Subordinated Obligee of information known to them
regarding such condition or any such circumstances. In the event Senior Creditor
undertakes, at any time or from time to time, to provide any such information to
Subordinated Obligee, Senior Creditor shall be under no obligation (a) to
provide any such information to Subordinated Obligee on any
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subsequent occasion, or (b) to undertake any investigation not a part of the
regular business routine of Senior Creditor and shall be under no obligation to
disclose any information which, pursuant to accepted or reasonable commercial
finance practices, Senior Creditor wishes to maintain confidential. Subordinated
Obligee hereby agrees that all payments received by Senior Creditor may be
applied, reversed, and reapplied, in whole or in part, to any of the Senior
Obligations, as Finova, deems appropriate and Subordinated Obligee assents to
any extension or postponement of the time of payment of the Senior Obligations
or to any other indulgence with respect thereto, to any substitution, exchange
or release of collateral which may at any time secure the Senior Obligations and
to the addition or release of any other party or person primarily or secondarily
liable therefor.
19. No Offset. In the event that Subordinated Obligee at any time
purchases goods or services from the Company or any Obligor, Subordinated
Obligee hereby irrevocably agrees that it shall pay for such goods or services
in cash or cash equivalents in accordance with the terms of such purchases and
shall not deduct from or setoff against any amounts billed to it by the Company
or any Obligor in connection with such purchases any amounts Subordinated
Obligee claims is due to it with respect to the Subordinated Indebtedness.
20. Inconsistencies. Subordinated Obligee acknowledges and agrees that,
to the extent the terms and provisions of this Agreement are inconsistent with
those of any Subordinated Documents, the terms of this Agreement shall control
and the Subordinated Documents shall be deemed to be subject to this Agreement.
21. Consent to Jurisdiction; Waivers. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the jurisdiction of any New York State court or federal court of the United
States sitting in New York City, and any appellate court for any thereof, and to
the jurisdiction of the courts or its own corporate domicile, with respect to
actions brought against it as a defendant, in any action or proceeding arising
out of or relating to any Subordinated Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. The Subordinated Obligee hereby irrevocably
appoints [CT Corporation System (the "Process Agent"), with offices at the date
hereof at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxx Xxxxxx,] as its
agent to receive on behalf of such Subordinated Obligee and its property service
of copies of the summons and complaint and any other process which may be served
in any such action or proceeding. Such service may be made by mailing or
delivering a copy of such process to the Subordinated Obligee in care of the
Process Agent at the Process Agent's address, and the Subordinated Obligee
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. As an alternative method of service, the Subordinated
Obligee irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to the
Subordinated Obligee at its address specified in Section 14.
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(b) The Subordinated Obligee irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of suit, action or
proceeding arising out of or relating to any Subordinated Document in any New
York State or federal court. The Subordinated Obligee hereby irrevocably waives,
to the fullest extent permitted by law, the defense of any inconvenient forum to
the maintenance of such action or proceeding in any such court.
(c) To the extent that the Subordinated Obligee has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, the Subordinated Obligee hereby irrevocably and unconditionally waives
such immunity in respect of its obligations under this Agreement and the
Subordinated Notes and the other Subordinated Documents and, without limiting
the generality of the foregoing, agrees that the waivers set forth in this
subsection (c) shall have the fullest scope permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States and are intended to be
irrevocable for purposes of such Act.
(d) Nothing in this Section 22 shall affect the right of FINOVA to
serve legal process in any other manner permitted by law.
22. Waiver of Subrogation. Subordinated Obligee hereby agrees that all
rights against the Company, Borrower or any other Obligor arising from any
Indebtedness under the Subordinated Documents, by way of subrogation,
contribution, reimbursement, indemnity or otherwise shall be in all respects
subordinated and junior in right of payment to, and shall not be exercised
until, the prior indefeasible payment in full of all Senior Obligations. If any
amount shall erroneously be paid to Subordinated Obligee on account of such
subrogation, contribution, reimbursement, indemnity or similar right, such
amount shall be held in trust for the benefit of the Senior Creditor and shall
be forthwith by paid to the Senior Creditor to be credited against the payment
of the Senior Obligations, whether matured or unmatured, in accordance with the
terms of the Senior Documents.
23. Notices. (a) Except as otherwise expressly provided herein and except
as to any service of legal process, any notice required or desired to be given
hereunder shall be in writing and shall be deemed to have been received upon the
earlier of actual receipt by manual delivery or teletransmission or three days
after being mailed by registered or certified mail, postage prepaid, to the
party as set forth below:
if to AMRO International, S.A.:
AMRO International, S.A.
c/o Ultra Finance
Xxxxxxxxxxxxxxxxx 0
Xxxxxx XX-0000 Xxxxxxxxxxx
Attention: Director
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with a copy to:
Xxxxxxx Xxxxxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxxxxxxxx.xxx
if to Finova:
Finova Mezzanine Capital Inc.
000 Xxxxxx Xx., Xxx. 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxxxxx@xxxxxx.xxx
with a copy to:
Xxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other address as may be given in a notice in compliance herewith.
(b) Any notice hereunder to Subordinated Obligee, whether or not
addressed by name, shall be sufficient for all purposes hereunder if identified
as to Subordinated Obligee and otherwise in compliance with this Section, and if
sent to each entity listed in this section.
24. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS AND
DECISIONS OF THE STATE OF NEW YORK; SHALL BE IMMEDIATELY BINDING UPON THE
SUBORDINATED OBLIGEE AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS; AND SHALL
INURE TO THE BENEFIT OF SENIOR CREDITOR AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS.
25. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be
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ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
26. Counterparts. This Agreement may be executed in any number of
counterparts which, when taken together, shall be deemed to constitute one and
the same instrument.
27. No Third Party Beneficiary. This Agreement is for the sole benefit of
the parties hereto and no other person or entity shall have any rights to
enforce this Agreement nor shall the consent of any such other person or entity
be required in order to amend, modify or terminate this Agreement.
28. Binding Action. Each of Senior Creditor and Subordinated Obligee
confirms, represents, warrants and agrees that its officer executing this
Agreement is fully and irrevocably authorized to act on its behalf in all
respects in connection with this Agreement and the transactions referred to
herein and Subordinated Obligee and Finova, respectively, shall have no
obligation to inquire as to such authority.
29. Certain Representations. Subordinated Obligee and Senior Creditor
hereby represents and warrants to Senior Creditor and Subordinated Obligee,
respectively, as follows:
(a) If it is an entity, it is duly organized and validly existing
under the laws of the State of its organization, and it has full power and
authority to enter into transactions and make legally binding obligations;
(b) The execution and delivery and performance of this Agreement is
authorized by its organizational documents (if applicable) and this Agreement
has been duly authorized, executed and delivered; and constitutes its legal and
validly binding agreement enforceable in accordance with these terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the rights and remedies of creditors generally; and
(c) The execution, delivery and performance by it of this Agreement
will not violate, conflict with, require consent, authorization or approval of
any person under (i) any law, statute, rule, regulation court or administrative
order, decree, injunction or judgment applicable to it, (ii) any agreement,
instrument, indenture, security document, franchise, license or permit to which
it is a party or by which it is bound or affected, or (iii) if applicable, under
its organizational documents.
30. Termination. Notwithstanding anything to the contrary set forth
herein, this Agreement shall terminate at such time as the principal amount of
the Senior Obligations shall be less than $250,000 in the aggregate; provided,
however that this Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time payment, or any part thereof, of any Senior
Obligation is rescinded or must otherwise be restored by any Obligor upon the
bankruptcy or reorganization of the Company, Borrower or any other Obligor such
that the principal amount of Senior Obligations shall be equal or greater than
$250,000 in the aggregate after giving effect thereto.
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31. Section Titles. The section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
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IN WITNESS WHEREOF, this instrument has been signed to be effective as
of the day and year first above written.
FINOVA CAPITAL CORPORATION, a Delaware
Corporation
By: /s/ Xxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxxx
------------------------------
Title: Senior Vice President
-----------------------------
AMRO INTERNATIONAL, S.A.
By: /s/ X.X. Xxxxxxxx
-----------------------------------
Name: X.X. Xxxxxxxx
------------------------------
Title: Director
-----------------------------
ACKNOWLEDGMENT
Each of the undersigned hereby accepts, and acknowledges receipt of a
copy of, the foregoing Subordination (the "Agreement") dated, as of August 12,
2002, and agrees that it will not pay or enact any of the "Subordinated
Indebtedness" (as defined in the Agreement) or grant any security therefor,
except as the Agreement may expressly provide. In the event of an action by any
of the undersigned causing a breach of any of the provisions in the Agreement,
an Event of Default (or default in the Loan Agreement) shall occur and all of
the "Senior Obligations" (as defined in the Agreement) shall, without
presentment, demand, protest or notice of any kind, become immediately due and
payable, unless Senior Creditor shall otherwise elect and give notice of that
election in writing.
IN WITNESS WHEREOF, the undersigned have executed this Acknowledgment
as of August 12, 2002.
AQUIS COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------
Title: President & CEO
--------------------------
AQUIS WIRELESS COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------
Title: President & CEO
--------------------------
