Exhibit 10.14
SECOND WAIVER AND AMENDMENT AGREEMENT
This SECOND WAIVER AND AMENDMENT AGREEMENT (this "Agreement") is entered
into this _____ day of March, 1997 ("Effective Date"), by and among MOTOROLA,
INC., a Delaware corporation with offices at 0000 Xxxx Xxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, by its Paging Division ("Motorola"), and PAGING
PARTNERS CORPORATION, a Delaware corporation, with offices at 0000 Xxxxx 0,
Xxxxxxxx, Xxx Xxxxxx 00000 ("You" or the "Borrower").
WHEREAS, the parties hereto entered into a Credit Agreement dated as of
June 29, 1995, as amended by a Waiver and Amendment Agreement dated as of
February 27, 1996 (as amended, the "Credit Agreement"), pursuant to which
Motorola provided financing to You for the purchase of certain equipment and
services on the terms and conditions set forth in the Credit Agreement,
including, without limitation, the Standard Terms and Conditions attached as
Exhibit A thereto (the "Standard Terms and Conditions") and each of the other
Exhibits attached thereto; and
WHEREAS, the parties hereto wish to amend certain provisions
of the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Any capitalized terms not defined herein shall have the same meaning as
given those terms in the Credit Agreement or the Standard Terms and Conditions.
2. Pursuant to the Credit Agreement, You agreed to maintain the financial
ratios and covenants provided for in Exhibit D attached thereto (the "Agreed
Financial Ratios"), including, without limitation, EBITDA of not less than (or
in the case of losses, not exceeding) certain specified amounts for certain
quarters. You have indicated that your EBITDA for the fiscal quarter ending
September 30, 1996 and for the fiscal quarter ending December 31, 1996 (the
"Periods") failed to satisfy the Agreed Financial Ratios set forth in Section 3
of Exhibit D to the Credit Agreement for the Period (such failure, the "Existing
Default"). You agree that the Existing Default constitutes a breach of the
provisions of the Credit Agreement. You further agree that, to the extent any
notice of the Existing Default is required by applicable law or the Credit
Agreement, You have either received such notice, this Agreement constitutes such
notice, or to the extent permitted by applicable law, You hereby waive any and
all such notice. You have requested and Motorola hereby agrees to waive the
Existing Default. This waiver (the "Waiver") shall not operate as a waiver of
any other term or provision of the Credit Agreement or the Standard Terms and
Conditions or of the provision with respect to
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which the Waiver is given for any period other than the Periods, nor shall it
prohibit Motorola from declaring any future default with respect to the Agreed
Financial Ratios or any other breach or default under the Credit Agreement.
3. The first two sentences of Section 1 of the Credit Agreement, "Amount
of Credit; Note", are hereby amended in their entirety and shall read as
follows:
The aggregate principal amount of Credit that may be drawn down
under this Credit Agreement shall be $2,270,000.00. You may obtain
advances under this Credit Agreement until June 30, 1997 if, at the
time of requesting an advance, you have complied with all
Requirements for Advances. The last $790,543.00 of funds available
for advances under the Credit may only be used by You for the
purchase by You of equipment and services identified in Schedule A
attached hereto.
4. Section 4 of the Credit Agreement, "Repayment Terms", is hereby amended
in its entirety and shall read as follows:
4. Repayment Terms. You shall make monthly interest payments
in arrears until July 1, 1997. Subject to Sections 13 and 14 below,
on July 15, 1997, all of the outstanding principal of each advance
under this Credit Agreement, together with all accrued and unpaid
interest and any other amounts due hereunder shall become due and
payable, and You shall pay MOTOROLA all of such amounts in full in
immediately available funds on such date; provided that such
principal amount shall not become due on July 15, 1997 if You shall
have delivered the items required by Sections 13(a) and (b) prior to
July 8, 1997 or shall have satisfied the conditions set forth in
Sections 14(a) and (b). Until July 1, 1997, MOTOROLA will send You,
on or before the first day of each month, monthly invoices showing
the total accrued and unpaid interest as of the first day of such
month (but not including such day). Each such invoice shall be due
and payable on the first day of each month. You agree to pay each
invoice on or before its due date. Your failure to pay an invoice
within fifteen days of its due date constitutes an Event of Default
under this Credit Agreement.
5. Section 1 of Exhibit D of the Credit Agreement, "Financial Restrictions
and Covenants", is hereby amended in its entirety and shall read as follows:
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1) The Company's Debt Service Ratio, as of the last day of each fiscal
quarter set forth below, of not less than the correlative amount
specified below. Debt Service Ratio is defined in the Standard Terms
and Conditions (Exhibit "A").
September 30, 1995 N/A
December 31, 1995 N/A
March 31, 1996 N/A
June 30, 1996 N/A
September 30, 1996 N/A
December 31, 1996 N/A
March 31, 1997 N/A
June 30, 1997 N/A
September 30, 1997 N/A
December 31, 1997 N/A
and thereafter
6. Section 2 of Exhibit D of the Credit Agreement, "Financial Restrictions
and Covenants", is hereby amended in its entirety and shall read as follows:
2) The Company's Tangible Net Worth position for the term of this
Credit Agreement shall never fall below Three Million Dollars
($3,000,000) during 1997, Two Million Five Hundred Thousand Dollars
($2,500,000) during 1998, and Two Million Dollars ($2,000,000)
during 1999 and thereafter. Tangible Net Worth is defined in the
Standard Terms and Conditions (Exhibit "A").
7. Section 3 of Exhibit D of the Credit Agreement, "Financial Restrictions
and Covenants", is hereby amended in its entirety and shall read as follows:
3) EBITDA, as of the last day of each fiscal quarter set forth below,
of not less than (or, in case of a loss, not in excess of) the
correlative amount specified below. The amounts specified below are
specific for the quarter and do not represent a cumulative total.
EBITDA is defined in the Standard Terms and Conditions (Exhibit
"A").
September 30, 1995 ($485,000)
December 31, 1995 ($450,000)
March 31, 1996 ($425,000)
June 30, 1996 ($441,000)
September 30, 1996 ($438,000)
December 31, 1996 ($260,000)
March 31, 1997 ($200,000)
June 30, 1997 ($120,000)
September 30, 1997 ($20,000)
December 31, 1997 $80,000
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March 31, 1998 $140,000
June 30, 1998 $200,000
September 30, 1998 $260,000
December 31, 1998 $320,000
and thereafter
8. Section 1 of Exhibit A of the Credit Agreement "Standard Terms and
Conditions" is hereby amended as follows:
(a) The following definitions are hereby added:
"Cash Equivalents" means (i) securities with maturities of 3 months
or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (ii)
certificates of deposit and eurodollar time deposits with maturities
of three months or less from the date of acquisition and overnight
bank deposits of any commercial bank having capital and surplus in
excess of $500,000,000, (iii) repurchase obligations of any
commercial bank satisfying the requirements of clause (ii) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United
States Government, (iv) securities with maturities of 3 months or
less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may
be) are rated at least A by S&P or A by Xxxxx'x, or (v) shares of
money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (i) through (iv) of
this definition.
"Equity Securities" means any equity securities of the Borrower, any
securities convertible into or evidencing the right to purchase or
subscribe for any shares of equity securities (other than debt
instruments) of the Borrower, including, without limitation,
options, warrants, calls, subscriptions, rights, commitments or any
other agreements of a similar character obligating the Borrower to
issue any equity securities.
(b) The definition of "Subordinated Debt" is
hereby amended and restated in its entirety as follows:
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"Subordinated Debt" means any indebtedness of the Borrower which (i)
by its terms does not allow the payment of any principal unless and
until the indebtedness under this Credit Agreement has been paid in
full, (ii) if any security interest or other lien in any property of
the Borrower is granted by the Borrower to secure such indebtedness,
each such security interest or other lien is subordinated and junior
in all respects to security interests and other liens on the same
property securing the indebtedness hereunder, and (iii) each holder
of any such indebtedness has executed and delivered to MOTOROLA a
subordination agreement, substantially in the form of Exhibit I
hereto.
9. Section 5 of Exhibit D of the Credit Agreement, "Financial Restrictions
and Covenants", is hereby amended in its entirety and shall read as follows:
5) The Borrower shall maintain cash and Cash Equivalents that
exceed Four Hundred Thousand Dollars ($400,000) as of December
31, 1996 and Two Hundred Thousand Dollars ($200,000) as of
March 31, 1997 and that at all other times during the term of
this Credit Agreement exceed One Hundred Twenty Thousand
Dollars ($120,000).
10. The Credit Agreement is hereby amended by adding the following new
Sections 13 and 14:
13. Failure to Satisfy Certain Conditions.
In the event that You (i) shall have failed to maintain any of the
financial covenants and ratios required pursuant to this Credit Agreement,
as amended, for any period prior to July 1, 1997, or (ii) between January
1, 1997 and July 1, 1997, shall have failed to raise net proceeds of not
less than (x) $500,000 (excluding any amounts raised and used to cure
EBITDA covenant breaches pursuant to Section 6.9 of the Standard Terms and
Conditions) from the issuance of Equity Securities, (y) $700,000
(excluding any amounts raised and used to cure EBITDA covenant breaches
pursuant to Section 6.9 of the Standard Terms and Conditions) from the
issuance of Subordinated Debt, or (z) $700,000 (excluding any amounts
raised and used to cure EBITDA covenant breaches pursuant to Section 6.9
of the Standard Terms and Conditions) from the issuance of a combination
of Subordinated Debt and Equity Securities, You agree that:
a. On or before July 8, 1997, in exchange for the then
existing promissory note evidencing advances hereunder,
You shall issue a $2,270,000.00 face amount promissory
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note in substantially the form attached hereto as Exhibit J, duly
executed on behalf of the Borrower.
b. You shall issue warrants in substantially the form attached hereto
as Exhibit K exercisable for shares of common stock of the Borrower
in the amounts and on the dates set forth on Schedule K-1, which
amounts are subject to adjustment as provided in Schedule K-1.
c. On or before August 1, 1997, You shall retain a reputable
brokerage company or sales agent (the "Sales Agent")
reasonably acceptable to Motorola on terms and conditions
reasonably acceptable to Motorola. The Borrower shall
use its reasonable best efforts to arrange, and the
Borrower shall authorize and direct the Sales Agent to
assist the Borrower in arranging, for the sale of such
portion or portions of the assets or equity of the
Borrower on or before January 31, 1998, in a transaction
or series of transactions that will result in MOTOROLA
being paid in full all of the outstanding principal of
each advance under this Credit Agreement, together with
all accrued and unpaid interest and any other amounts due
hereunder no later than January 31, 1998. MOTOROLA
acknowledges that to the extent the consummation of any
such transaction requires the approval of the Borrower's
Board of Directors, this Agreement does not purport to
and shall not be deemed to require any member of the
Board of Directors to breach any fiduciary duty owed by
such member to the Borrower or the stockholders of the
Borrower. Failure to retain or maintain a Sales Agent or
failure to diligently pursue the sale contemplated by
this Section 13 shall constitute an Event of Default
under this Credit Agreement. Borrower hereby authorizes
MOTOROLA to discuss the prospects for any sale
contemplated by this Section 13 directly with any Sales
Agent retained by Borrower. Borrower shall provide
MOTOROLA with copies of all contracts, notices,
correspondence or other documents sent to or received
from any Sales Agent (the "Sales Agent Documents"). In
the case of any Sales Agent Documents sent to the Sales
Agent by the Borrower, the Borrower shall send MOTOROLA
a copy thereof at the same time that it sends any such
Sales Agent Document to the Sales Agent. In the case of
any Sales Agent Document received by the Borrower from
the Sales Agent, the Borrower shall send MOTOROLA a copy
thereof no later than the Business Day following the
Borrower's receipt of any such Sales Agent Document.
14. Satisfaction of Certain Conditions.
In the event that You (a) shall have maintained each of the financial
covenants and ratios required pursuant to this
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Credit Agreement (as amended) for each period prior to July 1, 1997, and
(b) between January 1, 1997 and July 1, 1997, shall have raised net
proceeds of not less than (x) $500,000 (excluding any amounts raised and
used to cure EBITDA covenant breaches pursuant to Section 6.9 of the
Standard Terms and Conditions) from the issuance of Equity Securities, (y)
$700,000 (excluding any amounts raised and used to cure EBITDA covenant
breaches pursuant to Section 6.9 of the Standard Terms and Conditions)
from the issuance of Subordinated Debt, or (z) $700,000 (excluding any
amounts raised and used to cure EBITDA covenant breaches pursuant to
Section 6.9 of the Standard Terms and Conditions) from the issuance of a
combination of Subordinated Debt and Equity Securities, the following
shall occur:
a. the advances under this Credit Agreement shall be
reamortized in accordance with the following
payment schedule:
Payment Date Principal Amount(1)
July 1, 1997 $22,000
August 1, 1997 $22,000
September 1, 1997 $22,000
October 1, 1997 $22,000
November 1, 1997 $22,000
December 1, 1997 $22,000
January 1, 1998 $32,000
February 1, 1998 $32,000
March 1, 1998 $32,000
April 1, 1998 $32,000
May 1, 1998 $32,000
June 1, 1998 $32,000
July 1, 1998 $32,000
----------
(1) Or, if less, such amount on any payment date as shall be sufficient to
pay the then aggregate outstanding principal amount in full.
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August 1, 1998 $32,000
September 1, 1998 $32,000
October 1, 1998 $32,000
November 1, 1998 $32,000
December 1, 1998 $32,000
January 1, 1999 $37,000
February 1, 1999 $37,000
March 1, 1999 $37,000
April 1, 1999 $37,000
May 1, 1999 $37,000
June 1, 1999 $37,000
July 1, 1999 $37,000
August 1, 1999 $37,000
September 1, 1999 $37,000
October 1, 1999 $37,000
November 1, 1999 $37,000
December 1, 1999 $37,000
January 1, 2000 $42,000
February 1, 2000 $42,000
March 1, 2000 $42,000
April 1, 2000 $42,000
May 1, 2000 $42,000
June 1, 2000 $42,000
July 1, 2000 $42,000
August 1, 2000 $42,000
September 1, 2000 $42,000
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October 1, 2000 $42,000
November 1, 2000 $42,000
December 1, 2000 $42,000
January 1, 2001 $42,000
February 1, 2001 $42,000
March 1, 2001 $42,000
April 1, 2001 $42,000
May 1, 2001 $42,000
June 1, 2001 $42,000
July 1, 2001 $42,000
August 1, 2001 $42,000
September 1, 2001 $42,000
October 1, 2001 $42,000
November 1, 2001 $42,000
December 1, 2001 $42,000
January 1, 2002 $42,000
February 1, 2002 $42,000
March 1, 2002 $42,000
April 1, 2002 $42,000
May 1, 2002 $42,000
June 1, 2002 $42,000
July 1, 2002 $30,811
b. On or before July 8, 1997, in exchange for the then existing
promissory note evidencing advances hereunder, You shall issue
a $2,270,000.00 face amount promissory note in substantially
the form attached hereto as Exhibit L, duly executed on behalf
of the Borrower.
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c. The financial covenants and ratios contained in
Exhibit D of the Credit Agreement shall be amended
as follows:
Section 5 of Exhibit D of the Credit Agreement, "Financial
Restrictions and Covenants", shall be amended, effective as of July
1, 1997, in its entirety and shall read as follows:
5) The Borrower shall maintain cash and Cash
Equivalents that at all times during the term of
this Credit Agreement exceed Four Hundred Thousand
Dollars ($400,000).
11. Exhibit A, Standard Terms and Conditions, of the Credit Agreement is
hereby amended by adding the following new Sections 4.1.6, 6.8 and 6.9:
4.1.6 As soon as available but no later than 20 days after the end
of each month, commencing on March 20, 1997, You will provide MOTOROLA
with unaudited statements of earnings for the preceding month and a
balance sheet as of the last day of the preceding month.
6.8. Additional Remedy. In addition to all other rights
and remedies of MOTOROLA hereunder or under any applicable
law, the Borrower shall:
(a) issue warrants in substantially the form attached hereto as
Exhibit K exercisable for shares of common stock of the Borrower in
the amounts and on the dates set forth on Schedule K-2, which
amounts are subject to adjustment as provided in Schedule K-2;
(b) within 30 days of Motorola sending You a notice of an Event of
Default, You shall retain a reputable brokerage company or sales
agent (the "Sales Agent") reasonably acceptable to Motorola on terms
and conditions reasonably acceptable to Motorola;
(c) the Borrower shall use its reasonable best efforts to arrange,
and the Borrower shall authorize and direct the Sales Agent to
assist the Borrower in arranging, for the sale of such portion or
portions of the assets or equity of the Borrower on or before the
day that is six months after the date on which Motorola sends the
Borrower a notice of an Event of Default, in a transaction or series
of transactions that will result in MOTOROLA being paid in full all
of the outstanding principal of each advance under this Credit
Agreement, together with all accrued and unpaid interest and any
other amounts due hereunder no later than the day that is six months
after the date
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on which Motorola sends the Borrower a notice of an Event of
Default; provided that MOTOROLA acknowledges that to the extent the
consummation of any such transaction requires the approval of the
Borrower's Board of Directors, this Agreement does not purport to
and shall not be deemed to require any member of the Board of
Directors to breach any fiduciary duty owed by such member to the
Borrower or the stockholders of the Borrower; and
(d) effective as of the date on which Motorola sends the Borrower a
notice of an Event of Default, Borrower hereby authorizes MOTOROLA
to discuss the prospects for any sale contemplated by this Section
directly with any Sales Agent retained by Borrower; and
(e) Borrower shall provide MOTOROLA with copies of all contracts,
notices, correspondence or other documents sent to or received from
any Sales Agent (the "Sales Agent Documents") as follows: (i) in the
case of any Sales Agent Documents sent to the Sales Agent by the
Borrower, the Borrower shall send MOTOROLA a copy thereof at the
same time that it sends any such Sales Agent Document to the Sales
Agent and (ii) in the case of any Sales Agent Document received by
the Borrower from the Sales Agent, the Borrower shall send MOTOROLA
a copy thereof no later than the Business Day following the
Borrower's receipt of any such Sales Agent Document.
6.9. Special Cure Right. Notwithstanding any other provision
of this Credit Agreement, in the event Borrower breaches
any EBITDA covenant, Borrower may cure such breach by
causing a capital contribution to be made to Borrower in
cash or by obtaining cash proceeds of Equity Securities
or Subordinated Debt, in each case, within 10 days after
Borrower receives notice from MOTOROLA of any such
breach, in an amount equal to the amount of the
additional revenue Borrower would have needed to have
generated for the applicable period in order to have
complied with such EBITDA covenant.
12. The Borrower, in exchange for its existing promissory note evidencing
advances hereunder, hereby issues a $2,270,000.00 face amount promissory note in
substantially the form attached hereto as Annex A, duly executed on behalf of
the Borrower.
13. The Credit Agreement is hereby amended by adding Exhibits I, J, K and
L, and Schedule A, Schedule K-1 and Schedule K-2 in the forms attached hereto.
14. The Credit Agreement, the Standard Terms and Conditions, and the other
Exhibits, as amended hereby, are in full force and
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effect, and constitute the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their terms. The Borrower
acknowledges that as of March 1, 1997 (but not including such date), it owes
Motorola $1,466,544.43 in principal under the Credit Agreement and $14,204.84 in
accrued and unpaid interest. No claims or defenses exist with respect to the
Existing Default or otherwise with respect to the amounts owed to Motorola under
the Credit Agreement, or with respect to the rights or remedies of Motorola
under the Credit Agreement, or, to the extent that any such claim or defense may
exist, You hereby irrevocably and unconditionally waive each and every such
claim and defense.
15. You have no claims of liability or rights of action against Motorola
or Motorola's employees, agents and affiliates as of the date hereof and know of
no basis for any such claim or right of action, including, without limitation,
in connection with the sale by Motorola of any goods or services to the
Borrower, the Credit, the Credit Agreement, the drawdown of the Credit,
Motorola's administration of the Credit or otherwise arising out of Motorola's
dealings with respect thereto or in connection therewith, or, to the extent any
such claims or rights of action exist, whether known or unknown, You hereby
irrevocably and unconditionally release Motorola and Motorola's employees,
agents, and affiliates from any and all liability with respect thereto. All
discussions and communications to date have been conducted in good faith and
without undue influence by Motorola, and You hereby release Motorola and its
employees from any and all lender liability and other claims which You may have
against Motorola.
16. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Illinois applicable to contracts made and performed
therein, without reference to the conflicts of law principles thereof.
17. Purchaser agrees to pay or reimburse Motorola $20,004.58 for all its
costs and expenses incurred in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, this Agreement and any
related documents.
18. This Agreement may be executed in any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed and delivered by the proper and duly authorized officers of such party
as of the day and year first above written.
PAGING PARTNERS CORPORATION
By: ____________________________
Name:
Title:
MOTOROLA, INC.
By: ____________________________
Name:
Title:
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