SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement") is entered into as of
December 31, 1998 among AQUIS COMMUNICATIONS, INC., a Delaware corporation
("Borrower"), XXXX ATLANTIC PAGING, INC., a Delaware corporation ("Subordinated
Lender"), and FINOVA CAPITAL CORPORATION, a Delaware corporation ("Senior
Lender"), in its capacity as Agent for Lenders (as such terms are defined in the
Loan Agreement described below).
R E C I T A L S
A. Borrower and Senior Lender have entered into a Loan Agreement of even
date herewith (as the same hereafter may be amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement"), subject to the
terms and conditions of which the financial institutions from time to time party
thereto as Lenders have agreed to make loans and other financial accommodations
to Borrower.
B. Borrower is indebted to Subordinated Lender pursuant to the terms and
conditions of that certain Secured Promissory Note of even date herewith in the
original principal amount of $4,150,000 made by Borrower in favor of
Subordinated Lender (as the same hereafter may be amended, restated,
supplemented or otherwise modified from time to time, the "Subordinated Note").
C. One of the conditions precedent to Lenders' obligations under the Loan
Agreement is that this Agreement shall have been executed and delivered.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Recitals and Definitions.
1.1 Recitals. The Recitals set forth above are acknowledged by the
parties hereto to be true and correct and are incorporated herein by this
reference.
1.2 Definitions. All capitalized terms used but not elsewhere
defined herein shall have the respective meanings set forth below or in
Annex A to this Agreement. As used herein, the following terms shall have
the following meanings:
Additional Principal Payment shall mean the product of (i)
0.25 multiplied by (ii) the portion of the Base Principal Payment
financed with the proceeds of Indebtedness for Borrowed Money.
Available Excess Cash Flow for any year shall mean the lesser
of (a) the Excess Cash Flow for such year and (b) the amount by
which the Cash Equivalents exceed $1,000,000 as of the end of such
year.
Base Principal Payment shall mean the $1,200,000 principal
payment due on March 31, 2000 pursuant to the Subordinated Note.
Xxxx Atlantic Seller Note Payment shall mean the Required Xxxx
Atlantic Principal Payment, together with all accrued and unpaid
interest on the Subordinated Indebtedness through the date the
Required Xxxx Atlantic Principal Payment is made which is then due
and payable.
Net Excess Cash Flow for any year shall mean the remainder of
(i) the Available Excess Cash Flow for such year minus (ii) the
Required Excess Cash Flow Prepayment for such year.
Proceeding shall mean any insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization, assignment
for the benefit of creditors or other proceeding for the
liquidation, dissolution or other winding up of Borrower or its
properties (including, without limitation, any such proceeding under
the Bankruptcy Code).
Pro Rata Share shall mean, as of any date, the ratio which the
principal amount of the Subordinated Indebtedness as of such date
bears to the aggregate principal amount of the Subordinated
Indebtedness and the Senior Indebtedness as of such date.
Required Xxxx Atlantic Principal Payment shall mean the
scheduled principal payment due on March 31, 2000 pursuant to the
Subordinated Note in an amount equal to the sum of (i) the Base
Principal Payment plus (ii) the Additional Principal Payment.
Required Excess Cash Flow Prepayment for any year in which a
mandatory prepayment is required to be made pursuant to subsection
2.8.2(a) of the Loan Agreement, shall mean an amount equal to the
lesser of (i) (A) 50% of the Excess Cash Flow for the preceding year
(with respect to the mandatory prepayment due in 2001) or (B) 25% of
the Excess Cash Flow for the preceding year (with respect to the
mandatory prepayment due in 2002 and each year thereafter) or (ii)
the amount by which the Cash Equivalents as of the end of the
preceding year exceeds $1,000,000.
Senior Collection Action shall mean any judicial proceeding or
other action initiated or taken by Senior Lender against Borrower to
collect the Senior Indebtedness, to foreclose the Senior Liens or
otherwise to enforce the rights of Senior Lender under the Loan
Agreement and the other Loan Instruments or applicable law with
respect to the Senior Indebtedness.
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Senior Covenant Default shall mean any occurrence permitting
Senior Lender to accelerate the payment of all or any portion of the
Senior Indebtedness, other than a Senior Payment Default.
Senior Covenant Default Notice shall mean a written notice
from Senior Lender to Borrower of the occurrence of a Senior
Covenant Default.
Senior Default shall mean a Senior Covenant Default or a
Senior Payment Default.
Senior Default Notice shall mean a written notice from Senior
Lender to Borrower of the occurrence of a Senior Default.
Senior Indebtedness shall mean Borrower's Obligations,
together with all accrued and unpaid interest thereon, including all
interest which accrues during the pendency of any Proceeding,
whether or not allowed in such Proceeding.
Senior Liens shall mean all Liens granted to Senior Lender to
secure the Senior Indebtedness.
Senior Payment Default shall mean any default in the payment
when due of the Senior Indebtedness.
Senior Payment Default Notice shall mean a written notice from
Senior Lender to Borrower of the occurrence of a Senior Payment
Default.
Subordinated Collection Action shall mean (i) any acceleration
of the Subordinated Indebtedness, (ii) to file or initiate, or to
join with other Persons in filing or initiating, a Proceeding
against Borrower or (iii) any judicial proceeding or other action
initiated or taken by Subordinated Lender, or by Subordinated Lender
in concert with other Persons, against Borrower or any other Person
to collect the Subordinated Indebtedness, to foreclose the
Subordinated Liens or otherwise to enforce the rights of
Subordinated Lender under the Subordinated Instruments or applicable
law with respect to the Subordinated Indebtedness.
Subordinated Covenant Default shall mean any occurrence
permitting Subordinated Lender to accelerate the payment of all or
any portion of the Subordinated Indebtedness, other than a
Subordinated Principal Payment Default or a Subordinated Interest
Payment Default.
Subordinated Default shall mean a Subordinated Covenant
Default, a Subordinated Principal Payment Default or a Subordinated
Interest Payment Default.
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Subordinated Default Notice shall mean a written notice from
Subordinated Lender to Borrower of the occurrence of a Subordinated
Default.
Subordinated Indebtedness shall mean all of the Indebtedness
of Borrower to Subordinated Lender under the Subordinated
Instruments and all other Indebtedness for Borrowed Money now or
hereafter owed by Borrower to Subordinated Lender, specifically
other than indemnity obligations, prorations and like items arising
under the Xxxx Atlantic Acquisition Instruments, including the tax
obligations owing under the Transfer Tax Agreement dated December
31, 1998 among Borrower and the Xxxx Atlantic Sellers.
Subordinated Instruments shall mean the Subordinated Note and
all other documents and instruments executed and delivered by
Borrower to Subordinated Lender evidencing or pertaining to any
Indebtedness for Borrowed Money now or hereafter owed by Borrower to
Subordinated Lender.
Subordinated Interest Payment Default shall mean any default
in the payment when due under the terms of the Subordinated
Instruments of accrued and unpaid interest on the Subordinated
Indebtedness, regardless of whether such payment is permitted,
restricted or prohibited by the provisions of this Agreement.
Subordinated Liens shall mean all Liens granted to
Subordinated Lender to secure the Subordinated Indebtedness.
Subordinated Principal Payment Default shall mean any default
in the payment when due under the terms of the Subordinated
Instruments of all or any part of the principal balance of the
Subordinated Indebtedness, regardless of whether such payment is
permitted, restricted or prohibited by the provisions of this
Agreement.
Subordinated Securities shall mean any securities of Borrower
issued in connection with a Proceeding, the payment of which is
junior or otherwise subordinated, at least to the extent provided in
this Agreement, to the payment of all Senior Indebtedness and to the
payment of all securities issued in exchange therefor to the holders
of the Senior Indebtedness.
2. Subordination of the Subordinated Indebtedness to Senior Indebtedness
and Subordination of Subordinated Liens to Senior Liens.
2.1 Subordination. Upon the terms and conditions contained in this
Agreement (i) the payment of any and all of the Subordinated Indebtedness
hereby expressly is subordinated to the prior payment in full in cash of
the Senior Indebtedness and (ii) the Subordinated Liens hereby expressly
are subordinated to the Senior Liens.
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2.2 Restrictions on Payments. Notwithstanding any provision of the
Subordinated Instruments to the contrary and in addition to any other
limitations set forth herein or therein, no payment of principal,
interest, fees or any other amount due with respect to the Subordinated
Indebtedness shall be made, and Subordinated Lender shall not exercise any
right of set-off or recoupment with respect to any Subordinated
Indebtedness, until all of the Senior Indebtedness is paid in full in
cash; provided, however, that, subject to the last sentence of this
Section 2.2:
(a) in the event Borrower voluntarily prepays all or any part
of the Senior Indebtedness, concurrently with such prepayment
Borrower may pay to Subordinated Lender an amount equal to
Subordinated Lender's Pro Rata Share (calculated as of the date
immediately preceding the date such prepayment of the Senior
Indebtedness is made) of the amount of such prepayment of the Senior
Indebtedness, provided no Senior Default exists and is continuing or
would be created by the making of such prepayment to Subordinated
Lender, and further provided that such prepayment of the Senior
Indebtedness is in fact voluntary (i.e., not required pursuant to
the terms of the Loan Agreement or by Senior Lender in connection
with any waiver of or consent to a departure by Borrower from any
term or condition of the Loan Agreement);
(b) at any time during the period after Senior Lender has
received the financial statements required under the Loan Agreement
for the first Loan Year through the 180th day of the second Loan
Year Borrower may make the Xxxx Atlantic Seller Note Payment
provided that (i) no Senior Default exists and is continuing or
would be created by the making of such payment, (ii) the Senior
Leverage Ratio as of the last day of the month most recently ended
with respect to which Senior Lender has been in receipt for at least
10 days of the financial statements required under Section 6.3.1 for
such month and assuming such payment had been made on such last day
is less than 4.0 and (iii) the Total Leverage Ratio as of such last
day and assuming such payment had been made on such last day is less
than 5.0;
(c) after Senior Lender has received the financial statements
required under the Loan Agreement for the first Loan Year, Borrower
may make regularly scheduled current payments of accrued and unpaid
interest on the Subordinated Indebtedness at a rate per annum not in
excess of the Base Rate plus 1.0%;
(d) Borrower may make an annual payment on account of accrued
and unpaid interest on and the unpaid principal balance of the
Subordinated Indebtedness within 120 days after the end of 1999 and
each year thereafter in an amount not in excess of the Net Excess
Cash Flow for such year; and
(e) in the event a Subordinated Principal Payment Default
exists and is continuing and no Senior Payment Default exists and is
continuing, Borrower may
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make a payment on account of the unpaid principal balance of the
Subordinated Indebtedness within 120 days after the end of 1999 in
an amount not to exceed the greater of (i) the Pro Rata Share as of
December 31, 1999 of the portion of the Required Excess Cash Flow
Prepayment payable to the Lenders under the Loan Agreement pursuant
to subsection 2.8.2(a) of the Loan Agreement for 1999 and (ii) the
Net Excess Cash Flow for 1999.
Notwithstanding the foregoing provisions of this Section 2.2 to the contrary,
Borrower shall not make any payment of the amounts described in clauses (c) or
(d) above from and after the date Subordinated Lender receives from Senior
Lender a copy of a (i) Senior Payment Default Notice and until the date the
Senior Payment Default which is the subject of such Senior Payment Default
Notice is cured or waived or (ii) Senior Covenant Default Notice and until the
earlier to occur of the date (A) the Senior Covenant Default which is the
subject of such Senior Covenant Default Notice is cured or waived and (B) which
is 180 days after the date Subordinated Lender receives from Senior Lender such
copy of such Senior Covenant Default Notice; provided that payments on the
Subordinated Indebtedness shall not be prohibited under this clause (ii) for
more than 180 days in any period of 360 consecutive days.
2.3 Proceedings. In the event of any Proceeding, (a) all Senior
Indebtedness first shall be paid in full in cash before any payment of or
with respect to the Subordinated Indebtedness shall be made, other than
any payment consisting of Subordinated Securities; (b) any payment which,
but for the terms hereof, otherwise would be payable or deliverable in
respect of the Subordinated Indebtedness (other than Subordinated
Securities) shall be paid or delivered directly to Senior Lender (to be
held and/or applied by Senior Lender in accordance with the terms of the
Loan Agreement) until all Senior Indebtedness is paid in full, and
Subordinated Lender irrevocably authorizes, empowers and directs all
receivers, trustees, liquidators, custodians, conservators and others
having authority in the premises to effect all such payments and
deliveries and further irrevocably authorizes and empowers Senior Lender
to demand, xxx for, collect and receive every such payment or
distribution; (c) Subordinated Lender agrees to execute and deliver to
Senior Lender or its representative all such further instruments requested
by Senior Lender confirming the authorization referred to in the foregoing
clause (b); (d) Subordinated Lender agrees (i) not to waive, discharge,
release or compromise any claim of Subordinated Lender in respect of the
Subordinated Indebtedness without the prior written consent of Senior
Lender and (ii) to take all actions as Senior Lender reasonably may
request in order to enable Senior Lender to enforce all claims upon or in
respect of the Subordinated Indebtedness; (e) Subordinated Lender
expressly consents to the granting by Borrower to Senior Lender of first
priority Liens on Borrower's Property in connection with any financing
provided by Senior Lender to Borrower after the commencement o f such
Proceeding and (f) Subordinated Lender hereby irrevocably authorizes,
empowers and appoints Senior Lender its agent and attorney-in-fact (i) to
execute, verify, deliver and file any proofs of claim in respect of the
Subordinated Indebtedness in connection with any such Proceeding upon the
failure of Subordinated Lender to do so at least 5 Business Days prior to
the bar date for filing such proofs of claim and (ii) to vote such
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proofs of claim in any such Proceeding upon the failure of Subordinated
Lender to do so at least 5 Business Days prior to the final date for
voting such proofs of claim.
2.4 Incorrect Payments. If any payment not permitted under Section
2.2 is received by Subordinated Lender on account of the Subordinated
Indebtedness (other than Subordinated Securities) before all Senior
Indebtedness is paid in full in cash, such payment shall not be commingled
with any asset of Subordinated Lender, shall be held in trust by
Subordinated Lender for the benefit of Senior Lender and shall be paid
over to Senior Lender, or its designated representative, for application
(in accordance with the Loan Agreement) to the payment of the Senior
Indebtedness then remaining; unpaid, until all of the Senior Indebtedness
is paid in full in cash.
2.5 Sale, Transfer. Subordinated Lender shall not sell, assign,
dispose of or otherwise transfer all or any portion of the Subordinated
Indebtedness unless, prior to the consummation of any such action, the
transferee thereof executes and delivers to Senior Lender an agreement
substantially identical to this Agreement, providing for the continued
subordination and forbearance of the Subordinated Indebtedness to the
Senior Indebtedness as provided herein and for the continued effectiveness
of all of the rights of Senior Lender and Lenders arising under this
Agreement. Notwithstanding the failure to execute or deliver any such
agreement, the subordination effected hereby shall survive any sale,
assignment, disposition or other transfer of all or any portion of the
Subordinated Indebtedness, and the terms of this Agreement shall be
binding upon the successors and assigns of each Subordinated Lender, as
provided in Section 10 below.
2.6 Legends. Until the Senior Indebtedness is paid in full in cash,
each of the Subordinated Instruments at all times shall contain in a
conspicuous manner the following legend:
"The obligations evidenced hereby are subordinate in the manner and
to the extent set forth in that certain Subordination Agreement (the
"Subordination Agreement") dated as of December 31, 1998 among Aquis
Communications, Inc. ("Borrower"), Xxxx Atlantic Paging, Inc., and
FINOVA Capital Corporation ("Senior Lender") to the obligations
(including interest), owed by Borrower to the holders of all of the
notes issued pursuant to that certain Loan Agreement dated as of
December 31, 1998 between Borrower and Senior Lender, as such Loan
Agreement has been and hereafter may be supplemented, modified or
amended from time to time; and each holder hereof, by its acceptance
hereof, shall be bound by the provisions of the Subordination
Agreement."
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2.7 Restriction on Action by Subordinated Lender.
(a) Until the Senior Indebtedness is paid in full in cash and
notwithstanding anything, contained in the Subordinated Instruments,
the Loan Agreement or the other Loan Instruments to the contrary,
Subordinated Lender shall not agree to any amendment or modification
of, or supplement to, the Subordinated Instruments as in effect on
the date hereof, the effect of which is to (i) increase the rate of
interest on or fees payable in respect of the Subordinated
Indebtedness, (ii) accelerate the date of any regularly scheduled
principal payment on the Subordinated Indebtedness, (iii) shorten
the final maturity date of the Subordinated Indebtedness, (iv)
increase the principal amount of the Subordinated Indebtedness or
(v) make the covenants and events of default contained in the
Subordinated Instruments materially more restrictive.
(b) Until the Senior Indebtedness is paid in full in cash
Subordinated Lender shall not take any Subordinated Collection
Action unless (i) Senior Lender has commenced and is continuing to
prosecute a Senior Collection Action, (ii) a Subordinated Covenant
Default or a Subordinated Principal Payment Default exists and is
continuing, Subordinated Lender has provided Senior Lender with a
copy of the Subordinated Default Notice in respect of such
Subordinated Default and 365 days have expired since the date Senior
Lender received such Subordinated Default Notice from Subordinated
Lender or (iii) a Subordinated Interest Payment Default exists and
is continuing, Subordinated Lender has provided Senior Lender with a
copy of the Subordinated Default Notice in respect of such
Subordinated Interest Payment Default and 180 days have expired
since the date Senior Lender received such Subordinated Default
Notice from Subordinated Lender.
(c) Notwithstanding the provisions of the foregoing clause
(b), (i) Subordinated Lender may participate in any Proceeding not
initiated by or at the request of Subordinated Lender or any other
Persons acting in concert with Subordinated Lender and (ii) in the
event the Senior Indebtedness is accelerated, Subordinated Lender
may accelerate the Subordinated Indebtedness.
2.8 Subrogation. Subject to the payment in full in cash of all
Senior Indebtedness (or any lesser amount as may be agreed to by Senior
Lender as full and final discharge and settlement of the Senior
Indebtedness), Subordinated Lender shall be subrogated to the rights of
Senior Lender to receive payments or distributions of assets of Borrower
applicable to the Senior Indebtedness until the principal of, and interest
and premium, if any, on, and all other amounts payable in respect of the
Subordinated Indebtedness shall be paid in full. For purposes of such
subrogation, no payment or distribution to Senior Lender under the
provisions hereof to which Subordinated Lender would have been entitled
but for the provisions of this Agreement, and no payment pursuant to the
provisions of this Agreement to Senior Lender by Subordinated Lender, as
among Borrower and its creditors other than
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Senior Lender, shall be deemed to be a payment by Borrower to or on
account of the Senior Indebtedness. Notwithstanding the foregoing
provisions of this Section 2.8, the holders of the Subordinated
Indebtedness shall have no claim against Senior Lender for any impairment
of any subrogation rights herein granted to the holders of the
Subordinated Indebtedness.
2.9 Restrictions on Amendments of Loan Instruments. Until the
Subordinated Indebtedness is paid in full in cash and notwithstanding
anything contained in the Subordinated Instruments, the Loan Agreement or
the other Loan Instruments to the contrary, Senior Lender shall not agree
to any amendment or modification of, or supplement to, the Loan
Instruments as in effect on the date hereof, the effect of which is to (i)
increase the rate of interest on or, except as reasonably necessary in
connection with any increase in the Senior Indebtedness permitted under
clause (iv) below, fees, payable in respect of the Senior Indebtedness,
(ii) accelerate the date of any regularly scheduled principal payment on
the Senior Indebtedness, (iii) shorten the final maturity date of the
Senior Indebtedness, (iv) cause the principal amount of the Senior
Indebtedness to exceed the sum of (A) $20,500,000 plus (B) the lesser of
(1) $1,500,000 and (2) the amount disbursed by Senior Lender to pay a
portion of the Xxxx Atlantic Seller Note Payment plus (C) following the
consummation of the Paging Partners Merger, the remainder of (1)
$1,300,000 less (2) the outstanding principal balance of all Indebtedness
for Borrowed Money owed by Borrower to Motorola or (v) make the covenants
and events of default contained in the Loan Instruments materially more
restrictive, except as reasonably necessary in connection with any
increase in the Senior Indebtedness permitted under clause (iv) above.
3. Continued Effectiveness of this Agreement. The terms of this Agreement,
the subordination effected hereby, and the rights and the obligations of
Subordinated Lender and Senior Lender arising hereunder, shall not be affected,
modified or impaired in any manner or to any extent by (a) any amendment or
modification of or supplement to the Loan Agreement, the other Loan Instruments
or any of the Subordinated Instruments, and Subordinated Lender hereby
irrevocably consents to and waives any claim it may have as a result of any such
amendment, modification or supplement of the Loan Agreement or the other Loan
Instruments; (b) the validity or enforceability of any of such documents; or (c)
any exercise or non-exercise of any right, power or remedy under or in respect
of the Senior Indebtedness or the Subordinated Indebtedness or any of the
instruments or documents referred to in clause (a) above. The Senior
Indebtedness shall continue to be treated as Senior Indebtedness and the
provisions of this Agreement shall continue to govern the relative rights and
priorities of the holders of Senior Indebtedness and Subordinated Lender even if
all or part of the Senior Liens are subordinated, set aside, avoided or
disallowed in connection with any Proceeding (or if all or part of the Senior
Indebtedness is subordinated, set aside, avoided or disallowed in connection
with any Proceeding as a result of the fraudulent conveyance or fraudulent
transfer provisions under the Bankruptcy Code or under any state fraudulent
conveyance or fraudulent transfer statute or if any interest accruing on the
Senior Indebtedness following the commencement of such Proceeding is otherwise
disallowed) and this Agreement shall be reinstated if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by any
holder of Senior Indebtedness or any representative of such holder.
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4. Representations and Warranties. Subordinated Lender hereby represents
and warrants to Senior Lender as follows:
4.1 Existence and Power. Subordinated Lender is duly organized,
validly existing and in good standing under the laws of its state of
organization and has all requisite power and authority to own its property
and to carry on its business as now conducted and as proposed to be
conducted.
4.2 Authority. Subordinated Lender has full power and authority to
enter into, execute, deliver and carry out the terms of this Agreement and
to incur the obligations provided for herein, all of which have been duly
authorized by all proper and necessary action and are not prohibited by
the organizational instruments of Subordinated Lender.
4.3 Binding Agreements. This Agreement, when executed and delivered,
will constitute the valid and legally binding obligation of Subordinated
Lender enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles.
4.4 No Conflicts. Subordinated Lender is the current owner and
holder of the Subordinated Indebtedness free and clear of any Liens. No
provisions of any mortgage, indenture, contract, agreement, statute, rule,
regulation, judgment, decree or order binding on Subordinated Lender or
affecting the property of Subordinated Lender conflicts with, or requires
any consent which has not already been obtained under, or would in any way
prevent the execution, delivery or performance of the terms of this
Agreement. No pending or, to the best of Subordinated Lender's knowledge,
threatened, litigation, arbitration or other proceedings if adversely
determined would in any way prevent the performance by Subordinated Lender
of the terms of this Agreement.
5. Cumulative Rights, No Waivers. Each and every right, remedy and power
granted to Senior Lender or Subordinated Lender hereunder shall be cumulative
and in addition to any other right, remedy or power specifically granted herein,
in the Loan Agreement, the other Loan Instruments or in the Subordinated
Instruments or now or hereafter existing in equity, at law, by virtue of statute
or otherwise, and may be exercised by Senior Lender or Subordinated Lender, as
applicable, from time to time, concurrently or independently and as often and in
such order as Senior Lender or Subordinated Lender, as applicable, may deem
expedient. Any failure or delay on the part of Senior Lender or Subordinated
Lender in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Senior Lender's or Subordinated Lender's right thereafter to
exercise the same, and any single or partial exercise of any such right, remedy
or power shall not preclude any other or further exercise thereof or the
exercise of any other right, remedy or power, and no such failure, delay,
abandonment or single or partial exercise of Senior Lender's or Subordinated
Lender's rights
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hereunder shall be deemed to establish a custom or course of dealing or
performance among the parties hereto.
6. Modification. Any modification, termination or waiver of any provision
of this Agreement, or any consent to any departure by Senior Lender or
Subordinated Lender therefrom, shall not be effective in any event unless the
same is in writing and signed by Senior Lender and Subordinated Lender and then
such modification, termination, waiver or consent shall be effective only in the
specific instance and for the specific purpose given. Any notice to or demand on
Senior Lender or Subordinated Lender in any event not specifically required of
Senior Lender or Subordinated Lender hereunder shall not entitle Senior Lender
or Subordinated Lender to any other or further notice or demand in the same,
similar or other circumstances unless specifically required hereunder.
7. Additional Documents and Actions. Each of Senior Lender and
Subordinated Lender at any time, and from time to time, after the execution and
delivery of this Agreement, upon the request of the other and at its own
expense, promptly will execute and deliver such further documents and do such
further acts and things as Senior Lender or Subordinated Lender reasonably may
request in order to effect fully the purposes of this Agreement.
8. Notices. All notices under this Agreement shall be in writing and shall
be (a) delivered in person, (b) sent by telecopy or (c) mailed, postage prepaid,
either by registered or certified mail, return receipt requested, or by
overnight express courier, addressed as follows:
To Borrower: Aquis Communications, Inc.
0000X Xxxxx 00, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
To Subordinated Lender: x/x Xxxx Xxxxxxxx XXX
0000 Xxxx Xxxxxx
00xx Xxxxx, Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
To Senior Lender: FINOVA Capital Corporation
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Manager
Telecopy: (000) 000-0000
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Copy to: FINOVA Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Vice President, Law
Telecopy: (000) 000-0000
Copy to: Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a notice to the other parties hereto. All notices
sent pursuant to the terms of this Section 8 shall be deemed received (a) if
personally delivered, then on the Business Day of delivery, (b) if sent by
telecopy, on the day sent if a Business Day or if such day is not a Business
Day, then on the next Business Day, (c) if sent by registered or certified mail,
on the earlier of the third Business Day following the day sent or when actually
received or (d) if sent by overnight, express courier, on the next Business Day
immediately following the day sent. Any notice by telecopy shall be followed by
delivery of a copy of such notice on the next Business Day by overnight, express
courier or by personal delivery.
9. Severability. In the event that any provision of this Agreement is
deemed to be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court or governmental authority, this
Agreement shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions hereof,
and any and all other provisions hereof which otherwise are lawful and valid
shall remain in full force and effect.
10. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of Senior Lender, Borrower and
Subordinated Lender.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall be one and the same instrument.
12. Defines Rights of Creditors. The provisions of this Agreement are
solely for the purpose of defining the relative rights of Subordinated Lender
and Senior Lender and shall not be deemed to create any rights or priorities in
favor of any other Person, including, without limitation, Borrower.
13. Conflict. In the event of any conflict between any term, covenant or
condition of this Agreement and any term, covenant or condition of any of the
Subordinated Instruments, the Loan
12
Agreement and the other Loan Instruments, the provisions of this Agreement shall
control and govern.
14. Statements of Indebtedness. Upon demand by Senior Lender, Subordinated
Lender will furnish to Senior Lender a statement of the indebtedness owing from
Borrower to Subordinated Lender. Senior Lender may rely without further
investigation upon such statements. Upon demand by Subordinated Lender, Senior
Lender will furnish to Subordinated Lender a statement of the indebtedness owing
from Borrower to Lenders. Subordinated Lender may rely without further
investigation upon such statements.
15. Headings. The paragraph headings used in this Agreement are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.
16. Termination. This Agreement shall terminate upon the indefeasible
payment in full in cash of the Senior Indebtedness, provided that the provisions
of Section 2.8 hereof shall survive any such termination.
17. Default Notices. Subordinated Lender shall provide Senior Lender with
a copy of each Subordinated Default Notice concurrently with the sending thereof
to Borrower and promptly shall notify Senior Lender in the event the
Subordinated Default which is the subject of such Subordinated Default Notice is
cured or waived. Senior Lender shall provide Subordinated Lender with a copy of
each Senior Default Notice concurrently with the sending thereof to Borrower and
promptly shall notify Subordinated Lender in the event the Senior Default which
is the subject of such Senior Default Notice is cured or waived.
18. No Contest of Liens; Release of Subordinated Liens. Subordinated
Lender agrees that it will not at any time contest the validity, perfection,
priority or enforceability of the Liens in the Collateral granted to Senior
Lender pursuant to the Loan Agreement and the other Loan Instruments or accept
or take any collateral security for the Subordinated Indebtedness. The
provisions of this Agreement shall apply regardless of any invalidity,
unenforceability or lack of perfection of the Senior Liens. In the event Senior
Lender elects, for any reason, to release, in whole or in part, any Senior
Liens, Subordinated Lender shall be deemed to have released the Subordinated
Liens to the same extent and Subordinated Lender, at its own expense and
promptly upon demand by Senior Lender, shall execute and deliver all UCC
termination statements, releases and other documents necessary to evidence the
release of such Subordinated Liens; provided, however, that prior to the payment
to Subordinated Lender of the Xxxx Atlantic Seller Note Payment and except in
connection with any incidental release of the Senior Liens in the ordinary
course of business, the Senior Liens so released are released in connection with
a sale of the Property subject to such Senior Liens to a third party in an arm's
length transaction and the net proceeds of such sale (after deduction of all
reasonable, customary and documented costs and expenses of such sale) are
applied to permanently reduce the Senior Indebtedness. Subordinated Lender
hereby appoints Senior Lender its agent and attorney-in-fact to execute any such
UCC termination statements, releases or other documents required pursuant to the
foregoing sentence if Subordinated Lender has failed to execute and deliver same
to Senior
13
Lender within three (3) Business Days after demand by Senior Lender. Such
appointment of Senior Lender as Subordinated Lender's agent and attorney-in-fact
is coupled with an interest and is irrevocable until the Senior Indebtedness has
been paid in full in cash.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
20. JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
21. TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE PERFORMANCE BY SENIOR
LENDER AND SUBORDINATED LENDER OF THE OBLIGATIONS SET FORTH IN THIS AGREEMENT.
[remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
AQUIS COMMUNICATIONS, INC., a Delaware
corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx
President
XXXX ATLANTIC PAGING, INC., a Delaware
corporation
By: /s/ Xxxxxx X. Belascio
-------------------------------------
Name: Xxxxxx X. Belascio
-------------------------------------
Title: President
-------------------------------------
FINOVA CAPITAL CORPORATION, a
Delaware corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
Vice President
15
ANNEX A
DEFINITIONS
Accounts Decrease: for any period, the excess of the Eligible Accounts at
the beginning of such period over the Eligible Accounts at the end of such
period.
Accounts Increase: for any period, the excess of Eligible Accounts at the
end of such period over the Eligible Accounts at the beginning of such period.
Acquisition Portion: a portion of the Loan in an amount not to exceed the
sum of (i) $8,150,000 plus (ii) if the Xxxx Atlantic Seller Note Payment Date
occurs on or before June 30, 2000, the amount of the Subsequent Portion as of
the Xxxx Atlantic Seller Note Payment Date in excess of the proceeds of the
Subsequent Portion actually used to make the Xxxx Atlantic Seller Note Payment
and to pay the Subsequent Portion Loan Fee.
Advance: an advance of the Acquisition Portion.
Asset Acquisition: an acquisition of the assets of a Paging Business,
including the related FCC Licenses.
Base Rate: the per annum rate of interest announced or published publicly
from time to time by Citibank, N.A. in New York, New York as its corporate base
(or equivalent) rate of interest, which rate shall change automatically without
notice and simultaneously with each change in such corporate base rate. The Base
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer by Citibank, N.A. in New York, New York.
Xxxx Atlantic Acquisition: the acquisition by Borrower from the Xxxx
Atlantic Sellers of the Xxxx Atlantic System pursuant to the terms and
conditions of the Xxxx Atlantic Acquisition Instruments.
Xxxx Atlantic Acquisition Instruments: the Asset Purchase Agreement dated
as of July 2, 1998 among the Xxxx Atlantic Sellers and Borrower, and all
documents, instruments and agreements executed and delivered in connection
therewith.
Xxxx Atlantic Interest Account: a segregated deposit account maintained by
Borrower at a Qualified Depository.
Xxxx Atlantic Seller Note Payment Date: the date the Xxxx Atlantic Seller
Note Payment has been paid in full.
Xxxx Atlantic Sellers: collectively, Xxxx Atlantic - Delaware, Inc., a
Delaware corporation, Xxxx Atlantic - Maryland, Inc., a Maryland corporation,
Xxxx Atlantic - New Jersey, Inc., a New Jersey
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corporation, Xxxx Atlantic - Pennsylvania, Inc., a Pennsylvania corporation,
Xxxx Atlantic - Virginia, Inc., a Virginia corporation, Xxxx Atlantic -
Washington, D.C., Inc., a New York corporation, Xxxx Atlantic - West Virginia,
Inc., a West Virginia corporation, and Subordinated Lender.
Xxxx Atlantic System: the Property to be sold to Borrower pursuant to the
terms and conditions of the Xxxx Atlantic Acquisition Instruments.
Borrower's Obligations: (i) any and all Indebtedness due or to become due,
now existing or hereafter arising, of Borrower to Lenders and/or Agent pursuant
to the terms of the Loan Agreement or any other Loan Instrument (as defined in
the Loan Agreement), and (ii) the performance of the covenants of Borrower
contained in the Loan Instruments.
Capital Expenditures: payments that are made or liabilities that are
incurred by a Person for the lease, purchase, improvement, construction or use
of any Property, the value or cost of which under GAAP is required to be
capitalized and appears on such Person's balance sheet in the category of
property, plant or equipment, without regard to the manner in which such
payments or the instruments pursuant to which they are made are characterized,
and shall include, without limitation, payments for or liabilities incurred with
respect to the installment purchase of Property and payments under Capitalized
Leases. Except for the purpose of determining Excess Cash Flow, a Capital
Expenditure shall be deemed to be made as of the time the Property which is the
subject thereof is put into service.
Capitalized Lease: any lease of Property, the obligations for the rental
of which are required to be capitalized in accordance with GAAP.
Cash Equivalents: at any date, the remainder of (i) the aggregate of
Borrower's (A) cash on hand or in any bank or trust company, and checks on hand
and in transit, (B) monies on deposit in any money market account, and (C)
treasury bills, certificates of deposit, commercial paper and readily marketable
securities at current market value having, in each instance, a maturity of not
more than 90 days, minus (ii) the amount required under Section 6.16 of the Loan
Agreement to be maintained by Borrower on deposit in the Xxxx Atlantic Interest
Account as of such date.
Closing: the disbursement of the Initial Portion.
Closing Date: the date the Closing occurs.
Debt Service: during any period, all payments of principal, interest,
premium and other charges with respect to Indebtedness for Borrowed Money of
Borrower (other than the fees payable pursuant to the Loan Agreement).
Eligible Accounts: at any given time, the aggregate of the face amount of
tile accounts receivable of Borrower not over 60 days past due, net of
applicable reserves, with respect to such accounts and Trade Out Transactions.
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Excess Cash Flow: for any period, (i) the Operating Cash Flow for such
period, (ii) plus, the Accounts Decrease, if any, for such period and (iii)
minus, the sum of the following for such period: (A) Debt Service actually paid
or accrued during such period with respect to Indebtedness for Borrowed Money of
Borrower permitted under the Loan Agreement, (B) amounts actually paid by
Borrower with respect to Capital Expenditures for such period permitted under
the Loan Agreement, whether or not such Capital Expenditures were incurred
during such period, but excluding any such amounts paid from the proceeds of
Permitted Senior Indebtedness and (C) the Accounts Increase, if any, for such
period:
Equity Acquisition: an acquisition of the capital stock or other equity
interest of a Person or Persons which owns a Paging Business and the related FCC
Licenses.
FCC: the Federal Communications Commission or any Governmental Body
succeeding to its functions.
Funding Date: as the context requires, the date of disbursement of the
Initial Portion, the Merger Portion, the Subsequent Portion or any Advance, or,
for purposes of determining the satisfaction of the conditions set forth in
Sections 4.1 and 4.3 of the Loan Agreement, the date the Paging Partners Merger
is consummated.
GAAP: generally accepted accounting principles as in effect from time to
time, which shall include, but shall not be limited to, the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
Governmental Body: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Indebtedness: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a liability on
a balance sheet or would be required to be disclosed in a financial statement,
including, without duplication: (i) Indebtedness for Borrowed Money, (ii)
obligations secured by any Lien upon Property, (iii) guaranties, letters of
credit and other contingent obligations, and (iv) liabilities in respect of
unfunded vested benefits under any Pension Plan or in respect of withdrawal
liabilities incurred under ERISA by Borrower or any ERISA Affiliate to any
Multiemployer Plan.
Indebtedness for Borrowed Money: without duplication, all Indebtedness (i)
in respect of money borrowed, (ii) evidenced by a note, debenture or other like
written obligation to pay money (including, without limitation, all of
Borrower's Obligations and Permitted Senior Indebtedness), (iii) in respect of
rent or hire of Property under Capitalized Leases or for the deferred purchase
price of Property, (iv) in respect of obligations under conditional sales or
other title retention agreements, and (v) all guaranties of any or all of the
foregoing.
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Initial Portion: a portion of the Loan in an amount up to $20,500,000.
Licenses: all licenses, permits, consents, approvals and authority issued
by any Governmental Body in connection with the operation of a Paging Business,
including without limitation, all FCC Licenses.
Lien: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease or other title retention
agreement.
Loan: the term loan in the maximum amount of $30,000,000 to be made by the
lenders under the Loan Agreement to Borrower pursuant and subject to the terms
and conditions of the Loan Agreement.
Loan Year: a period of time from the Closing Date or any anniversary of
the Closing Date to the immediately succeeding anniversary of the Closing Date.
Merger Portion: a portion of the Loan in an amount equal to the remainder
of (i) $20,500,000 minus (ii) the amount of the Initial Portion disbursed on the
Closing Date.
Net Principal Balance: as of any date of determination, the Principal
Balance as of such date less (i) prior to the Paging Partners Merger Closing
Date, the aggregate undrawn face amount of the Letters of Credit and (ii) from
and after the Paging Partners Merger Closing Date, zero.
Operating Cash Flow: for any period, without duplication, the net income
of Borrower for such period:
(i) plus the sum of the following, to the extent deducted in
determining such net income for such period:
(A) losses from sales, exchanges and other dispositions of
Property not in the ordinary course of business;
(B) interest paid or accrued on Indebtedness of Borrower,
including, without limitation, interest on Capitalized Leases that
is imputed in accordance with GAAP;
(C) depreciation and amortization of assets during such
period;
(D) income taxes which are accrued, but not paid, during such
period; and
(E) expenses incurred in connection with Trade Out
Transactions;
A-4
(ii) minus the sum of the following, to the extent included in
determining such net income for such period:
(A) gains from sales, exchanges and other dispositions of
Property or other extraordinary gains not in the ordinary course of
business;
(B) proceeds of insurance; and
(C) revenue received in connection with Trade Out
Transactions.
Paging Business: the business of owning, operating and managing mobile
common carrier paging systems, mobile communications systems, control terminals
and switches, antenna and transmitter sites, or telephone systems.
Paging partners: Paging Partners Corporation, a Delaware corporation.
Paging Partners Merger: the merger of Paging Partners Merger Sub with and
into Borrower with Borrower as the surviving corporation pursuant to the terms
and conditions of the Paging Partners Merger Instruments.
Paging Partners Merger Closing Date: the date the Paging Partners Merger
is consummated as permitted pursuant to Section 7.3 of the Loan Agreement.
Paging Partners Merger Sub: Paging Partners Merger Corporation, a Delaware
corporation.
Paging Partners Merger Agreement: the Agreement and Plan of Merger dated
as of November 6, 1998 by and among Borrower, Paging Partners and Paging
Partners Merger Sub.
Paging Partners Merger Instruments: the Paging Partners Merger Agreement
and all other documents, instruments and agreements executed or delivered in
connection with the Paging Partners Merger.
Paging Partners System: the Property acquired by Borrower as a result of
the consummation of the Paging Partners Merger.
Permitted Senior Indebtedness: Indebtedness, other than Borrower's
Obligations, incurred to purchase tangible personal property or Indebtedness
incurred to lease tangible personal property pursuant to Capitalized Leases.
Person: any individual, firm, corporation, business enterprise, trust,
association, joint venture, partnership, Governmental Body or other entity,
whether acting in an individual, fiduciary or other capacity.
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Principal Balance: the unpaid principal balance of the Senior Indebtedness
outstanding from time to time.
Pro Forma Operating Cash Flow: for any period, Operating Cash Flow for
such period plus, for any portion of such period prior to the (i) Closing, the
net income of the Xxxx Atlantic Sellers derived from the operation of the Xxxx
Atlantic System, (ii) Funding Date of the Merger Portion, the net income of
Paging Partners derived from the operation of the Paging Partners System, or
(iii) Funding Date of any Advance, the net income derived from the Paging
Business which is the subject of the applicable Subsequent Acquisition, in each
case as adjusted in Senior Lender's sole discretion for expenses intended to be
eliminated following the consummation of the Xxxx Atlantic Acquisition, the
Paging Partners Merger or such Subsequent Acquisition, as applicable.
Property: all types of real, personal or mixed property and all types of
tangible or intangible property.
Qualified Depository: a member bank of the Federal Reserve System having a
combined capital and surplus of at least $500,000,000.
Senior Leverage Ratio: the ratio of the Net Principal Balance as of the
last day of any month to the Pro Forma Operating Cash Flow for the twelve month
period ending on such last day.
Subsequent Acquisition: an Asset Acquisition or Equity Acquisition by
Borrower subsequent to the Closing Date.
Subsequent Portion: a portion of the Loan in the amount of $1,350,000.
Subsequent Portion Loan Fee: the fee payable by Borrower pursuant to
subsection 2.7.2 of the Loan Agreement.
Total Leverage Ratio: the ratio of (i) the sum of (A) the Net Principal
Balance as of the last day of any month plus (B) the principal balance of all
Indebtedness for Borrowed Money of Borrower other than the Principal Balance as
of the last day of such month to (ii) the Pro Forma Operating Cash Flow for the
twelve month period ending on such last day.
Trade Out Transaction: an exchange of advertising time for non-cash
consideration, such as goods, services or program material.
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