SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Settlement Agreement") is entered into
this 9th day of June, 1999, by and among AQUIS COMMUNICATIONS, INC. ("Aquis"),
and XXXX ATLANTIC PAGING, INC. ("BAPCO") and XXXX ATLANTIC - DELAWARE, INC.,
XXXX ATLANTIC - MARYLAND, INC., XXXX ATLANTIC - PENNSYLVANIA, INC., XXXX
ATLANTIC -VIRGINIA, INC., XXXX ATLANTIC - WASHINGTON, D.C., INC., XXXX ATLANTIC
- WEST VIRGINIA, INC., (hereinafter collectively the "OTCs", and together with
BAPCO, the "Sellers").
RECITALS
WHEREAS, pursuant to an Asset Purchase Agreement dated as of July 2,
1998, as amended by Consent and Amendment No. 1 dated November 3, 1998 ("Asset
Purchase Agreement"), Aquis acquired certain of the paging assets of the Sellers
("the Acquisition") on December 31, 1998; and
WHEREAS, certain disputes have arisen among the Parties regarding
the Acquisition (the "Disputes"); and
WHEREAS, the Parties desire to resolve the Disputes in accordance
with the provisions of this Settlement Agreement,
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties agree to resolve
the Disputes as hereinafter set forth.
Capitalized terms used herein but not otherwise defined shall have the meanings
ascribed to them in the Asset Purchase Agreement.
1. Resolution of Disputes. The Disputes are hereby resolved as
follows:
A. Sales Tax - Reference is made to the Transfer Tax Agreement (the
"Tax Agreement") dated as of December 31, 1998, among Aquis and the Sellers. The
parties agree that Aquis's obligations under Section 2 of the Tax Agreement have
been satisfied by: (1) the payment of $54,217.00 to BAPCO and the OTCs, and (2)
delivery by Aquis to BAPCO and the OTCs of its direct pay permit number from the
West Virginia State Tax Department (as described in more detail in paragraph 4
of the March 22, 1999 memorandum from Xxxxx Xxxxxx to Xxxxx Xxxx and Xxx Xxxxx).
Notwithstanding anything to the contrary in this Settlement Agreement or in the
Reseller Agreement, the Buyer's covenants in Section 9.2 of the Asset Purchase
Agreement and the indemnity provisions in Section 5 of the Tax Agreement shall
remain in full force and effect and, in the event that Aquis fails timely to
make such an indemnity payment after 5 days following notice of such payment
being due, the Sellers shall be permitted to withhold the compensation
contemplated in Section 7(a) of the Reseller Agreement and apply such withheld
payments against any such indemnification obligation, provided, however, that
such compensation shall resume after such indemnity obligation has been
satisfied.
B. Inventory Transfer - Aquis hereby agrees not to assert and waives
and releases the Sellers from the claim of
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improper transfer of inventory referenced in the Memorandum dated January 29,
1999 to Xxxxx Xxxx from Xxxxx Xxxxxx and Xxxx Xxxxx. The Sellers continue to
disagree with and deny Aquis' contention.
C. Accounts Payable - The parties hereto agree that the accounts
payable listed on Exhibit A attached hereto in the aggregate amount of
$1,409,207 (after certain agreed adjustments) are Assumed Liabilities and
constitute all of the liabilities and obligations of BAPCO reflected on the
Balance Sheet in the line item entitled "Trade Accounts Payable", and BAPCO
shall be responsible for any pre-Closing accounts payable not reflected on
Exhibit A. BAPCO acknowledges and agrees that Metrocall claims it is owed
approximately $40,000 for services rendered to BAPCO prior to the Closing Date
in addition to the amounts listed on Exhibit A and that such amount shall be
included in the definition of Retained Liabilities as defined in the Asset
Purchase Agreement. BAPCO hereby represents and warrants to Aquis that it has
made payments to third parties in an aggregate amount of $899,880 for such
payables, and Aquis hereby agrees to reimburse BAPCO therefor in accordance with
the provisions of paragraph 2 hereof. Aquis hereby represents and warrants to
BAPCO that it has made, or will promptly make, payments to third parties in an
aggregate amount of $509,327, representing all accounts payable listed on
Exhibit A that BAPCO represents it has not paid.
Aquis has paid $63,998 in sales commissions for sales that occurred
in the month of December 1998; Aquis agrees that such
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amount was an Assumed Liability and it will not seek reimbursement or
indemnification therefor.
D. Other Issues - Attached hereto as Exhibit B is a schedule
entitled Aquis Communications, Inc. "Post Close Issues" setting forth all
remaining post-closing issues not heretofore resolved between the parties. Such
issues are hereby resolved in accordance with Exhibit B and Aquis hereby agrees
to pay to the Sellers, in addition to the amount set forth in paragraph 1(C),
above, the sum of $211,465 in accordance with the provisions of paragraph 2 of
this Agreement.
2. Moneys Due to BAPCO. It is agreed that a reconciliation of the
resolution of Disputes set forth above results in a balance owed by Aquis to
BAPCO in the aggregate amount of $1,111,345 (the "Dispute Obligation"). The
Dispute Obligation plus accrued interest thereon, shall be paid by wire transfer
to BAPCO of immediately available funds not later than June 30, 1999. Interest
shall accrue on the Dispute Obligation from the date hereof at the Defined Rate.
In the event that Aquis fails timely to make such payment of the Dispute
Obligation, the Sellers shall be permitted to withhold the compensation
contemplated in Section 7(a) of the Reseller Agreement and to apply such
withheld payments against any such unpaid amount of the Dispute Obligation and
interest accrued thereon, provided, however, that such compensation shall resume
after such obligation has been satisfied.
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3. Additional Consideration. A. As further consideration for BAPCO
to enter into this Settlement Agreement, Aquis hereby authorizes First Union
National Bank (the "Escrow Agent") to release to BAPCO all moneys being held in
escrow pursuant to the Indemnity Escrow Agreement and, upon such release, the
Indemnity Escrow Agreement shall be deemed terminated and the Escrow Agent shall
be released from any and all further obligations pursuant to such agreement. The
Parties will execute such additional documentation as may be reasonably
requested by any of them or the Escrow Agent to promptly effect the release of
the Escrow Money (as defined in the Escrow Agreement).
B. As additional consideration for each of the parties to enter into
this Settlement Agreement, BAPCO hereby grants to Aquis, from the date hereof
through June 30, 1999 (the "Option Period"), the right (the "Option") to satisfy
the Promissory Note in full by payment of the sum of Three Million One Hundred
Fifty Thousand Dollars ($3,150,000) (the "Exercise Price") by wire transfer to
BAPCO of immediately available funds subject to the following terms and
conditions:
Exercise of Option - Aquis may exercise the Option by giving
BAPCO written notice thereof (the "Notice") on or before June 30, 1999. The
Notice shall specify the date (within the Option period) that the Exercise Price
will be paid.
Effect of Payment - Upon BAPCO's receipt of the Dispute
Obligation and the Exercise Price, the Note, including any accrued interest
thereon, shall be deemed fully paid and satisfied
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and the Promissory Note shall be promptly returned to Aquis. In addition, BAPCO
and the Sellers shall promptly execute and deliver to Aquis all appropriate
documentation evidencing the release of its liens on the assets of Aquis
including UCC-3 termination statements (which documentation shall be prepared by
Aquis or its representatives at Aquis' expense; Aquis shall be responsible for
any filing fees).
Termination of Option - The Option shall terminate upon the
earlier of (i) payment of the Exercise Price, and (ii) June 30, 1999, but such
termination shall not relieve any party from any other obligations set forth in
this Settlement Agreement. Notwithstanding anything to the contrary herein, it
is a condition to Aquis' right to exercise the Option that Aquis shall have paid
or, simultaneously with payment of the Exercise Price shall pay, the Dispute
Obligation in full.
4. Release of Indemnities; Amendment. The indemnification
obligations of Aquis in Section 7.3(i) of the Asset Purchase Agreement regarding
representations and warranties are hereby terminated and of no further force and
effect, with the exception of (a) Section 3.3.7 to the Asset Purchase Agreement
regarding the H-S-R Act, (b) Section 9.3 of the Asset Purchase Agreement
regarding broker's and finder's fees, and (c) any fraudulent representations,
warranties or other disclosures. The indemnification obligations of the Sellers
contained in Section 7.2(i) of the Asset Purchase Agreement regarding
representations and warranties are hereby terminated and of no further force and
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effect with the exception of any fraudulent representations, warranties or other
disclosures. Notwithstanding the immediately preceding sentence, the parties
hereto acknowledge and agree that this Settlement Agreement does not affect the
enforceability of any Ancillary Agreement, including Seller's indemnification
obligations with respect to any representations or warranties thereunder, except
as specifically stated herein.
5. Final Purchase Price and Prorations. The parties hereto confirm
that the final Purchase Price is $27,992,681. Aquis's $27,814 overpayment has
been offset against amounts owed to the Sellers by Aquis hereunder (see Exhibit
B). Following the payment of the Dispute Obligation hereunder, the obligations
of the parties under Section 9.1 of the Asset Purchase Agreement regarding
prorations shall have been satisfied.
6. Accounts Receivable - Affiliates. Pursuant to Section 1.1.3 of
the Asset Purchase Agreement, "Accounts Receivable - Affiliates" are Excluded
Assets. $301,000 of such receivables have been deposited into Aquis's accounts,
and BAPCO and Aquis have agreed that Aquis will remit such funds to BAPCO as
part of the Dispute Obligation payment hereunder (see Exhibit B). Approximately
$339,000 of "Accounts Receivable - Affiliate" remain outstanding. Aquis agrees
to remit to BAPCO any additional payments it receives that are "Accounts
Receivable - Affiliates" promptly following receipt from BAPCO of notice thereof
and
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reasonable evidence that such funds are "Accounts Receivable - Affiliates."
7. Notices. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed in
accordance with the notice provisions of the Asset Purchase Agreement.
8. Counterparts. This Settlement Agreement may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
9. Successors. This Settlement Agreement shall be binding upon and
shall inure to the benefit of the Parties hereto and their respective legal
representatives, heirs, successors and assigns.
10. Governing Law. This Settlement Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, without
reference to the choice of law doctrine of such State.
11. Competency. Each of the parties hereto confirms that it has
carefully read and fully understands the provisions of this Settlement
Agreement, has had sufficient time and opportunity
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to consult with an attorney prior to signing it, and is signing this Settlement
Agreement knowingly and voluntarily and without coercion.
12. Representations and Warranties. Each party hereto represents and
warrants that it is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and that it has the
requisite corporate power and authority to execute and deliver this Settlement
Agreement.
IN WITNESS WHEREOF, Aquis and the Sellers enter into this Settlement
Agreement as of the date first above written.
AQUIS COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx, President
XXXX ATLANTIC PAGING, INC.
By: /s/ X. X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
XXXX ATLANTIC - DELAWARE, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, Controller
FURTHER SIGNATURE PAGE FOLLOWS
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XXXX ATLANTIC MARYLAND, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, Controller
XXXX ATLANTIC - PENNSYLVANIA, INC.
By: /s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx, Controller
XXXX ATLANTIC - VIRGINIA, INC.
By: /s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx, Controller
XXXX ATLANTIC-WASHINGTON, D.C., INC.
By: /s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx, Controller
XXXX ATLANTIC - WEST VIRGINIA, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, Controller
XXXX ATLANTIC - NEW JERSEY, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, Controller
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