EXHIBIT 10.17
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT AND
LOAN INSTRUMENTS (the "Amendment") is made effective as of March 29, 2003 by and
among AQUIS WIRELESS COMMUNICATIONS, INC., a Delaware corporation ("Borrower");
and FINOVA CAPITAL CORPORATION ("Lender"), a Delaware corporation.
BACKGROUND
A. Borrower and Lender have previously entered into that certain Second
Amended and Restated Loan Agreement dated August 12, 2002, (the "Loan
Agreement"), pursuant to which, inter alia, the Lender extended to the Borrower
certain credit facilities subject to the terms and conditions thereof.
B. Borrower is currently in default of its obligations under the Loan
Instruments as a result of Borrower's (i) failure to comply with the Leverage
Ratio and the minimum EBITDA requirement as set forth in Article 7 of the Loan
Agreement for the periods ending March 31, 2003 (collectively, the "Existing
Defaults"). As a result of the occurrence of the Existing Defaults, Lender may
exercise its rights and remedies against Borrower pursuant to any and all of the
Loan Instruments and under applicable law.
C. At Borrower' request, the Lender has agreed to enter into this
Amendment, inter alia, to (i) ratify and confirm the respective obligations and
liabilities of Borrower to the Lender under the Loan Instruments, (ii) reaffirm,
ratify and continue Lender's liens on, and security interests in, the assets of
Borrower, and (iii) set forth the terms and conditions under which the Lender
will waive the Existing Defaults and the Loan Agreement and Loan Instruments
will be amended.
NOW, THEREFORE, in consideration of foregoing premises and intending to be
legally bound hereby, the parties hereto agree as follows:
TERMS
1. CAPITALIZED TERMS. For purposes of this Amendment, all other
capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth for such terms in the Loan Agreement.
2. CONFIRMATION OF BACKGROUND. Borrower hereby ratify, confirm and
acknowledge that the statements contained in the foregoing Background are true
and that the Loan Instruments are valid, binding and in full force and effect as
of the date hereof and fully enforceable against Borrower in accordance with the
terms thereof. Borrower further acknowledge and agree that nothing contained in
this Amendment shall be deemed to impair, reduce or release in any manner
whatsoever any of the obligations of such Loan Party under the Loan Instruments.
3. GENERAL ACKNOWLEDGMENTS. Borrower hereby acknowledge and agree as
follows:
(a) They are currently in default of their obligations under the
Loan Instruments as a result of the occurrence of the Existing Defaults,
and hereby waive any requirement for any further notice or demand from the
Lender in connection therewith;
(b) As a result of the Existing Defaults, the Lender has the right
to declare the entire principal balance of the Note and all other
Obligations due and payable and exercise all of its rights and remedies
under the Loan Instruments;
(c) Neither this Amendment nor any other agreement entered into in
connection herewith or pursuant to the terms hereof shall be deemed or
construed to be a compromise, satisfaction, reinstatement, accord and
satisfaction, novation or release of any of the Loan Instruments or any
rights or obligations thereunder, or a waiver by Lender of any of its
rights under the Loan Instruments or at law or in equity, except as
expressly waived under Section 10 hereunder;
(d) All liens, security interests, rights and remedies granted to
the Lender in and under the Loan Instruments are hereby renewed, confirmed
and continued, and shall also secure the performance by Borrower of their
respective obligations hereunder; and
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(f) If at any time a payment or payments made by any Loan Party on
any part of the Obligations are subsequently invalidated, declared to be
fraudulent or preferential, and are set aside or are required to be repaid
to a trustee, receiver or any other person or entity under any bankruptcy
act, state or federal law, common law or equitable cause, then to the
extent of such payment or payments, the Obligations intended to be
satisfied shall be revived and continued in full force and effect as if
such payment or payments had not been made.
4. CHALLENGE TO ENFORCEMENT. Borrower acknowledge and agree that none of
them have any defense, set-off, counterclaim or challenge against the payment of
any sums owing under the Loan Instruments, or the enforcement of any of the
terms or conditions thereof.
5. CONFIRMATION OF EXISTING INDEBTEDNESS. Borrower hereby acknowledge and
agree that as of the close of business as of March 30, 2003, (a) the principal
balance outstanding under the Notes was $8,750,000. Borrower hereby acknowledges
and agrees that all sums described in this Section 5 are validly and duly owing
to the Lender.
6. AMENDMENT TO SENIOR LEVERAGE. Section 7.19 of the Loan Agreement is
hereby amended to read in its entirety as follows:
7.19 Senior Leverage Ratio. Permit the Senior Leverage Ratio as of
the last day of each fiscal year set forth below to be greater than the
ratio set forth opposite such date set forth below:
Year Ratio
---- -----
2002 4.00 to 1.00
2003 4.60 to 1.00
2004 1.61 to 1.00
2005 1.07 to 1.00
7. Minimum EBITDA. Section 7.20 of the Loan Agreement is hereby amended to
read in its entirety as follows: Permit (i) as of December 31, 2002, Operating
Cash Flow to be less than 92% of the amount set forth for such corresponding
date on the Projections and (ii) as of March 31, 2003 and the last day of each
fiscal quarter thereafter (calculated for a period of four consecutive fiscal
quarters ended on the last day of such fiscal quarter) until March 31, 2004,
Operating Cash Flow to be less than the amounts set forth below.
Quarter Ending Operating Cash Flow
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March 31, 2003 949,000
June 30, 2003 892,000
September 30, 2003 1,054,000
December 30, 2003 1,378,000
March 31, 2004 2,012,000
Thereafter the Operating Cash Flow will be as agreed by the parties.
8. MATURITY DATE. RESERVED.
9. WAIVER OF DEFAULTS. The Lender hereby waives the Existing Defaults,
subject to Borrowers' representations and warranties contained herein. This
waiver is strictly limited to the Existing Defaults and except as waived herein,
Lender retains all rights and remedies under the Loan Agreement and Loan
Instruments.
10. RESERVED.
11. FEE. As a condition for Lender entering into this Amendment, Borrower
agrees to pay to Lender a fee of $32,500 (the "Amendment Fee"), which Amendment
Fee shall be deemed fully earned upon Lender's execution of this Agreement and
shall be due and payable as follows at closing.
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12. COVENANTS AND CONDITIONS. Lenders' agreement to waive the Existing
Defaults and to execute the Amendment herein is expressly contingent upon the
following:
(a) Amendment. Borrower and all other required persons and entities
will have executed and delivered to Lender the Amendment.
(b) Representations and Warranties. All representations and
warranties of Borrower set forth in this agreement will be true at and as
of the date hereof, except as such representations and warranties may have
been affected by the Existing Defaults.
(c) No Default. No condition or event shall exist or have occurred
which would constitute a default hereunder (or would, upon the giving of
notice or the passage of time or both, constitute such a default) other
than the Existing Defaults.
(d) Delivery of Other Documents. The following documents shall have
been delivered to Lender by or on behalf of Borrower and must be
satisfactory to Lender in form and content:
(i) Closing Certificates. Such closing certificates, good
standing certificates and other documentation as required by Lender.
(ii) Other Information. With reasonable promptness, Borrower
shall deliver or cause to be delivered to Lender, all such other
data and information in respect of the condition, operation and
affairs of Borrower as Lender may reasonably request from time to
time.
13. ADDITIONAL DOCUMENTS AND FUTURE ACTIONS. Borrower will, at their sole
cost, take such actions and provide Lender from time to time with such
agreements, financing statements and additional instruments, documents or
information as Lender may in its discretion deem necessary or advisable to
perfect, protect, maintain or enforce the security interests in the Collateral
or to carry out the terms of the Loan Instruments. Borrower hereby authorize and
appoint Lender as their attorney-in-fact, with full power of substitution, to
take such actions as Lender may deem advisable to protect the Collateral and its
interests thereon and its rights thereunder, to execute on Borrower' behalf and
file at Loan Parties' expense financing statements, and amendments thereto, in
those public offices deemed necessary or appropriate by Lender to establish,
maintain and protect a continuously perfected security interest in the
Collateral, and to execute on Borrower' behalf such other documents and notices
as Lender may reasonably deem advisable to protect the Collateral and its
interests therein and its rights thereunder. Such power being coupled with an
interest is irrevocable.
14. REPRESENTATIONS AND WARRANTIES. In consideration of the waiver
extended herein by Lender, Borrower hereby represent and warrant, which
representations and warranties shall survive until all Obligations and all other
obligations of Borrower to Lenders are paid and satisfied in full, as follows:
(a) All representations and warranties of Borrower set forth in the
Loan Instruments are true and complete as of the date hereof, except as
such representations and warranties may have been affected by the Existing
Defaults.
(b) No condition or event exists or has occurred which would
constitute an event of default under the Loan Instruments (or would, upon
the giving of notice or the passage of time, or both constitute an event
of default) other than the Existing Defaults.
(c) The execution and delivery of this Amendment by Borrower and all
documents and agreements to be executed and delivered pursuant to the
terms hereof:
(i) have been duly authorized by all requisite corporate
action by each Loan Party;
(ii) will not conflict with or result in the breach of or
constitute a default (upon the passage of time, delivery of notice
or both) under any Loan Party's articles of Incorporation, By-Laws
(if applicable), or any applicable statute, law, rule, regulation or
ordinance or any indenture, mortgage, loan or other document or
agreement to which any Loan Party is a party or by which any of them
is bound or affected; and
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(iii) will not result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of any Loan Party, except liens in favor of the
Lender or as permitted hereunder or under the Loan Instruments.
15. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Borrower will pay all
of the Lender's reasonable expenses in connection with the review, preparation,
negotiation, documentation and closing of this Amendment and the consummation of
the transactions contemplated hereunder, including without limitation, fees,
disbursements, expenses, appraisal costs and fees and expenses of counsel
retained by Lender and all fees related to filings, recording of documents and
searches, whether or not the transactions contemplated hereunder are
consummated.
16. RELEASE AND INDEMNIFICATION. In order to induce Lender to enter into
this Amendment, Borrower do hereby agree as follows:
(a) Release. Each Loan Party hereby fully, finally and forever
acquits, quitclaims, releases and discharges Lender and its officers,
directors, employees, agents, successors and assigns of and from any and
all obligations, claims, liabilities, damages, demands, debts, liens,
deficiencies or cause or causes of action to, of or for the benefit
(whether directly or indirectly) of any Loan Party, at law or in equity,
known or unknown, contingent or otherwise, whether asserted or unasserted,
whether now known or hereafter discovered, whether statutory, in contract
or in tort, as well as any other kind or character of action now held,
owned or possessed (whether directly or indirectly) by any Loan Party on
account of, arising out of, related to or concerning, whether directly or
indirectly, proximately or remotely (i) the negotiation, review,
preparation or documentation of the Documents or any other documents or
agreements executed in connection therewith, (ii) the administration of
the Documents, (iii) the enforcement, protection or preservation of
Lender's rights under the Documents, or any other documents or agreements
executed in connection therewith, and/or (iv) any action or inaction by
Lender in connection with any such documents, instruments and agreements
(the "Released Claims").
(b) Covenant Not to Litigate. In addition to the release contained
above, and not in limitation thereof, each Loan Party does hereby agree
that they will never prosecute, nor voluntarily aid in the prosecution of,
any action or proceeding relating to the Released Claims, whether by
claim, counterclaim or otherwise.
(c) Transfer of Claims. If, and to the extent that, any of the
Released Claims are, for any reason whatsoever, not fully, finally and
forever released and discharged pursuant to the terms above, each Loan
Party does hereby absolutely and unconditionally grant, sell, bargain,
transfer, assign and convey to Lender all of the Released Claims and any
proceeds, settlements and distributions relating thereto.
(d) Indemnification. Each Loan Party expressly agrees to indemnify
and hold harmless Lender, and their officers, directors, employees,
agents, successors and assigns, of and from any and all obligations,
losses, claims, damages, liabilities, demands, debts, liens, costs and
expenses of Lender, and their officers, directors, employees, agents,
successors and assigns that may be asserted by, or may arise out of,
whether directly or indirectly, proximately or remotely, any
investigation, litigation, or other proceedings initiated, undertaken or
joined in by any Loan Party or any other third party (including, without
limitation, any employee, agent, personal representative, heir, executor,
successor or assign of any Loan Party) in connection with (i) the
negotiation, review, preparation or documentation of the Loan Instruments
or any other documents or agreements executed in connection with the
Obligations, or any of them, (ii) the administration of the Loan
Instruments; (iii) the enforcement, protection or preservation of Lender's
rights under the Loan Instruments or any other documents or agreements
executed in connection with the Obligations, or any of them, (iv) the
validity, perfection or enforceability of the Loan Instruments, and/or (v)
any action or inaction by Lender in connection with any of the foregoing;
provided however, that such obligations, losses, claims, damages,
liabilities, demands, debts, liens, costs and expenses are not the direct
result of the gross negligence or willful misconduct of Lender or its
officers, directors, employees, agents, successors and assigns.
17. NO COURSE OF DEALING.
(a) Termination of Waivers. Borrower hereby acknowledge and agree
that effective as of the date hereof any waiver or implied waiver by
Lender of any obligation or covenant of any Loan Parties under the
Amendment is expressly terminated and rescinded (except as expressly
provided herein to the contrary) and that Borrower are obligated to, and
are expected by Lender to, strictly perform and comply with all of such
obligations and covenants as provided in the Loan Instruments.
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(b) Future Forbearance. Nothing contained herein shall be deemed to
obligate the Lender to enter into any other forbearance agreements or to
waive any Events of Default.
18. WAIVERS. In connection with any proceedings hereunder or in connection
with any of the Obligations, including without limitation any action by Lender
in replevin, foreclosure or other court process or in connection with any other
action related to the Obligations or the transactions contemplated hereunder,
each Loan Party waives:
(a) all errors, defects and imperfections in such proceedings;
(b) all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from
attachment, levy or sale under execution, or providing for any stay of
execution to be issued on any judgment recovered in connection with the
Obligations or in any replevin or foreclosure proceeding;
(c) all rights to inquisition on any real estate, which real estate
may be levied upon pursuant to a judgment obtained in connection with any
of the Obligations and sold upon any writ of execution issued thereon in
whole or in part, in any order desired by Lender;
(d) presentment for payment, demand, notice of demand, notice of
nonpayment, protest and notice of protest of any of the Obligations;
(e) any requirement for bonds, security or sureties required by
statute, court rule or otherwise;
(f) any demand for possession of any collateral prior to
commencement of any suit;
(g) any right to require or participate in the marshaling of any
Loan Party's assets;
(h) any notice or demand from Lender with respect to any Loan
Party's obligations under the Loan Instruments; and
(i) all benefits under present and future laws permitting
termination of any Loan Party's obligations by delivery of notice or
otherwise, other than by performance of all Loan Parties' obligations
hereunder and under the Guaranty.
19. RESERVED.
20. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Amendment or under Loan
Instruments shall be made in accordance with the provisions of the Loan
Agreement.
21. JURISDICTION. Borrower hereby consent to the jurisdiction of any state
or federal court located within the Commonwealth of Arizona, and irrevocably
agree that, subject to the Lender's election, all actions or proceedings
relating to the Loan Instruments or the transactions contemplated hereunder
shall be litigated in such courts, and Borrower waive any objection which they
may have based on improper venue or forum non conveniens to the conduct of any
proceeding in any such court and waive personal service of any and all process
upon them, and consent that all such service of process be made by certified
mail (return receipt requested) or messenger directed to them at the address set
forth in the Loan Agreement for Borrower. Nothing contained in this section
shall affect the right of Lender to serve legal process in any other manner
permitted by law or affect the right of Lender to bring any action or proceeding
against any Loan Party or its respective property in the courts of any other
jurisdiction.
22. CONFESSION OF JUDGMENT. EACH LOAN PARTY HEREBY AUTHORIZES AND EMPOWERS
ANY ATTORNEY OR CLERK OF ANY COURT IN THE STATE OF ARIZONA, OR IN ANY OTHER
JURISDICTION WHICH PERMITS THE ENTRY OF JUDGMENT BY CONFESSION, TO APPEAR FOR
SUCH LOAN PARTY AT ANY TIME AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT
HEREUNDER OR UNDER ANY OF THE LOAN INSTRUMENTS IN ANY ACTION BROUGHT AGAINST
SUCH LOAN PARTY HEREUNDER OR UNDER THE FORBEARANCE DOCUMENTS AT THE SUIT OF
LENDER, WITH OR WITHOUT COMPLAINT OR DECLARATION FILED, WITHOUT STAY OF
EXECUTION, AS OF ANY TERM OR TIME, AND THEREIN TO CONFESS OR ENTER JUDGMENT
AGAINST SUCH LOAN PARTY FOR THE ENTIRE OBLIGATIONS TOGETHER WITH AN ATTORNEY'S
COLLECTION COMMISSION OF FIVE PERCENT (5%) OF THE AGGREGATE AMOUNT OF THE
FOREGOING SUMS, BUT IN NO EVENT LESS THAN $5,000.00; AND FOR SO DOING THIS
AMENDMENT OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
THE AUTHORITY GRANTED HEREIN TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY
EXERCISE THEREOF BUT SHALL CONTINUE FROM TIME AND AT ALL TIMES UNTIL PAYMENT IN
FULL OF ALL THE OBLIGATIONS.
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23. JOINT AND SEVERAL LIABILITY. If there is more than one Loan Party
executing this Amendment, all agreements, conditions, covenants and provisions
of this Amendment shall be the joint and several obligation of each Loan Party.
24. TIME OF ESSENCE. Time is of the essence of this Amendment.
25. BINDING EFFECT. This Amendment and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns. All obligations of Borrower under
this Amendment and the other Forbearance Documents are the joint and several
obligations of each Loan Party.
26. SEVERABILITY. The provisions of this Amendment and all other Loan
Instruments are deemed to be severable, and the invalidity or unenforceability
of any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
27. NO THIRD PARTY BENEFICIARIES. The rights and benefits of this
Amendment and the Loan Instruments shall not inure to the benefit of any third
party.
28. MODIFICATIONS. No modifications of this Amendment or any of the shall
be binding or enforceable unless in writing and signed by or on behalf of the
party against whom enforcement is sought.
29. HOLIDAYS. If the day provided herein for the payment of any amount or
the taking of any action falls on a Saturday, Sunday or public holiday at the
place for payment or action, then the due date for such payment or action will
be the next succeeding business day.
30. LAW GOVERNING. This Amendment will be construed in accordance with and
governed by the laws of the state of Arizona.
31. HEADINGS. The headings of the Articles, Sections, paragraphs and
clauses of this Amendment are inserted for convenience only and shall not be
deemed to constitute a part of this Amendment.
32. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, all of which taken together constitute one and the same
instrument, and any of the parties hereto may execute this Amendment by signing
any such counterpart.
33. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto concerning the subject matter set forth herein and
supersedes all prior or contemporaneous oral and/or written agreements and
representations not contained herein concerning the subject matter of this
Agreement.
34. WAIVER OF RIGHT TO TRIAL BY JURY. EACH LOAN PARTY AND LENDER WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AMENDMENT, THE LOAN INSTRUMENTS, OR ANY OTHER DOCUMENT OR
INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF SUCH LOAN PARTY
WITH RESPECT TO THIS AMENDMENT, THE LOAN INSTRUMENTS OR ANY OTHER DOCUMENT OR
INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. EACH LOAN PARTY AND LENDER AGREE AND CONSENT THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF LOAN PARTIES, LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
BORROWER ACKNOWLEDGE THAT THEY HAVE HAD AN OPPORTUNITY TO CONSULT WITH COUNSEL
REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND
EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS
SECTION.
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35. RESULTS OF NEGOTIATION. Borrower acknowledge that they have been
represented by counsel in connection with the execution and delivery of this
Amendment and that the terms and conditions of this Amendment are the result of
negotiation between the parties hereto. Borrower further acknowledge that they
have knowingly waived their right to (i) be heard prior to the entry of a
judgment by confession and understand that, upon such entry, such judgment shall
become a lien on all real property of Loan Parties in the county where such
judgment is entered; (ii) trial by jury; and (iii) certain other rights as set
forth in detail above. Borrower acknowledge that such waivers and consents
constitute a material inducement for Lender to enter into this Amendment and
they have been fully advised of the consequences of such provisions by their
counsel.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment,
intending to be legally bound hereby.
BORROWER:
AQUIS WIRELESS COMMUNICATIONS, INC., a
Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, Chief Executive Officer
LENDER:
FINOVA CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxx Xx.
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Name/Title: Xxxx X. Xxxxxxxxxx Xx., Sr. V.P.
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