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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 XXXX ATLANTIC PAGING, INC.,
FINOVA CAPITAL CORPORATION ("SENIOR LENDER") AND AQUIS COMMUNICATIONS, INC.
("PURCHASER"), TO THE OBLIGATIONS (INCLUDING INTEREST) OWED BY PURCHASER TO THE
HOLDERS OF ALL THE NOTES ISSUED PURSUANT TO THAT CERTAIN LOAN AGREEMENT DATED AS
OF DECEMBER 31, 1998, BETWEEN PURCHASER AND SENIOR LENDER, AS SUCH LOAN
AGREEMENT HAS BEEN AND HEREAFTER MAY BE SUPPLEMENTED, MODIFIED OR AMENDED FROM
TIME TO TIME (THE "FINOVA LOAN AGREEMENT"); AND EACH HOLDER HEREOF, BY ITS
ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
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SECURED PROMISSORY NOTE
$4,150,000 Dated: December 31, 1998
FOR VALUE RECEIVED, the undersigned, AQUIS COMMUNICATIONS, INC., a
corporation duly organized and existing under the laws of the State of Delaware
and formerly known as BAP Acquisition Corp. (the "Purchaser"), HEREBY PROMISES
TO PAY to the order of XXXX ATLANTIC PAGING, INC., a corporation duly organized
and existing under the laws of the State of Delaware, or its assigns (the
"Seller"), the principal sum of FOUR MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS
($4,150,000) on or before December 31, 2003 (the "Maturity Date").
This Note is the Promissory Note referred to in, and is entitled to the
benefits of and is subject to the provisions of, the Asset Purchase Agreement
dated as of July 2, 1998, among the Purchaser, the Seller, and seven operating
telephone companies affiliated with the Seller (such agreement as supplemented,
modified or amended from time to time is herein called the "Asset Purchase
Agreement"). No reference in this Note to the Asset Purchase Agreement and no
provision of this Note or of the Asset Purchase Agreement shall alter or impair
the obligation of the Purchaser, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, places and rates, and in
the coin and currency, set forth in this Note.
1. Principal. The principal amount of this Note shall be due and payable
in two installments as follows: (i) on March 31, 2000, the Required Xxxx
Atlantic Principal Payment (as defined in the Finova Loan Agreement as in effect
on the date hereof), and (ii) on the Maturity Date, the remaining outstanding
principal balance of the Note.
2. Interest. This Note shall bear interest on the unpaid principal sum
hereof from the date of this Note until the principal amount hereof is paid in
full at an annual rate equal to one percentage point (100 basis points) in
excess of the Base Rate; provided, however, that in the event of a default in
the making of any principal or interest payment as and when required under this
Note, interest shall accrue on such unpaid principal amount or unpaid interest,
as the case may be, from and including the date of default until the date such
default shall have been cured, at a rate equal to four percentage points (400
basis points) in excess of the Base Rate. As used herein, "Base Rate" means the
per annum rate of interest announced or published publicly from
Secured Promissory Note
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.
The Borrower acknowledges that with respect to all matters relevant hereto a
certificate signed by an officer of Citibank, N.A., setting forth the Base Rate
in effect on any applicable date, shall be binding and conclusive. "Interest
Period" means a calendar quarter beginning on January 1, April 1, July 1 or
October 1. Accrued interest shall be payable in arrears on the last day of each
Interest Period (or, if such day is a Saturday or Sunday, on the next succeeding
Monday) beginning with the Interest Period following the Interest Period in
which the first anniversary of the date of this Note falls and upon payment in
full of the outstanding principal balance of this Note. Interest payments on
this Note will be computed on the basis of a 365-day year and actual days
elapsed. In the event the interest rate otherwise applicable under this Note
exceeds the maximum amount permitted under applicable law, the interest rate
shall be automatically reduced, for such period as such limitation is imposed by
law, to the maximum rate so permitted.
3. Prepayment. The principal amount of this Note, together with accrued
interest thereon to the date of prepayment, shall be subject to prepayment, at
the option of the Purchaser, in whole or in part, at any time and from time to
time, without premium or penalty. In addition, in the event the Purchaser
voluntarily prepays all or any part of the indebtedness under the FINOVA Loan
Agreement (the "Senior Indebtedness"), concurrently with such prepayment the
Purchaser shall pay to the Seller an amount equal to the Pro Rata Share
(calculated as of the date immediately preceding the date such prepayment of
Senior Indebtedness is made) of the amount of such prepayment of the Senior
Indebtedness, provided that such prepayment is in fact voluntary (i.e., not
required pursuant to the terms of the FINOVA Loan Agreement as in effect on the
date hereof or by FINOVA in connection with any waiver of or consent to a
departure by Purchaser from any term or condition of the FINOVA Loan Agreement
as in effect on the date hereof. For purposes of this Note, "Pro Rata Share"
shall mean, as of any date, the ratio which the outstanding principal amount of
this Note as of such date bears to the aggregate outstanding principal amounts
of this Note and the Senior Indebtedness as of such date.
4. Payments. All payments of principal of and interest on this Note shall
be made by wire transfer of immediately available funds to the bank account of
Seller (Mellon Bank West, 0 Xxxxxx Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000, ABA
Routing No. 000000000, for the account of Xxxx Atlantic Financial Services,
Inc., Account No. 199-2890, for further credit to Xxxx Atlantic Paging, Inc.) or
to such other account as the holder of this Note may designate from time to
time. All payments shall be made in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
5. Security. The full and timely payment of the principal of and interest
on this Note is secured by a security interest granted by the Purchaser to the
Seller in all of the assets of the Purchaser pursuant to the terms of the
Security Agreement dated as of the date hereof (the "Security Agreement")
between the Purchaser and the Seller. Reference is made to the Security
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Secured Promissory Note
Agreement for a more detailed description of the collateral which secures this
Note and the rights of the Seller and the holder of this Note in respect of such
collateral.
6. Negative Covenants. Until this Note shall have been paid in full, the
Purchaser shall not:
(a) Pay any dividend or make any other distribution in respect of
its capital stock or redeem or otherwise purchase or repurchase any of its
capital stock.
(b) Directly or indirectly, (i) create, incur, issue, assume or
become liable with respect to, contingently or otherwise, any indebtedness for
borrowed money other than (X) indebtedness to FINOVA Capital Corporation,
Motorola, Inc. or other lenders in an aggregate amount not at any time exceeding
the Permitted Debt Amount (as defined below) (the "Permitted Debt"), (Y) the
Letters of Credit Indebtedness (as defined in the Finova Loan Agreement as in
effect on the date hereof), and (Z) the Deferred Payment Indebtedness (as
defined in the FINOVA Loan Agreement as in effect on the date hereof), (ii)
guarantee the obligations of any other person or entity, other than through
endorsement of negotiable instruments in the ordinary course of business, (iii)
create, incur, issue, assume or become liable with respect to, contingently or
otherwise, any other indebtedness (including without limitation capitalized
lease obligations and purchase money obligations) not encompassed by clause (i)
or (ii) of this Section 6(b), other than in the ordinary course of business and
other than capitalized lease obligations to the extent permitted under the
Finova Loan Agreement as in effect on the date hereof, (iv) create, incur,
assume or suffer to exist any mortgage, lien, pledge, security interest,
conditional sale or other title retention agreement, charge or other security
interest or encumbrance of any kind (a "Lien") upon its properties except for
Permitted Liens (as hereinafter defined), or (v) make any payment or prepayment
on account of the Letter of Credit Indebtedness or the Deferred Payment
Indebtedness, except to the extent permitted under the FINOVA Loan Agreement as
in effect on the date hereof. For purposes of this Note "Permitted Liens" means
(P) Liens existing on the properties of the Purchaser as of the date hereof, (Q)
Liens created by this Note and the Security Agreement, (R) Liens to secure the
Permitted Debt, (S) Liens for taxes or assessments or other governmental charges
or levies not yet due or payable under law or being contested in good faith by
appropriate proceedings, (T) landlords', carriers', vendors', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising by operation
of law in the ordinary course of business and with respect to amounts not
overdue for a period of more than 90 days or being contested in good faith by
appropriate proceedings, (U) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation, (V)
deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature, in each case incurred in the ordinary course of business, (W)
zoning ordinances, easements, rights of way, restrictions, and other similar
encumbrances, (X) Liens securing capitalized lease obligations and purchase
money obligations permitted by clause (b)(iii) above, (Y) judgment Liens and
similar Liens arising in connection with court proceedings, provided that the
execution or other enforcement thereof is effectively stayed and the claims
secured thereby are being contested in good faith and by appropriate
proceedings, (Z) any extension, renewal or refunding of any Lien referred to in
the foregoing clauses (P) and (X) and (ZZ) other Liens permitted under the
Finova Loan Agreement as
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Secured Promissory Note
in effect on the date hereof. For purposes of this Note, "Permitted Debt Amount"
means the sum of (A) $21,800,000, plus (B) the lesser of (1) $1,500,000 or (2)
the amount disbursed by FINOVA Capital Corporation to pay a portion of the Xxxx
Atlantic Seller Note Payment (as defined in the FINOVA Loan Agreement as in
effect on the date hereof).
(c) (i) Directly or indirectly, make any loans or advances to any
person or entity other than to its directors, officers, employees and agents in
the ordinary course of business, except for a loan in the amount of $240,000 to
Xxxx X. Xxxxxxxx, provided that all of the proceeds of such loan were invested
in Purchaser for equity issued to Xxxx X. Xxxxxxxx, or (ii) forgive any loans or
advances made to any person or entity.
(d) Purchase any shares of capital stock of any other person or
entity with cash consideration; or purchase any of the assets of any other
business with cash consideration other than in the ordinary course of business.
(e) Consolidate with or merge with or into any other entity, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets in a single transaction or in a
series of related transactions, except as permitted under the Consent and
Amendment No. 1 to Asset Purchase Agreement dated November 3, 1998.
7. Affirmative Covenants.
(a) Financial Statements. Until this Note shall have been paid in
full, the Purchaser will furnish to the Seller quarterly financial statements of
the Purchaser for the first three quarters of each fiscal year and annual
financial statements of the Purchaser (in each case, including, without
limitation, a balance sheet, income statement and statement of cash flows), all
of which will be prepared in accordance with generally accepted accounting
principles consistently applied except that footnotes may be omitted from such
quarterly statements. All quarterly financial statements will be delivered to
the Seller within 45 days after the end of each of the Purchaser's first three
fiscal quarters, and all annual financial statements will be delivered to the
Seller within 90 days after the end of the last fiscal quarter of the
Purchaser's fiscal year. The Purchaser will deliver to the Seller within 45 days
after the end of each of the Purchaser's fiscal quarters (90 days if such fiscal
quarter is the last fiscal quarter of the Purchaser's fiscal year) an officer's
certificate (which shall be executed by the principal executive officer and the
principal financial officer of the Purchaser) stating that a review of the
activities of the Purchaser during the preceding fiscal quarter or fiscal year,
as the case may be, has been made under the supervision of the signing officers
and further stating that no Event of Default has occurred and is continuing
(and, if an Event of Default shall have occurred whether or not it shall be
continuing, describing all such Events of Default of which he or she has
knowledge and what action the Purchaser has taken, is taking or proposes to take
with respect thereto).
(b) FINOVA Loan Agreement. Until this Note shall have been paid in
full, Purchaser will comply in all material respects with all of its agreements,
covenants and other undertakings set forth in the FINOVA Loan Agreement, which
agreements, covenants and
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Secured Promissory Note
undertakings are by this reference, hereby incorporated herein as if they were
fully set forth herein.
8. Default. An "Event of Default" occurs if:
(i) the Purchaser fails to pay any installment of the principal of
this Note when the same becomes due and payable and such failure continues for a
period of five (5) business days;
(ii) the Purchaser fails to pay interest on this Note when the same
becomes due and payable and such failure continues for a period of five (5)
business days;
(iii) the Purchaser fails to observe or perform any other covenant,
condition or agreement on the part of the Purchaser required to be observed or
performed pursuant to the terms of the Asset Purchase Agreement or this Note and
such failure is not remedied within fifteen (15) days after written notice
thereof shall have been given to the Purchaser by the Seller;
(iv) the Purchaser fails to observe or perform any covenant,
condition or agreement on the part of the Purchaser required to be observed or
performed pursuant to the terms of the Security Agreement and such failure is
not remedied within fifteen (15) days after written notice thereof shall have
been given to Purchaser;
(v) any representation or warranty made by the Purchaser in the
Security Agreement relating to the security interest or any rights of the Seller
arising thereunder shall prove to have been incorrect in any material respect
when made;
(vi) (A) there shall be a default or defaults in any payment of
principal, premium, if any, or interest beyond any grace period provided with
respect thereto under any mortgage, bond, debenture, note or other evidence of
indebtedness for borrowed money with a principal or face amount of $100,000 or
more, individually or in the aggregate, of the Purchaser, whether such
indebtedness for borrowed money exists or shall hereafter be created (other than
with respect to the Letters of Credit Indebtedness or the Deferred Payment
Indebtedness); or (B) the Purchaser fails to observe or perform any other
covenant, condition or agreement contained in any agreement under which any
indebtedness (whether or not for borrowed money) with a principal or face amount
or $200,000 or more, individually or in the aggregate, of the Purchaser is
created (or if any other event thereunder or tinder such agreement shall occur
and be continuing) and the effect of such default, failure or other event
described in clause (A) or (B) is to accelerate (or to cause the obligee of such
indebtedness to accelerate) the maturity of any such indebtedness;
(vii) the Purchaser pursuant to or within the meaning of any
Bankruptcy Law (as hereinafter defined): (A) commences a voluntary case or
proceeding; (B) consents to the entry of an order for relief against it in an
involuntary case or proceeding; (C) consents to the appointment of a receiver,
trustee, custodian or other similar official for it or for all or substantially
all of its property; or (D) makes a general assignment for the benefit of its
creditors;
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Secured Promissory Note
(vii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (A) is for relief against the Purchaser; (B)
appoints a receiver, trustee, custodian or other similar official for the
Purchaser or for all or substantially all of its properties; or (C) orders the
liquidation of the Purchaser; and in each of (A), (B) or (C) the order or decree
remains unstayed and in effect for sixty (60) days;
(viii) one or more final judgments, orders or decrees for the
payment of money, which, either individually or in the aggregate, exceed
$250,000 shall be rendered against the Purchaser by a court of competent
jurisdiction and shall remain undischarged or not fully bonded for a period
(during which execution shall not be effectively stayed by reason of a pending
appeal or otherwise) of thirty (30) days or an enforcement proceeding shall be
commenced (and not discharged, bonded or execution thereof stayed) by any
creditor or upon judgments, orders and/or decrees exceeding such amount, either
individually or in the aggregate; or
(ix) the Security Agreement shall for any reason cease to be, or be
asserted by the Purchaser not to be, a legal, valid and binding obligation of
the Purchaser, in full force and effect and enforceable in accordance with its
terms, or any Lien purported to be created by the Security Agreement shall for
any reason (other than as expressly permitted by the Security Agreement) cease,
in any material respect, to be a valid and perfected security interest in the
Collateral thereunder.
For purposes of this Note, the term "Bankruptcy Law" means Xxxxx 00,
Xxxxxx Xxxxxx Code or any substantially similar Federal or state law for the
relief of debtors and the protection of creditors, and the rules and regulations
thereunder.
If an Event of Default (other than an Event of Default under clauses (vii)
or (viii) of this Section 8) occurs and is continuing, the Seller may, by
written notice to the Purchaser, declare all unpaid principal of and unpaid and
accrued interest on this Note and under the Security Agreement to be due and
payable. Upon such declaration, the unpaid principal of and unpaid and accrued
interest on this Note and under the Security Agreement shall become and be due
and payable immediately, without presentment, demand, protest or further notice
of any kind, all of which the Purchaser hereby expressly waives. If an Event of
Default under clauses (vii) or (viii) of this Section 8 occurs and is
continuing, the unpaid principal of and unpaid and accrued interest on this Note
and under the Security Agreement shall automatically become and be due and
payable immediately, without presentment, demand, protest or further notice of
any kind, all of which the Purchaser hereby expressly waives.
9. Miscellaneous.
(a) All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed in
accordance with the notice provisions of the Asset Purchase Agreement.
(b) This Note shall be binding upon and shall inure to the benefit
of the Purchaser and the Seller and their respective successors and assigns.
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Secured Promissory Note
(c) No failure or delay by the Seller at any time to enforce one or
more of the terms, conditions or obligations of the Purchaser under this Note or
under the Asset Purchase Agreement shall constitute a waiver of such terms,
conditions or obligations or shall preclude the Seller from requiring
performance by the Purchaser of any one or more of them at any time.
(d) Upon request and surrender of this Note by the Seller or any of
its successor or assigns, the Purchaser shall execute and deliver to the Seller
(or its successors or assigns, as the case may be) a replacement note reflecting
the name of the payee after giving effect to such change.
(e) THE PURCHASER HEREBY EXPRESSLY WAIVES THE PLEADING OF ANY
STATUTE OF LIMITATIONS AS A DEFENSE TO ANY DEMAND AGAINST THE BORROWER, AND
FURTHER WAIVES THE RIGHT OF THE PURCHASER TO TRIAL BY JURY IN ANY SUIT, ACTION
OR PROCEEDING IN CONNECTION HEREWITH.
(f) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CHOICE OR
CONFLICT OF LAWS PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the undersigned, with full power and authority to do
so, intending that this Note shall constitute an instrument under seal, has
caused these presents to be executed, delivered, and sealed on the day and year
first above written.
[SEAL] AQUIS COMMUNICATIONS, INC.
ATTEST:
/s/ B. Xxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: President
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