EXHIBIT 10.8
SECOND AMENDMENT TO SUBSIDIARY GUARANTY
(Areawide Cellular, Inc.)
This Second Amendment (this "Amendment") is effective as of the 19th
day of May, 1999, to that certain Subsidiary Guaranty executed by AREAWIDE
CELLULAR, INC., a Florida corporation (the "Guarantor") in favor of FOOTHILL
CAPITAL CORPORATION, a California corporation (the "Agent"), as Agent for the
Lenders (as defined below).
W I T N E S S E T H:
WHEREAS, Source One Wireless, Inc., an Illinois corporation, the
financial institutions listed on the signature pages thereto (the "Lenders"),
and the Agent are parties to that certain Loan and Security Agreement dated as
of September 8, 1997, as amended by that certain First Amendment to Loan and
Security Agreement dated January 30, 1998, as further amended by that certain
Second Amendment to Loan and Security Agreement dated March 18, 1998, as further
amended by that certain Third Amendment dated as of October 20, 1998 (as further
amended, restated, supplemented or otherwise modified from time to time, the
"Source One Loan Agreement");
WHEREAS, Guarantor executed that certain Subsidiary Guaranty dated as
of March 18, 1998 in favor of the Agent to secure the prompt and complete
payment, observance and performance of all of the Obligations under the Source
One Loan Agreement, as amended by that certain First Amendment to Subsidiary
Guaranty dated as of October 20, 1998 (as further amended, restated,
supplemented or otherwise modified from time to time, the "Guaranty");
WHEREAS, Areawide Cellular, L.L.C. (f/n/a Source One Wireless I,
L.L.C.), a Delaware limited liability company ("Areawide"), the Lenders and the
Agent are parties to that certain Loan and Security Agreement dated October 20,
1998, as amended by that certain First Amendment to Loan and Security Agreement
of even date herewith (as further amended, restated, supplemented or otherwise
modified from time to time, the "Areawide Loan Agreement");
WHEREAS, Guarantor is in default of its obligations under the Guaranty;
and
WHEREAS, Guarantor has requested that Agent, and the Agent, on behalf
of the Lenders, has agreed to, modify the terms of the Guaranty;
NOW THEREFORE, in consideration of the foregoing premises for other
good and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. Amendment to Section 22. Section 22 of Guaranty is hereby amended by
deleting that Section in its entirety and replacing it with the following:
"22. Notwithstanding anything herein to the
contrary, upon payment in full of the Obligations (as defined
in the Areawide Loan Agreement) and termination of the
Commitments (as defined in the Areawide Loan Agreement) on or
before the Maturity Date and upon Lenders' irrevocable
receipt of the Guaranty Termination Amount (as defined
below), this Guaranty shall terminate and the Agent shall
take all action reasonably requested by the Guarantor, at the
expense of such Guarantor, to evidence the termination of
this Guaranty; provided, however, that any and all events and
provisions of the last sentence of Section 10 of the Guaranty
shall survive the termination of this Guaranty."
2. Guaranty Termination Amount. Section 23, Guaranty Termination
Amount, is hereby added to the Guaranty as follows:
"(a) Definitions. For purposes of this Section 23, the following terms
shall have the following meanings:
(i) "Commitments" has the meaning ascribed thereto in the Areawide
Loan Agreement.
(ii) "Guaranty Termination Amount" means $2,000,000, subject to
reduction as provided in Section 23 and otherwise payable to
Lenders in the form of cash or, if applicable pursuant to the
terms of Section 23(d) below, Preferred Stock.
(iii) "Xxxxxx Areawide" means Xxxxxx Family Areawide LLC, a Delaware
limited liability company.
(iv) "Xxxxxx Debt" means the debt consisting solely of principal
and interest and evidenced by that certain Note in the
principal amount of $2,000,000, made payable by Areawide to
Xxxxxx Areawide as more fully described in Section 2.2 of that
certain Term Loan and Security Agreement, dated October 20,
1998, between Areawide and Xxxxxx Areawide.
(v) "Liquidity Event" means a Mandatory Redemption Event (as
defined in Exhibit A) other than by reason of paragraph (i) of
the definition of Mandatory Redemption Event.
(vi) "Maturity Date" has the meaning ascribed thereto in the
Areawide Loan Agreement.
(vii) "Obligations" has the meaning ascribed thereto in the Areawide
Loan Agreement.
(viii) "Preferred Stock" means the Preferred Stock of Guarantor as
more fully described on Exhibit A attached hereto.
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(ix) "Retained Financing Proceeds" means proceeds from a debt or
equity transaction required by third party lenders or
investors to be retained by Areawide or Guarantor for purposes
other than repayment of debt or distributions to equity
holders.
(b) Reduction of Guarantor's Obligations. Upon payment in full of all
Obligations and termination of the Commitments on or before the Maturity Date,
the obligations of the Guarantor hereunder shall be reduced to the Guaranty
Termination Amount.
(c) Guaranty Termination Amount Upon Liquidity Event or Maturity. Upon
the occurrence of each Liquidity Event (other than a refinancing by Areawide of
all of the Obligations prior to the Maturity Date) or the Maturity Date, if
earlier:
(i) Payment shall be made and applied as follows: (A) first, to
Lenders until the Obligations have been paid in full, (B)
second, to the Xxxxxx Debt, and (C) third, to Lenders'
Guarantee Termination Amount in an amount equal to the greater
of (I) $500,000 and (II) the sum of fifty percent (50%) of the
balance of the gross proceeds from a Liquidity Event,
multiplied by a fraction the numerator of which is the number
of months (whole or partial) elapsed between May 19, 1999 and
payment in full of the Obligations, and the denominator of
which is 12, in each instance reduced by amounts previously
received by Lenders on account of the Guarantee Termination
Amount; and
(ii) To the extent the proceeds paid to Lenders under Section
23(c)(i)(C) above are insufficient to satisfy the Guarantee
Termination Amount (including by reason of the failure of a
Liquidity Event to occur on or before the Maturity Date), such
deficiency shall be paid pursuant to Section 23(d) below.
(d) Guarantee Termination Amount Upon Refinancing. Upon the occurrence
of a refinancing in full by Areawide of all Obligations prior to the Maturity
Date:
(i) Refinancing proceeds shall be applied as follows: (A) first,
to Lenders until the Obligations have been paid in full, (B)
second, to the Xxxxxx Debt and (C) third, to Lenders'
Guarantee Termination Amount in an amount equal to the greater
of (I) $500,000 or (II) the sum of fifty percent (50%) of the
balance of such refinancing proceeds, multiplied by a fraction
the numerator of which is the number of months (whole or
partial) elapsed since May 19, 1999 and the denominator of
which is 12, in each case reduced by amounts previously
received by Lenders on account of the Guarantee Termination
Amount; and
(ii) To the extent the refinancing proceeds paid to Lenders under
Section 23(d)(i)(C) above are insufficient to satisfy the
Guarantee Termination
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Amount as the same may have been reduced by amounts received
by Lenders as aforesaid, Guarantor shall issue in favor of
Lenders the Preferred Stock with a Redemption Price (as
defined in Exhibit A) equal to the then unpaid portion of the
Guaranty Termination Amount.
(iii) Proceeds distributed pursuant to Sections 23(d)(i) and (d)(ii)
above shall, after repayment in full of the Obligations,
exclude Retained Financing Proceeds."
3. Release. As partial consideration for the execution of this
Amendment, Guarantor, for itself and each of its subsidiaries, their
successors-in-title, legal representatives and assignees and, to the extent the
same is claimed by right of, through or under Guarantor, or its Subsidiaries,
for its or their past, present and future employees, agents, representatives,
officers, directors, shareholders, and trustees, does hereby forever remise,
release and discharge the Agent and the Lenders, individually and collectively,
and the Agent's and the Lenders' respective successors-in-title, legal
representatives and assignees, past, present and future officers, directors,
shareholders, trustees, agents, employees, consultants, experts, advisors,
attorneys and other professionals and all other persons and entities to whom the
Agent or the Lenders, individually and collectively, would be liable if such
persons or entities were found to be liable to Guarantor or its Subsidiaries
(hereinafter, collectively the "Releasees"), from any and all manner of action
and actions, cause and causes of action, counterclaims, suits, debts, dues, sums
of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, damages, judgments, expenses, compensation, recovery or relief on
account of any liability, obligation, demand or cause of action of whatever
nature relating to, arising out of or in connection with the Source One Loan
Agreement, the Areawide Loan Agreement, the Guaranty or any other Loan Document,
including but not limited to, acts, omissions to act, actions, negotiations,
discussions and events resulting in the finalization and execution of this
Amendment, as, among and between the Guarantor or its Subsidiaries and any of
the Releasees, such claims whether now accrued and whether now known or
hereafter discovered, from the beginning of time through the date hereof, and
specifically including, without any limitation, any claims of liability asserted
or which could have been asserted with respect to, arising out of or in any
manner whatsoever connected directly or indirectly with any "lender
liability-type" claim. For purposes of the preceding sentence, Guarantor and any
of its Subsidiaries shall be deemed to assert a claim or cause of action when
such a claim or cause of action, otherwise meeting the prerequisites of the
previous sentence, is asserted by Guarantor or any of its Subsidiaries in legal
or equitable proceedings instituted by Guarantor, its Subsidiaries or any third
party.
4. No Other Amendment. Except for the amendment expressly set forth
above, the text of the Guaranty shall remain unchanged and in full force and
effect. The Guarantor acknowledges and expressly agrees that the Lenders reserve
the right to, and do in fact, require strict compliance with all terms and
provisions of the Guaranty.
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5. Loan Document. This Amendment shall be deemed to be a Loan Document
for all purposes. Any and all references to the Guaranty shall be deemed to
refer to the Guaranty as hereby amended.
6. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement. Delivery of an
executed counterpart of this Amendment by facsimile transmission shall be as
effective as delivery of a manually executed counterpart hereof.
7. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings set forth in the Guaranty.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Amendment on their own behalf or by and through their duly authorized officers,
as applicable, as of the day and year first above written.
AREAWIDE CELLULAR, INC.
By /s/ Xxxxxx X. Xxxxxx
Its Secretary and General Counsel
Agreed and Accepted By:
FOOTHILL CAPITAL CORPORATION, as Agent
for the Lenders
By: /s/ Xxxxx Xxxxxxxxx
Its: Vice President
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