UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ________________________
Commission File Number: 1-13002
AQUIS COMMUNICATIONS GROUP, INC.
(formerly known as Paging Partners Corporation)
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3281446
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1719A Route 10, Suite 300 07054
- ------------------------------- --------------------------
(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973) 560-8000
(Former name, former address and former fiscal year,
if changed since last report)
Paging Partners Corporation
Freehold Office Plaza 4249
Route 9 North
Building 2
Freehold, NJ 07728
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
As of March 31, 1999 there were 15,222,000 shares of the Registrant's Common
Stock outstanding.
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
INDEX To Form 10-Q
Page
----
Part I Financial Information:
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and March 31, 1998 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and March 31, 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3 - Quantitative and Qualitative Disclosures
About Market risks 16
Part II Other Information:
Item 4 - Submission of Matters to a Vote of Security Holders 17
Item 5 - Other Events 18
Item 6 - Exhibits and Reports on Form 8-K 18
Signature 19
-2-
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except for per share amounts)
(Unaudited)
March 31, December 31,
ASSETS: 1998 1999
-------- -----------
Current assets:
Cash $ 2,650 $ --
Accounts receivable, net of allowance for
doubtful accounts of $625 at March 31, 1999
and $490 at December 31, 1998 3,012 2,061
Inventory 1,775 2,076
Prepaid expenses and other 1,092 1,012
-------- --------
Total current assets 8,529 5,149
Fixed assets, net 13,034 10,107
Intangible assets, net 20,520 16,749
Deferred charges 839 330
-------- --------
Total assets $ 42,922 $ 32,335
======== ========
LIABILITIES:
Current liabilities:
Accounts payable $ 3,202 $ 1,769
Accrued expenses 2,123 236
Advance billings 1,280 1,033
Customer deposits 559 577
Capital lease obligation 209 --
Note payable 1,200 --
Notes payable to stockholders -- 520
-------- --------
Total current liabilities 8,573 4,135
-------- --------
Long term debt 20,500 --
Note payable 2,950 4,150
Payable to Bell Atlantic Corp.
and affiliates -- 18,535
Capital lease obligation 1,091 --
-------- --------
Total liabilities 33,114 26,820
-------- --------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 1,000,000
shares authorized, none issued -- --
Common stock, $0.01 par value, authorized
- 30,000,000 shares, 15,222,000
and 8,892,000 shares issued and
outstanding at March 31, 1999 and
December 31, 1998, respectively 152 89
Additional paid in capital 11,534 5,962
Accumulated deficit (1,638) (296)
Note receivable from stockholder (240) (240)
-------- --------
Total stockholders' equity 9,808 5,515
-------- --------
Total liabilities and stockholders'
equity $ 42,922 $ 32,335
======== ========
See notes to condensed consolidated financial statements.
3
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except for per share amounts)
(Unaudited)
Predecessor
Company
------------
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
----------- ------------
Revenues:
Paging services $ 6,294 $ 5,502
Equipment sales 128 641
----------- -----------
Total revenues 6,422 6,143
----------- -----------
Operating expenses:
Paging services 1,471 1,038
Cost of equipment sales 258 613
Technical 688 750
Selling and marketing 832 983
General and administrative 1,358 1,352
Depreciation and amortization 1,973 983
Provision for doubtful accounts 255 217
----------- -----------
Total operating expenses 6,835 5,936
----------- -----------
Operating (loss) income (413) 207
Interest expense, net 929 --
----------- -----------
(Loss) income before income taxes (1,342) 207
Provision for income taxes -- 82
----------- -----------
Net (loss) income $ (1,342) $ 125
=========== ===========
Net loss per common share:
- Basic and diluted $ (0.15)
===========
Weighted average common shares outstanding 8,962,000
===========
See notes to condensed consolidated financial statements.
4
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Predecessor
Company
------------
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
------------ ------------
Cash flows from operating activities:
Net (loss) income $ (1,342) $ 125
Adjustments to reconcile net (loss)
income to net cash provided
by operating activities:
Depreciation and amortization 1,973 983
Provision for doubtful accounts 255 217
Changes in assets and liabilities,
net of business acquired:
Accounts receivable (789) (160)
Due from affiliates (for trade) -- (1,224)
Inventory 499 (77)
Prepaid expenses and other assets (11) 406
Accounts payable and accrued expenses 1,930 928
Advance billings and customer deposits 45 3
-------- --------
Net cash provided by operating
activities 2,560 1,201
-------- --------
Cash flows from investing activities:
Business acquisitions (18,535) --
Capital expenditures (601) (1,564)
Sale of fixed assets 39 573
-------- --------
Net cash used in investing
activities (19,097) (991)
-------- --------
Cash flows from financing activities:
Issuance of long term debt 20,500 --
Repayment of notes payable to stockholder (520) --
Repayment of capital lease obligation (1,506) --
Refinancing of capital lease obligation 1,300 --
Deferred financing costs (587) --
Due to affiliates -- 494
-------- --------
Net cash provided by financing
activities 19,187 494
-------- --------
Increase in cash 2,650 704
Cash, beginning of period -- 30
-------- --------
Cash, end of period 2,650 734
-------- --------
Supplemental information on business
acquired:
Fair value of assets acquired 9,150
Liabilities assumed (3,080)
Exchange of common stock (5,635)
Accrued transaction costs (135)
--------
Cash paid 300
--------
Less: cash acquired 160
--------
Net cash paid $ 140
========
See notes to condensed consolidated financial statements.
5
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands, except for share information)
1. Basis of Presentation:
On March 31, 1999, a wholly owned subsidiary of the Company (which was
then known as Paging Partners Corporation ("Paging Partners")), merged
with Aquis Communications, Inc. ("ACI") in a transaction accounted for as
a reverse acquisition with ACI as the accounting acquirer (see Note 2). At
such time, the Company changed its name to Aquis Communications Group,
Inc.
The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its subsidiaries, and reflect the
March 31, 1999 merger with ACI (see Note 2) and the acquisition of the net
assets of Bell Atlantic Paging, Inc. ("BAPCO" or the "Predecessor
Company") (see Note 3) on December 31, 1998. These statements should be
read in conjunction with the historical financial statements, and notes
thereto, of ACI and BAPCO included in the Paging Partners Proxy Statement
dated March 11, 1999. All material intercompany accounts and transactions
have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements
reflect all adjustments considered necessary by management to present
fairly the consolidated financial position as of March 31, 1999 and
December 31, 1998, and the consolidated results of operations and the
consolidated cash flows for the three month periods ended March 31, 1999
and 1998. The historical financial statements prior to March 31, 1999, are
those of ACI. ACI had no operating activities prior to the acquisition of
BAPCO on December 31, 1998. The statements of operations and of cash flows
for the three month period ended March 31, 1998 have been derived from the
audited financial statements of the Predecessor Company for such period.
The Predecessor Company financial statements include allocations of
certain Bell Atlantic Corporation ("Bell Atlantic") revenues and expenses.
Management believes that these allocations are reasonable. However, the
revenues and expenses allocated are not necessarily indicative of the
costs that would have been incurred if the Predecessor Company had
performed or procured these functions as a separate entity. All
adjustments reflected in the accompanying unaudited condensed consolidated
financial statements are of a normal recurring nature.
The results of operations for the respective interim periods are not
necessarily indicative of the results to be expected for the full year.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
Continued 6
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Notes to Condensed Consolidated Financial Statements, Continued
(Dollars in thousands, except for share information)
2. Merger Transaction:
On November 6, 1998, ACI entered into a merger agreement with Paging
Partners whereby each share of ACI common stock was to be exchanged for
88.92076 shares of Paging Partners' common stock (the "Merger"). The
Merger was consummated on March 31, 1999, and has been accounted for as a
recapitalization of the Company with ACI as the acquirer (reverse
acquisition) under the purchase method of accounting in accordance with
Accounting Principles Board ("APB") Opinion No. 16, "Business
Combinations." The aggregate purchase price of $6,071, which includes
transaction costs, has been allocated to the net assets acquired based
upon their estimated fair market values. The purchase price was determined
by using the average quoted stock price of Paging Partners a few days
before and after the date of the Merger agreement. Intangible assets of
approximately $4,400 (principally FCC licenses and customer lists) are
being amortized over three to ten years on a straight-line basis. The
assets and liabilities recorded in connection with the purchase price
allocation are based on preliminary estimates of fair value; actual
adjustments will be based on final analyses of fair values which are
currently in progress. Changes between preliminary and final purchase
price allocations are not expected to be material.
The following unaudited pro forma information presents a summary of the
combined results of operations of the Company and the Predecessor Company
as if the Predecessor Company Acquisition (see Note 3) and the Merger
occurred on January 1, 1998.
Predecessor
Company Company
---------------- ---------------
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
---------------- ---------------
Revenue $ 8,696 $ 8,616
Net loss $ (1,772) $ (1,669)
Net loss per common share (0.12)
The pro forma results are based on various assumptions and are not
necessarily indicative of what would have occurred had these transactions
been consummated on January 1, 1998.
3. Predecessor Company Acquisition:
On December 31, 1998, ACI acquired the net assets of BAPCO and the paging
frequencies and the paging network infrastructure owned by various Bell
Atlantic operating telephone companies for approximately $29,200,
including transaction costs. The acquisition was
Continued 7
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Notes to Condensed Consolidated Financial Statements, Continued
(Dollars in thousands, except for share information)
accounted for as a purchase in accordance with APB Opinion No. 16. The
aggregate purchase price was allocated to the net assets acquired based
upon their estimated fair market values.
Subsequent to the acquisition, Bell Atlantic and ACI commenced
negotiations regarding the assets acquired and liabilities assumed under
the terms of the sale agreement. These negotiations pertain to the
reimbursement to BAPCO and assumption by ACI of certain liabilities in
excess of amounts acknowledged by ACI. As a result, ACI recorded an
additional $1,100 in assumed liabilities, which represents management's
best estimate of the additional liabilities which will be assumed upon
completion of the negotiations. It is management's opinion that the
ultimate resolution of these claims will not have a material adverse
effect on the Company's financial position or the results of its
operations or cash flows.
4. Long-Term Debt:
On October 23, 1998, ACI entered into a five-year term loan agreement with
FINOVA Capital Corporation ("FINOVA") which provides a $30,000 facility
comprising the FINOVA loan of $20,000, a $500 loan for the Merger funded
at the Merger date (the "Merger Loan"), an additional loan in an amount
not to exceed $1,500 to be received at the request of ACI (the "Subsequent
Loan"), and an acquisition line of credit in an amount of $8,000, plus the
amount of the Subsequent Loan in excess of the amount used to pay the
scheduled $1,200 payment of principal on the note issued in connection
with the acquisition of BAPCO. The FINOVA loan has a term of five years at
an interest rate based on Citibank, N.A.'s corporate base rate plus 175
basis points. ACI may also elect to have interest on a part of the FINOVA
loan based on a LIBOR rate plus 425 basis points. The FINOVA loan is
collateralized by all property owned by the Company and after-acquired
property of ACI and all issued and outstanding capital stock and warrants,
options and other rights to acquire capital stock of ACI.
On January 4, 1999, ACI received $20,000 from FINOVA and on March 31, 1999
received the Merger Loan of $500. The loan agreement with FINOVA contains
various restrictive covenants that include restrictions on capital
expenditures and compliance with certain financial ratios.
5. Net Loss per Common Share:
The calculation of net loss per common share for the three month period
ended March 31, 1999 has not been reduced for the dilutive effects of
stock options since the result would be antidilutive.
8
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands)
On March 31, 1999 a wholly-owned subsidiary of the Company (then known as Paging
Partners Corporation ("Paging Partners")) merged with Aquis Communications, Inc.
("ACI") in a transaction accounted for as a reverse acquisition with ACI as the
accounting acquirer (see Note 2 to the condensed consolidated financial
statements). At such time, the Company changed its name to Aquis Communications
Group, Inc. ACI had no operating activities prior to the acquisition of the Bell
Atlantic paging business ("BAPCO" or the "Predecessor Company"), on December 31,
1998. See Note 3 to the condensed consolidated financial statements. The
historical financial statements prior to March 31, 1999 are those of ACI. The
financial statements for the three month period ended March 31, 1998 have been
derived from the audited financial statements of the Predecessor Company for
such period. See the columns denoted "ACI" and the "Predecessor Company"
representing the successor periods and predecessor periods, respectively, in the
statements of operations and of cash flows for the three month periods ended
March 31, 1999 and 1998, included in this report.
The results of operations of the Predecessor Company for the three month period
ended March 31, 1998 include certain revenues and expenses allocated by Bell
Atlantic Corporation and its affiliates ("Bell Atlantic"). The provision for
income taxes was allocated to the Predecessor Company as if it were a separate
taxpayer. Also, certain employee benefit costs were allocated based on employee
headcount. Accordingly, the results of operations and financial position of the
Predecessor Company may not be the same as would have occurred had the
Predecessor Company been an independent entity and operated by ACI management.
This discussion should be read in conjunction with the condensed consolidated
financial statements of the Company and the notes thereto.
General
The Company markets one-way paging service and equipment to customers directly
and through resellers. The Company also offers its customers both customer owned
and maintained equipment or lease options for equipment. See "Results of
Operations."
The Company derives its revenue primarily from fixed periodic fees for services
that are not generally dependent on usage. Consequently, the ability to recoup
initial selling and marketing costs and operating expenses and to achieve
profitability is dependent on the average length of each customer's subscription
period. As long as a subscriber continues to utilize the service, operating
results benefit from the recurring payment of the fixed fees without the
incurrence of additional selling expenses. Conversely, operating results are
adversely affected by customer disconnections. Each month a percentage of
existing customers have their service terminated for a variety of reasons,
including failure to pay, dissatisfaction with service, and switching to
competing service provider. The average monthly disconnection rates for the
three month period ended March 31, 1999 and 1998, were 2.7% and 2.5%,
respectively.
Continued 9
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands)
Approximately 95% of ACI's service revenue was attributable to fixed fees for
airtime, coverage options and features. A portion of the remainder was dependent
on usage.
Results of Operations
During the periods covered by this discussion, ACI and the Predecessor Company's
principal operations were regional one-way paging operations. The following
discussion of results of operations analyzes the results of these one-way paging
operations during such periods, unless otherwise indicated.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
The following table sets forth selected statement of operations data for ACI and
the Predecessor Company for the periods indicated:
Predecessor
ACI Company
-------------- --------------
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
-------------- --------------
(in thousands)
Revenues:
Paging services $ 6,294 $ 5,502
Equipment sales 128 641
-------------- --------------
6,422 6,143
Cost of paging services 1,471 1,038
Cost of equipment sales 258 613
Other operating expenses 5,106 4,285
-------------- --------------
(413) 207
Interest expense, net 929 --
-------------- --------------
Provision for income taxes -- 82
-------------- --------------
Net (loss) income $ (1,342) $ 125
============== ==============
Continued 10
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands)
Revenues
Revenues of $6,424 in the three months ended March 31, 1999 (the "current
period") increased by $281 over revenues of $6,143 in the three months ended
March 31, 1998 (the "prior period"). The increase in paging services revenues of
$792 was attributable to the increase in the customer base. The decrease in
revenues from equipment sales of $513 was due to a reduction in billings to
terminated customers for unreturned units, lower per-unit sale prices, and fewer
units sold due to a smaller sales force in the current period.
Cost of paging services
Cost of service consists principally of fees paid to third party carriers, and,
to a lesser extent, to message dispatch companies. This generally occurs when a
customer requires service outside of ACI's service area, including nationwide
coverage. The increase of $433 is attributable to customer growth, and an
increase in customer demand for services such as wide-area, nationwide,
alphanumeric, and message dispatch services. Management expects that the merger
with Paging Partners will significantly reduce ACI's use of third party carriers
with the exception of nationwide coverage and message dispatch services.
Cost of equipment sales
The decrease of $355 in the current period was primarily due to a decrease in
the number of units sold and, to a lesser extent, lower vendor prices. The
decrease in the gross profit margin in the current period is primarily due to
the Predecessor Company billing approximately $200 to terminated customers for
unreturned units.
Operating Expenses
Technical expenses, which include transmission site rentals, telephone
interconnect services and the costs of engineering, in the current period and
prior period were $688 million and $750, respectively. The elimination of Bell
Atlantic network allocations in 1998 was offset by external costs for
transmitter and terminal site rents, telephone company access charges, and
personnel costs in the current period.
Selling and marketing expenses in the current period and prior period were $832
and $983, respectively. This decrease of $151 resulted from a reduction in
salary, benefit and commission expense in 1999 as a result of a smaller sales
force, offset by an increase in print advertising expenses.
Continued 11
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands)
General and administrative expenses (including costs associated with customer
service, field administration and corporate headquarters) in the current period
and prior period were $1,358 and $1,352, respectively. General and
administrative expense remained consistent from the prior period to the current
period; however, the comparison of these expenses is not meaningful because the
Predecessor Company amounts were based on allocations to Bell Atlantic. This was
offset by increased salaries and benefits and facility charges in the current
period.
Depreciation and amortization in the current period and prior period were of
$1,973 and $983, respectively. The increase of $990 was primarily due to
depreciation and amortization on the assets acquired from the operating
telephone companies of Bell Atlantic, which are not reflected in the prior
period expense, and the amortization of intangible assets arising from the
acquisition of BAPCO.
Interest Expense
Interest expense in the current period of $929 primarily includes interest on
ACI's five year term loan with FINOVA Capital Corporation ("FINOVA") of
approximately $400, and $300 (including premiums) on letters of credit. The
Predecessor Company's operations were financed by its ultimate parent, and, as a
result, the prior period results do not reflect any financing charges.
Provision for Income Taxes
The provision for income taxes decreased by $82 in the current period as a
result of ACI's operating loss for book and tax purposes. During the prior
period, the Predecessor Company was included in the consolidated Federal and
certain combined state income tax returns of its parent. The provision for the
prior period has been calculated on a separate return basis.
Liquidity and Capital Resources
The following table sets forth the selected cash flow statement data for ACI and
the Predecessor Company for the periods indicated:
Predecessor
ACI Company
-------------- --------------
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
-------------- --------------
(in thousands)
Net cash provided by operating activities $ 2,560 $ 1,201
Net cash used in investing activities (19,097) (991)
Net cash provided by financing activities 19,187 494
-------------- --------------
Net change in cash $ 2,650 $ 704
============== ==============
Continued 12
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands)
The operations have historically required substantial capital investment for the
procurement of subscriber units. During 1998, this investment was funded by
BAPCO's ultimate parent, Bell Atlantic.
Net cash provided by operating activities for the current period and prior
period was $2,560 and $1,201, respectively. The increased operating cash flow in
the current period was a result of improved operating results from a larger
subscriber base.
Net cash used in investing activities for the current period consisted primarily
of $18,535 paid by ACI for the acquisition of the Predecessor Company. See Note
3 to the condensed consolidated financial statements. In addition, net cash paid
in the amount of $601 in the current period and $1,564 in the prior period were
for the purchase of capital assets, principally rental pagers.
Cash provided by financing activities in the amount of $19,187 in the current
period consisted primarily of $20,500 of financing received from FINOVA. Cash
provided by financing activities of $494 in the prior period resulted from
funding provided by Bell Atlantic.
Bell Atlantic used a centralized cash management system to finance its
operations and the operations of its subsidiaries. During 1998, cash deposits
from BAPCO's business were transferred to Bell Atlantic on a daily basis and
Bell Atlantic funded the BAPCO disbursement bank accounts as required.
Working capital, defined as current assets less current liabilities, as of March
31, 1999 and December 31, 1998 was ($44) and $1,014, respectively. The decrease
in working capital was primarily attributable to the current classification of
$1,250 of the note payable which matures on March 31, 2000.
In order to finance the acquisition of BAPCO, ACI entered into a five year term
loan agreement with FINOVA which provided a $30,000 facility. The term loan
agreement provides: 1) a $20,000 initial disbursement which was used for the
acquisition of BAPCO, 2) a $500 loan funded at the merger date, 3) an additional
loan, not to exceed $1,500 (the "Subsequent Loan"), which will primarily be used
to make the scheduled $1,200 payment of principal on the note payable to Bell
Atlantic, and 4) an acquisition line of credit of $8,000 plus the amount of the
Subsequent Loan which was not used for the aforementioned principal payment. If
the Company continues to make acquisitions, it will require additional sources
of financing.
Year 2000
Until recently, many computer programs were written using two digits as a space
saving measure rather than four digits to define the applicable year in the
twentieth century. Such software may recognize a date using "00" as the year
1900 rather than the year 2000. During 1998, BAPCO was
Continued 13
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands)
in the process of defining, assessing and converting various internal computer
programs and systems to ensure that these Information Technologies will be Year
2000 (Y2K) compliant. At December 31, 1998, ACI assumed all responsibility for
BAPCO's previously initiated Y2K efforts.
The Company has divided its Y2K efforts into two primary areas: its
administrative and network systems, and third party vendors.
The administrative and network systems consist of software and hardware systems
that were a combination of internally developed software and third party
software and hardware. ACI's approach has been to:
1. Create an inventory of items that must be assessed and prioritize the
items by how critical they are to the operations;
2. Assess their readiness through testing;
3. Plan and implement corrective actions; and
4. Develop contingency plans.
As of March 31, 1999, the Company had substantially completed the inventory and
prioritization of items. The Company plans to substantially complete testing in
the second quarter of 1999. The Company expects that critical hardware and
software systems will either be replaced or be Y2K ready by December 31, 1999.
The Company expects to develop contingency plans by September 30, 1999, to
mitigate, to the extent possible, the effects of any significant Year 2000
problem that is not corrected.
The Company has initiated communications with third party vendors to determine
that the vendors' operations and the products and services they provide are Y2K
compliant, and will attempt to mitigate its risks with respect to the failure of
vendors to be Y2K ready. In the event that these third parties are not Y2K
compliant, the Company will seek alternative sources of supplies. However, such
failures remain a possibility and could have an adverse impact on the Company's
results of operations or financial condition.
The total costs associated with required modifications to become Y2K compliant
are estimated to be $200. The total amount expended on Y2K remediation through
March 31, 1999 was $100, which related to the cost to repair software and
related hardware problems.
Continued 14
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands)
The above expectations are subject to uncertainties. For example, if the Company
is unsuccessful in identifying or fixing all Y2K problems in its critical
operations, or if the Company is affected by the inability of suppliers or major
customers to continue operations due to such a problem, the Company's results of
operations, liquidity, and financial condition could be materially impacted.
Seasonality
Pager usage is slightly higher during the spring and summer months, which is
reflected in higher incremental usage fees. Retail sales were subject to
seasonal fluctuations that affect retail sales generally. Otherwise, the results
were generally not significantly affected by seasonal factors.
Forward-looking Statements
Future revenues, costs, product mix and new product acceptance are all
influenced by a number of factors which are inherently uncertain and difficult
to predict. Therefore, no assurance can be given that financing for such
investments will be available. In addition, no assurance can be given that the
Company's operations will generate positive cash flows.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward-looking statements made by the Company's management
that are based on current expectations, estimates and projections about the
industries in which the Company operates and management's beliefs and
assumptions. In addition, other written or oral statements which constitute
forward-looking statements may be made by or on behalf of the Company. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," or various of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions
which are difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such forward-looking
statements. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Subsequent to the acquisition of BAPCO, ACI began to operate the paging
business, and its views and objectives of how to operate the business may differ
from those of BAPCO management.
15
<PAGE>
AQUIS COMMUNICATIONS GROUP, INC.
Item 4 - Quantitative and Qualitative Disclosures about Market Risk
(Dollars in thousands)
As of March 31, 1999, the Company had approximately $24,000 of floating-rate
debt outstanding. The Company's management believes the interest rate risk
represented by this debt is not material in relation to the market
capitalization of the Company.
The Company has not, and does not plan to, enter into any derivative financial
instruments for trading or speculative purposes. As of March 31, 1999, the
Company had no other significant material exposure to market risk.
16
<PAGE>
PART II OTHER INFORMATION
Item 6 Submission of Matters to a Vote of Security Holders.
(a) A Special Meeting of Shareholders (the "Meeting") was held on March
29, 1999.
(b) At the Meeting, the following persons were elected as directors:
Leonard D. Fink
Robert Davidoff
John X. Adiletta
Monte Engler
Patrick M. Egan
John B. Frieling
Michael Salerno
(c) The proposals voted upon, and the votes cast, were as follows:
1. To approve the merger (the "Merger") of Paging Partners Merger
Corporation, a wholly-owned subsidiary of the Issuer, with and
into Aquis Communications, Inc., to adopt the Agreement and
Plan of Merger, dated as of November 6, 1998, relating thereto
(the "Merger Agreement") and to approve consummation of the
transactions contemplated by the Merger Agreement.
FOR AGAINST ABSTAIN
--- ------- -------
4,112,282 0 0
2. To approve a change of the Issuer's name to Aquis
Communications Group, Inc. in the event that the Merger is
approved.
FOR AGAINST ABSTAIN
--- ------- -------
4,112,282 0 0
3. To approve an increase in the number of authorized shares of
the Issuer's common stock, in the event that the Merger is
approved.
FOR AGAINST ABSTAIN
--- ------- -------
4,077,416 10,350 0
4. To approve a potential one-for-eight reverse stock split, in
the event the Merger is approved, pursuant to which up to
every eight shares of the Issuer's common stock issued and
outstanding will become and be exchanged for one share of the
Issuer's common stock.
FOR AGAINST ABSTAIN
--- ------- -------
4,077,832 33,950 500
-17-
<PAGE>
5. To approve certain amendments to the Issuer's 1994 Incentive
Stock Option Plan, in the event that the Merger is approved.
FOR AGAINST ABSTAIN
--- ------- -------
4,071,232 35,200 5,850
6. Election of Directors:
FOR WITHHELD
--- --------
John X. Adiletta 3,746,229 0
John B. Frieling 3,746,229 0
Michael Salerno 3,746,229 0
Monte Engler 3,746,229 0
Patrick M. Egan 3,746,229 0
Leonard D. Fink 3,746,229 0
Robert Davidoff 3,746,229 0
7. To approve the transfer of substantially all of the Issuer's
assets to the surviving corporation in the Merger, in the
event the Merger is approved.
FOR AGAINST ABSTAIN
--- ------- -------
3,776,745 4,000 0
8. To ratify the appointment of Berenson & Company LLP as
independent public accountants for the Issuer for the fiscal
year ended December 31, 1998.
FOR AGAINST ABSTAIN
--- ------- -------
3,700,349 0 50,000
Item 5 Other Events.
Reference is made to the Issuer's Report on Form 8-K filed with the
Commission on April 15, 1999. A hearing before a Listing Qualification Panel
designated by Nasdaq was held on April 29, 1999 with respect to the Issuer's
request for continued listing on the Nasdaq SmallCap Market. The Issuer has not
yet received notice of the Panel's decision.
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits Included Within:
(4) Certificate of Amendment to Restated Certificate of
Incorporation of Paging Partners Corporation, filed March
31, 1999.
-17-
<PAGE>
(10.1) Asset Purchase Agreement, dated as of July 2, 1998, by and
among Bell Atlantic - Delaware, Inc., Bell
Atlantic-Maryland, Inc., Bell Atlantic - New Jersey, Inc.,
Bell Atlantic -Pennsylvania, Inc., Bell Atlantic-Virginia,
Inc., Bell Atlantic - Washington, D.C., Inc., Bell Atlantic
- West Virginia, Inc., Bell Atlantic Paging, Inc. and BAP
Acquisition Corp.
(10.2) Consent and Amendment No. 1 to Asset Purchase Agreement,
dated as of November 3, 1998 by and among Bell Atlantic -
Delaware, Inc., Bell Atlantic - Maryland, Inc., Bell
Atlantic New Jersey, Inc., Bell Atlantic - Pennsylvania,
Inc., Bell Atlantic - Virginia, Inc., Bell Atlantic -
Washington, D.C., Inc., Bell Atlantic - West Virginia,
Inc., Bell Atlantic Paging, Inc. and BAP Acquisition Corp.
(10.3) Amendment Agreement, dated as of December 31, 1998, by and
between Aquis Communications, Inc. (f/k/a/ BAP Acquisition
Corp.) and Bell Atlantic Paging, Inc.
(10.4) Guarantee of Cellco Partnership (dba, Bell Atlantic Mobile)
for the Benefit of BAP Acquisition Corp., dated as of
December 31, 1998.
(10.5) Assumption Agreement, dated as of December 31, 1998, by and
among Aquis Communications, Inc. (f/k/a/ BAP Acquisition
Corp.), Bell Atlantic - Delaware, Inc., Bell-Atlantic -
Maryland, Inc., Bell Atlantic - New Jersey, Inc., Bell
Atlantic-Pennsylvania, Inc., Bell Atlantic - Virginia,
Inc., Bell Atlantic - Washington, D.C. Inc., Bell Atlantic
- West Virginia, Inc. and Bell Atlantic Paging, Inc.
(10.6) Reseller Agreement, dated as of December 31, 1998, by and
between Aquis Communications, Inc. (f/k/a BAP Acquisition
Corp.) and Cellco Partnership (dba Bell Atlantic Mobile).
(10.7) License Agreement, dated December 31, 1998, by and between
Bell Atlantic Network Services, Inc. for and on behalf of
Bell Atlantic - Delaware, Inc., Bell Atlantic - Maryland,
Inc., Bell Atlantic - New Jersey, Inc., Bell Atlantic -
Pennsylvania, Inc., Bell Atlantic -Virginia, Inc., Bell
Atlantic - Washington, D.C., Inc. and Bell Atlantic - West
Virginia, Inc. and Aquis Communications, Inc. (f/k/a/ BAP
Acquisition Corp.).
(10.8) Secured Promissory Note, dated December 31, 1998, of Aquis
Communications, Inc. (f/k/a BAP Acquisition Corp.) in the
original principal amount of $4,150,000.
(10.9) Subordination Agreement, dated as of December 31, 1998, by
and between Aquis Communications, Inc. (f/k/a BAP
Acquisition Corp.), Bell Atlantic Paging, Inc. and FINOVA
Capital Corp.
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Issuer filed a report on Form 8-K with respect to the business
combination of Paging Partners Corporation and Aquis Communications,
Inc. on April 15, 1999.
-18-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized:
Signature Title Date
- --------- ----- ----
/s/ D. Brian Plunkett Chief Financial and Accounting Officer May 17, 1999
- ---------------------
D. Brian Plunkett
-19-
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 03/31/1999
991125912 -- 2379274
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
PAGING PARTNERS CORPORATION
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
PAGING PARTNERS CORPORATION (hereinafter called the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
1. That Article FIRST of the Amended and Restated Certificate of
Incorporation of the Corporation dated as of March 13 1994 (the "Restated
Certificate of Incorporation"), shall be amended by deleting such Article in its
entirety and replacing it with the following:
"FIRST: NAME.
The name of the corporation is Aquis Communications Group,
Inc. (hereinafter referred to as the "Corporation")."
2. That Article FOURTH, Section 1 of the Restated Certificate of
Incorporation shall be amended by deleting such Section 1 in its entirety and
replacing it with the following:
"Section 1. Authorized Capital. The total number of shares of
shares of all classes of capital stock which the Corporation shall
have authority to issue is 30,000,000, of which 29,000,000 shares
shall be common stock of the par value of $.0l per share (the
"Common Stock") and 1,000,000 shares shall be preferred stock of the
par value of $.01 per share (the "Preferred Stock").
3. That Article FIFTH, Section 2 of the Restated Certificate of
Incorporation shall be amended by deleting the first paragraph of such Section 2
and replacing it with the following:
<PAGE>
"Section 2. Classification. The Board of Directors shall be
divided into three classes, as nearly equal in number as the then
total number of directors constituting the whole board permits, with
the term of office of one class expiring each year. Notwithstanding
anything herein or in the Corporation's By-Laws to the contrary,
commencing on the effective date of this Certificate of Amendment,
and in accordance with a resolution adopted by the Board of
Directors consistent with the terms of a certain Agreement and Plan
of Merger by and among Aquis Communications, Inc., the Corporation
and Paging Partners Merger Corporation dated as of November 6, 1998
(the "Merger Agreement"), the Board of Directors shall be
reconstituted and reclassified with directors of the first class
holding office for a term expiring at the next succeeding annual
meeting, directors of the second class holding office for a term
expiring at the second succeeding annual meeting and directors of
the third class holding office for a term expiring at the third
succeeding annual meeting. Subject to the foregoing, at each annual
meeting of stockholders, the successors to the class of directors
whose term shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting, and each
director so elected shall hold office until his or her successor is
elected and qualified, or until his or her earlier resignation or
removal."
4. That Article FIFTH, Section 3 of the Restated Certificate of
Incorporation shall be amended by deleting such Section 3 and replacing it with
the following:
"Section 3. Vacancies. Newly created directorships (other than
newly created directorships resulting from the resignation of
members of the Board of Directors in connection with the terms of
the Merger Agreement), resulting from death, resignation, increase
in the size of the Board of Directors, retirement, disqualification,
removal from office or other cause, may be filled by a majority vote
of the remaining directors then in office, although less than a
quorum, or by the sole remaining director, and each director so
chosen shall hold office fix a term expiring at the annual meeting
of stockholders at which the term of the class to which he or she
has been elected expires and until such director's successor shall
have been duly elected and qualified. No decrease in the authorized
number of directors shall shorten the term of any incumbent
director."
5. That a resolution was duly adopted at a duly called and held meeting of
the Board of Directors of the Corporation, pursuant to Section 242 of the
General Corporation Law of the State of Delaware setting forth the
above-mentioned amendments to the Restated Certificate of Incorporation and
declaring said amendment to be advisable. The stockholders of the
<PAGE>
Corporation duly approved said proposed amendments at a Special Meeting of
Stockholders of the Corporation in accordance with Sections 222 and 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on this 31st day of March, 1999.
PAGING PARTNERS CORPORATION
By: /s/ Richard J. Giacchi
-------------------------------
Name: Richard J. Giacchi
Title: President
Exhibit 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of
_________, 1998, by and among BELL ATLANTIC - DELAWARE, INC., a Delaware
corporation ("BA-DE"), BELL ATLANTIC - MARYLAND, INC., a Maryland corporation
("BA-MD"), BELL ATLANTIC - NEW JERSEY, INC., a New Jersey corporation ("BA-NJ"),
BELL ATLANTIC - PENNSYLVANIA, INC., a Pennsylvania corporation ("BA-PA"), BELL
ATLANTIC - VIRGINIA, INC., a Virginia corporation ("BA-VA"), BELL ATLANTIC -
WASHINGTON, D.C., INC., a New York corporation ("BA-DC"), and BELL ATLANTIC -
WEST VIRGINIA, INC., a West Virginia corporation ("BA-WV"; BA-DE, BA-MD, BA-NJ,
BA-PA, BA-VA, BA-DC and BA-WV shall each be referred to from time to time as an
"OTC" and collectively as the "OTCs"); BELL ATLANTIC PAGING, INC., a Delaware
corporation ("BAPCO"; each of the OTCs and BAPCO shall be referred to from time
to time as a "Seller" and collectively as "Sellers"); and BAP ACQUISITION CORP.,
a Delaware corporation ("Buyer"; each of Buyer and Sellers shall be referred to
from time to time as a "Party" and collectively as the "Parties").
RECITALS
This Agreement is entered into in recognition of the following facts and
circumstances:
A. The OTCs hold certain licenses from the Federal Communications
Commission (the "FCC") for the provision of one-way paging service, and own or
lease one-way paging transmission facilities and equipment that they use to
provide such services. BAPCO is in the business of selling and renting one-way
pagers and providing one-way paging services to customers (the "BAPCO Paging
Business") and is a reseller of services provided by various facilities based
paging carriers and related paging service providers (the BAPCO Paging Business
together with such resale business shall be referred to as the "Paging
Business").
B. Buyer wishes to purchase from the Sellers, and Sellers wish to sell,
transfer, assign and convey to Buyer, the OTC Assets (as defined in Section
1.1.1) and substantially all of BAPCO's right, title and interest in and to its
assets and the Paging Business, upon the terms and conditions set forth in this
Agreement.
In consideration of the premises, and of the mutual promises and
agreements herein contained, and intending to be legally bound, the Parties
hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS
1.1 The Purchased Assets.
1.1.1 OTC Assets. Upon the terms and subject to the conditions
contained herein, at the Closing (as defined in Section 2.1) the OTCs shall
grant, sell, convey, assign, transfer and deliver to Buyer, free and clear of
all Liens (as defined in Section 9.12) except for
<PAGE>
Asset Purchase Agreement
Permitted Liens (as defined in Section 9.12), all of the following assets,
properties and rights of the OTCs and no others (collectively, the "OTC
Assets"):
(a) All right, title and interest of the OTCs in and to the
FCC licenses listed on Schedule 1.1.1(a) (the "FCC Licenses"), any
authority derived from the FCC Licenses for fill-in sites associated
therewith, which sites are also listed on Schedule 1.1.1(a), and any
authority held by the OTCs with respect to the 157.89 MHz frequency
associated with the 152.63 MHz frequency;
(b) All right, title and interest of the OTCs as of the
Closing Date in and to (i) the Equipment (as defined in Section 3.1.3),
(ii) the spare parts (the "Spare Parts" and maintenance manuals for the
Equipment, (iii) any and all rights of the OTCs under warranties covering
such Equipment and parts, and (iv) all contracts for maintenance or
servicing of the Equipment (all such contracts are listed on Schedule
1.1.1(b)) (the "Service Contracts");
(c) All rights of the OTCs as of the Closing Date under the
leases, licenses and easements for land, buildings and/or towers on which
Equipment is located listed on Schedule 1.1.1(c) (the "Site Leases");
(d) All rights of BA-VA as of the Closing Date under that
certain Agreement among BA-VA, The Beeper Company, Clifton Forge -
Waynesboro Telephone Company, Shenandoah Mobile Company and BAPCO executed
May 21, 1990 (the "Beeper Company Contract"); and
(e) All rights of BA-WV as of the Closing Date under its
contracts with customers for the provision of paging services; as of the
date hereof, such customers are: (i) Federal Bureau of Investigation, (ii)
Sheryl McNeive, (iii) Griffin Electric and (iv) Griffin Construction (the
"WV Customer Contracts").
1.1.2 BAPCO Assets. Upon the terms and subject to the conditions
contained herein, at the Closing BAPCO shall grant, sell, convey, assign,
transfer and deliver to Buyer, free and clear of all Liens except for Permitted
Liens, all of its right, title and interest in and to all of the assets,
properties, rights, contracts and claims used by BAPCO in the Paging Business
other than the Excluded Assets (as defined in Section 1.1.3), as the same shall
exist on the Closing Date (the "BAPCO Assets"; the OTC Assets and the BAPCO
Assets shall be referred to collectively as the "Purchased Assets"), including
without limitation the following:
(a) All rights of BAPCO as lessee under its leases for retail
and office space;
(b) All rights of BAPCO as lessee under its personal property
leases;
(c) All of BAPCO's accounts receivable from customers (and any
causes of action relating to such receivables) excluding "Accounts
Receivable - Affiliates"
-2-
<PAGE>
Asset Purchase Agreement
as determined for purposes of BAPCO's regularly prepared financials (the
"Trade Receivables");
(d) All of BAPCO's right, title and interest in and to all
furniture, furnishings, fixtures, computers and other office equipment and
supplies located on its leased premises (the "Fixed Assets"), including,
without limitation, the computer hardware listed on Schedule 1.1.2(d)
hereto;
(e) All rights of BAPCO under any and all oral and written
agreements, arrangements, licenses, leases, instruments, obligations,
customer contracts, vendor contracts and purchase and sale orders,
including without limitation agreements for the resale of wireless
messaging services, agreements for pager rental, service, maintenance or
loss protection, and that certain Software License Agreement dated March
30, 1993 (the "CSI 1993 License"), between BAPCO and Communications
Software, Inc. ("CSI"), as amended by First Amendment to Software License
Agreement dated August 16, 1994 (the "CSI Amendment"; the CSI 1993 License
together with the CSI Amendment shall be referred to as the "CSI
License");
(f) BAPCO's inventory of pagers held by BAPCO for the purpose
of resale or leasing to customers (the "Pager Inventory"), and all pagers
under lease by BAPCO to customers (the "Leased Pagers") or formerly under
lease by BAPCO to customers which have been disconnected but have not yet
been picked up by or returned to BAPCO (the "Disconnected Pagers"; the
Pager Inventory, Leased Pagers and Disconnected Pagers shall be referred
to collectively as the "Pagers");
(g) All books, records and customer lists relating to the
Paging Business, other than those relating to Excluded Assets or Retained
Liabilities (to the extent they so relate) (the "Books and Records");
(h) BAPCO's rights to any security and utility deposits of
BAPCO held by third parties relating to the BAPCO Assets;
(i) BAPCO's rights to its bank account at First National Bank
and to use the post office box number it currently uses through First
National Bank, which collectively currently serve as the lock box accounts
for the Paging Business;
(j) BAPCO's rights to the Telephone Number Inventory (as
defined in Section 3.2.13) and to its office telephone and other utility
services, including the 1-800-BEEP-NOW telephone number; and
(k) All of BAPCO's rights in and to the BAPCO Modifications
(as defined in Section 6.12).
1.1.3 Excluded Assets. Notwithstanding anything to the contrary
herein, BAPCO is not granting, selling, conveying, assigning, transferring or
delivering to Buyer, and Buyer is not purchasing, any of BAPCO's right, title
and interest in and to the following assets
-3-
<PAGE>
Asset Purchase Agreement
(the properties, assets and rights excluded by this Section 1.1.3 or otherwise
excluded by the terms of this Agreement constitute the "Excluded Assets"):
(a) All cash on hand and in financial institutions, cash
equivalents, marketable securities and bonds;
(b) "Accounts Receivable - Affiliates" as determined for
purposes of BAPCO's regularly prepared financials;
(c) Any tax credit or tax refund;
(d) All rights of BAPCO to the Bell Atlantic and Bell Atlantic
Paging names, marks and logos, and all other marks and other intellectual
property owned by Bell Atlantic Corporation or any of its Affiliates
(other than BAPCO) where BAPCO has a right to use such mark or other
intellectual property only by virtue of being an Affiliate of Bell
Atlantic Corporation or such other Affiliate of Bell Atlantic Corporation;
(e) Consideration paid to, and the other rights that accrue or
will accrue for the benefit of, BAPCO under this Agreement;
(f) Corporate minute books, stock certificate books, stock
registers, tax returns, books of account and other records having to do
with the corporate organization of BAPCO;
(g) Books and records (i) produced under FCC or state Laws
governing public utility affiliate transactions or (ii) relating to
Cellco's (as defined in Section 5.1.4) overhead costs;
(h) Insurance proceeds payable on account of casualty or
liability claims for which BAPCO may seek recovery under its existing
insurance policies;
(i) Any assets of any BAPCO Benefit Plan (as defined in
Section 3.2.7) or book accruals relating to any BAPCO Benefit Plan;
(j) Any contracts for borrowed money and all contracts and
arrangements with Affiliates of BAPCO including without limitation those
listed on Schedule 1.1.3 (collectively, the "Retained Contracts"); and
(k) The other assets, properties and rights listed on Schedule
1.1.3.
-4-
<PAGE>
Asset Purchase Agreement
1.2 Consideration.
1.2.1 Amount of Consideration. In full consideration for the
Purchased Assets and other covenants and agreements made herein, Buyer shall (a)
assume the liabilities and obligations described in Section 1.3, (b) fulfill its
obligation under Section 9.2 to pay certain taxes to the Sellers and (c) pay to
Sellers Twenty Eight Million Dollars ($28,000,000), adjusted as follows (the
"Purchase Price"):
(a) decreased by the amount, if any, by which "Trade Accounts
Payable" of BAPCO (as determined for purposes of BAPCO's regularly
prepared financial statements) exceed Trade Receivables as of the Closing
Date (the "Trade Adjustment");
(b) increased by an amount equal to the total amount of
BAPCO's security and utility deposits held by third parties as of the
Closing Date and related to the BAPCO Assets; and
(c) decreased by an amount equal to the difference between (i)
the aggregate accrued vacation pay benefits of the Transferred Employees
as of the Closing Date and (ii) the aggregate vacation pay benefits
actually used by the Transferred Employees as of the Closing Date.
1.2.2 The Deposit. On the date hereof, Buyer is depositing $500,000
(the "Deposit") into an interest bearing escrow account pursuant to the Deposit
Escrow Agreement among Buyer, BAPCO and the Escrow Agent named therein dated as
of the date hereof (the "Deposit Escrow Agreement"). The Deposit shall be
disbursed to the Sellers at Closing in accordance with Section 1.2.4, or shall
be otherwise disbursed upon termination of this Agreement in accordance with
Section 8.1 and the terms of the Deposit Escrow Agreement.
1.2.3 Estimated and Final Purchase Price.
(a) Using the latest available financial reports prepared in the
ordinary course of the Paging Business, BAPCO shall deliver in writing to
Buyer, no later than five business days prior to the Closing Date, its
good faith estimate of the amount of the Purchase Price (the "Estimated
Purchase Price"), setting forth in reasonable detail BAPCO's calculation
thereof. The Parties shall agree in good faith to the final Purchase Price
prior to the Closing; provided, however, that the failure to so agree
shall not preclude the Closing, and in such event the Buyer shall make
payment at the Closing of the Estimated Purchase Price, and there shall be
a post-Closing adjustment pursuant to subsection (b) below.
(b) If the Parties have not agreed upon the final Purchase Price on
the Closing Date, they shall attempt to reach such agreement within 14
days following the Closing Date. If they fail to so agree, then either
BAPCO or Buyer shall have the right to refer the matter to the New York
office of Deloitte & Touch (the "Accounting Firm") to review BAPCO's
calculation of the Estimated Purchase Price and Buyer's objections
thereto, which Buyer shall set forth in reasonable detail and provide in
writing to Buyer and the
-5-
<PAGE>
Asset Purchase Agreement
Accounting Firm. The Accounting Firm shall be directed to review BAPCO's
calculation of the Purchase Price and Buyer's objections thereto and to
notify the Parties in writing of its determination of the Purchase Price
within 45 days after the commencement of its review, and of the bases for
its determination. The Accounting Firm's determination of the Purchase
Price shall be final and binding, absent fraud or manifest error. The
reasonable fees and expenses of the Accounting Firm shall be paid 50% by
BAPCO and 50% by Buyer, unless the adjustment made to the Estimated
Purchase Price is an amount greater than $1,000,000, in which case the
Party (Sellers or Buyer, as applicable) disfavored by the adjustment shall
pay 100% of such fees and expenses. If the Purchase Price as determined by
the Accounting Firm is greater than the Estimated Purchase Price, Buyer
shall pay BAPCO the difference in cash within 14 days after the Parties
are notified of such determination, and if such Purchase Price is less
than the Estimated Purchase Price, BAPCO shall return the difference to
Buyer in cash within such period.
1.2.4 Payment of Purchase Price; Escrow Amount. At the Closing, the
Buyer shall pay the Purchase Price to Sellers as follows:
(a) Buyer shall pay at the Closing the Purchase Price less
$6,050,000 to Sellers by wire transfer of immediately available funds to
one or more accounts designated by Sellers in writing no later than five
business days prior to the Closing Date.
(b) Buyer shall give notice to the Escrow Agent under the
Deposit Escrow Agreement instructing such Escrow Agent that the Closing
has occurred and directing such Escrow Agent to disburse the Deposit,
together with all earnings accrued thereupon, to Sellers.
(c) Buyer shall deposit at the Closing $1,400,000 of the
Purchase Price by wire transfer of immediately available funds into an
interest bearing escrow account pursuant to an escrow agreement dated as
of the Closing Date in substantially the form attached hereto as Exhibit A
(the "Indemnity Escrow Agreement").
(d) Buyer shall deliver at the Closing to holders designated
by Sellers one or more notes in the aggregate principal amount of
$4,150,000, each in substantially the form attached hereto as Exhibit B
(collectively, the "Promissory Note").
1.2.5 Purchase Price Allocation. The Parties agree to allocate the
Purchase Price among the Purchased Assets and the customer non-solicitation
agreement described in Section 6.2 for all purposes (including financial
accounting and tax purposes) in accordance with Schedule 1.2.5.
1.3 Assumption of Liabilities by Buyer. At the Closing, subject to Section
1.7, Buyer shall accept and assume, and thereafter be fully responsible for and
perform, pay or otherwise discharge, in accordance with the respective terms and
subject to the respective conditions thereof, all of the liabilities and
obligations of the OTCs under the Service Contracts, the Site Leases, the Beeper
Company Contract and the WV Customer Contracts and only those liabilities
-6-
<PAGE>
Asset Purchase Agreement
and obligations of the OTCs, and the following, and only the following,
liabilities and obligations of BAPCO (collectively, the "Assumed Liabilities"):
(a) All liabilities and obligations of BAPCO, whether fixed or
contingent, known or unknown, or matured or unmatured, arising under
agreements, arrangements, contracts, licenses, leases, instruments,
obligations, customer contracts, vendor contracts and purchase and sale
orders relating to the Paging Business or the Purchased Assets and entered
into prior to the Closing Date, including without limitation agreements
for the resale of wireless messaging services and agreements for pager
rental, service, maintenance or loss protection (other than Retained
Contracts);
(b) All liabilities and obligations of BAPCO reflected on the
Balance Sheet in the line items included in "Total Current Liabilities",
other than the following line items: (i) "Accrued Expenses" (excluding
Inventory Accruals (as defined below), which shall be Assumed
Liabilities), (ii) "Accounts Payable-Affiliates", (iii) "Accrued Payroll
Payables", and (iv) "Accrued Taxes Payable", each as modified or changed
between the Balance Sheet Date (as hereinafter defined) and the Closing
Date in the ordinary course of business without violation of Section 4.3;
"Inventory Accruals" means liabilities and obligations of BAPCO for pagers
in inventory for which BAPCO has not yet processed the related bills as
reflected on BAPCO's regularly prepared schedules to support its trial
balances; and
(c) Certain liabilities with respect to employees, as
specified in Section 6.1;
provided that Assumed Liabilities shall not include obligations or liabilities
that are Retained Liabilities (as defined below).
1.4 Retained Liabilities. Notwithstanding any other provision of this
Agreement, except to the extent expressly assumed by Buyer pursuant to Section
1.3, Buyer shall not assume or otherwise be responsible for or be bound by, and
Sellers shall remain responsible for, any liabilities or obligations of the
respective Sellers of any kind or nature, known or unknown, actual or
contingent, matured or unmatured, liquidated or unliquidated, or otherwise,
arising out of occurrences on or prior to the Closing Date (the "Retained
Liabilities"), which include, without limitation:
(a) Any obligation or liability of any Seller under this
Agreement;
(b) Any liability or obligation of any Seller with respect to
(i) Loan Documents (as defined in Section 3.2.3) and indebtedness for
borrowed money or (ii) any taxes (except as provided in Section 9.2);
(c) Any liability or obligation of BAPCO under the Retained
Contracts;
(d) Any fees payable by BAPCO to Daniels & Associates, L.P. as
a result of the transactions contemplated by this Agreement;
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(e) The "FSI Advance" as determined for purposes of BAPCO's
regularly prepared financials;
(f) Any liability of any Seller to or in respect of any
employees or former employees of any Seller (except as specifically
provided in Section 6.1), including, without limitation, (i) any liability
under any BAPCO Benefit Plan (as defined in Section 3.2.7) at any time
maintained, contributed to or required to be contributed to, by or with
respect to Sellers, including any liability with respect to the
termination or partial termination of any BAPCO Benefit Plan, or (ii) any
claim of unfair labor practice, or any claim under wage or hour laws, or
any state unemployment compensation or worker's compensation law or
regulation or under any federal or state employment discrimination law or
regulation; and
(g) Any liabilities not incurred in the ordinary and usual
course of business and consistent with past practice since the Balance
Sheet Date (as defined in Section 3.2.10) and not approved by Buyer
pursuant to Section 4.3 hereof.
1.5 FCC Consent to Assignment of Licenses. NOTWITHSTANDING ANYTHING HEREIN
TO THE CONTRARY, THE TERMS AND CONDITIONS OF THIS AGREEMENT ARE SUBJECT TO ONE
OR MORE ORDERS OF THE FCC PRIOR TO CLOSING APPROVING THE TRANSFER OF CONTROL OF
ALL OF THE FCC LICENSES (AS DEFINED IN SECTION 1.1.1(a)) FROM THE OTCS TO BUYER.
1.6 State Public Utility Commission Consent. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, THE TERMS AND CONDITIONS OF THIS AGREEMENT ARE SUBJECT
TO ONE OR MORE ORDERS OF ANY STATE PUBLIC UTILITY COMMISSION HAVING JURISDICTION
IN THE MATTERS CONTEMPLATED BY THIS AGREEMENT AUTHORIZING THE ASSIGNMENT OF THE
OTC ASSETS PROVIDED FOR HEREIN AND THE ISSUANCE OF ANY REQUISITE AUTHORITY FOR
THE SELLERS TO CEASE AND THE BUYER TO COMMENCE THE PROVISION OF PAGING SERVICE.
1.7 Third Party Consents.
(a) If Sellers are unable to obtain, prior to the Closing Date, the
consent of any third party listed on Schedule 3.1.7 required to assign all or
any portion of any agreement, arrangement, contract, license, easement, lease,
instrument, obligation, customer contract, warranty, vendor contract or purchase
or sale order ("Contract") to Buyer hereunder, for each such Contract:
(i) At Sellers' option, which Sellers shall communicate in
writing to Buyer at least five days prior to the Closing, this Agreement
will nevertheless constitute and be deemed to be an assignment of and
agreement to assign the applicable Seller's rights under such Contract and
an assumption by Buyer of and agreement by Buyer to assume such Seller's
obligations under such Contract.
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(ii) With respect to any such Contract for which Sellers do
not make the election referred to in clause (i) above, Sellers agree that
for a period of one year following the Closing Date they (a) will
cooperate with Buyer in any reasonable arrangement requested by Buyer in
writing to provide Buyer with the benefits of any such Contract at Buyer's
expense and (b) if requested by Buyer in writing (which request may be
revoked by Buyer in writing prior to the time the relevant consent is
obtained), will continue to use commercially reasonable efforts (which
shall not include the payment of any sums of money) to obtain such
consents, and the Parties agree that notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an
assignment of or agreement to assign any Seller's rights under all or any
portion of such Contract, or an assumption of or agreement to assume any
Seller's obligations under all or any portion of such Contract, until such
time (if ever) as the required consent has been received. Any such failure
to obtain such a consent under any such Contract shall not constitute a
breach of any representation or warranty of any Seller hereunder.
(b) It is understood and agreed that the only third party consents,
authorizations or approvals which are conditions precedent to the obligations of
Buyer to consummate the transactions contemplated by this Agreement are the
consents, authorizations and approvals specified in Section 5.1.3 and the
consent of CSI to the assignment of the CSI License to Buyer.
1.8 BAPCO Reseller Agreements.
(a) BAPCO is a party to each of the agreements listed under the
heading "BAPCO Reseller Agreements" on Schedule 3.2.3 hereto under which third
parties ("Resellers") resell BAPCO paging services (the "BAPCO Reseller
Agreements"). Between the date hereof and the Closing Date, BAPCO shall notify
each of the Resellers in writing (i) of the contemplated transaction with Buyer,
(ii) that effective the Closing Date BAPCO shall assign all of its rights under
the respective BAPCO Reseller Agreement to Buyer and Buyer shall assume BAPCO's
obligations thereunder, (iii) that effective the Closing Date (or such date when
Reseller receives notice from BAPCO or Buyer that the Closing has occurred)
Reseller must cease any use of the Bell, Bell Atlantic, Bell Atlantic Mobile,
Bell Atlantic Paging and OTC marks, names, symbols and logos, and (iv) that
should the Closing not occur, the applicable BAPCO Reseller Agreement shall
continue in effect in accordance with its terms.
(b) Should a Reseller not consent to BAPCO's assignment to Buyer of
its BAPCO Reseller Agreement (if consent is required pursuant to the terms of
the applicable BAPCO Reseller Agreement), or assert that its consent to BAPCO's
assignment to Buyer of its BAPCO Reseller Agreement is required under such
Reseller Agreement and that it will not grant such consent without compensation
or otherwise will not cooperate with BAPCO and Buyer, BAPCO and Buyer agree to
use commercially reasonable efforts to cause such Reseller to consent or
otherwise cooperate. For purposes of this Section 1.8 only, "commercially
reasonable efforts" shall include payments by BAPCO, but not by Buyer, to
Resellers of commercially reasonable sums, not to exceed, for each Reseller, the
amount required to be paid by BAPCO to such
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Reseller for paging receivers and subscriber lines as a result of a termination
of the applicable BAPCO Reseller Agreement.
(c) In the event, notwithstanding the foregoing, a Reseller does not
grant such consent or otherwise cooperate and the applicable BAPCO Reseller
Agreement is terminable by BAPCO between the time when it becomes reasonably
evident that such Reseller is not going to grant such consent or cooperate and
the Closing Date, BAPCO shall terminate such BAPCO Reseller Agreement in
accordance with its terms, and upon such termination BAPCO shall purchase the
paging receivers and subscriber lines underlying such BAPCO Reseller Agreement
and any paging receivers and subscriber lines so purchased by BAPCO from
Reseller shall automatically become Purchased Assets. In the event a Reseller
does not grant such consent or otherwise cooperate and the applicable BAPCO
Reseller Agreement is not terminable by BAPCO during such time frame, then:
(A) BAPCO and Buyer agree that, notwithstanding anything
to the contrary in this Agreement, this Agreement shall not constitute an
assignment of or agreement to assign BAPCO's rights under all or any
portion of such BAPCO Reseller Agreement, or an assumption of or agreement
to assume BAPCO's obligations under all or any portion of such BAPCO
Reseller Agreement, until such time (if ever) as the required consent has
been received, and neither any such failure to obtain such a consent under
any such BAPCO Reseller Agreement nor the failure to list such BAPCO
Reseller Agreement on Schedule 3.7 hereto shall constitute a breach of any
representation or warranty of BAPCO hereunder, and
(B) BAPCO either shall remain a party to such BAPCO
Reseller Agreement or shall assign it to Cellco, and Buyer shall sell to
BAPCO or Cellco, as the case may be, at the prices provided for in or
pursuant to such BAPCO Reseller Agreement, and BAPCO or Cellco, as the
case may be, shall have the right to resell and shall resell, Buyer's
paging services to Reseller (without charge to Buyer, provided that Buyer
shall be responsible for providing support to such Reseller to the extent
appropriate under the BAPCO Reseller Agreement) until such time as such
BAPCO Reseller Agreement becomes terminable by BAPCO or Cellco, as the
case may be, at which time (and at any time thereafter that such BAPCO
Reseller Agreement is terminable) BAPCO or Cellco, as the case may be,
shall, at its option, either (x) terminate such BAPCO Reseller Agreement
in accordance with its terms, and upon such termination BAPCO shall
purchase the paging receivers and subscriber lines underlying such BAPCO
Reseller Agreement and any paging receivers and subscriber lines so
purchased by BAPCO from Reseller shall automatically become Purchased
Assets, or (y) continue to resell Buyer's services to Reseller thereunder.
In the event a BAPCO Reseller Agreement is transferred to Buyer after the
Closing Date pursuant to the provisions of this Section 1.8(c), BAPCO or Cellco,
as the case may be, shall be deemed to make the representation contained in
Section 3.2.3 with respect to such BAPCO Reseller Agreement as of the date of
such transfer.
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(d) In the event BAPCO or Cellco acts as a reseller of Buyer's
paging services in accordance with subsection (c) above, neither BAPCO nor
Cellco shall be deemed to be an employee or agent of Buyer; Buyer shall be
responsible for billing such Resellers for post-Closing services and directing
that payment be made to Buyer's account, provided that BAPCO or Cellco, as the
case may be, shall promptly remit to Buyer all amounts which may be paid by
Reseller to BAPCO or Cellco for post-Closing services under such BAPCO Reseller
Agreement; and Buyer shall provide BAPCO or Cellco, as the case may be, with the
services necessary for BAPCO or Cellco to perform its obligations under such
BAPCO Reseller Agreement. In the event a Reseller fails to make payment for the
paging services sold to such Reseller, BAPCO or Cellco, as the case may be,
shall at Buyer's option either (x) take commercially reasonable steps, at
Buyer's expense, to obtain payment therefor, or (y) assign the unpaid
receivables to Buyer so that Buyer may itself undertake collection efforts.
BAPCO or Cellco, as the case may be, shall provide Buyer with a monthly
accounting of the services sold to each Reseller and of any payments received by
BAPCO or Cellco therefor since the last such accounting.
(e) Buyer and BAPCO shall cooperate in good faith to minimize any
amounts to be paid to Resellers by BAPCO under this Section 1.8 and shall keep
the agreements in this Section 1.8 regarding such payments in strict confidence.
ARTICLE II
CLOSING
2.1 Closing. The closing ("Closing") of the transactions contemplated by
this Agreement shall take place at a location mutually convenient to the Parties
as soon as practicable (but not later than one month) after the satisfaction or
waiver of the conditions to the Parties' obligations to proceed with the Closing
as set forth in Sections 5.1.3, 5.2.3 and 5.2.6, provided that the other
conditions to the Parties' obligations to proceed with the Closing as set forth
in Article V shall have been satisfied or waived. The date of the Closing is
sometimes herein referred to as the "Closing Date". All transactions at the
Closing shall be deemed to have taken place simultaneously at the opening of
business on the Closing Date.
2.2 Items to be Delivered at Closing. At the Closing and subject to the
terms and conditions herein set forth:
(a) Sellers shall deliver to Buyer one or more bills of sale and
assignment and other such assignments, endorsements, and other good and
sufficient instruments and documents of conveyance and transfer (collectively,
"Assignment Documents"), in form reasonably satisfactory to Buyer and its
counsel, which shall be effective to vest in Buyer good and valid title (to the
extent the concept of good and valid title applies to the type of Purchased
Asset) to the Purchased Assets;
(b) Buyer shall make the payments, deposits and deliveries referred
to in Section 1.2.4 and Section 9.2 and shall execute and deliver to Sellers one
or more assumption agreements (the "Assumption Agreement"), in form reasonably
satisfactory to Sellers and their
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counsel, whereby Buyer will assume from Sellers the due payment, performance and
discharge of the Assumed Liabilities;
(c) Each of the Parties hereto shall also deliver to the others such
items as are described in Article V.
2.3 Further Assurances. Each of the Parties will cooperate with the others
and execute and deliver to the other Parties such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by another Party hereto as necessary to carry out, evidence and confirm
the intended purposes of this Agreement, including Sellers executing and
delivering such other instruments of conveyance and transfer and taking such
other actions as Buyer may reasonably request in order to vest in Buyer good and
valid title to the Purchased Assets (to the extent the concept of good and valid
title applies to the type of Purchased Asset).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Sellers. Each Seller, severally and
not jointly, represents and warrants to Buyer as follows:
3.1.1 Corporate Existence. Such Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Such Seller is authorized to do business, and is
in good standing, in each state in which the ownership of Purchased Assets or
conduct of the Paging Business by it requires it to be so authorized. Such
Seller has the requisite power and authority to own the Purchased Assets it is
selling hereunder.
3.1.2 Enforceable Obligations. This Agreement has been duly executed
and delivered by such Seller and, assuming due execution and delivery thereof by
Buyer, constitutes the legal, valid and binding obligation of such Seller
enforceable against such Seller in accordance with its terms, except to the
extent that enforcement may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally. The Ancillary Documents (as defined in Section 9.8) to be executed by
such Seller will be executed and delivered by duly authorized officers of such
Seller and, when so executed and delivered, will constitute the legal, valid and
binding obligations of such Seller, enforceable against such Seller in
accordance with their respective terms, except to the extent that enforcement
may be limited by bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the rights of creditors generally. The execution,
delivery and performance by such Seller of this Agreement and all Ancillary
Documents to which such Seller is a party have been, or as of the Closing will
have been, duly authorized by all requisite corporate action.
3.1.3 Equipment and Telecommunications Transmission Services.
(a) Such OTC has good and valid title to the paging
transmission equipment set forth on Schedule 3.1.3(a), which has heretofore been
provided to the Buyer, and
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identified on such schedule as being located in its state (all such equipment
described on Schedule 3.1.3(a) shall be referred to herein as the "Equipment"),
and to the Spare Parts for such Equipment, free and clear of all Liens except
for Permitted Liens. The Equipment identified on Schedule 3.1.3(a) as being
located in such OTC's state constitutes all of the terminals, transmitters, link
receivers and antennas used by such OTC to provide one-way paging service in
support of the BAPCO Paging Business.
(b) Such OTC represents that, to its knowledge and as of May
28, 1998, Schedule 3.1.3(b), which has heretofore been provided to the Buyer,
sets forth a list of all of the telecommunications transmission services it
provides in support of the BAPCO Paging Business, including services to (i)
interconnect such OTC's local telephone network to paging terminals, (ii)
connect paging terminals to transmitters; (iii) connect transmitters to
monitoring locations for the performance of status monitoring, control and
troubleshooting functions; and (iv) program numbers into the paging terminals
and perform remote monitoring, adjustments, and troubleshooting with respect to
the paging terminals. No more than 15 days prior to the Closing Date, the OTCs
shall provide Buyer with an updated version of Schedule 3.1.3(b). BAPCO
represents and such OTC represents to its knowledge that the only
telecommunications transmission services provided in support of the BAPCO Paging
Business other than by the OTCs are pursuant to arrangements between BAPCO and
certain independent local exchange carriers and interexchange carriers
specifically listed as such on Schedule 3.2.3.
3.1.4 FCC Licenses. Such Seller has heretofore provided Buyer with
or made available to Buyer true, complete and correct copies of all of the FCC
Licenses held by such Seller and has heretofore made available to Buyer copies
of all associated license applications (including any filings made with the FCC
to memorialize the sites of any fill-in transmitter as defined and provided for
under the rules of the FCC but which may not be shown on the FCC Licenses, and
any authority provided under the FCC rules for fill-in transmitters that have
not been memorialized by any filing with the FCC, but which are listed on
Schedule 1.1.1(a) ("Fill-in Transmitters")), files and correspondence with the
FCC. The FCC Licenses identified on Schedule 1.1.1(a) as being held by such
Seller are all of the FCC Licenses held by such Seller relating to 152.63 MHz,
152.84 MHz or 158.10 MHz Radio Common Carrier frequencies or the Paging
Business. Except as set forth on Schedule 3.1.5, the FCC Licenses held by such
Seller are in full force and effect, are validly held by such Seller, and are
free and clear of Liens, conditions or other restrictions of such nature as
would materially limit the operation of such Seller's antenna and transmitter
sites covered by the FCC Licenses (including sites for any Fill-in Transmitters)
held by such Seller (all such sites for all Sellers collectively, the
"Transmitter Facilities"). Each Seller, severally and not jointly, represents
and warrants to Buyer that, except for the FCC Licenses, there are no permits,
licenses or other authorizations currently held by it, or required by Law to be
held by it, with respect to its ownership of its Purchased Assets or operation
of the Paging Business, except where its failure to hold such a permit, license
or other authorization would not reasonably be expected to materially and
adversely affect the Sellers' ownership of the Purchased Assets or conduct of
the Paging Business. The sites of such Seller set forth in the FCC Licenses and
any associated sites for Fill-in Transmitters listed therewith in Schedule
1.1.1(a) have been timely constructed and placed into operation with service to
subscribers by such Seller in accordance with the rules of the FCC. Except as
set forth on Schedule 3.1.5, there are no applications, petitions to deny,
complaints or proceedings pending before the FCC or relating to
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the operations of or the provision of service from such Seller's Transmitter
Facilities that are likely to preclude such Seller from entering this
transaction or consummating the transactions contemplated hereby or that are
likely to materially adversely affect the validity of the FCC Licenses held by
such Seller.
3.1.5 Litigation. Except as set forth on Schedule 3.1.5, there is no
litigation, including without limitation any arbitration, investigation or other
proceeding of or before any court, arbitrator or governmental or regulatory
official, body or authority (collectively, "Proceedings"), but excluding any
Proceedings before the FCC other than formal complaints challenging such
Seller's right to hold any of its FCC Licenses, pending or, to such Seller's
knowledge, threatened against such Seller with respect to the Purchased Assets,
the Paging Business or the transactions contemplated by this Agreement. Such
Seller is not a party to or subject to the provisions of any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority (collectively, "Orders") which would
materially and adversely affect Buyer's ownership, use or enjoyment of the
Purchased Assets or the transactions contemplated by this Agreement.
3.1.6 Compliance with Law. Such Seller's Purchased Assets and
ownership and operation of its Transmitter Facilities are, and BAPCO's Paging
Business and operation of the Paging Business are, in compliance with all
applicable federal, state and local laws, statutes, ordinances, regulations and
administrative orders ("Laws") relating to the Purchased Assets and the Paging
Business (including without limitation the rules of the FCC relating to
regulatory fees, universal service fund obligations, telecommunications relay
service, antenna support structure lighting and marking, tower registration,
timely construction of facilities and the provision of service to subscribers,
and the timely filing of applications and reports), except to the extent failure
to comply with any such Laws would not materially and adversely affect Buyer's
ownership, use or enjoyment of the Purchased Assets or the Paging Business. Such
Seller has not received any written notice or otherwise been advised that such
Seller's ownership of its Purchased Assets, operation of its Transmitter
Facilities or operation of the Paging Business is not in compliance with any
such Laws.
3.1.7 Approvals, Notices and Consents. Except as set forth on
Schedule 3.1.7, no consent or approval of, other action by, or notice to, any
governmental body or agency or other third party is required in connection with
the execution and delivery by such Seller of this Agreement or the consummation
by such Seller of any of the transactions contemplated hereby.
3.1.8 Restrictive Documents; Non-Contravention. Except as set forth
on Schedule 3.1.8, such Seller is not subject to or a party to any charter,
by-law, mortgage, Lien, lease, permit, agreement, contract, instrument, law,
rule, ordinance, regulation, order, judgment or decree, or any other restriction
of any kind or character, which would prevent consummation of the transactions
contemplated by this Agreement. Except as set forth on Schedule 3.1.8, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not (a) with or without the giving of
notice or the passage of time or both, violate any provision of, conflict with,
result in the breach of, constitute a default under, or result in the creation
or imposition of any lien under (i) the charter documents or by-laws of such
Seller; (ii) any order, writ, judgment, injunction, award, decree, license,
permit or other
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authorization of any court, arbitrator or governmental or regulatory body
against, or to the knowledge of such Seller binding upon, such Seller or the
Purchased Assets being sold by such Seller; or (iii) any contract, indenture,
instrument, agreement, mortgage or lease which is a Purchased Asset and to which
such Seller is a party; or (b) result in a violation by such Seller of any Law.
3.1.9 Site Leases; Beeper Company and WV Customer Contracts.
(a) Except as described in subsection (b) below, each Site
Lease to which such Seller is a party is valid, binding and enforceable in
accordance with its terms and is in full force and effect; all rents due to date
under each such lease have been paid; in each case, the lessee has been in
peaceable possession since the commencement of the original term of such lease
and is not in default thereunder and no waiver or postponement of the lessee's
obligations thereunder has been granted by the lessor; and there exists no
default or event of default by the lessee or, to the knowledge of such Seller,
by any other party, or occurrence, condition or act which, with or without the
giving of notice, the lapse of time or the happening of any further event or
condition, would become a default or event of default under such lease. Such
Seller has not received any notice of special assessment and, to the knowledge
of such Seller, there is no threatened special assessment with respect to such
Seller's Site Leases.
(b) Schedule 3.1.9 sets forth those Site Leases which are
subject to the terms of the Prime Leases or Master Leases referred to therein.
The Seller party to each such Site Lease has not received notice of and has no
knowledge of any termination of any Prime Lease or Master Lease referred to in
such Site Lease.
(c) BA-VA represents that the Beeper Company Contract is
valid, binding and enforceable in accordance with its terms and is in full force
and effect, and that there are no existing material violations or defaults by
BA-VA, or, to the knowledge of BA-VA, by any other party thereto and no event,
act or omission has occurred which (with or without notice or the passage of
time or both) would result in a material violation or default under the Beeper
Company Contract. All of BA-VA's rights to and under the Beeper Company Contract
are fully and freely assignable by BA-VA to Buyer, and no consent of any party
to such Contract is required for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby. All
amounts, if any, due and payable by BA-VA under the Beeper Company Contract have
been paid.
(d) BA-WV represents that the WV Customer Contracts are valid,
binding and enforceable in accordance with their respective terms and are in
full force and effect, and that there are no existing material violations or
defaults by BA-WV, or, to the knowledge of BA-WV, by any other party thereto and
no event, act or omission has occurred which (with or without notice or the
passage of time or both) would result in a material violation or default under
the WV Customer Contracts. All of BA-WV's rights to and under the WV Customer
Contracts are fully and freely assignable by BA-WV to Buyer, and no consent of
any party to any such Contract is required for the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby. All amounts, if any, due and payable by BA-WV under the WV
Customer Contracts have been paid.
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3.1.10 Environmental Matters. With respect to any real property
leased by such Seller pursuant to a Site Lease or Retail and Office Lease (any
such leased real property is referred to hereinafter as "Real Property"), to the
best of such Seller's knowledge after reasonable inquiry, there has been no use,
generation, manufacture, production, storage, release, discharge or disposal of
any Hazardous Material (as defined below) on, under or about the Real Property
or transportation by such Seller or its employees, agents or representatives of
any Hazardous Materials to or from the Real Property, for which such Seller or
any subsequent holders of such Seller's interest in the Real Property have any
material liability under the laws governing such Hazardous Materials. For
purposes of this Section 3.1.10, "Hazardous Materials" means any hazardous
material, hazardous substance, regulated substance, pollutant or contaminant,
hazardous waste, hazardous chemical or hazardous material, as those terms are
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or any other so-called "Superfund" or "Superlien" law,
the Resource Conservation and Recovery Act of 1976, as amended, The Hazardous
Materials Transportation Act, any regulations promulgated under the foregoing,
or by the U.S. Environmental Protection Agency or any applicable state
environmental agency.
3.1.11 Books and Records. All accounts, books, ledgers and official
and other records material to the Paging Business or the Purchased Assets
maintained by or on behalf of such Seller have been properly and accurately kept
in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein.
3.1.12 Hart-Scott-Rodino. The "ultimate parent entity" of such
Seller, as such term is defined in ss.801.1 of the rules promulgated under the
Clayton Act, 15 U.S.C. ss.18a (1976) (the "H-S-R Act"), is Bell Atlantic
Corporation, a Delaware corporation.
3.1.13 Customers. Each OTC, severally and not jointly, represents
and warrants to Buyer that other than the WV Customer Contracts, such OTC is not
a party to any Contract for provision to any customer of paging services using
any of the FCC Licenses.
3.1.14 Disclosure. No representation or warranty by such Seller in
this Agreement or any Ancillary Document contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made, in order to
make the statements herein or therein not misleading.
3.2 Representations and Warranties of BAPCO. BAPCO additionally represents
and warrants as follows:
3.2.1 Title to Tangible Properties. BAPCO has good and valid title
to the Fixed Assets (except those leased by BAPCO under personal property
leases) and the Pagers free and clear of all Liens except for Permitted Liens.
3.2.2 Corporate Power and Authority. BAPCO has the requisite
corporate power and authority to own its properties and to conduct its business
as currently conducted.
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The Certificate of Incorporation and By-Laws of BAPCO heretofore made available
to Buyer are complete and correct copies of such instruments as presently in
effect.
3.2.3 Contracts and Commitments. Schedule 3.2.3 contains an accurate
and complete list of all Defined Contracts (as defined below) to which BAPCO is
a party or under which BAPCO is obligated as of the date of this Agreement,
whether written or oral (if oral, Schedule 3.2.3 contains a summary of material
terms), which relate to the Paging Business or any BAPCO Asset. No more than 15
days prior to the Closing Date, BAPCO shall provide Buyer with an updated
version of Schedule 3.2.3. For purposes of this Section, "Defined Contract"
means any (a) agreement, arrangement, commitment, contract, lease, license,
instrument or other obligation which obligates, or which, in accordance with its
express terms if certain conditions or circumstances were to occur, would
obligate, BAPCO to pay any Person more than $15,000 in cash or property or which
is material to the Paging Business or the BAPCO Assets and is not included in
another category below; (b) partnership, joint venture or licensing agreement
(other than for the licensing of computer software); (c) loan agreement or
commitment, credit agreement, indenture, promissory note, guarantee or other
agreement in respect of indebtedness (collectively, "Loan Documents"), other
than any such agreement or arrangement between BAPCO and any other direct or
indirect subsidiary of Bell Atlantic Corporation; (d) inter-carrier agreement,
agreement with a reseller, agreement with an agent, interLATA circuit contract,
or interconnection agreement with any interexchange carrier; (e) employment
agreement or agreement with a consultant; (f) agreement not to compete in a line
of business; (g) confidentiality agreement entered into outside the ordinary
course of business; (h) license for the use of the computer software or (i)
collective bargaining or union contracts or agreements; provided that Defined
Contracts does not include any of the Retained Contracts. Each Defined Contract
included in the BAPCO Assets is valid, binding and enforceable in accordance
with its terms and is in full force and effect, and there are no existing
material violations or defaults by BAPCO or, to the knowledge of BAPCO, by any
other party thereto and no event, act or omission has occurred which (with or
without notice or the passage of time or both) would result in a material
violation or default under any Contract included in the BAPCO Assets. Except as
set forth in Schedule 3.1.7 hereto, all of BAPCO's rights to and under the
Contracts included in the BAPCO Assets are fully and freely assignable by BAPCO
to Buyer, and no consent of any party to the Contracts included in the BAPCO
Assets is required for the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby. All amounts due and
payable by BAPCO under each Contract included in the BAPCO Assets have been
paid.
3.2.4 Trade Accounts Receivable. The Trade Receivables of the Paging
Business have arisen in the ordinary course of business for goods or services
delivered or rendered, are not to BAPCO's knowledge subject to any valid
defenses, set-offs, counterclaims or barter arrangements, and at least 65% of
such receivables (by dollar amount) are current or sixty days or less past due.
3.2.5 Customer Contracts. Copies of the forms of customer contracts
entered by BAPCO since 1989 for the provision by BAPCO of paging service, pager
rental and pager maintenance, were previously delivered to Buyer by BAPCO;
substantially all of BAPCO's customers are parties to written contracts in the
form of one or more of such forms, except for the customers whose contracts are
listed on Schedule 3.2.5.
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3.2.6 Employees. Schedule 3.2.6 is an accurate and complete list
showing the full names, job titles and job locations of all employees of BAPCO
as of the date of this Agreement. BAPCO has made or will at or prior to Closing
make available to Buyer the personnel files of each of the BAPCO Eligibles (as
defined in Section 6.1).
3.2.7 Employee Benefit Plans.
(a) BAPCO maintains, contributes to or established the
"employee benefit plans," within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"), including but not limited to bonus, stock
option, stock purchase, restricted stock, incentive, profit-sharing, pension,
retirement, deferred compensation, severance, medical, dental, life, disability,
accident, accrued leave, vacation, sick pay, sick leave, supplemental retirement
and unemployment benefit plans, programs, arrangements, commitments or practices
(whether or not insured) set forth in Schedule 3.2.7. Each such employee benefit
plan is referred to herein as a "BAPCO Benefit Plan" and collectively as the
"BAPCO Benefit Plans". Each BAPCO Benefit Plan that is intended to be qualified
within the meaning of section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and, to the extent applicable, section 401(k) of the Code,
has been determined by the Internal Revenue Service to be so qualified. The
BAPCO Benefit Plans have been maintained, operated and administered in all
material respects in accordance with their terms and applicable law, including
without limitation ERISA and the Code. No complete or partial termination of any
BAPCO Benefit Plan has occurred or is expected to occur prior to or on the
Closing Date or as a result of this transaction. No event has occurred, or is
reasonably expected to occur as a result of the transactions contemplated by
this Agreement, with respect to or pursuant to any BAPCO Benefit Plan which will
result in any material liability to Buyer.
(b) No BAPCO Benefit Plan is an "employee pension benefit
plan," within the meaning of Section 3(2) of ERISA, subject to Section 412 of
the Code or Section 302 of Title IV of ERISA. BAPCO has never contributed or had
any obligation to contribute to any multiemployer pension plan within the
meaning of ERISA and the Code.
(c) BAPCO does not maintain any BAPCO Benefit Plan which is a
"group health plan" (as such term is defined in ERISA or the Code) that has not
been administered or operated in all material respects in compliance with the
applicable requirements of Section 601 of ERISA and Section 4980B(f) of the
Code.
3.2.8 Pagers. Schedule 3.2.8 sets forth, as of May 31, 1998, (i) the
approximate number of new Pagers in Pager Inventory, (ii) the approximate number
of Leased Pagers and (iii) the approximate number of used Pagers not in service;
and identifies the approximate number of each general type of Pager (i.e.,
digital, alphanumeric, etc.) in each category. Since such date, the number of
Pagers in Pager Inventory has not changed except in the ordinary course of
business. No more than 15 days prior to the Closing Date, BAPCO shall provide
Buyer with an updated version of Schedule 3.2.8.
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3.2.9 Retail and Office Leases. Schedule 3.2.9 sets forth a list of
all of BAPCO's real property leases (the "Retail and Office Leases"), copies of
which have previously been delivered to or made available to Buyer. Each Retail
and Office Lease is valid, binding and enforceable in accordance with its terms
and is in full force and effect; all rents due to date under each such lease
have been paid; in each case, BAPCO has been in peaceable possession since the
commencement of the original term of such lease and is not in default thereunder
and no waiver or postponement of BAPCO's obligations thereunder has been granted
by the lessor; and there exists no default or event of default by the lessee or,
to the knowledge of BAPCO, by any other party, or occurrence, condition or act
which, with or without the giving of notice, the lapse of time or the happening
of any further event or condition, would become a default or event of default
under such lease. The buildings and leasehold improvements leased under the
Retail and Office Leases are in good operating condition (normal wear and tear
excepted), are not in need of any known major repairs and are suitable for their
current uses. BAPCO has not received any notice of special assessment and, to
BAPCO's knowledge, there is no threatened special assessment relating to the
premises leased by it under the Retail and Offices Leases or any portion
thereof.
3.2.10 Financial Statements; No Material Adverse Effect. Attached as
Schedule 3.2.10(a) are the unaudited balance sheets of BAPCO as at December 31,
1997 and March 31, 1998 (the "Balance Sheets") and the related unaudited
statements of income for the twelve months ended December 31, 1997 and the three
months ended March 31, 1998 (the "Income Statements"). The Balance Sheets fairly
present the financial position of BAPCO as at the respective dates thereof, and
the Income Statements fairly present the results of operations of BAPCO for the
periods indicated, all in accordance with generally accepted accounting
principles consistently applied throughout the periods involved and subject in
the case of interim financial statements to normal year-end adjustments. From
March 31, 1998 (the "Balance Sheet Date") through the date of this Agreement,
BAPCO has conducted the Paging Business in the ordinary and usual course
consistent with past practices, and there has not been any material adverse
change in the financial condition, assets or results of operations of BAPCO
during such period. On the date of this Agreement, BAPCO has no knowledge of any
fact or circumstance which, individually or in the aggregate, is likely to have
a "material adverse effect" on the Purchased Assets or the Paging Business. For
purposes of this Section 3.2.10, "material adverse effect" shall not include the
effects of facts, circumstances or changes described in Schedule 3.2.10(b), and
knowledge of BAPCO means the actual knowledge of Robert M. Balascio (Director
and President), Christopher J. Costanzo (Secretary and Treasurer), David H.
Benson (Director) and Dennis F. Strigl (Director), with no obligation to
undertake any investigation. Such individuals are all of the officers and
directors of BAPCO as of the date of this Agreement.
3.2.11 No Undisclosed Liabilities. As at the respective dates of the
Balance Sheets, BAPCO had no liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) not otherwise disclosed herein which relate to
the Paging Business or the BAPCO Assets which are not reflected or reserved
against in the Balance Sheets and which, in accordance with generally accepted
accounting principles, consistently applied, should have been shown or reflected
in the Balance Sheets.
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3.2.12 Taxes. BAPCO has filed all federal, state, local, foreign and
other tax returns and reports required to be filed in connection with the BAPCO
Assets or the Paging Business, and has paid all taxes and other assessments due,
if any.
3.2.13 Telephone Number Inventory. Schedule 3.2.13 hereto, which has
heretofore been provided to the Buyer, sets forth, as of February 24, 1998, (i)
the telephone numbers that have been assigned to or associated with individual
paging units used by customers as part of the BAPCO Paging Business, and (ii)
the telephone numbers available for assignment to or association with individual
paging units as part of the BAPCO Paging Business. All such telephone numbers
have been activated in the paging control terminals included in the Equipment.
No more than 15 days prior to the Closing Date, BAPCO shall provide Buyer with
an updated version of Schedule 3.2.13.
3.2.14 Billing Software. The Billing Software (as defined in Section
6.12), as configured and delivered to Buyer at the Closing, shall be in the same
condition in which BAPCO used it in its operations of the Paging Business
immediately prior to the Closing. BAPCO has good and valid title to the BAPCO
Modifications. The BAPCO Modifications were developed "in house" in accordance
with the terms and conditions of the CSI Amendment. EXCEPT AS EXPRESSLY SET
FORTH IN THIS SECTION 3.2.14, BAPCO MAKES NO REPRESENTATIONS OR WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE BILLING SOFTWARE AND HEREBY
DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND THE BILLING SOFTWARE SHALL BE PROVIDED TO BUYER ON AN "AS IS" BASIS.
3.2.15 Billing System. The computer hardware set forth on Schedule
1.1.2(d) and the Billing Software collectively comprise the billing system
utilized by BAPCO to perform billing services.
3.3 Representations and Warranties of Buyer. Buyer represents and warrants
to Sellers as follows:
3.3.1 Corporate Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.3.2 Enforceable Obligations. This Agreement has been duly executed
and delivered by Buyer and, assuming due execution and delivery thereof by
Sellers, constitutes the legal, valid and binding obligation of Buyer
enforceable against it in accordance with its terms, except to the extent that
enforcement may be limited by bankruptcy, reorganization, insolvency, moratorium
or other similar laws affecting the rights of creditors generally. The Ancillary
Documents to be executed and delivered by duly authorized officers of Buyer and,
when so executed and delivered, will constitute the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except to the extent that enforcement may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
rights of creditors generally. The execution, delivery and performance by Buyer
of this
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Agreement and all Ancillary Documents to which Buyer is a party have been duly
authorized by all requisite corporate action.
3.3.3 Litigation. No Proceeding is pending or, to Buyer's knowledge,
threatened against Buyer, with respect to the transactions contemplated by this
Agreement, and to Buyer's knowledge, no investigation that might result in any
such Proceeding is pending or threatened. Buyer is not a party to or subject to
the provisions of any Order which would materially and adversely affect the
transactions contemplated by this Agreement.
3.3.4 Approvals, Notices and Consents. Except for the approvals
described in Sections 1.5 and 1.6, no consent or approval of, other action by,
or notice to, any governmental body or agency or other third party is required
in connection with the execution and delivery by Buyer of this Agreement or the
consummation by Buyer of any of the transactions contemplated hereby.
3.3.5 Restrictive Documents; Non-Contravention. Buyer is not subject
to or a party to any charter, by-law, mortgage, Lien, lease, permit, agreement,
contract, instrument, law, rule, ordinance, regulation, order, judgment or
decree, or any other restriction of any kind or character, which would prevent
consummation of the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not (a) with or without the giving of
notice or the passage of time or both, violate any provision of, conflict with,
result in the breach of, constitute a default under, or result in the creation
or imposition of any lien under (i) the charter documents or by-laws of Buyer;
(ii) any order, writ, judgment, injunction, award, decree, license, permit or
other authorization of any court, arbitrator or governmental or regulatory body
against or, to the knowledge of Buyer, binding upon Buyer; or (iii) any
contract, indenture, instrument, agreement, mortgage or lease to which Buyer is
a party; or (b) result in a violation by Buyer of any Law.
3.3.6 Financing; Capitalization. Buyer has heretofore received
written commitments from responsible financial institutions to fulfill its
obligations to pay the Purchase Price hereunder (which commitments are subject
to the negotiation, preparation and execution of definitive financing
agreements, it being understood that the obligations of such financial
institutions under such agreements will be subject to the conditions to be set
forth therein) and has heretofore delivered true, complete and correct copies of
such commitments to Sellers. Prior to the Closing, Shareholders of Buyer shall
have contributed at least $5,000,000 in cash to Buyer, and the shareholders
equity of Buyer on the Closing Date shall be at least $5,000,000 (less
reasonable amounts expended for transactional costs related to this
transaction).
3.3.7 Hart-Scott-Rodino. The "total assets" and "annual net sales"
(as such terms are used in subsection (a)(2) of Section 7A of the H-S-R Act) of
Buyer's "ultimate parent entity and all entities which it controls directly or
indirectly" (as such phrase is used in ss.801.1 of the rules promulgated under
the H-S-R Act) are each less than $10,000,000.
3.4 Warranties Exclusive. Except for the express representations and
warranties made by Sellers in this Article III, Sellers make no representations
or warranties, express or implied, concerning the Purchased Assets or the Paging
Business. Buyer acknowledges that it has been
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given a full opportunity to examine the Purchased Assets, the Books and Records
and the Paging Business (except that prior to the date hereof BAPCO has not
permitted the Buyer to interview the Eligible Employees) and, except as set
forth in this Agreement (including the representations and warranties in this
Article III and the indemnification provisions relating thereto), is relying on
its own independent investigation and analysis of the Purchased Assets, the
Books and Records and the Paging Business.
ARTICLE IV
AGREEMENTS PENDING CLOSING
4.1 Cooperation. Upon the terms and subject to the conditions hereof, each
of the Parties agrees to use its commercially reasonable efforts to take or
cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, including without limitation obtaining all necessary waivers,
consents and approvals and making all necessary filings with the FCC and state
public utility commissions ("PUCs") in a timely manner. BA-NJ also shall apply
to the New Jersey Board of Public Utilities for a waiver of the advertising
requirements of N.J.A.C. Section 14:1-5.6(b) with respect to the consummation of
the transactions contemplated herein, and shall use commercially reasonable
efforts to obtain such a waiver. Any such filings with the PUCs shall be made
within 45 days after the date hereof. Within fifteen days after the date hereof,
Sellers and Buyer, cooperating in good faith, shall have completed and have
provided to each other for review their respective portions of the applications
requesting FCC consent to the proposed assignment of the FCC Licenses to Buyer.
Within the earlier of twenty days after the date hereof or five business days
after the date the Board of Directors of Bell Atlantic Corporation approves the
transactions contemplated hereby, Sellers and Buyer shall file such applications
with the FCC.
4.2 Closing Conditions; Representations and Warranties. Each of the
Parties covenants and agrees that pending the Closing and except as otherwise
specified in this Agreement it shall use commercially reasonable efforts to
ensure that the Closing conditions contained in Article V are met and that its
representations and warranties remain true in all material respects and shall
promptly inform the other Parties if it discovers that any such Closing
condition cannot be met or that the representations and warranties were either
materially incorrect when made or have become materially incorrect. Buyer agrees
to notify Sellers immediately if it receives any oral or written notification
from its lenders that its financing commitments are in jeopardy.
4.3 Operation of the Transmitter Facilities and Paging Business Before
Closing. Between the date of this Agreement and the Closing Date:
(a) The OTCs shall, except as otherwise approved by Buyer in
writing:
(i) continue to operate the Transmitter Facilities and
the Equipment in the ordinary and usual course of business and consistent
with past practice (except for any changes contemplated by this Agreement)
and in compliance with applicable Law;
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(ii) file with the FCC all documents required to be
filed in connection with the FCC Licenses and the operation of the
Transmitter Facilities and the Equipment, including without limitation all
renewal applications in connection with the FCC Licenses, in a timely
manner and in the ordinary course, as provided in the FCC rules;
(iii) prior to the timely filing of a renewal
application for any FCC License, cause all Transmitter Facilities and
Equipment covered by such FCC License to be in compliance with the FCC
rules pertaining to human exposure to radio frequency emissions; and
(iv) satisfy and obtain the release of any Liens on the
OTC Assets (except for Permitted Liens) and not create or suffer to exist
any Liens (except for Permitted Liens) on any of the OTC Assets, except as
approved by Buyer in writing; and
(b) BAPCO shall, except as otherwise approved by Buyer in
writing:
(i) conduct the Paging Business in the ordinary and
usual course and consistent with past practice except for any changes
contemplated by this Agreement;
(ii) not enter into any Contract which obligates, or
which, in accordance with its express terms if certain conditions or
circumstances were to occur, would obligate, BAPCO to pay any Person more
than $15,000 in cash or property or which is material to the Paging
Business, except for (i) Contracts which terminate or are terminable prior
to the Closing Date (and which shall impose no liability or obligations on
Buyer) and (ii) purchase orders made in the ordinary and usual course of
business consistent with past practices;
(iii) not enter into any employment agreement (other
than with Retained Employees) or agreement with a consultant, unless such
agreement terminates or is terminable prior to the Closing Date and, if so
terminated, would not impose any liability or obligation on Buyer, and
BAPCO gives Buyer written notice of such agreement prior to the Closing
and terminates the agreement on or before the Closing Date if so directed
by Buyer;
(iv) not enter into any Contract which requires the
consent of a third party to the transfer of such Contract to Buyer;
(v) not create, assume or incur indebtedness other than
in the ordinary course of business with respect to the BAPCO Assets;
(vi) satisfy and obtain the release of any Liens on the
BAPCO Assets (except for Permitted Liens) and not create or suffer to
exist any Liens (except for Permitted Liens) on any of the BAPCO Assets,
except as approved by Buyer in writing;
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(vii) not grant or otherwise commit to make any increase
in the compensation of the employees of BAPCO (other than Retained
Employees) except in the ordinary and usual course of business, it being
understood and agreed that raises and bonuses are given to BAPCO employees
each spring and BAPCO sales representatives who meet certain sales
thresholds are given raises and/or promotions, all in the ordinary and
usual course of business; and
(viii) use commercially reasonable efforts to maintain
in its employment, or otherwise maintain any arrangements existing on the
date hereof with, employees or other personnel employed or otherwise
retained by BAPCO in connection with and for the operation of the Paging
Business which employees or personnel BAPCO, in its judgment and in good
faith, deems to be reasonably necessary for the operation of the Paging
Business, provided that this clause creates no requirement to pay
additional compensation or give promotions outside of the ordinary course
or business.
(c) Neither BAPCO nor the OTCs shall make any capital
improvements outside of the ordinary course of business with respect to
the BAPCO Paging Business or the Purchased Assets without the prior
written approval of Buyer.
(d) Buyer shall not, directly or indirectly, control,
supervise or direct, or attempt to control, supervise or direct, the operations
of the Transmitter Facilities, and such operations shall be solely the
responsibility of the OTCs and, subject to the provisions of this Section 4.3,
shall be in their complete discretion.
(e) Buyer agrees to approve or disapprove in writing any
action that requires Buyer's consent under Section 4.3(a), 4.3(b) or 4.3(c)
within five business days following written notice to Buyer from Sellers
requesting such approval, and Buyer agrees not to unreasonably withhold any such
consent. If Buyer fails to approve or disapprove of any such action in writing
within five business days after presentation by Sellers, then Buyer shall be
deemed to have approved of such action.
4.4 No Solicitation. Except in connection with obtaining required
consents, authorizations and approvals of, and giving required notices to,
governmental authorities and other third parties in connection with the
transactions contemplated hereby, and subject to Section 4.1, each Seller hereby
agrees that prior to the Closing or termination of this Agreement, it shall
neither directly nor indirectly solicit, hold discussions or negotiations with
or otherwise cooperate with any Person other than Buyer and its representatives
concerning any sale of BAPCO, the Purchased Assets or the Paging Business,
provided that the Closing is concluded by the date which is the nine month
anniversary of the date applications are filed with the FCC as contemplated in
Section 4.1 (the "Termination Date").
4.5 Insurance of Property. Until the Closing Date, Sellers shall continue
existing insurance coverage or substantial equivalents thereof on the Purchased
Assets and shall not allow or permit to be done any act by which such insurance
policies may be impaired, terminated or canceled.
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4.6 Risk of Loss. From the date hereof through the Closing Date, if any
Purchased Asset is destroyed or damaged by fire or any other cause, other than
use, wear or loss in the ordinary course of business, the applicable Seller
shall give written notice to Buyer as soon as practicable (but in no event later
than five calendar days) after discovery by Seller of such damage or
destruction. Such Seller shall have the option of (a) delivering such Purchased
Asset at the Closing to Buyer in its destroyed or damaged condition in which
event the Purchase Price shall be reduced by the amount allocated to such
Purchased Assets (to the extent of such damage or destruction), as mutually
agreed by the Parties, (b) excluding such Purchased Assets from this Agreement,
in which event the Purchase Price shall be reduced by the amount allocated to
such Purchased Assets, as mutually agreed by the Parties, or (c) replacing or
repairing such Purchased Assets (any replacement shall be deemed a Purchased
Asset) at such Seller's expense. No such loss shall result in the breach of any
representation or warranty hereunder.
4.7 Access; Financial Statements.
(a) Sellers shall give Buyer's officers, employees, counsel,
accountants and other representatives access to and the right to inspect, during
normal business hours and on reasonable notice, the Purchased Assets and records
pertaining thereto, and shall permit them to consult with and interview Sellers'
officers, employees, accountants, and agents for the purpose of making such
investigation of the Purchased Assets as Buyer shall reasonably desire to make,
provided that such inspection and investigation activities shall not
unreasonably interfere with Sellers' business operations. Buyer shall give
Sellers' officers, employees, counsel, accountants and other representatives
access to all documentation and information related to Buyer's financial
condition and ability to pay the Promissory Notes as reasonably requested by
Sellers, and shall permit them to consult with Buyer's officers, employees,
accountants, agents and lenders for the purpose of assessing Buyer's financial
condition and ability to pay the Promissory Notes.
(b) Prior to the Closing Date, BAPCO shall deliver to Buyer its
regularly prepared unaudited balance sheets and the related unaudited statements
of income within 15 days following the last day of the applicable reporting
period.
4.8 Bell Atlantic Corporation Authorization. Sellers shall present this
transaction for approval by the requisite Bell Atlantic Corporation authorizing
entity as soon as practicable following the date hereof and not later than July
28, 1998.
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent unless waived in writing by Buyer:
5.1.1 Representations, Warranties and Covenants. The representations
and warranties of Sellers contained in this Agreement, in any schedule or
exhibit hereto or in any
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instrument, document or certificate delivered by Sellers to Buyer pursuant to
the provisions hereof, and which do not speak as of a specific date, shall be
true in all material respects on the Closing Date with the same effect as though
such representations and warranties were made as of such date, except for
changes or exceptions (a) required to reflect the operation of the Paging
Business after the date hereof in the ordinary course consistent with past
practices or (b) contemplated by this Agreement, and Sellers shall have
performed in all material respects all covenants and agreements required by this
Agreement to be performed by them on or prior to the Closing Date. Each Seller
shall have delivered to Buyer a certificate dated as of the Closing Date and
executed by an officer of such Seller, certifying that the conditions specified
in this Section have been fulfilled with respect to such Seller.
5.1.2 No Litigation. No Proceedings by any governmental or
regulatory official, body or authority or other Person shall have been
instituted or threatened for the purpose of enjoining or preventing, or which
question the validity or legality of, any of the transactions contemplated
hereby.
5.1.3 Consents and Approvals. The governmental approvals described
in Sections 1.5 and 1.6 (it being agreed by the Parties that as of the date
hereof such approvals are limited to those set forth on Schedules 3.1.7 and
3.3.4; it being further agreed by the Parties that Schedules 3.1.7 and 3.3.4
shall be updated to reflect any changes in applicable Law after the date
hereof), the consent of CSI to the assignment of the CSI License to Buyer (which
will be substantially in the form attached hereto as Exhibit M), and any notices
required in connection with the transfer of the Lease dated April 8, 1996
between 1719 Route 10, L.L.C. and BAPCO to Buyer, shall have been obtained or
given, as the case may be, and shall be effective. Unless waived by Buyer, the
approvals of the FCC and any authorizations required from the PUCs shall have
become Final Orders (i.e., no longer subject to reconsideration, appeal or
review, whether judicial or administrative).
5.1.4 Transaction Documents. At the Closing, the appropriate
Seller(s) shall execute and deliver to Buyer each of the following documents:
(a) the Indemnity Escrow Agreement, (b) an official services agreement in
substantially the form attached hereto as Exhibit C (the "Official Services
Agreement"), (c) a real estate license agreement in substantially the form
attached hereto as Exhibit D (the "Real Estate License Agreement"), (d) a
maintenance agreement in substantially the form attached hereto as Exhibit E
(the "Maintenance Agreement"), (e) the Assignment Documents and (f) a software
license agreement in substantially the form attached hereto as Exhibit F (the
"BAPCO Modification License"). In addition, at the Closing, Cellco Partnership,
a partnership d/b/a Bell Atlantic Mobile ("Cellco") shall execute and deliver to
Buyer each of the following documents: (i) a reseller agreement in substantially
the form attached hereto as Exhibit G (the "Reseller Agreement"), (ii) a
professional services agreement in substantially the form attached hereto as
Exhibit H (the "Professional Services Agreement"), (iii) a billing services
agreement in substantially the form attached hereto as Exhibit N (the "Billing
Services Agreement"), (iv) a guarantee in substantially the form attached hereto
as Exhibit I, guarantying BAPCO's indemnity obligations under Article VII hereof
(the "Guarantee")and (v) a bill of sale transferring ownership of BAPCO's Banyan
server to Buyer for One Thousand Dollars ($1,000) on an "as is" basis.
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5.1.5 Legal Opinion. At the Closing, Sellers shall deliver to Buyer
an opinion of Susan B. Asch, Esq., or another in-house counsel of Bell Atlantic
Corporation or a subsidiary thereof, dated as of the Closing Date, substantially
in the form attached hereto as Exhibit J.
5.2 Conditions Precedent to Sellers' Obligations. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are
subject to the fulfillment or satisfaction, prior to or at the Closing, of each
of the following conditions precedent unless waived in writing by Sellers:
5.2.1 Representations, Warranties and Covenants. The representations
and warranties of Buyer contained in this Agreement, in any schedule or exhibit
hereto or in any instrument, document or certificate delivered by Buyer to
Sellers pursuant to the provisions hereof, shall be true in all material
respects on the Closing Date with the same effect as though such representations
and warranties were made as of such date, except for changes contemplated by
this Agreement, and Buyer shall have performed in all material respects all
covenants and agreements required by this Agreement to be performed by it on or
prior to the Closing Date. Sellers shall have received a certificate from Buyer
dated as of the Closing Date and executed by the President or Chief Financial
Officer of Buyer, certifying that the conditions specified in this Section have
been fulfilled.
5.2.2 No Litigation. No Proceedings by any governmental or
regulatory official, body or authority or other Person shall have been
instituted or threatened for the purpose of enjoining or preventing, or which
question the validity or legality of, any of the transactions contemplated
hereby.
5.2.3 Consents and Approvals. The governmental approvals described
in Sections 1.5 and 1.6 (it being agreed by the Parties that as of the date
hereof such approvals are limited to those set forth on Schedules 3.1.7 and
3.3.4; it being further agreed by the Parties that Schedules 3.1.7 and 3.3.4
shall be updated to reflect any changes in applicable Law after the date hereof)
shall have been obtained and shall be effective.
5.2.4 Transaction Documents. At the Closing, Buyer shall execute and
deliver to the appropriate Seller(s) (or Affiliate(s) of Sellers) each of the
following documents: (a) the Indemnity Escrow Agreement, (b) the Promissory Note
and security documents referred to therein, (c) the Reseller Agreement, (d) the
Official Services Agreement, (e) the Real Estate License Agreement, (f) the
Maintenance Agreement, (g) the Assumption Agreement, (h) the BAPCO Modification
License, (i) the Professional Services Agreement and (j) the Billing Services
Agreement, and Buyer shall deliver to Cellco, by check or wire transfer, One
Thousand Dollars ($1,000) for BAPCO's Banyan server.
5.2.5 Limited Subordination. As security for the payment by Buyer of
the Promissory Note, Buyer shall have granted to the holder of each Promissory
Note a perfected security interest in all of Buyer's assets, which security
interest shall be subordinate only to security interest(s) of the bank(s)
financing Buyer's acquisition of the Purchased Assets and the Paging Business
securing a maximum of $21,800,000 in senior debt.
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5.2.6 Board Approval. The Board of Directors of Bell Atlantic
Corporation or the appropriate authorizing entity shall have approved the
consummation of the transactions contemplated hereby.
5.2.7 Legal Opinion. At the Closing, Buyer shall deliver to Sellers
an opinion of Phillips Nizer Benjamin Krim & Ballon LLP dated as of the Closing
Date, substantially in the form attached hereto as Exhibit K.
ARTICLE VI
OTHER AGREEMENTS
6.1 Employees.
(a) Effective as of the Closing Date, Buyer shall offer employment
to at least 90% of the employees of BAPCO as of the Closing Date (excluding the
employees set forth on Schedule 6.1(a) (the "Retained Employees"), to whom Buyer
shall not make offers of employment) (the BAPCO employees as of the date hereof
excluding the Retained Employees are referred to herein as the "BAPCO Eligibles"
and are set forth on Schedule 6.1(b) with relevant details of their employment
with BAPCO, including compensation and net credited service; BAPCO shall provide
Buyer with an updated version of Schedule 6.1(b) within five days prior to the
Closing Date), on terms and conditions (including position, location, total cash
compensation and benefits) substantially comparable to each BAPCO Eligible's
terms and conditions of employment immediately prior to the Closing, and subject
to and in accordance with the other terms of this Section 6.1(a). BAPCO shall
cooperate with and use reasonable efforts to assist Buyer in its efforts to
secure reasonably satisfactory employment arrangements with the BAPCO Eligibles;
provided that Cellco shall have the right to hire any BAPCO Eligible who applies
for a job with Cellco through Cellco's normal job application processes, who
does not receive an offer of employment from Buyer, who declines an offer of
employment by Buyer or who is terminated by Buyer after the Closing Date;
further provided that, notwithstanding the foregoing, Cellco shall not hire more
than ten percent (excluding any BAPCO Eligible hired by Cellco who did not
receive an offer of employment from Buyer or who was terminated by Buyer after
the Closing Date) of the BAPCO Eligibles during the period commencing on the
date hereof and ending one year following the Closing Date. BAPCO shall have the
right to notify its employees of the foregoing, other than the fact that
employees who are terminated by Buyer for cause can be hired by Cellco. Each
BAPCO Eligible who accepts such an offer of employment from Buyer (each, a
"Transferred Employee") shall become an employee of Buyer as of the Closing Date
and shall participate in the following employee benefit plans to be provided by
Buyer (the "Buyer Benefit Plans"), provision of which plans shall satisfy
Buyer's obligation to provide substantially comparable benefits: (i) a medical
benefit plan and dental benefit plan on terms substantially comparable to
BAPCO's medical and dental benefit plans, except, however, the Buyer's medical
benefit plan need not offer mental health/substance abuse benefits; (ii) a
reimbursement account plan on terms substantially comparable to BAPCO's
reimbursement account plan; (iii) a disability benefit plan including both short
term disability benefits and basic long term disability benefits on terms
substantially comparable to BAPCO's disability benefit plan; (iv) a life
insurance benefit plan on terms substantially comparable to BAPCO's life
insurance benefit plan; (v) a tuition
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assistance plan on terms substantially comparable to BAPCO's tuition
reimbursement plan, except, however, the Buyer's tuition reimbursement plan need
not provide company prepaid tuition benefits; (vi) a separation or severance pay
plan which shall be established on terms substantially comparable to BAPCO's
separation or severance pay plan; and (vii) a savings and investment plan with
terms substantially comparable to BAPCO's savings plan, including a required
employer match contribution. Buyer shall maintain the aforementioned Buyer
Benefit Plans for at least an eighteen month period commencing with the Closing
Date, and each Transferred Employee, as long as such employee remains in the
employ of Buyer, shall remain eligible to participate in such Buyer Benefit
Plans during such eighteen month period. For purposes of eligibility to
participate in and vesting under the Buyer Benefit Plans, but not for purposes
of benefit accrual under any defined benefit pension plan or defined
contribution retirement plan (other than the savings and investment plan
described in clause (vii) above), each Transferred Employee shall receive full
credit for all prior service properly credited under the BAPCO Benefit Plans as
set forth on Schedule 6.1(b). Each Transferred Employee shall also receive
credit under the relevant Buyer Benefit Plans for co-pays, deductibles and other
similar payments made under the corresponding BAPCO Benefit Plan through the
Closing Date. Each Transferred Employee's participation in the BAPCO Benefit
Plans shall terminate as of the Closing Date (except to the extent of benefits
accrued under such Plans on or prior to the Closing Date but not yet paid out).
Except as provided in Section 6.1(c) below, BAPCO shall pay all obligations to
Transferred Employees, and fulfill all other relevant obligations to Transferred
Employees, in accordance with the terms of the relevant BAPCO Benefit Plan and
applicable law. Except to the extent inconsistent with the above, any and all
decisions to offer employment or not to offer employment to BAPCO Eligibles
shall be made by Buyer in its sole discretion, but in compliance with all
applicable law, and BAPCO shall have no responsibility for such decisions. Buyer
shall have no liability with respect to the Retained Employees or with respect
to any BAPCO Eligible who does not become a Transferred Employee, except to the
extent that such BAPCO Eligible fails to become a Transferred Employee under
circumstances in which Buyer has breached its obligations under this Agreement
or otherwise violated applicable law.
(b) BAPCO shall retain all liability under the BAPCO Benefit Plans
and, unless Buyer adopts such Plans, Buyer shall have no liability under any
BAPCO Benefit Plan. Buyer shall bear all liability under the Buyer Benefit Plans
and, unless BAPCO adopts such Plans, BAPCO shall have no liability under any
Buyer Benefit Plan.
(c) Notwithstanding the above, BAPCO shall not pay out to
Transferred Employees vacation pay benefits earned but not yet used as of the
Closing Date. Buyer shall provide Transferred Employees with credit under
Buyer's vacation pay plan for the earned but not yet used vacation pay benefits
attributable to each Transferred Employee as set forth on Schedule 6.1(b).
Liability for such amounts shall be borne by Buyer; BAPCO shall have no
liability for such vacation pay benefits.
(d) Except as provided in Section 6.1(a), nothing in this Agreement
shall confer upon any employee of BAPCO, including any Transferred Employee, any
right with respect to continuance of employment with Buyer, nor shall any
provision of this Agreement interfere with the right of Buyer to terminate the
employment of any of the Transferred Employees at any time, with or without
cause, or restrict Buyer in its independent judgment in
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modifying any of the terms and conditions of employment of the Transferred
Employees; provided, however, that (i) Buyer shall bear all liability for any
such termination of employment or modification of terms and conditions of
employment following the Closing Date; and (ii) Transferred Employees shall not
be provided disadvantageous treatment in any respect due to their status as
Transferred Employees.
(e) No provisions of this Agreement shall create any third party
beneficiary rights in any Transferred Employee, or any beneficiary or dependents
thereof, with respect to the compensation, terms and conditions of employment
and benefits that may be provided to any Transferred Employee by Buyer or under
any Buyer Benefit Plan. Notwithstanding the above, BAPCO shall retain no
liability with respect to any issues regarding the compensation, terms and
conditions of employment and benefits that may be provided to any Transferred
Employee by Buyer or under any Buyer Benefit Plan.
(f) BAPCO shall retain the obligation to provide health care
continuation (COBRA) coverage under section 4980B of the Code to Retained
Employees, to each BAPCO Eligible who does not receive an offer to become a
Transferred Employee (provided that the failure by Buyer to make such an offer
does not constitute a breach of Buyer's obligations under this Agreement) and to
BAPCO Eligibles who decline an offer to become a Transferred Employee. Buyer
shall comply with COBRA and provide health care continuation coverage to
Transferred Employees in accordance with applicable law. The obligation of BAPCO
and Buyer respectively to offer health care continuation (COBRA) coverage is
conditioned upon the occurrence of a qualifying event with respect to the
relevant employee (or dependent).
(g) BAPCO shall be entitled to retain copies of the personnel files
of the Transferred Employees.
6.2 Customer Non-Solicitation. Except as permitted under the Reseller
Agreement, BAPCO agrees that during the period commencing on the Closing Date
and ending eighteen months thereafter, it will not, and it will cause Cellco not
to, directly solicit Business from any of the customers whose accounts are
transferred to Buyer at the Closing; a list of such customers shall be delivered
by BAPCO to Buyer at the Closing and initialed by BAPCO and Buyer. For purposes
of this Section 6.2, "Business" means the business of selling or leasing one-way
pagers and providing one-way paging services to customers, and "direct
solicitation" does not include any general advertising or maintenance of retail
points of presence. In addition, Sellers agree, on behalf of themselves and
their Affiliates, not to use such customer list to target such customers for
solicitation of Business, but this sentence shall not restrict Sellers' or their
Affiliates' freedom to solicit Business from such customers without the use of
such customer list.
6.3 Expenses. Each Party shall pay its own expenses relating to the
preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby,
including without limitation the fees and expenses of their respective counsel,
accountants and financial advisers, except as stated in this Section 6.3, in
Section 6.7 or in the Indemnity Escrow Agreement or the Deposit Escrow
Agreement. Any filing fees payable to the FCC in connection with obtaining the
FCC's consent to the proposed assignment of the FCC Licenses to Buyer shall be
borne 50% by Buyer and 50% by the OTCs.
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Any filing fees payable to the PUCs in connection with the OTCs' transfer of the
OTC Assets to Buyer, withdrawal of service offerings or cancellation of tariffs
hereunder shall be borne 50% by Buyer and 50% by the OTCs (it being understood
and agreed that Buyer shall be responsible for any fees or other amounts payable
in connection with its obtaining the requisite authority to commence the
provision of paging and radio telephone communication service).
6.4 Public Announcements. No Party shall issue a press release, make
publicly available any document or make any public statement concerning this
Agreement, the terms hereof or the transactions contemplated hereby without
obtaining the prior written consent of the other Parties, which consent shall
not be unreasonably withheld or delayed, except to the extent that such Party,
or a publicly held parent company of such Party, is required to issue such a
press release, to make available such a document or to make such a public
statement under the rules of a stock exchange on which such Party's or such
Party's ultimate parent company's securities are listed, or pursuant to any
applicable law or regulation, in which case such Party shall provide prompt
notice of the disclosure to the other Party and shall only issue, make available
or state such information to the extent so required.
6.5 Notices to Customers; No Rights to Bell Atlantic Mark. Buyer agrees to
send all of the customers of the Paging Business a notice (or notices) within 30
days following the Closing Date, the form and substance of which shall have been
previously approved in writing by BAPCO (which approval may not be unreasonably
withheld), explaining that (a) Buyer has acquired the Paging Business, (b) their
paging service is no longer being provided by BAPCO or any of its Affiliates and
(c) either or both of the following: (i) they may return their pagers to Buyer
for relabeling with Buyer's name at Buyer's expense or (ii) enclosed is a
temporary label with Buyer's name for them to place on their pagers over the
Bell Atlantic name. Buyer shall remove the Bell Atlantic mark and logo from all
pagers in inventory by the date which is 60 days following the Closing Date and
shall use commercially reasonable efforts to remove the Bell Atlantic mark and
logo from all Leased Pagers. Buyer shall permit BAPCO to audit the Pagers in
inventory to confirm Buyer's compliance with this Section. Within 60 days
following the Closing, BAPCO may send a notice approved by Buyer, which approval
shall not be unreasonably withheld, to any or all of the pager suppliers of the
Paging Business, advising them that (i) Buyer has acquired the Paging Business,
(ii) all of their contracts and purchase orders with BAPCO have been assigned to
and assumed by Buyer, (iii) they may no longer use the Bell Atlantic mark or
logo on pagers, and (iv) they must promptly destroy any specifications and other
materials provided by Bell Atlantic regarding such mark and logo and certify the
same to BAPCO in writing or promptly return them to BAPCO. Buyer acknowledges
and agrees that neither this Agreement nor the sale of the Purchased Assets
grants Buyer any right, title or interest whatsoever in or to the Bell Atlantic
mark.
6.6 Maintenance of Books and Records; Cooperation. Each of BAPCO and Buyer
shall preserve until the seventh anniversary of the Closing Date all records
possessed or to be possessed by such Party relating to any of the assets,
liabilities or business of the Paging Business prior to the Closing Date ("Prior
Information"). After the Closing Date, where there is a legitimate purpose, each
of BAPCO and Buyer (the "Requestee") shall provide the other party (the
"Requestor") and its representatives with access, upon prior reasonable written
request specifying the need therefor, during regular business hours, to (i) the
Requestee's officers and
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employees and (ii) the Requestee's books of account and records (including,
without limiting the generality of the foregoing, records maintained in
electronic form which are accessible via the computer equipment to be sold to
Buyer hereunder and/or the software to be licensed to Buyer under the CSI
License or the BAPCO Modification License), and the Requestor and its
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing access rights shall be limited to
obtaining and discussing Prior Information, and shall not be exercisable in such
a manner as to interfere unreasonably with the normal operations and business of
the Requestee; and further provided that, as to so much of such information as
constitutes trade secrets or confidential business information of the Requestee,
the Requestor and its representatives will use due care to not disclose such
information except (i) as required by Law, (ii) with the prior written consent
of the Requestee, which consent shall not be unreasonably withheld, or (iii)
where such information becomes available to the public generally, or becomes
generally known to competitors of the Requestee, through sources other than the
Requestor or any Person to whom Requestor has disclosed such information. Such
records may nevertheless be destroyed by a party if such party sends to the
other party written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may then
be destroyed after the 60th day after such notice is given unless the other
party objects to the destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party (and, in the case of
records which are accessible via computer software, shall provide the objecting
party with the use of such software for the purpose of effecting such access).
In addition, Buyer agrees to cooperate with Sellers to the extent reasonably
necessary in connection with the defense of any litigation brought by third
parties with respect to Retained Liabilities (including, without limitation,
making Buyer's personnel available).
6.7 Audited Financial Statements. BAPCO shall furnish Buyer, at Buyer's
expense (including, without limitation, prompt reimbursement of any reasonable
out-of-pocket costs (not to exceed $2,000) of BAPCO or Cellco), with audited
financial statements as at December 31, 1997, and for the twelve month period
ended on such date, which financials will be certified by Coopers & Lybrand,
Sellers' independent certified public accountant, whose reports shall be
included therein.
6.8 Bulk Sales Compliance. Buyer waives compliance by Sellers with the
provisions of any applicable bulk transfer laws and/or bulk sales tax acts
(including, without limitation, any notice provisions thereunder) (the "Bulk
Acts").
6.9 FBI Contract. Following the Closing, at the request of the Federal
Bureau of Investigation, Buyer shall extend the Paging Service Pricing Agreement
with the Federal Bureau of Investigation in the State of West Virginia for a
period of three years (i.e., until its anniversary in 2001), but only to the
extent said Agreement is identical to the form set forth in Schedule 6.9.
6.10 Provision of Telecommunications Transmission Services. Subject to the
other provisions of this Section 6.10 and in accordance with applicable Law, the
OTCs agree that, effective on the Closing Date and continuing thereafter, they
will provide to Buyer the telecommunications transmission services set forth on
Schedule 3.1.3(b), as such Schedule shall be updated in accordance with Section
3.1.3(b). The OTCs further agree that on and for a period of 30 days following
the Closing Date, they will take all reasonable measures to avoid any
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interruption or degradation of such telecommunications transmission services as
a result of the consummation of this transaction. Between the date hereof and
the Closing Date, BAPCO agrees to cooperate as reasonable with Buyer in its
efforts to establish relationships with the independent local exchange carriers
and interexchange carriers listed on Schedule 3.2.3 to avoid interruption or
degradation of the telecommunication transmission services such carriers provide
as a result of the consummation of this transaction. The services used to
interconnect the OTC local telephone networks to the Buyer's paging network for
delivery of local traffic from the OTCs' end users to Buyer shall be provided to
Buyer by the OTCs at no charge pending the negotiation of interconnection
agreements, each of which shall be negotiated by Buyer and the applicable OTC in
good faith and submitted to the applicable PUC for approval, and each of which
shall likewise obligate the OTC to provide such local interconnection services
at no charge. The services used to (a) interconnect the OTC networks to the
Buyer's paging network for non-local traffic, (b) connect Buyer's paging
terminals to its paging transmitters, (c) connect such transmitters to
monitoring locations for the performance of status monitoring, control and
troubleshooting functions and (d) program numbers into such paging terminals and
perform remote monitoring, adjustments, and troubleshooting with respect to such
paging terminals, shall be provided at the rates set forth in the applicable
state and/or interstate tariffs. Until such time (which must be within six
months following the Closing Date) when Buyer provides an OTC with a traffic
study using a methodology mutually agreed by the Buyer and such OTC of the
non-local portion of interconnection traffic in the applicable jurisdiction, the
OTCs and Buyer agree that the non-local portion of such traffic shall be deemed
to be 20%. Should such a traffic study demonstrate that the non-local portion of
such traffic is less than 20%, such OTC shall provide Buyer with a refund equal
to the difference between the amounts actually paid by Buyer for the non-local
portion of such traffic less the amounts which would have been due from Buyer
had such lower percentage been applied during such period. Thereafter, on an
annual basis, Buyer shall submit an updated traffic study to each such OTC and
such OTC and Buyer shall determine in good faith whether to adjust the
percentage for the non-local portion of such traffic; in the event Buyer fails
to submit such a study, the non-local portion of such traffic shall be deemed to
be 20%. Schedule 3.1.3(b) sets forth the monthly charges for each such service
((a) through (d) above) pursuant to the applicable tariff(s) as of May 28, 1998,
and includes detail regarding applicable rates and mileage (or other appropriate
measurement of length) for distance-sensitive pricing; such charges shall be
updated by the OTCs no more than 15 days prior to the Closing Date. Following
the Closing, the maximum aggregate amount the OTCs shall charge Buyer for the
telecommunication transmission services set forth on Schedule 3.1.3(b), as
updated prior to the Closing, shall be $110,000 per month, subject to change as
a result of any changes (i) following the Closing to the Buyer's paging network
configuration, the Equipment or the locations of the Equipment, (ii) in traffic
patterns or (iii) in the applicable tariffs. Notwithstanding the foregoing,
Buyer reserves the right following Closing to obtain interconnection and other
services from the OTCs or other carriers pursuant to the Communications Act of
1934, as amended, relevant state statutes and the rules and policies of the FCC
and relevant PUCs.
6.11 Removal of Equipment from Central Offices. Buyer agrees to remove all
of the transmitters and associated equipment listed on Schedule 3.1.3 and
located inside paging sites identified on Schedule 6.11(a) as being OTC central
offices ("CO" identifies a site as such) ("Transmitters") to cabinets outside
such premises during the five year period immediately following the Closing
Date, in accordance with the following schedule: The first relocation shall
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be completed within 90 days following the Closing Date, and the Transmitters at
the remaining sites shall be relocated in equal amounts during each six month
period during the five year period immediately following the Closing Date (i.e.,
such Transmitters shall be removed from seven or eight sites during each such
six month period). The locations of the Transmitters are listed on Schedule
6.11(a). Buyer agrees to relocate all of the paging terminals and associated
equipment listed on the attachments to Schedule 3.1.3(a) and located inside
paging sites identified on Schedule 6.11(a) as being OTC central offices
("Terminals") to other locations during the seven year period immediately
following the Closing Date, in accordance with the following schedule: The first
relocation shall be completed within one year following the Closing Date, the
second and third relocations shall be completed within two years following the
Closing Date, and the remaining thirteen relocations shall be completed equally
over the next five years (i.e., two or three Terminals shall be relocated during
each such year). The locations of the Terminals are listed on Schedule 6.11(a).
Schedule 6.11(b) sets forth the specific Transmitters and Terminals (including
the current location of such Equipment) that Buyer shall relocate during the six
month period immediately following the Closing Date. At the Closing, Buyer shall
deliver to Sellers a schedule in the form of Schedule 6.11(b) for relocating
Transmitters and Terminals during the period commencing six months after the
Closing Date and ending one year after the Closing Date in accordance with this
Section 6.11(b). Thereafter, on each six month anniversary of the Closing Date,
Buyer shall deliver to Sellers a schedule in the form of Schedule 6.11(b) for
relocating Transmitters and Terminals in accordance with this Section during the
six month period commencing six months following the date of delivery of such
schedule, the last such schedule being delivered on the 78 month anniversary of
the Closing Date. All Transmitters and Terminals shall be removed from inside
the OTC central offices by OTC personnel or OTC approved vendors. All costs
associated with removal of Transmitters and Terminals shall be paid by Buyer in
accordance with the terms of the Maintenance Agreement.
6.12 Billing Software. At the Closing, BAPCO shall deliver to Buyer (a)
the object code and machine-readable source code for the CSI billing software
(the "CSI Software"), as modified by BAPCO (the "BAPCO Modifications", together
with the CSI Software, the "Billing Software") and the related documentation and
(b) a copy of the Billing Software on the appropriate physical medium as agreed
in good faith by BAPCO and Buyer; BAPCO shall be entitled to keep one or more
copies of the Billing Software. It is understood and agreed that Buyer's use of
the CSI Software shall be pursuant to the terms of the CSI License to be
assigned by BAPCO to Buyer at the Closing.
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ARTICLE VII
INDEMNIFICATION
7.1 Survival of Representations and Warranties. All representations and
warranties made by the Parties in this Agreement or in any certificate,
schedule, exhibit, or instrument furnished hereunder shall survive the Closing
for a period of eighteen months after the Closing Date (the "Survival Period").
No claim for a breach of any representation or warranty or of any covenant in
Article IV may be brought by any Party unless written notice of the claim shall
have been given pursuant to Section 7.5(a) on or prior to the last day of the
Survival Period.
7.2 Obligation of Sellers to Indemnify. Each Seller hereby agrees to
indemnify Buyer and its directors, officers and employees (collectively the
"Buyer Indemnified Parties") against, and to protect, save and keep harmless the
Buyer Indemnified Parties from, and to assume liability for, payment of all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
judgments, settlements, taxes, out-of-pocket costs, expenses and disbursements
(including reasonable costs of investigation, and reasonable attorneys',
accountants' and expert witnesses' fees) of whatever kind and nature, whether or
not arising out of third-party claims or losses incurred or sustained in the
absence of third-party claims (collectively "Losses"), that may be imposed on or
incurred by the Buyer Indemnified Parties as a consequence of or relating to or
arising out of (i) the failure or breach of any representation or warranty by
such Seller contained in this Agreement or in any certificate or instrument
delivered hereunder, (ii) any failure or breach by such Seller of any covenant
or agreement made by such Seller in this Agreement or in any certificate or
instrument delivered hereunder, (iii) the Retained Liabilities, (iv) an
assignment by such Seller of a Contract pursuant to subsection 1.7(a)(i) hereof,
(v) such Seller's failure to comply with any Bulk Act or (vi) the termination of
a Site Lease to which such Seller is a party on a date that is earlier than the
expiration date set forth in such Site Lease as a result of the termination of a
Master Lease or Prime Lease referred to in such Site Lease, provided that for
each such Site Lease, Losses for purposes of this clause (vi) shall be limited
to the increase in rent, if any, that Buyer reasonably has to pay as a direct
result of such termination during the period commencing on the date of such
termination and ending 30 months following the Closing Date.
7.3 Obligation of Buyer to Indemnify. Buyer hereby agrees to indemnify the
Sellers, their Affiliates, and the Sellers' and their Affiliates' respective
directors, officers and employees (collectively the "Seller Indemnified
Parties"), and to protect, save and keep harmless the Seller Indemnified Parties
from, any Losses that may be imposed on or incurred by the Seller Indemnified
Parties as a consequence of or relating to or arising out of (i) the failure or
breach of any representation or warranty by Buyer contained in this Agreement or
in any certificate or instrument delivered hereunder, (ii) any failure or breach
by Buyer of any covenant or agreement made by Buyer in this Agreement or in any
certificate or instrument delivered hereunder, (iii) any Assumed Liability, (iv)
any claim made by any Transferred Employee as a result of the failure of Buyer
to comply with Section 6.1 hereof or as a result of any other act or omission of
Buyer or its Affiliates after the Closing; or (v) the conduct of the Paging
Business by Buyer, its Affiliates, successors or assignees after the Closing.
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7.4 Indemnification Matters. The Party required to pay any amount in
respect of Losses under Section 7.2 or 7.3 (the "Indemnifying Party") shall pay
interest on any cash expenditures by the Buyer Indemnified Parties or the Seller
Indemnified Parties, as the case may be (the "Indemnified Party") to which the
Indemnified Party shall become entitled under Section 7.2 or 7.3 at a rate equal
to the published prime rate of the Chase Manhattan Bank, N.A. in effect from
time to time during the relevant period (the "Defined Rate") from the date the
Indemnified Party paid the Losses which are the subject of the indemnity claim
until the date of payment to the Indemnified Party. Buyer and the Sellers agree
that payments by any Seller under Section 7.2 shall be treated as an adjustment
to the Purchase Price.
7.5 Indemnification Procedures.
(a) Notice of Asserted Liability. In the event that any Indemnified
Party desires to make a claim against any Indemnifying Party in connection with
any Loss for which it may seek indemnification hereunder (an "Asserted
Liability"), the Indemnified Party shall give notice (a "Claims Notice") to the
Indemnifying Party of the Asserted Liability and of its claims of
indemnification with respect thereto. Failure to give such Claims Notice shall
not relieve the Indemnifying Party of its obligations under this Article VII
except to the extent, if at all, that the Indemnifying Party shall have been
prejudiced thereby. The Claims Notice shall describe the Asserted Liability in
reasonable detail and shall indicate the amount (estimated, if necessary, and to
the extent feasible) of the Losses that have been or may be suffered by an
Indemnified Party in connection with such Asserted Liability.
(b) Defense of Asserted Liability. If the facts giving rise to the
Asserted Liability shall involve any actual or threatened claim or demand by any
third party against any Indemnified Party (a "Third Party Claim"), the
Indemnifying Party shall be entitled, but shall not be required, to participate
(at its own expense) in the defense thereof, or the Indemnifying Party may elect
to take charge of and control the defense of such Third Party Claim, provided
that the Indemnifying Party shall pursue the defense of such claim in good faith
by appropriate actions or proceedings promptly taken or instituted and
diligently pursued, and further provided that the Indemnifying Party shall not
have the right to take charge of and control such defense if the named parties
to such action or proceeding include both the Indemnifying Party and the
Indemnified Party and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to such Indemnified Party that
are different from or additional to those available to the Indemnifying Party;
the Indemnifying Party must notify the Indemnified Party of such an election
within fifteen days after receipt of a Claims Notice. If the Indemnifying Party
elects to assume the defense of any Third Party Claim in accordance with the
immediately preceding sentence, then the Indemnified Party shall be entitled to
participate (at its own expense) in said defense; if the Indemnifying Party does
not so elect to assume the defense, the Indemnifying Party shall reimburse the
Indemnified Party for all reasonable fees, costs and expenses incurred by the
Indemnified Party in connection with a Third Party Claim indemnifiable under
Section 7.2 or 7.3, as the case may be, as such reasonable fees, costs and
expenses are incurred by the Indemnified Party.
(c) Cooperation. Each Party shall cooperate and shall cause its
officers and employees to cooperate in the defense or prosecution of any claim
for which indemnification is
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Asset Purchase Agreement
sought hereunder and furnish such records, information and testimony and attend
such conferences, discovery proceedings, hearings, trials, and appeals as may be
reasonably requested in connection therewith.
(d) Settlements. No Indemnifying Party will be subject to any
liability for any settlement made without its written consent (but such consent
shall not be unreasonably withheld or delayed); provided, however, in the event
that an Indemnifying Party fails to timely reimburse an Indemnified Party
pursuant to Section 7.5(b), such Indemnified Party shall have the right to
settle a Third Party Claim without the consent of the Indemnifying Party. If an
Indemnified Party refuses to consent to a bona fide offer of settlement which
provides solely for a monetary payment which the Indemnifying Party wishes to
accept, the Indemnified Party may continue to pursue such matter, free of any
participation by the Indemnifying Party, at the sole expense of the Indemnified
Party. In such event, the obligation of the Indemnifying Party shall be limited
to the amount of the offer of settlement which the Indemnified Party refused to
accept plus the costs and expenses (including interest thereon as provided by
Section 7.4) of the Indemnified Party prior to the date the Indemnifying Party
notified the Indemnified Party of the offer of settlement.
7.6 No Consequential or Punitive Damages. Notwithstanding anything in this
Agreement to the contrary, in no event shall any Party be liable for indirect,
special, consequential or punitive damages to another Party arising out of a
breach of this Agreement, even if advised at the time of breach of the
possibility of such damages.
7.7 Limitations on Indemnification. No claim, action or other Asserted
Liability with respect to Losses arising out of a breach of a representation or
warranty of a Seller under this Agreement may be asserted until such time as
claims, actions or other Asserted Liabilities with respect to Losses arising out
of breaches of representations and warranties of Sellers under this Agreement
shall exceed $400,000 in the aggregate (in which case Sellers shall be liable
for all Losses to the extent they are in excess of $400,000). The total
liability of Sellers hereunder for breaches of representations and warranties
shall not exceed the Purchase Price.
7.8 Exclusive Remedy. The indemnification rights of the Parties under this
Article VII for any misrepresentation, breach of warranty or failure to fulfill
any agreement or covenant hereunder on the part of either Party shall be the
Parties' exclusive rights and remedies at law for such misrepresentation, breach
or failure, and are independent of and in addition to any equitable rights or
remedies.
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Asset Purchase Agreement
ARTICLE VIII
TERMINATION
8.1 Termination.
(a) Anything herein to the contrary notwithstanding, this Agreement
shall terminate automatically if the Closing has not occurred by midnight on the
Termination Date, unless extended by the Parties in writing. In addition, this
Agreement may be terminated by written notice of termination at any time before
the Closing Date only as follows:
(i) by mutual written agreement of the Parties;
(ii) by Buyer at any time if the representations and
warranties of Sellers contained herein were materially incorrect when
made, or at any time if a Seller materially breaches any of its
obligations contained herein and such breach is not cured within ten days
after notice from Buyer, or at any time if it becomes evident that any of
the conditions precedent to Closing set forth in Section 5.1 cannot be
met, or if Sellers fail to obtain the requisite approvals referred to in
Section 4.8 on or prior to the date set forth in Section 4.8;
(iii) by Sellers at any time if the representations and
warranties of Buyer contained herein were materially incorrect when made,
or at any time if Buyer materially breaches any of its obligations
contained herein and such breach is not cured within ten days after notice
from Sellers, or at any time if it becomes evident that any of the
conditions precedent to Closing set forth in Section 5.2 cannot be met, or
if Sellers make timely application for, but fail to obtain the requisite
approvals referred to in Section 4.8 on or prior to the date set forth in
Section 4.8; or
(iv) by Sellers at any time if, within seven (7) days after
the satisfaction or waiver of the conditions to the Parties' obligations
to proceed with the Closing set forth in Sections 5.1.2, 5.1.3 and 5.2.6,
Buyer shall be unable to proceed to Closing as a result of failure to have
financing sufficient to fulfill its obligations to pay the Purchase Price
hereunder, provided that failure of Sellers or Cellco, as the case may be,
to deliver all of the documents referred to in Sections 5.1.1, 5.1.4,
5.1.5 and 5.1.6 is not the sole reason for such failure of Buyer to have
such financing.
(b) In the event of termination pursuant to the provisions of this
Section 8.1, this Agreement shall become void and have no effect, without any
liability on the part of any Party or its directors, officers or stockholders in
respect of this Agreement, unless a Party committed a breach of or a default
hereunder or otherwise failed to exercise reasonable commercial efforts to
perform its obligations and to fulfill the conditions to the other Party's
obligations hereunder, in which case the aggrieved Party shall be entitled to
the remedy of specific performance in addition to any other available legal or
equitable remedies.
(c) In the event that this Agreement shall be terminated pursuant to
subsection 8.1(a)(iv) above, BAPCO shall be entitled to keep the Deposit as
liquidated damages. In the
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Asset Purchase Agreement
event that this Agreement shall be terminated for another reason, BAPCO shall
refund the Deposit to Buyer. This Section 8.1(c) shall be in addition to all
other remedies available at law or equity to Sellers.
ARTICLE IX
MISCELLANEOUS
9.1 Proration. State and local property taxes on the Purchased Assets,
rents paid or due under the Site Leases and the Retail and Office Leases,
regulatory fees paid or due in the ordinary course in connection with the Paging
Business or the Purchased Assets (including fees under the universal service
fund and telecommunications relay service), and payments made or due under the
other agreements, arrangements, commitments, contracts, leases, licenses,
instruments and other obligations assigned to Buyer hereunder shall be prorated
as of the Closing Date, and the appropriate amount paid promptly upon demand of
the Party entitled to reimbursement.
9.2 Transfer Taxes. Buyer shall pay all federal, state and local sales,
use, value-added, recording, documentary and other transfer taxes, and any
related penalties, additions to tax and interest, payable as a result of the
purchase, sale or transfer of the Purchased Assets hereunder, whether imposed by
law upon a seller or buyer. Buyer shall pay to the appropriate Seller, if a
Seller is legally responsible for the collection or payment of such taxes, the
amount of such taxes at the Closing or shall deliver appropriate resale
exemption certificates in lieu thereof.
9.3 Broker's and Finder's Fees. Buyer represents and warrants to Sellers
that all negotiations relative to this Agreement have been carried on by Buyer
directly without the retention by Buyer of any Person who may be entitled to any
brokerage or finder's fee or other commission in respect of this Agreement or
the consummation of the transactions contemplated hereby. Sellers represent and
warrant to Buyer that except for Daniels & Associates L.P., no Person who may be
entitled to any brokerage or finder's fee or other commission in respect of this
Agreement or the consummation of the transactions contemplated hereby has
intervened in the negotiations relative to this Agreement. Sellers shall be
responsible for and shall timely pay any fees and commissions due to Daniels &
Associates L.P. in connection with the transactions contemplated by this
Agreement, and shall hold Buyer harmless from and against all such fees,
commissions, amounts and claims therefor. The provisions of this Section 9.3 are
not intended for the benefit of, and shall not be enforceable by, Daniels &
Associates L.P.
9.4 Arbitration.
(a) In the event that there shall be a dispute among the Parties
arising out of or relating to this Agreement, including, without limitation, the
indemnities provided in Article VII, or the breach thereof, the Parties agree
that such dispute shall be resolved by final and binding arbitration before one
arbitrator if such dispute involves an amount less than $150,000 and if such
dispute involves an amount equal to or in excess of $150,000 then before a panel
of three arbitrators, in either case, in New York, New York administered by the
American Arbitration Association ("AAA"), in accordance with AAA's commercial
rules of practice then in effect or
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Asset Purchase Agreement
such other procedures as the Parties may agree to prior to the Closing. Any
award issued as a result of such arbitration shall be final and binding between
the parties thereto, and shall be enforceable by any court having jurisdiction
over the party against whom enforcement is sought. The arbitrator shall have the
authority in his or her discretion to award to the prevailing party the fees and
expenses of such arbitration (including reasonable attorneys' fees) or any
action to enforce an arbitration award.
(b) Solely for purposes of an action to enforce an arbitration award
under this Section 9.4, the Parties each hereby consent to the jurisdiction of
the Supreme Court of the State of New York and the service of process therein.
9.5 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by a Party to the other
Party shall be in writing and shall be deemed to have been given upon receipt if
delivered by hand or sent by certified or registered mail postage prepaid, or
the next business day if sent by a prepaid overnight courier service, and in
each case at the respective addresses set forth below or such other address as
such Party may have fixed by notice:
If to Sellers, addressed to:
Bell Atlantic Paging, Inc.
(and certain other Bell Atlantic companies)
c/o Bell Atlantic Corporation
1717 Arch Street, 29th Floor
Philadelphia, PA 19103
Attention: Raymond J. Martz,
Executive Director, Investments
with a copy to:
Bell Atlantic Network Services, Inc.
1717 Arch Street, 32nd Floor
Philadelphia, PA 19103
Attention: Stephen B. Heimann, Senior Attorney
If to Buyer, addressed to:
BAP Acquisition Corp.
42 Timber Rock Trail
Bernardsville, New Jersey 07924
Attention: John X. Adiletta
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<PAGE>
Asset Purchase Agreement
with a copy to:
Phillips Nizer Benjamin Krim & Ballon LLP
666 Fifth Avenue
New York, New York 10103
Attention: Monte Engler, Esq.
9.6 Successors and Assigns. This Agreement, and the Parties' respective
rights and obligations hereunder, may not be assigned, by transfer, change of
control, merger or otherwise, by any Party, other than by operation of law. This
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective heirs, executors, administrators, successors and permitted
assigns.
9.7 Severability. In the event any provision of this Agreement is found to
be invalid, illegal or unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall nevertheless be binding upon the
Parties with the same effect as though the invalid, illegal or unenforceable
part had been severed and deleted.
9.8 Entire Agreement. This Agreement, including the Exhibits and Schedules
hereto which form a part hereof, the Deposit Escrow Agreement, the other
documents referred to herein that are being delivered by the Parties at the
Closing (the "Ancillary Documents") and the Non-Disclosure Agreement dated as of
October 29, 1997 between Cellco Partnership and Buyer (the "Non-Disclosure
Agreement") contain the entire understanding of the Parties with respect to the
subject matter contained herein and therein. This Agreement, the Deposit Escrow
Agreement and the Ancillary Documents supersede all prior agreements and
understandings, whether written or oral, between the Parties with respect to
such subject matter except for the Non-Disclosure Agreement.
9.9 Amendments and Waivers. This Agreement may not be amended or modified
except by written instrument duly executed by each of the Parties. No term or
provision of this Agreement may be waived without the written consent of the
Party entitled to the benefit thereof by a written instrument duly executed by
such Party.
9.10 Third Party Beneficiaries. Nothing in this Agreement shall confer any
rights, remedies or other benefits to any Person other than the Parties and
their respective successors and assigns permitted under Section 9.6.
9.11 Governing Law. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of the State of
New York without reference to its conflict of laws provisions.
9.12 Headings, Gender and Defined Terms. All article and section headings
contained in this Agreement are for convenience of reference only, do not form a
part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Any reference herein to any article, section,
exhibit or schedule is a reference to such article or section of, or exhibit or
schedule to, this Agreement unless otherwise specified. Words used herein,
regardless of the
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Asset Purchase Agreement
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine,
or neuter, as the context requires. The definition of each term listed in
Exhibit L may be found in the Section set forth next to such term. The following
terms shall have the following meanings when used in this Agreement:
a. "Affiliate" of any Person means any Person that directly or
indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such other Person. For purposes of
the foregoing sentence, the term "control" means the direct or indirect
possession of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise.
Without limiting the foregoing, any Person that owns, directly or
indirectly, fifty percent (50%) or more of the securities or partnership
or other ownership interests of another Person having ordinary voting
power for the election of directors or other similar members of the
governing body of such Person (other than as a limited partner) is deemed
to "control" such Person.
b. "Liens" means all mortgages, liens, pledges, security interests,
charges, claims, restrictions and other encumbrances and defects of title
of any nature whatsoever.
c. "Permitted Liens" means Liens for taxes not yet due and payable;
automatic Liens of landlords on personal property located on leased
premises for rents not yet due and payable; Liens of carriers,
warehousemen, mechanics and materialmen for charges for services by such
persons not yet due and payable, and other Liens imposed by law incurred
in the ordinary course of business for sums not yet delinquent; Liens on
personal property arising from filing UCC financing statements relating
solely to leases for such personal property where a Seller is the lessee;
and the other Liens listed on Schedule 9.12.
d. "Person" means an individual, firm, corporation, partnership,
limited liability company, trust, governmental authority or body,
association, unincorporated organization or any other entity.
9.13 Schedules and Exhibits. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement.
9.14 Counterparts. This Agreement may be executed and delivered
originally, by facsimile or electronic signature and in two or more
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute one and the same instrument.
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Asset Purchase Agreement
IN WITNESS WHEREOF, and intending to be legally bound, the Parties have
duly executed this Agreement as of the date first written above.
BELL ATLANTIC PAGING, INC. BAP ACQUISITION CORP.
By: /s/ Robert M. Balascio By: /s/ John X. Adiletta
------------------------------ ----------------------------------
Name: Robert M. Balascio Name: John X. Adiletta
Title: President Title: President
BELL ATLANTIC - DELAWARE, INC. BELL ATLANTIC - PENNSYLVANIA, INC.
By: /s/ Edwin F. Hall By: /s/ Edwin F. Hall
------------------------------ ----------------------------------
Name: Edwin F. Hall Name: Edwin F. Hall
Title: Controller Title: Controller and Chief
Financial Officer
BELL ATLANTIC - MARYLAND, INC. BELL ATLANTIC - VIRGINIA, INC.
By: /s/ Edwin F. Hall By: /s/ Edwin F. Hall
------------------------------ ----------------------------------
Name: Edwin F. Hall Name: Edwin F. Hall
Title: Controller Title: Controller
BELL ATLANTIC - NEW JERSEY, INC. BELL ATLANTIC - WASHINGTON, D.C., INC.
By: /s/ Edwin F. Hall By: /s/ Edwin F. Hall
------------------------------ ----------------------------------
Name: Edwin F. Hall Name: Edwin F. Hall
Title: Chief Financial Officer Title: Controller
BELL ATLANTIC - WEST VIRGINIA, INC.
By: /s/ Edwin F. Hall
----------------------------------
Name: Edwin F. Hall
Title: Principal Financial
Officer and
Controller
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<PAGE>
Asset Purchase Agreement
Exhibits
Exhibit A - Form of Indemnity Escrow Agreement
Exhibit B - Form of Promissory Note
Exhibit C - Form of Official Services Agreement
Exhibit D - Form of Real Estate License Agreement
Exhibit E - Form of Maintenance Agreement
Exhibit F - Form of Software Modification License
Exhibit G - Form of Reseller Agreement
Exhibit H - Form of Professional Services Agreement
Exhibit I - Form of Cellco Guarantee
Exhibit J - Form of Legal Opinion of Sellers' Counsel
Exhibit K - Form of Legal Opinion of Buyer's Counsel
Exhibit L - Table of Defined Terms
Exhibit M - Form of CSI Consent
Exhibit N - Form of Billing Services Agreement
Schedules
Schedule 1.1.1(a) FCC Licenses
Schedule 1.1.1(b) Service Contracts
Schedule 1.1.1(c) Site Leases
Schedule 1.1.2(d) Computer Hardware
Schedule 1.1.3 Excluded Assets
Schedule 1.2.5 Purchase Price Allocation
Schedule 3.1.3(a) Equipment
Schedule 3.1.3(b) Telecommunications Transmission Services
Schedule 3.1.5 Litigation
Schedule 3.1.7 Seller Approvals, Notices and Consents
Schedule 3.1.8 Seller Restrictive Documents; Non-Contravention
Schedule 3.1.9 Sites Subject to Master Leases
Schedule 3.2.3 Defined Contracts
Schedule 3.2.5 Customer Contracts
Schedule 3.2.6 BAPCO Employees
Schedule 3.2.7 BAPCO Benefit Plans
Schedule 3.2.8 Pagers
Schedule 3.2.9 Retail and Office Leases
Schedule 3.2.10(a) Financial Statements
Schedule 3.2.10(b) No Material Adverse Effect Exceptions
Schedule 3.2.13 Telephone Number Inventory
Schedule 6.1(a) Retained Employees
Schedule 6.1(b) BAPCO Eligibles
Schedule 6.9 Form of FBI Contract
Schedule 6.11(a) Removal of Equipment from Central Offices
Schedule 6.11(b) Buyer Six Month Equipment Removal Schedule
Schedule 9.12 Permitted Liens
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Asset Purchase Agreement
Exhibit L
to Purchase Agreement
TABLE OF DEFINED TERMS
- -------------------------------------------------
Defined Term Section
- ------------ -------
- -------------------------------------------------
AAA 9.4(a)
- -------------------------------------------------
Accounting Firm 1.2.3(b)
- -------------------------------------------------
Affiliate 9.12
- -------------------------------------------------
Agreement Introduction
- -------------------------------------------------
Ancillary Documents 9.8
- -------------------------------------------------
Asserted Liability 7.5(a)
- -------------------------------------------------
Assignment Documents 2.2(a)
- -------------------------------------------------
Assumed Liabilities 1.3
- -------------------------------------------------
Assumption Agreement 2.2(b)
- -------------------------------------------------
BA-DC Introduction
- -------------------------------------------------
BA-DE Introduction
- -------------------------------------------------
BA-MD Introduction
- -------------------------------------------------
BA-NJ Introduction
- -------------------------------------------------
BA-DC Introduction
- -------------------------------------------------
BA-PA Introduction
- -------------------------------------------------
BAPCO Introduction
- -------------------------------------------------
BAPCO Assets 1.1.2
- -------------------------------------------------
BAPCO Benefit Plans 3.2.7(a)
- -------------------------------------------------
BAPCO Eligibles 6.1(a)
- -------------------------------------------------
BAPCO Modifications 6.12
- -------------------------------------------------
BAPCO Modification License 5.1.4
- -------------------------------------------------
BAPCO Paging Business Recitals
- -------------------------------------------------
BAPCO Reseller Agreement 1.8(a)
- -------------------------------------------------
BA-VA Introduction
- -------------------------------------------------
BA-WV Introduction
- -------------------------------------------------
Balance Sheet 3.2.10
- -------------------------------------------------
Balance Sheet Date 3.2.10
- -------------------------------------------------
Beeper Company Contract 1.1.1(d)
- -------------------------------------------------
Billing Services Agreement 5.1.4
- -------------------------------------------------
Billing Software 6.12
- -------------------------------------------------
Books and Records 1.1.2(g)
- -------------------------------------------------
Bulk Acts 6.10
- -------------------------------------------------
Buyer Introduction
- -------------------------------------------------
Buyer Benefit Plans 6.1(a)
- -------------------------------------------------
Buyer Indemnified Parties 7.2
- -------------------------------------------------
Cellco 5.1.4
<PAGE>
Asset Purchase Agreement
- -------------------------------------------------
Claims Notice 7.5(a)
- -------------------------------------------------
Closing 2.1
- -------------------------------------------------
Closing Date 2.1
- -------------------------------------------------
Code 3.2.7(a)
- -------------------------------------------------
Contract 1.7
- -------------------------------------------------
CSI 1.1.2(e)
- -------------------------------------------------
CSI Amendment 1.1.2(e)
- -------------------------------------------------
CSI 1993 License 1.1.2(e)
- -------------------------------------------------
CSI License 1.1.2(e)
- -------------------------------------------------
CSI Software 6.12
- -------------------------------------------------
Defined Contract 3.2.3
- -------------------------------------------------
Defined Rate 7.4
- -------------------------------------------------
Deposit 1.2.2
- -------------------------------------------------
Deposit Escrow Agreement 1.2.2
- -------------------------------------------------
Disconnected Pagers 1.1.2(f)
- -------------------------------------------------
Equipment 3.1.3
- -------------------------------------------------
ERISA 3.2.7(a)
- -------------------------------------------------
Estimated Purchase Price 1.2.3(a)
- -------------------------------------------------
Excluded Assets 1.1.3
- -------------------------------------------------
FCC Recitals
- -------------------------------------------------
FCC Licenses 1.1.1(a)
- -------------------------------------------------
Fill-in Transmitters 3.1.4
- -------------------------------------------------
Fixed Assets 1.1.2(d)
- -------------------------------------------------
Guarantee 5.1.4
- -------------------------------------------------
Hazardous Material 3.1.10
- -------------------------------------------------
H-S-R Act 3.1.12
- -------------------------------------------------
Income Statement 3.2.10
- -------------------------------------------------
Indemnified Party 7.4
- -------------------------------------------------
Indemnifying Party 7.4
- -------------------------------------------------
Indemnity Escrow Agreement 1.2.4(b)
- -------------------------------------------------
Inventory Accruals 1.3(b)
- -------------------------------------------------
Laws 3.1.6
- -------------------------------------------------
Leased Pagers 1.1.2(f)
- -------------------------------------------------
Liens 9.12
- -------------------------------------------------
Loan Agreement 5.1.5
- -------------------------------------------------
Loan Documents 3.2.3
- -------------------------------------------------
Losses 7.2
- -------------------------------------------------
Maintenance Agreement 5.1.4
- -------------------------------------------------
Non-Disclosure Agreement 9.8
- -------------------------------------------------
Official Services Agreement 5.1.4
- -------------------------------------------------
Orders 3.1.5
- -------------------------------------------------
OTC Introduction
- -------------------------------------------------
OTC Assets 1.1.1
- -------------------------------------------------
Owned Facilities 6.6.1
- -------------------------------------------------
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Asset Purchase Agreement
- -------------------------------------------------
Pager Inventory 1.1.2(f)
- -------------------------------------------------
Pagers 1.1.2(f)
- -------------------------------------------------
Paging Business Recitals
- -------------------------------------------------
Parties Introduction
- -------------------------------------------------
Permitted Liens 9.12
- -------------------------------------------------
Person 9.12
- -------------------------------------------------
Prior Information 6.6
- -------------------------------------------------
Proceedings 3.1.5
- -------------------------------------------------
Professional Services Agreement 5.1.4
- -------------------------------------------------
Promissory Notes 1.2.4(c)
- -------------------------------------------------
PUCs 4.1
- -------------------------------------------------
Purchased Assets 1.1.2
- -------------------------------------------------
Purchase Price 1.2.1
- -------------------------------------------------
Real Property 3.1.10
- -------------------------------------------------
Real Property License Agreement 5.1.4
- -------------------------------------------------
Requestee 6.6
- -------------------------------------------------
Requestor 6.6
- -------------------------------------------------
Reseller 1.8(a)
- -------------------------------------------------
Reseller Agreement 5.1.4
- -------------------------------------------------
Retail and Office Leases 3.2.9
- -------------------------------------------------
Retained Contracts 1.1.3(j)
- -------------------------------------------------
Retained Employees 6.1(a)
- -------------------------------------------------
Retained Liabilities 1.4
- -------------------------------------------------
Security and Utility Deposit
Adjustment 1.2.1(b)
- -------------------------------------------------
Seller Indemnified Parties 7.3
- -------------------------------------------------
Sellers Introduction
- -------------------------------------------------
Service Contracts 1.1.1(b)
- -------------------------------------------------
Site Leases 1.1.1(c)
- -------------------------------------------------
Spare Parts 1.1.1(b)
- -------------------------------------------------
Survival Period 7.1
- -------------------------------------------------
Telephone Number Inventory 3.2.13
- -------------------------------------------------
Terminal 6.11
- -------------------------------------------------
Termination Date 4.4
- -------------------------------------------------
Third Party Claim 7.5(b)
- -------------------------------------------------
Trade Adjustment 1.2.1(a)
- -------------------------------------------------
Trade Receivables 1.1.2(c)
- -------------------------------------------------
Transferred Employees 6.1(a)
- -------------------------------------------------
Transmitter 6.11
- -------------------------------------------------
Transmitter Facilities 3.1.4
- -------------------------------------------------
WV Customer Contracts 1.1.1(e)
- -------------------------------------------------
Exhibit 10.2
BAP Acquisition Corp.
42 Timber Rock Road
Bernardsville, New Jersey 07924
November 3, 1998
Bell Atlantic Paging, Inc.
(and certain other Bell Atlantic companies)
c/o Bell Atlantic Corporation
1717 Arch Street 29th Floor
Philadelphia, PA 19103
Attn: Raymond J. Martz
Re: Consent and Amendment No. 1 to Asset Purchase Agreement
Ladies and Gentlemen:
Reference is made to the Asset Purchase Agreement dated as of July 2, 1998
(the "Agreement") by and among Bell Atlantic-Delaware, Inc., Bell
Atlantic-Maryland, Inc., Bell-Atlantic-New Jersey, Inc., Bell
Atlantic-Pennsylvania, Inc., Bell Atlantic-Virginia, Inc., Bell
Atlantic-Washington, D.C., Inc., Bell Atlantic-West Virginia, Inc., Bell
Atlantic Paging, Inc. and BAP Acquisition Corp. Capitalized terms used herein
but not defined herein shall have the meanings given to them in the Agreement.
As we have discussed, Buyer intends to enter into a merger agreement (the
"Merger Agreement") with Paging Partners Corporation, a publicly-traded company
also in the paging business ("Paging Partners"), and a subsidiary of Paging
Partners ("Sub"). Pursuant to the Merger Agreement, among other things, (i) Sub
will merge (the "Merger") with and into Buyer, with the result that Buyer will
become a wholly-owned subsidiary of Paging Partners, (ii) Paging Partners will
transfer substantially all of its assets, subject to the related liabilities, to
Buyer, (iii) FINOVA Capital Corporation will hold a lien on the combined assets
of Buyer and Paging Partners and (iv) Motorola, Inc. ("Motorola"), which
presently has secured loans outstanding to Paging Partners, will become a
secured creditor of Buyer and will also have a lien on the combined assets of
Buyer and Paging Partners. It is expected that immediately following the Merger,
the current stockholders of Buyer will own approximately 58.5% of Paging
Partners' issued and outstanding capital stock and that the indebtedness owed to
Motorola will not exceed $1.3 million. We would, of course, be happy to provide
you with any additional details you would like concerning the Merger or the
related transactions.
<PAGE>
November 3, 1998
Page 2
We hereby request the consent and approval of the Sellers to the Merger
and the related transactions described above, to the extent the same would
require any consent or approval under, or the amendment of any provision of, the
Agreement, the Promissory Note or any other agreement or document executed or to
be executed in connection therewith. Without limiting the foregoing, we hereby
request that you consent to and approve the following amendments to the
Agreement:
1. The following sentence is hereby added to the end of Section 5.2.5 of
the Agreement:
"Notwithstanding the foregoing, in the event that Buyer merges with Paging
Partners Corporation (or a subsidiary thereof), the security interests of
the holders of the Promissory Notes shall also be subordinate to the lien
of Motorola, Inc. securing a maximum of $1,300,000 in debt to Motorola,
Inc., and the maximum amount of senior bank debt referred to in the
previous sentence shall decrease to $20,500,000."
2. Subsection 6(b)(i) of the Promissory Note is hereby amended to read as
follows:
"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 in an aggregate amount not
at any time exceeding $21,800,000 (which amount shall decrease to
$20,500,000 in the event that Purchaser merges with Paging Partners
Corporation or a subsidiary thereof) (the "Bank Debt") and (Y) in the
event that Purchaser merges with Paging Partners Corporation (or a
subsidiary thereof), indebtedness to Motorola, Inc. in an aggregate amount
not at any time exceeding $1,300,000 (the "Motorola Debt")."
3. Subsection 6(b)(R) of the Promissory Note is hereby amended to read as
follows:
"Liens to secure the Bank Debt or the Motorola Debt"
As you know, Paging Partners is a public company, and will be preparing a
proxy statement (the "Proxy") to be submitted to its shareholders in connection
with the Merger. It is anticipated that the Proxy, in addition to disclosing the
Merger, will describe the material terms of the Agreement and the BAPCO Paging
Business and financial information relating thereto. Therefore, we are
additionally requesting your consent and approval with respect to such
disclosure, provided, however, that any such disclosure will be subject to the
approval of BAPCO, which approval will not be unreasonably withheld. In the
event BAPCO declines to give its consent with respect to all or a portion of
such disclosure, it may still be disclosed if it
<PAGE>
November 3, 1998
Page 3
is determined in good faith by Paging Partners' counsel that such disclosure is
necessary as a result of Paging Partners being a public company and subject to
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the SEC thereunder.
In addition to disclosing the material terms of the Agreement as provided
above, the Proxy will also contain a statement that the Agreement and the
Exhibits shall be available for review by the shareholders of Paging Partners
upon their request.
Although the Agreement will not be attached as an Exhibit to the Proxy, in
the event the SEC or a securities exchange on which Paging Partners securities
are listed requires that the Agreement be submitted as an Exhibit or otherwise
disclosed, the Agreement will be so filed or disclosed, and you hereby consent
and approve to such filing or disclosure. For purposes of the foregoing
sentence, a request in a comment letter from the SEC shall be deemed a
"requirement."
Buyer represents and warrants to Sellers that it has provided them with
true, complete, and correct copies of the Merger Agreement and all Exhibits and
Schedules thereto. To the same extent and subject to any limitations contained
in the Merger Agreement, each of the representations and warranties of Paging
Partners contained in Article II of the Merger Agreement is herein made by
Buyer, as if Buyer were making each such representation and warranty; provided,
however, that each representation is only made to the best of Buyer's knowledge,
after reasonable inquiry. In addition, Buyer represents that it is not aware,
after reasonable inquiry, of any litigation pending or threatened against Paging
Partners Corporation or any subsidiary thereof, excluding any such litigation
which would not reasonably be expected to have a material adverse effect on
Paging Partners Corporation or such subsidiary. Buyer agrees that it shall
promptly inform Sellers if it discovers that any of the representations or
warranties made in this paragraph were either materially incorrect when made or
have become materially incorrect. The representations and warranties referred to
in Sections 5.2.1 and 7.3 of the Agreement shall be deemed to include the
representations and warranties of Buyer contained in this Paragraph.
Nothing in the Agreement or this consent and amendment shall confer any
rights, remedies or other benefits to Paging Partners or its shareholders;
provided, however, that upon the effectiveness of the Merger, the surviving
corporation will be entitled to Buyer's rights, remedies and other benefits
under the Agreement and this consent and amendment.
Notwithstanding anything in the Agreement or this consent and amendment to
the contrary, in no event shall any Party be liable for indirect, special,
consequential or punitive damages to another Party arising out of a breach of
the Agreement or this consent and amendment, even if advised at the time of
breach of the possibility of such damages.
<PAGE>
November 3, 1998
Page 4
Buyer agrees to indemnify and hold harmless the Seller Indemnified Parties
from any Losses incurred by the Seller Indemnified Parties as a consequence of
any litigation commenced by Paging Partners Corporation or its shareholders
prior to the consummation of the Merger relating to the Agreement or this
consent and amendment.
Attached hereto is a draft press release which Paging Partners plans to
issue with respect to the Merger.
We agree to promptly prepare and execute any additional amendments to the
Agreement, the Promissory Note or any such agreement or document reasonably
necessary to more fully reflect the above. To the extent this letter does not
satisfy any formal requirement for a consent or amendment under the Agreement,
such formal requirement is hereby waived.
We understand that senior lender's counsel is preparing and filing UCC-1
financing statements and other security documents necessary to perfect the
security interests of the holders of the Promissory Notes and we agree to pay
such counsel's reasonable fees in connection therewith (including any fees of
any filing service hired by such counsel).
Please acknowledge your consent and approval to the above by signing in
the appropriate space provided below.
Sincerely,
BAP ACQUISITION CORP.
By: /s/ John X. Adiletta
---------------------------
John X. Adiletta, President
<PAGE>
Consented and Approved by Sellers:
BELL ATLANTIC PAGING, INC.
By: /s/ Rayomond J. Martz
---------------------------
BELL ATLANTIC-DELAWARE, INC.
By: /s/ Rayomond J. Martz
---------------------------
BELL ATLANTIC-MARYLAND, INC.
By: /s/ Rayomond J. Martz
---------------------------
BELL ATLANTIC-NEW JERSEY, INC.
By: /s/ Rayomond J. Martz
---------------------------
BELL ATLANTIC-PENNSYLVANIA, INC.
By: /s/ Rayomond J. Martz
---------------------------
BELL ATLANTIC-VIRGINIA, INC.
By: /s/ Rayomond J. Martz
---------------------------
BELL ATLANTIC-WASHINGTON, D.C., INC.
By: /s/ Rayomond J. Martz
---------------------------
BELL ATLANTIC-WEST VIRGINIA, INC.
By: /s/ Rayomond J. Martz
---------------------------
Exhibit 10.3
AMENDMENT AGREEMENT
This Amendment Agreement is entered into as of the 31st day of
December, between AQUIS COMMUNICATIONS, INC., a Delaware corporation formerly
known as BAP Acquisition Corporation ("Debtor") and BELL ATLANTIC PAGING, INC.,
a Delaware corporation ("Secured Party").
R E C I T A L S:
A. Reference is made to that certain Security Agreement dated as of
December 31, 1998 (the "Security Agreement") between Debtor and Secured Party.
B. Reference is made to that certain Loan Agreement dated as of
December 31, 1998 ("Loan Agreement") between Debtor and FINOVA CAPITAL
CORPORATION, a Delaware corporation, in its individual capacity and as agent for
all Lenders.
C. There is a discrepancy between the Loan Agreement and the
Security Agreement regarding notice to be given by Borrower before moving
certain collateral. The parties hereto wish to amend the Security Agreement to
remove the discrepancy.
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt of sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Security Agreement. Section 3.2 of the Security Agreement is
hereby deleted in its entirety and replaced with the following:
"3.2 Places of Business. There is listed on Exhibit A hereto
the location of the chief executive office of Debtor, all of the
other places of business of Debtor and all locations where the
Tangible Collateral and the books and records of Debtor are kept.
Debtor shall not change the location of (i) Debtor's (A) chief
executive office or (B) books and records or (ii) any Tangible
Collateral, in each case without first giving Secured Party notice
of such change not later than ten (10) days after such change and
having taken any and all action reasonably requested by Secured
Party to maintain and preserve the Lien in favor of Secured Party
hereby granted free and clear of any Lien whatsoever except for
Permitted Liens."
<PAGE>
2. Miscellaneous. This Amendment Agreement may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. Except as otherwise provided herein, this Amendment Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective legal representatives, heirs, successors and permitted assigns.
3. Security Agreement in Effect. Except as specifically amended by
this Amendment Agreement, the Security Agreement shall remain in full force and
effect.
4. Governing Law. This Amendment Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to the choice of law doctrine of such State.
IN WITNESS WHEREOF, the parties enter into this Amendment Agreement
as of the date first above written.
AQUIS COMMUNICATIONS, INC.
By: /s/ John X. Adiletta
--------------------------
John X. Adiletta
President
BELL ATLANTIC PAGING, INC.
By: /s/ Robert M. Belascio
--------------------------
Name: Robert M. Belascio
Title: President
2
GUARANTEE
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions...................................................... 1
SECTION 1.1 Definitions................................................. 1
ARTICLE II Guarantee........................................................ 1
SECTION 2.1 Guarantee of Indemnity Obligations under Asset Purchase
Agreement .................................................. 1
SECTION 2.2 Unconditional Obligations................................... 2
SECTION 2.3 Cellco Obligations Not Affected............................. 2
SECTION 2.4 Waiver...................................................... 4
SECTION 2.5 Full Recourse Obligation.................................... 5
SECTION 2.6 Waiver of Rights of Subrogation and Contribution............ 5
ARTICLE III Representations, Warranties and Covenants of Cellco.............. 5
SECTION 3.1 Representations, Warranties and Covenants of Cellco......... 5
ARTICLE IV Miscellaneous ................................................... 6
SECTION 4.1 Costs and Expenses.......................................... 6
SECTION 4.2 Withholding Taxes........................................... 6
SECTION 4.3 Survival or Representations, Warranties and Agreements...... 6
SECTION 4.4 Amendment and Waivers....................................... 6
SECTION 4.5 Termination; Assignment; Severability....................... 7
SECTION 4.6 Arbitration................................................. 7
SECTION 4.7 Notices..................................................... 7
SECTION 4.8 Governing Law............................................... 8
SECTION 4.9 Limitation of Liability..................................... 8
SECTION 4.10 Rights of Beneficiaries..................................... 9
i
<PAGE>
EXHIBIT I
GUARANTEE, dated as of December 31, 1998 from CELLCO PARTNERSHIP, a
Delaware general partnership d/b/a Bell Atlantic Mobile ("Cellco" or
"Guarantor") for the benefit of BAP Acquisition Corporation, a Delaware
Corporation ("BAP").
WHEREAS, Cellco is an affiliate of Bell Atlantic Paging, Inc., a Delaware
corporation ("BAPCO");
WHEREAS, BAP, BAPCO and the other parties named therein have entered into
an Asset Purchase Agreement dated as of July 2, 1998 (the "Asset Purchase
Agreement"), pursuant to which BAP agreed to purchase the Purchased Assets
referred to therein for the consideration and upon the terms and conditions set
forth therein (the "Transaction");
WHEREAS, as a condition to BAP entering into the Transaction, Cellco is
required to guarantee to BAP the indemnity obligations of BAPCO contained in
Article VII of the Asset Purchase Agreement.
NOW THEREFORE, in consideration of the foregoing, Cellco agrees with BAP
as follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions. Unless the context otherwise requires, all
capitalized terms used, and not otherwise defined, herein shall have the
meanings set forth in the Asset Purchase Agreement.
ARTICLE II
Guarantee
SECTION 2.1 Guarantee of Indemnity Obligations under Asset Purchase
Agreement. Cellco irrevocably and unconditionally, as primary obligor and not
merely as surety, guarantees to and for the benefit of BAP and its respective
successors and assigns the due and punctual payment by BAPCO of all amounts
required to be paid by BAPCO to BAP by the terms of Article VII
("Indemnification") of the Asset Purchase Agreement (the "Obligations"). In the
event that BAPCO shall fail to pay duly and punctually any Obligation as and
when the same
<PAGE>
shall be due and payable in accordance with the terms of such Obligation, Cellco
shall forthwith pay the same to BAP within 10 business days of the receipt of
notice from BAP.
SECTION 2.2 Unconditional Obligations. The guarantee by Cellco contained
in Section 2.1 is a primary obligation of Cellco and is an unconditional,
absolute, present and continuing obligation and is not conditioned in any way
upon the institution of suit or the taking of any other action with respect to
the representations, warranties and covenants of BAPCO contained in the Asset
Purchase Agreement or any attempt to enforce performance of or compliance with
the Obligations and, to the extent permitted by law, shall be binding upon and
enforceable against Cellco without regard to the validity or enforceability of
the Asset Purchase Agreement. To the extent that performance of or compliance
with the guarantee by Cellco contained in Section 2.1 requires the payment of
money, such guarantee is an absolute, unconditional, present and continuing
guarantee of payment and not of collectability and is in no way conditioned or
contingent upon any attempt to collect from BAPCO or any other Person or to
institute a suit against BAPCO or any other Person or to perfect or enforce any
security or upon any other condition or contingency or upon any other action,
occurrence or circumstances whatsoever. Such guarantee will continue to be
effective, or be reinstated, as the case may be, if at any time payment, in
whole or in part, by BAPCO pursuant to the terms of any Obligation is rescinded
or must otherwise be restored or returned upon the bankruptcy, insolvency,
reorganization, arrangement, adjustment, composition, dissolution, liquidation,
or the like, of BAPCO, or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to BAPCO or
any substantial part of its property, or otherwise, all as though such payment
had not been made.
In furtherance of the foregoing and not in limitation of any right that
BAP may have at law or in equity against BAPCO or any other Person by virtue of
the Asset Purchase Agreement, in the case of the failure or inability of BAPCO
duly and punctually to pay any Obligation, Guarantor hereby irrevocably and
unconditionally agrees to so pay the same or cause the same to be paid.
Notwithstanding anything to the contrary in the Asset Purchase Agreement,
the guarantee of the Obligations by Guarantor hereunder is a complete guarantee
of the payment in full in accordance with their terms of all Obligations of
BAPCO, without regard to any extension of the time of payment of any or all of
the Obligations.
SECTION 2.3 Cellco Obligations Not Affected. The obligations of Cellco
under this Guarantee shall remain in full force and effect without regard to,
and shall not be released, discharged or in any way impaired or affected by any
of the following (except for the full payment and performance by BAPCO to BAP of
all Obligations):
(a) any extension, renewal or indulgence in respect of the payment
of any amount payable, or the performance of any covenant, agreement, term
or condition,under the Asset Purchase Agreement or any Ancillary Document
(collectively, the "Operative Documents"); or
2
<PAGE>
(b) any amendment, modification of or addition or supplement to or
deletion of any of the terms of any Operative Document, or any assignment,
mortgaging, pledge or transfer thereof or of any interest therein; or
(c) any compromise, waiver, release, consent, extension, indulgence
or other action or inaction in respect of any of the terms of any
Operative Document; or
(d) any exercise, non-exercise or election not to exercise, by BAP
or any other Person of the right, power, privilege or remedy under or in
respect of any Operative Document, or any waiver of any such right, power,
privilege or remedy or of any default in respect of any Operative
Document; or
(e) any bankruptcy, insolvency, reorganization, arrangement,
adjustment, composition, dissolution, liquidation, or similar proceeding
with respect to BAPCO or BAP or any other Person or any of their
respective properties; or
(f) any limitation of the liability or obligations of BAPCO or BAP
under the terms of any Operative Document which may now or hereafter be
imposed by any statute, regulation or rule of law, or any invalidity or
unenforceability, in whole or in part, of any Operative Document or any
term thereof; or
(g) any merger or consolidation of BAPCO or Cellco into or with any
other Person, or any sale, lease or transfer of any or all of the assets
of BAPCO or Cellco to any other person; or
(h) any indebtedness of BAPCO to any Person; or
(i) any claim, set-off, deduction or defense that Cellco or BAPCO
may have against BAP, whether hereunder or under any Operative Document or
independent of or unrelated to the transactions contemplated by any
Operative Document; or
(j) any change in law; or
(k) any sale, transfer or other disposition of any right, title to
or interest in any Operative Document; or
(l) any termination of or change in any relationship between Cellco
and BAPCO, including without limitation any such termination or change
resulting from the cessation of any commercial relationship between Cellco
and BAPCO or from any change in Cellco being an Affiliate of BAPCO; or
(m) any default, failure or delay, wilful or otherwise, in the
performance of the Obligations; or
3
<PAGE>
(n) to the extent as may be waived by applicable law, the benefit of
all principles or provisions of law, statutory or otherwise, which may be
in conflict with the terms hereof, including, without limitation, any law
which provides that the obligation of a guarantor must neither be larger
in amount nor in other respects more burdensome that than that of the
principal obligation or which reduces a guarantor's obligation in
proportion to the principal obligation; or
(o) any disability or other defense of BAPCO with respect to any
obligation under any Operative Document including the effect of any
statute of limitation that may bar the enforcement of any obligation under
any Operative Document; or
(p) any failure of BAP to file or enforce a claim in bankruptcy or
other proceeding with respect to any Person; or
(q) any agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding; or
(r) any other circumstance which might otherwise constitute a legal
or equitable discharge, release or defense of a guarantor or surety, or
which might otherwise limit recourse against Cellco (it being agreed that
the obligations of Cellco hereunder shall not be discharged except by
payment or performance as herein provided).
SECTION 2.4 Waiver. Cellco unconditionally waives, to the fullest extent
permitted by law, (a) notice of any of the matters referred to in Section 2.3
hereof (without derogation of any requirement that notice be provided pursuant
to the Asset Purchase Agreement), (b) except to the extent provided in this
Guarantee, all notices which may be required by statute or rule of law, now or
hereafter in effect, to preserve intact any rights of BAP against Cellco,
including, without limitation, notice of acceptance of this Guarantee and of any
Operative Document and demand, presentment and protest, proof of notice of
default or any failure on the part of BAPCO to perform and comply with any
covenant, agreement, term or condition of any of the Obligations, (c) any right
to the enforcement, assertion or exercise by BAP of any right, power, privilege
or remedy conferred herein or in any Operative Document, (d) any requirement of
promptness or diligence on the part of BAP hereunder, (e) any requirement on the
part of BAP to mitigate the damages resulting from any default hereunder or
under any Operative Document, (f) any defense based upon or arising out of any
defense which BAPCO may have to the payment or performance of all or any part of
the Obligations; (g) all other defenses under any applicable law available to
Cellco as a defense against or a reduction or limitation of its liabilities and
obligations hereunder; and (h) any other circumstances which might otherwise
constitute a legal or equitable discharge, release or defense of a guarantor or
surety, or which might otherwise limit or reduce recourse against Cellco (it
being agreed that the obligations of Cellco hereunder shall not be discharged
except by payment or performance as herein provided).
No remedy herein conferred upon or reserved to BAP is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Guarantee or now or hereafter
4
<PAGE>
existing by contract, at law, in equity or by statute. No notice to or demand on
Cellco under this Guarantee in any case shall entitle Cellco to any other or
further notice or demand hereunder in the same or similar circumstances.
SECTION 2.5 Full Recourse Obligation. The obligations of Cellco set forth
herein constitute the full recourse obligations of Cellco enforceable against it
to the fullest extent of all of its assets and properties, notwithstanding any
provision in the Asset Purchase Agreement or any other agreements limiting the
liability of any Person.
SECTION 2.6 Waiver of Rights of Subrogation and Contribution.
Notwithstanding any payment or payments made by Cellco hereunder or any setoff
or application of funds of Cellco, Cellco will not assert any right to which it
may become entitled, whether by subrogation, contribution or otherwise, against
BAPCO or any of its properties, by reason of the performance by Cellco of its
obligations under this Guarantee, nor shall Cellco seek or be entitled to seek
any reimbursement from BAPCO in respect of payments made by Cellco hereunder,
until such time as all of the Obligations shall be duly and fully paid.
ARTICLE III
Representations, Warranties and Covenants of Cellco
SECTION 3.1 Representations, Warranties and Covenants of Cellco. Cellco
hereby represents, warrants and covenants to BAP that:
(a) it is a partnership duly organized and validly existing in good
standing under the laws of the State of Delaware with requisite power and
authority to own its properties and conduct its business as now being conducted;
(b) it has the requisite power and partnership authority to enter
into and perform its obligations and undertakings under this Guarantee;
(c) the execution, delivery and performance of this Guarantee have
been duly authorized by all necessary action on the part of Cellco and this
Guarantee constitutes the legal, valid and binding obligation of Cellco,
enforceable against Cellco in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws affecting the rights of creditors generally from time to time in
effect). The enforceability of the obligations of Cellco is also subject to
applicable laws and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) the execution, delivery and performance of this Guarantee do not
contravene any law, judgment, governmental rule, regulation or order binding on
Cellco or contravene Cellco's organizational documents;
5
<PAGE>
(e) neither the execution and delivery by Cellco of this Guarantee,
nor the consummation or performance of any of the transactions by Cellco
contemplated hereby, requires the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in respect of
any state governmental authority or agency or other third party;
(f) there are no pending or, to Cellco's best knowledge after due
inquiry, threatened actions or proceedings before any court or administrative
agency or arbitrator which seek to enjoin or prevent, or which question the
validity or legality of, this Guarantee.
Cellco understands that all of its statements, representations and
warranties and covenants have been relied upon as an inducement by BAP to enter
into the Asset Purchase Agreement and any transactions contemplated thereby.
ARTICLE IV
Miscellaneous
SECTION 4.1 Costs and Expenses. Cellco will pay all costs and expenses
(including, without limitation, reasonable legal fees and expenses) incurred by
or on behalf of BAP in connection with the enforcement of Cellco's obligations
under this Guarantee.
SECTION 4.2 Withholding Taxes. All payments by Cellco hereunder shall be
made without deduction or withholding for or on account of, any taxes, unless
such deduction or withholding is required by law. If Cellco shall be required by
law to make any such deduction or withholding, then Cellco shall make payment
hereunder net of such deduction or withholding, and such net payment shall fully
satisfy Cellco's obligations hereunder. Any amounts deducted or withheld by
Cellco for or on account of taxes shall be paid over to the government or taxing
authority imposing such taxes on a timely basis, and BAP shall provide as soon
as practicable with such tax receipts or other official documents with respect
to the payment of such taxes, as may be available.
SECTION 4.3 Survival or Representations, Warranties and Agreements. The
representations, warranties and agreements of Cellco contained herein shall
survive the execution and delivery of this Guarantee, any examination by or on
behalf of BAP and the consummation of the transactions contemplated hereby and
the Asset Purchase Agreement.
SECTION 4.4 Amendment and Waivers. Except by payment or performance as
herein provided, this Guarantee may be changed, modified, amended, waived,
discharged or terminated, and the obligations of Cellco herein set forth may be
compromised, waived, released or terminated, in whole or in part, only by an
instrument in writing duly executed by Cellco and BAP.
SECTION 4.5 Termination; Assignment; Severability. This Guarantee shall
survive the performance or termination of the Asset Purchase Agreement and shall
remain in full force and
6
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effect until payment in full of all sums payable by Cellco hereunder or by BAPCO
to BAP in respect of the Obligations, and until applicable bankruptcy preference
or fraudulent conveyance recapture periods have expired. Except as provided
herein, the obligations of Cellco under this Guarantee shall not be assigned
without the prior written consent of BAP. Subject to the preceding sentence,
this Guarantee shall inure to the benefit of, and be binding on and enforceable
against, the successors and assigns of Cellco and BAP. The headings contained in
this Guarantee are for purposes of reference only and shall not affect in any
way the meaning or interpretation of this Guarantee. This Guarantee constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof. This Guarantee may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same instrument. Any provision of this Guarantee that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 4.6 Arbitration.
(a) In the event that there will be a dispute among the parties
arising out of or relating to this Guarantee, the parties agree that such
dispute shall be resolved by final and binding arbitration before one arbitrator
if such dispute involves an amount less than $150,000 and if such dispute
involves an amount equal to or in excess of $150,000 then before a panel of
three arbitrators, in either case, in New York, New York administered by the
American Arbitration Association ("AAA"), in accordance with AAA's commercial
rules of practice then in effect. Any award issued as a result of such
arbitration shall be final and binding between the parties thereto, and shall be
enforceable by any court having jurisdiction over the party against whom
enforcement is sought. The arbitrator shall have the authority in his or her
discretion to award to the prevailing party the fees and expenses of such
arbitration (including reasonable attorneys' fees) or any action to enforce an
arbitration award.
(b) Solely for purposes of an action to enforce an arbitration award
under this Section 4.6, the parties each hereby consent to the jurisdiction of
the Supreme Court of the State of New York and the service of process therein.
SECTION 4.7 Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder shall be in writing
and shall be deemed to have been given upon receipt if delivered by hand or sent
by certified or registered mail postage prepaid, or the next business day if
sent by a prepaid overnight courier service, and in each case at the respective
addresses set forth below or such other address as such party may have fixed by
notice:
If to Cellco, addressed to:
Cellco Partnership
7
<PAGE>
180 Washington Valley Road
Bedminster, NJ 07921
Attn: Chief Financial Officer
with copies to:
Cellco Partnership
180 Washington Valley Road
Bedminster, NJ 07921
Attn: General Counsel
and to:
Stephen B. Heimann, Esq.
Bell Atlantic Network Services, Inc.
1717 Arch Street, 32nd Floor West
Philadelphia, PA 19103
If to BAP, addressed to:
BAP Acquisition Corporation
42 Timber Rock Trail
Bernardsville, New Jersey 07924
Attention: John X. Adiletta
with a copy to:
Phillips Nizer Benjamin Krim & Ballon LLP
666 Fifth Avenue
New York, New York 10103
Attention: Monte Engler, Esq.
SECTION 4.8 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York without reference to its conflict of laws provisions.
SECTION 4.9 LIMITATION OF LIABILITY. NEITHER BAP NOR ANY AFFILIATE,
DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF BAP SHALL HAVE ANY LIABILITY WITH
RESPECT TO, AND CELLCO HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR, (A)
ANY LOSS OR DAMAGE SUSTAINED BY CELLCO THAT MAY OCCUR AS A RESULT OF OR IN
CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, ANY ACT OR FAILURE TO ACT
REFERRED TO IN SECTION 2.3 OR (B) ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES
SUFFERED BY CELLCO IN CONNECTION WITH ANY PROPER CLAIM ARISING OUT
8
<PAGE>
OF, RELATED TO OR CONNECTED WITH THIS GUARANTEE OR THE ASSET PURCHASE AGREEMENT
OR THE RELATIONSHIPS ESTABLISHED THEREUNDER.
SECTION 4.10 Rights of Beneficiaries. This Guarantee shall not be
construed to create any right in any Person other than BAP or to be a contract
in whole or in part for the benefit of any Person other than BAP.
IN WITNESS WHEREOF, the undersigned has duly executed this Guarantee as of
the date first above written.
CELLCO PARTNERSHIP
a partnership d/b/a Bell Atlantic Mobile by
Bell Atlantic Mobile, Inc., General Partner
By /s/ Dennis F. Strigl
--------------------------
Name: Dennis F. Strigl
Title: President
9
ASSUMPTION AGREEMENT
KNOW ALL PEOPLE BY THESE PRESENTS that from and after the date of
this Assumption Agreement, Aquis Communications, Inc. ("Buyer"), intending to be
legally bound and in consideration of the transfers to Buyer by Bell Atlantic -
Delaware, Inc. ("BA-DE"), Bell Atlantic - Maryland, Inc. ("BA-MD"), Bell
Atlantic - New Jersey, Inc. ("BA-NJ"), Bell Atlantic - Pennsylvania, Inc.
("BA-PA"), Bell Atlantic - Virginia, Inc. ("BA-VA"), Bell Atlantic - Washington,
D.C., Inc. ("BA- DC"), Bell Atlantic - West Virginia, Inc. ("BA-WV", and
together with BA-DE, BA-MD, BA-NJ, BA-PA, BA-VA and BA-DC, the "OTCs") and Bell
Atlantic Paging, Inc. ("BAPCO", and together with the OTCs, the "Sellers") of
the Purchased Assets in accordance with an Asset Purchase Agreement dated July
2, 1998 (the "Purchase Agreement") by and among Buyer and Sellers, hereby
assumes the due payment, performance and discharge of the Assumed Liabilities,
and agrees to indemnify and hold Sellers harmless to the extent provided in the
Purchase Agreement, from and against any and all claims, damages, losses,
actions, liabilities, obligations, costs and expenses of any nature whatsoever
(including reasonable attorney's fees) arising out of the Assumed Liabilities.
Capitalized terms used herein but not defined shall have the meanings assigned
to them in the Purchase Agreement.
It is understood and agreed that Buyer is not, by this or any other
instrument, assuming any obligation or liability of Sellers other than the
Assumed Liabilities and that Sellers continue to be liable for any and all
obligations and liabilities of Sellers that are not Assumed Liabilities.
In the event of any conflict or inconsistency between this agreement
and the Purchase Agreement, the terms of the Purchase Agreement shall supersede
this Assumption Agreement and shall be controlling.
<PAGE>
IN WITNESS WHEREOF, Buyer and Sellers have duly executed and
delivered this instrument the 31st day of December, 1998.
Aquis Communications, Inc.
By: /s/ John X. Adiletta
-----------------------------------
John X. Adiletta, President
Bell Atlantic - Delaware, Inc. Bell Atlantic - Pennsylvania, Inc.
By: /s/ Edwin F. Hall By: /s/ Edwin F. Hall
------------------------------- -----------------------------------
Edwin F. Hall, Controller Edwin F. Hall, Controller and
Chief Financial Officer
Bell Atlantic - Maryland, Inc. Bell Atlantic - Virginia, Inc.
By: /s/ Edwin F. Hall By: /s/ Edwin F. Hall
------------------------------- -----------------------------------
Edwin F. Hall, Controller Edwin F. Hall, Controller
Bell Atlantic - New Jersey, Inc. Bell Atlantic - Washington, D.C., Inc.
By: /s/ Edwin F. Hall By: /s/ Edwin F. Hall
------------------------------- -----------------------------------
Edwin F. Hall, Edwin F. Hall, Controller
Chief Financial Officer
Bell Atlantic - West Virginia, Inc.
By: /s/ Edwin F. Hall
-----------------------------------
Edwin F. Hall, Principal
Financial Officer and Controller
2
<PAGE>
Bell Atlantic Paging, Inc.
By: /s/ Robert M. Balascio
-----------------------------------
Robert M. Balascio, President
3
RESELLER AGREEMENT
This Reseller Agreement (the "Agreement"), dated as of this 31st day of
December, 1998, by and between Aquis Communications, Inc., a Delaware
corporation formerly known as BAP Acquisition Corp. ("Aquis"), and Cellco
Partnership, a Delaware partnership doing business as Bell Atlantic Mobile
("Cellco"), and Bell Atlantic Paging, Inc., a Delaware corporation ("BAPCO").
WITNESSETH:
WHEREAS, Aquis has entered into an Asset Purchase Agreement (the "Asset
Purchase Agreement") dated as of July 2, 1998, among Aquis, BAPCO and the other
Sellers named therein (collectively, with BAPCO, the "Sellers"), pursuant to
which, among other things, Aquis is purchasing certain assets of the Sellers;
and
WHEREAS, as a condition to Aquis consummating the transactions
contemplated by the Asset Purchase Agreement, Cellco has agreed to enter into
this Agreement; and
WHEREAS, Aquis provides paging and related communication services
utilizing the FCC licenses set forth on Exhibit A attached to and hereby made a
part of this Agreement (collectively, the "Aquis Services"), and resells paging
and related communication services provided by third-party operators
(collectively, the "Third-Party Services"); and
WHEREAS, Cellco wishes for the transactions contemplated in the Asset
Purchase Agreement to be consummated, and wishes to obtain from Aquis the
non-exclusive right to resell the Aquis Services and Third-Party Services on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, and of the mutual
promises and agreements herein contained, and intending to be legally bound, the
parties hereby agree as follows:
1. License.
(a) Aquis grants to Cellco a non-exclusive license to resell Aquis
Services to retail customers ("Retail Subscribers"). Aquis acknowledges that
Cellco may act as an agent or reseller of paging services provided by service
providers other than Aquis, and agrees that nothing in this Agreement shall
restrict or limit Cellco's freedom to sell, resell or distribute any such
services, even if such services compete directly with the services provided by
Aquis. Nothing herein shall limit Cellco's right to sell, convert, transfer, or
otherwise assign Retail Subscriber accounts to any other paging system.
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Reseller Agreement
(b) Aquis shall make available to Cellco, on a non-exclusive basis,
upon the same prices and terms obtained by Aquis from its respective vendors,
for resale by Cellco to Retail Subscribers, any and all Third-Party Services
which Aquis has the right to obtain from third-party service providers from time
to time. Aquis shall, during the term of this Agreement, use commercially
reasonable efforts to maintain its right to obtain Third-Party Services from
AirTouch Paging, Metrocall, Destineer, ConXUs and National Dispatch Company.
(c) Neither Cellco nor BAPCO shall, within the geographic service
areas covered by the FCC Licenses (as defined in the Asset Purchase Agreement),
knowingly, directly or indirectly, sell to resellers or other third parties
paging products or services utilizing frequencies which as of the date of this
Agreement are allocated to and authorized primarily for paging services, which
are to be sold under any name and for any account other than that of Cellco or
BAPCO. Nothing contained herein shall preclude Cellco or BAPCO, or their agents
or subagents, from offering services to end users under Cellco's names, trade
names or service marks, and Cellco is expressly authorized to distribute Aquis
Services and Third-Party Services to agents and subagents for purposes of such
sales.
(d) Aquis agrees that it will offer to Cellco all services that it
offers to other resellers or to its own subscribers, unless Aquis is prohibited
from offering certain services to resellers by the terms of any agreement with a
vendor providing Aquis with services. If, notwithstanding any such prohibition,
Aquis permits any other reseller to obtain such service, then Cellco shall have
the right to similarly obtain such service, at a mutually agreed upon and
negotiated rate.
2. Term. The initial term of this Agreement shall be for three (3) years
from the date of this Agreement and may be renewed by Cellco for additional
one-year terms, upon Cellco's notice to Aquis at least ninety (90) days prior to
the expiration of the then current term of its intention to renew this
Agreement. This Agreement may be terminated prior to expiration of any term as
set forth in this Agreement.
3. Quality of Paging Service.
(a) Aquis hereby represents, warrants and covenants that, at all
times, the Aquis Services (a) shall materially comply with the specifications
set forth in Exhibit B, attached hereto and incorporated herein by reference, to
the extent the communications services offered by Sellers utilizing the FCC
Licenses prior to the date hereof ("Sellers' Services") complied with such
specifications, (b) shall be materially consistent with industry standards
applicable to services substantially similar to the Aquis Services, to the
extent Sellers' Services were so consistent, (c) shall be fit for use in the
manner intended, and (d) shall not infringe any trademark, trade secret, patent,
copyright or other intellectual property right of any person or entity. Aquis
further represents and warrants that it is in compliance with all laws,
regulations, and orders applicable to, and has filed and obtained all necessary
permits and governmental approvals for the provision and resale of, the Aquis
Services, except where a failure to be in such compliance or to so file and
obtain would not reasonably be expected to materially and adversely affect the
Aquis Services.
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Reseller Agreement
Attached hereto as Exhibit C is a schedule listing known deficiencies and
works-in-progress in the Aquis paging network as of the date of this Agreement.
Aquis agrees to correct such deficiencies and complete such works-in-progress by
the respective dates shown on Exhibit C
(b) Cellco will report to Aquis any material problems with respect
to the Aquis Services that it becomes aware of. Aquis shall address and resolve
as promptly as possible any material complaints or concerns raised by Cellco or
Retail Subscribers with respect to the Aquis Services, and Cellco will
reasonably cooperate in resolving such complaints and concerns.
4. Additional Obligations of Aquis.
(a) Aquis shall not during the term of this Agreement directly
solicit business from any Retail Subscriber. For purposes of this Section 4(a),
"business" means the business of selling or leasing one-way pagers and providing
one-way paging services to customers, and "direct solicitation" does not include
any general advertising or maintenance of retail points of presence.
(b) Aquis will provide Cellco with documentation and such other
materials as appropriate in Aquis's reasonable judgment to use the Aquis system.
(c) Aquis will provide Cellco with at least sixty (60) days written
notice prior to initiating any changes in its network or facilities which may
adversely impact Cellco or Retail Subscribers. Cellco shall have the right to
terminate this Agreement if any such changes materially adversely impact
Cellco's obligations or benefits under this Agreement.
(d) Aquis will maintain the licenses to provide the Aquis Services
hereunder. If Aquis ceases to provide services to a region or market previously
serviced under this Agreement, Cellco shall have the right to terminate this
Agreement effective immediately as to such region or market, and Aquis shall
reimburse Cellco for all costs incurred in relocating Retail Subscribers to
alternative service providers.
(e) Aquis agrees to provide Cellco direct access to its billing
system to facilitate the service activation and account maintenance processes,
but only to the extent that Cellco had access to BAPCO's billing system prior to
the date hereof. Both Aquis and Cellco agree to bear their respective system
costs for this arrangement. Aquis and Cellco shall each furnish and pay for all
equipment and software to enable secure and redundant telecom facilities for
this arrangement, at their respective locations, but only to the extent
similarly done between BAPCO and Cellco prior to the date hereof.
5. Equipment.
(a) Aquis agrees to make available to Cellco pagers and paging
equipment at Aquis's wholesale cost therefor, as supplies and inventories permit
for the purpose of reselling the Aquis Services. Cellco shall not be required to
purchase any such equipment from Aquis, and
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<PAGE>
Reseller Agreement
shall be free to obtain pagers and paging equipment for sale or rent to Retail
Subscribers from other sources.
(b) Cellco agrees that all paging equipment placed in service on the
Aquis paging system under this Agreement will be compatible with such system.
Aquis shall advise Cellco of any changes in its paging system that affect
compatibility with paging equipment. If any such modification results in any
cost or expense to Cellco (e.g., costs to purchase/exchange pagers, mailing,
administration, stranded inventory, and other out-of-pocket expenses), Aquis
shall reimburse Cellco for such costs and expenses. Aquis will give Cellco
reasonable advance notice of any modifications that would affect equipment
compatibility. If Aquis changes paging protocols or formats, such notification
shall be given no less than six (6) months in advance of implementation of the
modified protocols or formats.
(c) Cellco shall act solely on its own behalf and not as an agent or
contractor of Aquis in connection with the rental, sale and maintenance of any
equipment relating to the paging services delivered by Aquis hereunder. Cellco
shall maintain and keep in good working order and condition all such equipment
leased by Cellco to subscribers.
(d) Cellco shall provide and mail at its own expense all
announcements and notices required by law to be mailed to subscribers.
6. Cap Codes. Aquis will reasonably assign and coordinate cap codes for
the pagers connected to Aquis Services. Cellco will assign cap codes to Retail
Subscribers only from the group of cap codes assigned to Cellco by Aquis.
7. Compensation.
(a) Cellco shall pay to Aquis (i) a minimum monthly charge of
$99,400 (the "Minimum Retail Payment"), constituting payment in full for 37,000
Retail Subscriber paging units in service for Aquis Services (the "Minimum
Retail Subscriber Commitment"), which Minimum Retail Payment shall be due only
for the first thirty (30) months of the term of this Agreement (or until the
earlier termination of this Agreement in accordance with its terms), and (ii) a
monthly charge of $1.50 per month (the "Retail Overage Rate") for each active
Aquis Services Retail Subscriber paging unit in service in excess of the Minimum
Retail Subscriber Commitment (or, following termination of the Minimum Retail
Payment obligation, for each active Aquis Services Retail Subscriber paging unit
in service).
(b) To the extent that, in any month, there are fewer than 37,000
active Aquis Services Retail Subscriber paging units in service, Cellco shall
nevertheless make the Minimum Retail Payment for such month, but shall be
entitled to apply the overpayment amount against any amounts in excess of the
Minimum Retail Payment which may payable in any subsequent month. To the extent
that Cellco's aggregate payments to Aquis for any month exceed the Minimum
Retail Payment, such excess may be applied to offset the Minimum Retail Payment
for any subsequent month or months in the event that, in any such subsequent
month, there shall not be at
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Reseller Agreement
least 37,000 active Aquis Services Retail Subscriber paging units in service.
The offset amount shall be calculated at the rate of $2.69 per Aquis Services
Retail Subscriber paging unit in service underage.
(c) Notwithstanding anything to the contrary contained herein, for
purposes of computing the amounts to be paid to Aquis hereunder, Retail
Subscriber paging units in service shall not include any paging units in service
which Cellco or BAPCO may secure or sell utilizing Aquis Services pursuant to
Section 1.8 of the Asset Purchase Agreement (which provides for Cellco or BAPCO
to act as a "middleman" between certain resellers and Aquis in certain specified
situations, all as more fully provided for therein).
(d) Aquis represents, warrants and covenants that the Retail Overage
Rate does not and shall not exceed the rates offered to any other reseller for
like services at like volumes, except for services and volumes provided under
the Official Service Agreement of even date herewith between Aquis and Bell
Atlantic Network Services, Inc. (the "Official Service Agreement"). If Aquis
offers services to any other reseller for lower rates at like volumes, except
for services and volumes provided under the Official Service Agreement, Aquis
shall promptly offer and provide such lower rate to Cellco.
8. Billing.
(a) Aquis shall invoice Cellco monthly for all sums due pursuant to
this Agreement, which invoice shall set forth the number of billed units for the
month and such other information and detail as Cellco may reasonably request,
and Cellco agrees to pay all such invoiced amounts owing for the services
provided hereunder to Aquis not later than thirty (30) days after receipt of the
invoice.
(b) Cellco shall be entitled, upon its written request, to a credit
for interruptions in service which last (i) in excess of 24 hours and affect at
least one-half of the transmitters on a given frequency, or (ii) in excess of 48
hours and affect at least one transmitter. Such credit amounts shall be
determined on a prorated basis, and applied against future invoices. Cellco
shall notify Aquis within forty-five (45) days after the interruption of any
such requests for credit.
(c) Cellco shall receive all payments from Retail Subscribers to the
Aquis Services secured by Cellco and shall be responsible with respect to those
subscribers for all billing, collection of payments and security deposits and
bad debt recovery.
9. Advertising, Promotion and Publicity. Each party's logos, trademarks
and service marks are and shall be the sole and exclusive property of that
party. The other party shall not use such marks or name except with the prior
written consent of the owner party and such party shall immediately discontinue
any such authorized use upon termination of this Agreement or written notice
from the owner party. Neither party shall issue or otherwise permit to be
published any
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Reseller Agreement
press releases or public statements regarding this Agreement without the other
party's prior written consent.
10. Default.
(a) The occurrence of any of the following shall constitute an event
of default:
(i) Failure to make any payment when due which is not cured
within five (5) business days after notice of such default is given to the
defaulting party;
(ii) A party, 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;
(iii) A court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against a party; (B)
appoints a receiver, trustee, custodian or other similar official for a party or
for all or substantially all of its properties; or (C) orders the liquidation of
a party; and in each of (A), (B) or (C) the order or decree remains unstayed and
in effect for sixty (60) days;
(iv) Material failure to observe or perform any of the
covenants contained in this Agreement or in any other agreement or document
executed pursuant hereto which is not cured within thirty (30) days after notice
of such default is given to the defaulting party;
(v) The occurrence of an Event of Default under the Secured
Promissory Note of even date herewith from Aquis to the order of Bell Atlantic
Paging, Inc.
For purposes of this Agreement, the term "Bankruptcy Law" means Title 11, United
States 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.
(b) Upon and at any time during the continuance of an event of
default, the party not in default shall have the right to terminate this
Agreement by notice to the other.
11. Assignment. Either party, upon written notice to the other, may assign
this Agreement, in whole or in part, or any of the rights, duties and
obligations under this Agreement only to its parent or to a wholly-owned
subsidiary of itself or its parent. The foregoing notwithstanding, it is
expressly agreed that any assignment of moneys or accounts receivable shall be
void to the extent that it attempts to or does impose upon Cellco obligations to
the assignee additional to the payment of such moneys or preclude Cellco from
dealing solely and directly with
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Reseller Agreement
Aquis in all matters pertaining hereto, including the negotiation of amendments
or settlements of amounts due.
12. Force Majeure. Neither party shall be liable for interruption, delays,
errors or defects in transmission, or failure to transmit when caused by act of
God, fire, war, acts of government, civil or military authorities, or other
cause beyond its control.
13. Representations and Warranties.
(a) Aquis represents and warrants as follows:
(i) Aquis is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, operate and lease its
properties, to carry on its business as now being conducted and to enter into
this Agreement and perform its obligations hereunder.
(ii) The execution and delivery of this Agreement by Aquis has
been duly and validly authorized and approved by all necessary action and this
Agreement is valid and binding upon Aquis.
(iii) The execution and performance of this Agreement and
compliance with the provisions hereof by Aquis will not, to the best of Aquis's
knowledge, violate any provision of law, and will not, with or without the
giving of notice and/or the passage of time, conflict with or result in any
breach of any of the terms or conditions of, or constitute a material default
under, any indenture, mortgage, agreement, or other instrument to which Aquis is
a party or by which it is bound.
(b) Cellco represents and warrants as follows:
(i) Cellco is a partnership duly organized and validly
existing under the laws of the State of Delaware and has all requisite
partnership power and authority to own, operate and lease its properties, to
carry on its business as now being conducted and to enter into this Agreement
and perform its obligations hereunder.
(ii) The execution and delivery of this Agreement by Cellco
has been duly and validly authorized and approved by all necessary action and
this Agreement is valid and binding upon Cellco.
(iii) The execution and performance of this Agreement and
compliance with the provisions hereof by Cellco will not, to the best of
Cellco's knowledge, violate any provision of law, and will not, with or without
the giving of notice and/or the passage of time, conflict with or result in any
breach of any of the terms or conditions of, or constitute a material default
under, any indenture, mortgage, agreement, or other instrument to which Cellco
is a party or by which it is bound.
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Reseller Agreement
14. Relationship of the Parties.
(a) At all times during the term of this Agreement each of Aquis and
Cellco shall endeavor to render prompt, courteous and efficient service to the
other and to the public and will be governed by the standards of honesty,
integrity, and fair dealing.
(b) The parties hereto are independent contractors. Neither party is
authorized to act as an agent for, or legal representative of, the other party
nor shall either party have authority to assume or create any obligation on
behalf of, or binding upon, the other party. Cellco shall not represent itself
as an agent of Aquis.
15. Confidentiality.
(a) All information which is disclosed in connection with this
Agreement by one party to another party and which is by its nature confidential
or proprietary shall be protected hereunder as Confidential Information.
(b) The receiving party shall, for a period of two (2) years from
the later of the date of disclosure or the termination of this Agreement, use
the same care and discretion to limit disclosure of such Confidential
Information as it uses with Confidential Information of its own of the same
nature which it does not desire to disclose or disseminate, including but not
limited to taking steps to:
(i) restrict disclosure of Confidential Information solely to
its employees, advisors or representatives with a need to know and not disclose
such Confidential Information to any other parties;
(ii) advise all receiving party employees, advisors or
representatives with access to the Confidential Information of the obligation to
protect the Confidential Information provided hereunder and obtain the
employees', advisors' and representatives' agreement in writing to be so bound;
and
(iii) use the Confidential Information provided hereunder only
for purposes expressly provided for herein and for no other purposes.
(b) The obligations imposed upon the parties hereto shall not apply
to Confidential Information:
(i) which is made public by the disclosing party;
(ii) which the receiving party can demonstrate was already in
the possession of the receiving party at the time of disclosure by the
disclosing party and not subject to an existing agreement of confidence;
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Reseller Agreement
(iii) which is received from a third party without restriction
and without breach of this Agreement;
(iv) which is independently developed by the receiving party
as evidenced by its records; or
(v) which the receiving party is required to disclose pursuant
to a valid order of a court or other governmental body or any political
subdivision thereof; provided, however, that the recipient of the Confidential
Information shall first have given notice to the disclosing party.
(c) Nothing contained in this Agreement shall be construed as
granting or conferring any rights by license or otherwise in any Confidential
Information disclosed to the receiving party. All Confidential Information shall
remain the property of the disclosing party and upon the termination of this
Agreement, all such information shall be returned by the receiving party to the
disclosing party upon written request. Any abstracts, notes, memoranda or other
documents containing any Confidential Information or any description, summary or
analysis of any Confidential Information shall be destroyed by the receiving
party, which destruction shall be certified in writing by an officer of the
receiving party.
16. Miscellaneous.
(a) Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by a party to the other
party shall be in writing and shall be deemed to have been given upon receipt if
delivered by hand or sent by certified or registered mail postage prepaid, or
the next business day if sent by a prepaid overnight courier service, and in
each case at the respective addresses set forth below or such other address as
such party may have fixed by notice:
If to Cellco or BAPCO, addressed to:
Cellco Partnership
d/b/a Bell Atlantic Mobile
180 Washington Valley Road
Bedminster, New Jersey 07921
Attention: Robert M. Balascio
with a copy to:
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Reseller Agreement
Cellco Partnership
d/b/a Bell Atlantic Mobile
180 Washington Valley Road
Bedminster, New Jersey 07921
Attention: General Counsel
If to Aquis, addressed to:
Aquis Communications, Inc.
1719A Route 10, Suite 300
Parsippany, NJ 07054
with a copy to:
Phillips Nizer Benjamin Krim & Ballon LLP
666 Fifth Avenue
New York, New York 10103
Attention: Monte Engler, Esq.
(b) Arbitration. In the event that there shall be a dispute among
the parties arising out of or relating to this Agreement, the parties agree that
such dispute shall be resolved by final and binding arbitration before one
arbitrator if such dispute involves an amount less than $150,000 and if such
dispute involves an amount equal to or in excess of $150,000 then before a panel
of three arbitrators, in either case, in New York, New York administered by the
American Arbitration Association ("AAA"), in accordance with AAA's commercial
rules of practice then in effect or such other procedures as the parties may
agree to prior to the Closing. Any award issued as a result of such arbitration
shall be final and binding between the parties thereto, and shall be enforceable
by any court having jurisdiction over the party against whom enforcement is
sought. The arbitrator shall have the authority in his or her discretion to
award to the prevailing party the fees and expenses of such arbitration
(including reasonable attorneys' fees) or any action to enforce an arbitration
award. Solely for purposes of an action to enforce an arbitration award under
this section, the parties each hereby consent to the jurisdiction of the Supreme
Court of the State of New York and the service of process therein.
(c) Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York without reference to its conflict of laws provisions.
(d) Amendments and Waivers. This Agreement may not be amended or
modified except by written instrument duly executed by each of the parties. No
term or provision of this Agreement may be waived without the written consent of
the party entitled to the benefit thereof by a written instrument duly executed
by such party.
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Reseller Agreement
(e) No Third Party Beneficiaries. No person other than the parties
to this Agreement shall be entitled to enforce any of the provisions of this
Agreement.
(f) Access to Information. Aquis and Cellco (and each relevant
Affiliate thereof) shall provide reasonable opportunity for the other party to
examine its relevant records in order to verify compliance with the terms of
this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which counterparts shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
(h) Non-Conflict. Each party warrants that no obligation provided
for herein is in conflict with any other contractual obligation of either party
with any third party.
(i) Binding Effect. This Agreement and the rights and obligations of
the parties shall inure to the benefit of and be binding upon the parties and
their successors and permitted assignees.
(j) Severability. Should any part of this Agreement for any reason
be declared invalid by order of any court or regulatory agency, such order shall
not affect the validity of any remaining portion, which shall remain in force
and effect as if this Agreement had been executed with the invalid portion
eliminated if, the intention of the parties would be reflected by the remaining
portion of this Agreement without including therein any such part or portion
which may, for any reason, be hereafter declared invalid.
(k) Non-Waiver. The waiver, express or implied, by either party, of
any rights or of any failure to perform or breach by the other party shall not
constitute or be deemed a waiver of any other right hereunder or any other
failure to perform or breach by the other party, whether of a similar or
dissimilar nature.
(l) Amendments. This Agreement may not be changed or modified except
by a written agreement, executed on behalf of both parties.
(m) Entire Agreement. The parties have read this Agreement and all
of its attachments and agree to be bound by its terms, and further agree that it
constitutes the complete statement of the agreement between them which
supersedes all proposals, oral or written, and all other communications between
them relating to the subject matter of this Agreement.
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Reseller Agreement
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
CELLCO PARTNERSHIP AQUIS COMMUNICATIONS, INC.
By: Bell Atlantic Mobile, Inc., its
Managing General Partner
By: /s/ Dennis F. Strigl By: /s/ John X. Adiletta
----------------------------------- -------------------------------
Name: Dennis F. Strigl Name: John X. Adiletta
Title: President Title: President
BELL ATLANTIC PAGING, INC.
By: /s/ Robert M. Belascio
-----------------------------------
Name: Robert M. Belascio
Title: President
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Reseller Agreement
EXHIBIT A
PAGING LICENSES
The Aquis Services comprise the provision of paging and related communications
services using the following FCC licenses, any authority derived from such
Licenses for fill-in sites associated therewith, and any authority held by Aquis
with respect to the 157.89 MHz frequency associated with the 152.63 MHz
frequency.
FCC License Call Signs
KAA891 KGA586 KGI785 KNKI454
KEK300 KGC226 KIB529 KNKP337
KGA473 KGC411 KIC347 KNKP688
KGA474 KGC590 KIG852 KNLM403
KGA475 KGC602 KLF627 KUO562
KGA476 KGH861 KLF628 KWH310
KGA585
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<PAGE>
Reseller Agreement
EXHIBIT B
PAGING SERVICES, SPECIFICATIONS, AND PERFORMANCE STANDARDS
PAGING NETWORK PERFORMANCE STANDARDS
System Availability: See Exhibit C
Response Time: See Exhibit C
Scheduled Downtime o 7 day advance notification
(per Network Frequency): o Off-hours downtime (12:00am - 5:00am)
o See Exhibit C
Unscheduled Downtime: o Immediate notification (emergency)
BILLING SYSTEM ACCESS
System Availability: 7:00 am to 11:00 pm - 7 days per week
Activation Response Time: 60 seconds or less
Test Page: Immediately following activation, subject to
paging network response time above
Scheduled Downtime: o 7 day advance notification (during hours
of availability)
Unscheduled Downtime: o Immediate notification (emergency)
o Not more than 48 hours for interruption
in service which affect at least one-half
of the transmitters on a given frequency.
o Not more than 24 hours for interruption
in service which affect at least one such
transmitter.
SUPPORT
Reseller Operational Support: o See Exhibit C
Marketing/Sales Support: Designated single point of contact
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<PAGE>
Reseller Agreement
Billing System Support: o Designated single point of contact
o Contact list, with back-up designees and
escalation procedures and contacts, to
include phone, pager and cellular
telephone numbers
-15-
LICENSE AGREEMENT
THIS LICENSE AGREEMENT, made the 31st day of December, 1998 (this "License
Agreement"), between BELL ATLANTIC NETWORK SERVICES, INC., a Delaware
corporation for and on behalf of
BELL ATLANTIC - DELAWARE, INC., a Delaware corporation,
BELL ATLANTIC - MARYLAND, INC., a Maryland corporation,
BELL ATLANTIC - NEW JERSEY, INC., a New Jersey corporation,
BELL ATLANTIC - PENNSYLVANIA, INC., a Pennsylvania corporation,
BELL ATLANTIC - VIRGINIA, INC., a Virginia corporation,
BELL ATLANTIC - WASHINGTON, D.C., INC., a New York corporation, and
BELL ATLANTIC - WEST VIRGINIA, INC., a West Virginia corporation, shall each be
referred to from time to time as an "OTC" or "Licensor" and collectively as the
"OTCs" or "Licensors"
and AQUIS COMMUNICATIONS, INC., a Delaware corporation formerly known as BAP
Acquisition Corp., referred to from time to time as the "Licensee".
NOW THEREFORE, for good and valuable consideration and intending to be
legally bound, the parties hereto covenant and agree as follows:
1. Premises:
(a) Licensors are the respective owners or lessees of the real
properties described in Exhibit A annexed hereto (the "Properties").
Subject to the restrictions contained in the various leases of
Properties to Licensors, where applicable (the "Master Leases"),
Licensors agree to license to Licensee certain space in or on the
buildings, roof tops, towers and lands of the Properties depicted in
Exhibit B annexed hereto (the "Premises") for the purposes of
installing, operating, maintaining, repairing, and replacing the
communications equipment described in Exhibit C annexed hereto
("Equipment"). Licensee's rights to occupy space on Properties
leased by Licensors under the Master Leases are subject to the
rights of the respective lessors thereunder and the terms of the
respective Master Leases.
(b) For those locations for which Licensors have authority to grant such
rights and subject to Licensors' access requirements as set forth
hereinafter, Licensors also grant to Licensee a non-exclusive
license over so much of the Properties as is reasonably necessary
for:
i. access to the Premises by vehicle and foot, and
<PAGE>
License Agreement
ii. the installation, maintenance, and repair and replacement of
requisite wires, cables, conduits and pipes for the
installation, operation and maintenance.
2. Use:
(a) The Premises shall be used by the Licensee for the installation,
maintenance, operation, repair and replacement of the Equipment
which shall be used to provide communications services licensed by
the Federal Communications Commission ("FCC").
(b) Licensee will provide Licensor a statement containing the
manufacture and model of any new or replacement Equipment.
(c) Licensee will provided Licensor with a copy of any amendments to the
FCC licenses which authorize the operation of the Equipment.
3. Term and Commencement Date:
(a) The Initial Term of this License Agreement shall be five years
("Initial Term"), commencing the date of this Agreement
("Commencement Date").
(b) Except as set forth in subsection (c) hereinafter, this License
Agreement shall automatically be renewed for each Premises without
need of further documentation for one (1) additional five-year term
("Renewal Term") unless Licensee provides notice of its intention
not to renew at least 90 days prior to the expiration of the Initial
Term. Licensee may provide such notice for one or more Premises.
(c) Pursuant to Section 6.11 of that certain Asset Purchase Agreement
dated as of July 2, 1998 among the OTCs, Bell Atlantic Paging, Inc.
and Licensee (the "Purchase Agreement"), Licensee has agreed to
remove Equipment from certain of the Premises in accordance with
certain agreements and schedules referred to in such Section.
Licensor's obligations hereunder to lease or sublease such Premises
shall expire on the earlier of the date Licensee has removed such
Equipment from such Premises or the date by which Licensee is
obligated under Section 6.11 of the Purchase Agreement to have
removed such Equipment from such Premises; provided, however, that
with respect to Transmitters (as defined in the Purchase Agreement)
and Equipment associated therewith, Licensor shall identify and make
available for lease to Licensee under the terms of this License
Agreement as a site for such Equipment other premises in non-secure
locations of the same Property.
-2-
<PAGE>
License Agreement
4. License Fee:
(a) During the Initial Term and the Renewal Term, if any, the monthly
license fee for each of the Premises shall be $375.00 per month,
subject to increase pursuant to Section 4(b) below (the "Monthly
License Fee"); provided that there shall be no charge for the first
month.
(b) The Monthly License Fees shall increase by three percent (3%)
(cumulatively) on each one-year anniversary of the Commencement
Date.
(c) The Monthly License Fees for all of the Premises shall be paid to
Licensors at the following address:
Bell Atlantic - Maryland, Inc.
1 E. Pratt Street, 8N
Baltimore, Maryland 21202
Attention: Sandra Williams, Assistant Manager - Real Estate
(d) The first month's Monthly License Fees (prorated to the extent
necessary to give Licensee the benefit of one full month's free
rent) shall be paid on the first day of the calendar month following
the Commencement Date, and thereafter the Monthly License Fees shall
be paid in advance on the first day of each month.
5. Real Estate Taxes, Taxes and Operating Expenses:
(a) Licensee shall not pay any real estate taxes on the Properties or
buildings thereon.
(b) Licensor shall provide electrical service to the Premises for use by
Licensee. Licensee shall pay Licensor for its electrical utilities
usage to the extent such usage exceeds $10 per month at each of the
Premises.
(c) Any tax, assessment, levy, charge, fee or license imposed or
required by reason of or in connection with property ownership or
lease by Licensor, with regard to the Premises, shall be paid in
full by the Licensor. Any tax, assessment, levy, charge, fee, or
license required by reason of the use of the Premises by Licensee
shall be paid in full by Licensee.
6. Permits and Approvals:
Upon request, Licensors agree to cooperate with Licensee in obtaining, at
Licensee's sole expense, any licenses, permits and other approvals
required by any federal, state or local
-3-
<PAGE>
License Agreement
authority to be held by Licensee for Licensee's use of the Premises and/or
the Equipment (the "Approvals"). Licensee agrees that it shall maintain
all licenses, permits and other approvals required by any federal, state
or local authority to be maintained by Licensee for Licensee's use of the
Premises and/or the Equipment.
7. Indemnification:
(a) Licensee shall indemnify Licensors, their affiliates and its and
their directors, officers and employees against, and protect, save
and hold them harmless from, and assume liability for, any and all
claims, suits, penalties, actions, judgments, settlements,
obligations, liabilities and other damages (and all reasonable costs
and expenses incidental thereto, including reasonable attorney's
fees) (i) arising by reason of any injury or death to any person or
persons (including employees or agents of Licensee), or damage to
property of Licensors or other person or persons, where such
injuries, losses or damage have been caused by, or arising out of,
any act or omission of Licensee, its agents, or employees at or
around the Premises or (ii) arising from third party claims of
liability or loss resulting from service outages, failures,
malfunctions or damage to Licensee's equipment located on the
Property (collectively, "Losses").
(b) No indemnity in favor of Licensors under this Agreement against
Losses shall apply to any such injury or damage caused by or
resulting primarily from the negligence of Licensors, their agents
or employees.
8. Limitation on Licensors' Liability:
Notwithstanding anything to the contrary contained in this License
Agreement, Licensee agrees that Licensors shall have no liability or
responsibility to Licensee under this License Agreement due to an
interruption or suspension of utility services or other services at the
Premises or to Licensee's Equipment, if access is denied due to labor
dispute or any other reason, or for any malfunction or non-functioning of
Licensee's Equipment for any cause, except that in the event electric
service to Licensee's Equipment is interrupted for more than 24
consecutive hours due to the negligence of Licensors, Licensors' agents,
contractors or employees, then Licensee shall be entitled to damages equal
to one day's license payment for each additional 24 consecutive hour
period that such interruption continues, which damages may, at either
party's option, be paid in the form of a credit against the next accruing
monthly license payment hereunder. The maximum liability, if any, of
Licensors for any damages arising out of or in connection with this
License Agreement, including without limitation contract damages and
damages for injuries to persons or property and regardless of whether a
claim is based on contract, tort, strict liability or otherwise, shall be
limited to an amount not to exceed the aggregate amount of
-4-
<PAGE>
License Agreement
Monthly Rental Fees received by Licensors hereunder. In no event shall
Licensors be liable for any special, indirect, incidental or consequential
damages, including without limitation lost revenues or profits, even if
they have been advised of the possibility of such damages. Licensors shall
not be liable hereunder for any delay or failure in performance caused by
acts beyond Licensors' reasonable control, including without limitation,
acts of God, war, vandalism, sabotage, accidents, fires, floods, strikes
or labor disputes (including without limitation strikes by or labor
disputes with Licensors' unionized labor force), interruption of utility
services, or acts of any unit of government or governmental agency.
9. Compliance with Law:
(a) Licensee shall, at Licensee's sole cost and expense, comply with all
of the requirements of the county, municipal, state, federal, and
other applicable governmental, authorities, now in force, or which
may hereinafter be in force and shall defend, indemnify, and save
harmless Licensor from any claims or suits arising by reason of
Licensee's failure to comply with such requirements.
(b) Licensor shall, at Licensor's sole cost and expense, comply with all
of the requirements of the county, municipal, state, federal, and
other applicable governmental, authorities, now in force, or which
may hereinafter be in force and shall defend, indemnify, and save
harmless Licensee from any claims or suits arising by reason of
Licensor's failure to comply with such requirements.
(c) The failure of either party to enforce any terms or conditions of
this License Agreement shall not constitute a waiver of the same or
other terms and conditions or otherwise prevent or preclude such
party from exercising the rights or remedies hereunder, at law or in
equity.
(d) This License Agreement shall be deemed to have been executed in the
Licensors' respective States, and the parties hereto agree that the
terms and performances hereof shall be governed by and construed in
accordance with the laws of the Licensors' respective States, so
that the law of the State in which a Property is located shall apply
to that Property.
10. Interference:
(a) Licensee agrees that the Equipment shall not cause interference with
the use or enjoyment of the property of Licensors, other licensees
located at the Premises or neighboring landowners, including, but
not limited to interference with radio communications facilities. In
the event that Licensee's equipment causes such
-5-
<PAGE>
License Agreement
interference to such use or enjoyment, Licensee agrees immediately
to cease operations until such interference is removed by Licensee,
at its sole expense.
(b) Licensors shall not knowingly allow any other licensee of the
Property to cause interference with the Licensee use of the
Premises. In the event of such interference, Licensors will take
reasonable action to ensure that the party causing the interference
takes appropriate action to correct and eliminate the interference.
11. Improvements:
(a) All Equipment mounted on a roof or tower must be attached securely
with approved mounts, hangers, and clamps as approved by the
Licensor. All cables and wires entering or exiting equipment and/or
buildings must do so in a manner approved by the Licensor. Failure
to correct any non-compliance with the terms and conditions of this
Paragraph within three (3) days after notice thereof is given to
Licensee shall be cause for immediate termination of this License
Agreement by Licensor at its sole discretion. Additionally no
materials may be used in the installation, maintenance or upgrade of
the antennas, cables, and wires that will cause corrosion, rust, or
deterioration of the building, roof, tower or appurtenances thereof.
(b) Each antenna must be identified by a metal tag fastened securely to
its mounting bracket. Licensee shall have thirty (30) days from the
date of this License Agreement to comply with this requirement.
(c) Installation and maintenance of the Licensee's Equipment shall be
done at the Licensee's sole expense, using contractors having the
applicable Licensor's prior approval, shall be in accordance with
the standards and requirements of the Licensor, and shall be done
under the Licensor's supervision and shall be subject to Licensor's
final written approval, which shall not be unreasonably withheld.
The supervision, approval and other activities of Licensor under
this Paragraph, however, shall not constitute the waiver of any term
or condition of this License Agreement. Scheduling of and all work
shall be coordinated with the Licensor. Any future maintenance
involving antennas and transmission lines must be coordinated with
Licensor within a reasonable time of not less than twenty-four (24)
hours prior to work being done, except in case of emergency. Failure
to comply with the terms and conditions of this Paragraph shall be
cause for immediate termination of this License Agreement by
Licensor at its sole discretion.
(d) It is understood and agreed by and between the parties hereto that
the Equipment shall, unless otherwise agreed in writing, remain the
personal property of Licensee
-6-
<PAGE>
License Agreement
and Licensee shall have the privilege and right to remove the same
at any time during the term of this License Agreement, by
contractors approved by Licensors (which approval shall not be
unreasonably withheld) and in accordance with the terms of Section
6.11 of the Purchase Agreement and that certain Maintenance
Agreement dated the date hereof between Licensee and Bell Atlantic
Network Services, Inc., on behalf of Licensors (the "Maintenance
Agreement").
(e) Licensee agrees not to damage the Premises or any personal property
or fixtures thereon in any way. The liability for any such damage,
if committed, shall be the liability of Licensee in accordance with
the Indemnification Paragraph 7.
(f) It is agreed that any fixtures, structures, signs, or other
improvements placed upon the Premises by Licensee other than the
Equipment, may only be so placed with the express written approval
of Licensor.
12. Maintenance:
Licensee agrees to keep and maintain the Equipment at all times and at its
expense, in a good state of repair and maintenance and in compliance with
all laws, rules and regulations of any and all governmental authorities by
Licensee, and Licensee shall defend, indemnify and save Licensor harmless
from any claims or suits arising by reason of Licensee's failure to so
keep and maintain the Equipment or to comply with such laws, rules or
regulations. Licensee agrees that Licensee's Equipment will comply with
American Standard Nation Safety Levels with Respect to Human Exposure to
Radiofrequency Electromagnetic Fields, 300KHz to 100GHz (ANSI/IEEE
C95.1-1992). Licensors assume no responsibility for maintaining the
Equipment except as explicitly stated in the Maintenance Agreement.
13. Restoration:
Licensee shall remove the Equipment, as well as its fixtures, structures,
signs or other improvements, if any, placed upon the Premises, upon the
expiration of the term of this License Agreement or the termination
hereof, whichever first occurs, unless the parties otherwise expressly
agree in writing. In performing such removal, Licensee shall restore the
Premises and any personal property and fixtures thereon to as good a
condition as they were prior to the installation or placement of such
Equipment, fixtures, signs or other improvements, reasonable wear and tear
excepted, as determined in the reasonable opinion of Licensor. If Licensee
fails to remove such Equipment, fixtures, signs or other equipment upon
expiration of this License Agreement, Licensor may, after reasonable
notice of not longer than thirty (30) days, remove and dispose of such
equipment, fixtures, signs or other improvements and Licensee shall
reimburse Licensor for the costs of such
-7-
<PAGE>
License Agreement
removal and disposal. Licensee must use contractors approved by Licensors
to remove the Equipment.
14. Insurance:
Licensee shall at its own expense during the term of this License
Agreement maintain throughout the term of this License, as the same may be
extended:
(a) commercial general liability insurance with $1 million combined
single limit for bodily injury and/or property damage, together with
an endorsement for contractual liability and broad form property and
personal injury endorsements; and
(b) all-risk property insurance for full replacement value of Licensee's
Equipment, with a waiver of subrogation on behalf of Licensee; and
(c) statutory worker's compensation insurance; and
(d) employers liability insurance in the amount of $1 million; and
(e) automobile liability insurance with $1 million combined single limit
coverage; and
(f) umbrella/excess liability insurance with $5 million of coverage
which applies to the policy set forth in (a) above.
Such policies shall be in a form and with such insurance companies as
shall be reasonably satisfactory to Licensors and will contain a provision
for ten (10) days' prior notice to the Licensors of any cancellation. Such
insurance policies as set forth in (a), (d) and (f) shall name Licensors
as an additional insured. An approved certificate of eachsuch insurance
policy shall be furnished to Licensors.
15. Access:
Licensee will provide to Licensors on or before the effective date of this
License Agreement, a list of all personnel authorized by Licensee to have
access to its Equipment, and will update such list as soon as reasonably
practicable, upon a change in such personnel; provided, however, that any
personnel not on such list may not enter upon the Premises. In the
alternative to maintaining such a list, however, Licensee may supply its
employees with photographic identification which is acceptable to
Licensors that clearly and prominently identifies its employees as
employees of Licensee, and, except as set forth hereinafter, Licensor
agrees to allow Licensee's employees access to the Premises upon
presentation of such identification. Notwithstanding anything to the
contrary herein,
-8-
<PAGE>
License Agreement
unless accompanied by an employee of a Licensor, Licensee shall not have
access to those Premises at which the Licensee's equipment is maintained
by Licensors or which is located in the Bell Atlantic Tower.
16. Termination:
(a) Licensor may terminate this License Agreement upon written notice to
Licensee of a breach or default hereunder and, except where
immediate termination or termination after another specified notice
and cure period is provided for under this License Agreement, by
affording Licensee a reasonable opportunity, not to exceed thirty
(30) days from the date of Licensee's receipt of such notice (unless
expressly extended in writing by the Licensor), to correct the
breach or default.
(b) Licensee may terminate this License Agreement with respect to
certain Premises, without further liability hereunder with respect
to such Premises, upon providing not less than ninety (90) days
prior notice to Licensor:
(i) if Licensee is unable to obtain or maintain any necessary
approval to operate and maintain the Equipment at such
Premises; or
(ii) if, due to changed circumstances, Licensee determines that the
Premises is no longer suitable for its intended purpose; or
(iii) if Licensee determines that any of the Equipment at such
Premises cannot be used without interference from, or to,
other nearby property.
(c) Licensee or Licensors may terminate this License Agreement with
respect to certain Premises, without further liability hereunder
with respect to such Premises, upon providing notice if such
Premises or the Equipment thereon is destroyed or damaged and
rendered unsuitable for normal use (unless such damage or
destruction resulted from acts of Licensor and the Equipment is
again rendered suitable for normal use as promptly as reasonably
practicable) or if the Property is taken pursuant to a condemnation
action. In such event, all rights and obligations of the parties
shall cease with respect to such Premises as of the date of the
damage or destruction or taking. The foregoing notwithstanding, if
such destruction or damage of the Premises results from acts of
Licensor and if reconstruction of the Premises would cost less than
sixty (60) times the Monthly License Fee for such Premises, Licensee
shall be entitled to require Licensor not to terminate this License
Agreement and to reconstruct the Premises.
(d) [Reserved]
-9-
<PAGE>
License Agreement
(e) For those Properties that are not owned by a Licensor, the license
granted hereunder will terminate contemporaneously with the
termination of the applicable Licensor's right of occupancy.
(f) Licensors may terminate this License Agreement upon the occurrence
and during the continuance of an Event of Default under the
Promissory Note (as defined in the Purchase Agreement).
17. Sale or Mortgage of Property:
Should Licensors, at any time after the execution date of the License
Agreement, decide to sell, mortgage or encumber all or any part of a
Property, such transaction and its documentation shall be subject to this
License Agreement and Licensee's rights hereunder.
18. Assignment:
This License Agreement may be sold, assigned or transferred by Licensee to
Licensee's owner, affiliates controlled by Licensee's owner or
subsidiaries controlled by Licensee's owner, whose net worth equals or
exceeds that of the Licensee, with the prior written approval of Licensor,
which shall not be unreasonably withheld. No other sale, assignment or
transfer is permitted without the prior written consent of Licensor.
19. Notice:
Any and all notices or other written communications required or permitted
hereunder shall be in writing and mailed postpaid via United States
Registered Mail or Certified Mail, or by overnight courier as follows:
Licensors:
Manager - Real Estate Leasing
Bell Atlantic Network Services, Inc.
1320 N. Court House Road, 5th Floor
Arlington, Virginia 22201
Licensee:
Aquis Communications, Inc.
1719A Route 10, Suite 300
Parsippany, NJ 07054
Attention: John X. Adiletta
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<PAGE>
License Agreement
with copies to:
Phillips Nizer Benjamin Krim & Ballon LLP
666 Fifth Avenue
New York, New York 10103
Attention: Monte Engler, Esq.
and, if such notice is a notice of default, to
FINOVA Capital Corporation
1850 North Central Avenue
Phoenix, Arizona 85002-2209
Attention: Vice President, Law
Telecopy No: (602) 207-5036
20. No Third Party Rights:
This License Agreement shall not create for, nor give to, any third party
any claim or right of action against either party to this License
Agreement that would not arise in the absence of this License Agreement.
21. Quiet Enjoyment and Eminent Domain:
(a) Provided Licensee has made all payments required hereunder and is
otherwise in compliance with the terms of this license, Licensee
shall have quiet enjoyment of the Premises, from Licensors or anyone
claiming through Licensors. Licensors make no warranty of quiet
enjoyment from its landlords on behalf of Licensee.
(b) If the property or any part thereof is taken by eminent domain, this
Agreement shall expire with respect to that property only on the
date when the leased property shall so be taken and the rental shall
be apportioned as of that date. Licensee shall have the right to
make a separate claim with the condemning authority for the value of
the Licensee's property and for moving and relocation expenses;
provided, however, that such separate claim shall not reduce or
adversely affect the amount of Licensors' award.
22. Entire Agreement:
This License Agreement, including the Exhibits annexed hereto which form a
part hereof, contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and supersedes all prior
understandings or agreements with respect to
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<PAGE>
License Agreement
such subject matter. This License Agreement may not be amended or modified
except by a writing duly executed by both of the parties hereto. Any term
or provision of this License Agreement may not be waived without the
written consent of the party hereto entitled to the benefit thereof by a
writing duly executed by such party. Any failure by either party hereto to
exercise its rights hereunder is not a waiver or such rights.
23. Time is of the Essence:
Time is of the essence in all terms of this License Agreement, except as
may be otherwise expressly provided herein.
24. Miscellaneous:
(a) Any and all rights and remedies hereunder are cumulative and are in
addition to such other rights and remedies as may be available at
law or in equity.
(b) This License Agreement grants a license only, revocable or
terminable under the terms and conditions herein, and does not grant
any lease, easement or other interest in real estate.
(c) This License Agreement may be executed and delivered originally or
by facsimile and in two counterparts, each of which shall constitute
an original, but both of which taken together shall constitute one
and the same instrument.
(d) Headings used in this License Agreement are provided for convenience
only and shall not be used to construe meaning or intent.
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<PAGE>
License Agreement
IN WITNESS WHEREOF, the parties hereto, consenting to be legally bound,
have placed their hands and seals below as of the date set forth hereinabove.
LICENSEE:
WITNESS: AQUIS COMMUNICATIONS, INC.
______________________ By: /s/ John X. Adiletta
--------------------------
Name: John X. Adiletta
Title: President
LICENSORS:
BELL ATLANTIC NETWORK SERVICES, INC.
For and on behalf of:
Bell Atlantic - Delaware, Inc.
Bell Atlantic - Maryland, Inc.
Bell Atlantic - New Jersey, Inc.
Bell Atlantic - Pennsylvania, Inc.
Bell Atlantic - Virginia, Inc.
Bell Atlantic - Washington, D.C., Inc.
Bell Atlantic - West Virginia, Inc.
WITNESS:
______________________ By: /s/ Edward H. Sproat
--------------------------
Name: Edward H. Sproat
Title: President and Chief Operating Officer
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<PAGE>
License Agreement
EXHIBITS A AND B
DESCRIPTION OF PROPERTIES
DESCRIPTION OF DEMISED PREMISES
See Attachment
-14-
<PAGE>
EXHIBIT C
DESCRIPTION OF EQUIPMENT
See Schedule 3.1.3(a) to the Asset Purchase Agreement, which lists
which Equipment is located on the respective Premises.
-15-
- --------------------------------------------------------------------------------
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 BELL 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.
- --------------------------------------------------------------------------------
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 BELL 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 Bell
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
<PAGE>
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, 3 Mellon Bank Center, Pittsburgh, PA 15259, ABA
Routing No. 043000261, for the account of Bell Atlantic Financial Services,
Inc., Account No. 199-2890, for further credit to Bell 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 Bell
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
John X. Adiletta, provided that all of the proceeds of such loan were invested
in Purchaser for equity issued to John X. Adiletta, 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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<PAGE>
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 Title 11,
United States 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. Brian Plunkett By: /s/ John X. Adiletta
- -------------------------------- ------------------------------------
Name: John X. Adiletta
Title: President
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SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement") is entered into as of
December 31, 1998 among AQUIS COMMUNICATIONS, INC., a Delaware corporation
("Borrower"), BELL 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.
<PAGE>
Base Principal Payment shall mean the $1,200,000 principal
payment due on March 31, 2000 pursuant to the Subordinated Note.
Bell Atlantic Seller Note Payment shall mean the Required Bell
Atlantic Principal Payment, together with all accrued and unpaid
interest on the Subordinated Indebtedness through the date the
Required Bell 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 Bell 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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<PAGE>
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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<PAGE>
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 Bell Atlantic Acquisition Instruments, including the tax
obligations owing under the Transfer Tax Agreement dated December
31, 1998 among Borrower and the Bell 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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<PAGE>
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 Bell 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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<PAGE>
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, sue 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"), Bell 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 Bell 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.
1719A Route 10, Suite 300
Parsippany, New Jersey 07054
Attention: John X. Adiletta
Telecopy: (973) 560-8004
To Subordinated Lender: c/o Bell Atlantic NSI
1717 Arch Street
32nd Floor, West
Philadelphia, PA 19103
Attention: Stephen B. Heimann, Esq.
Telecopy: (215) 963-9195
To Senior Lender: FINOVA Capital Corporation
311 South Wacker Drive
Suite 4400
Chicago, Illinois 60606
Attention: Portfolio Manager
Telecopy: (312) 322-3533
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Copy to: FINOVA Capital Corporation
1850 North Central Avenue
Phoenix, Arizona 85002-2209
Attention: Vice President, Law
Telecopy: (602) 207-5036
Copy to: Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Attention: Michael L. Owen, Esq.
Telecopy: (312) 715-4800
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
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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 Bell 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
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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/ John X. Adiletta
-------------------------------------
John X. Adiletta
President
BELL ATLANTIC PAGING, INC., a Delaware
corporation
By: /s/ Robert M. Belascio
-------------------------------------
Name: Robert M. Belascio
-------------------------------------
Title: President
-------------------------------------
FINOVA CAPITAL CORPORATION, a
Delaware corporation
By: /s/ David A. Meier
-------------------------------------
David A. Meier
Vice President
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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 Bell Atlantic Seller Note Payment Date
occurs on or before June 30, 2000, the amount of the Subsequent Portion as of
the Bell Atlantic Seller Note Payment Date in excess of the proceeds of the
Subsequent Portion actually used to make the Bell 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.
Bell Atlantic Acquisition: the acquisition by Borrower from the Bell
Atlantic Sellers of the Bell Atlantic System pursuant to the terms and
conditions of the Bell Atlantic Acquisition Instruments.
Bell Atlantic Acquisition Instruments: the Asset Purchase Agreement dated
as of July 2, 1998 among the Bell Atlantic Sellers and Borrower, and all
documents, instruments and agreements executed and delivered in connection
therewith.
Bell Atlantic Interest Account: a segregated deposit account maintained by
Borrower at a Qualified Depository.
Bell Atlantic Seller Note Payment Date: the date the Bell Atlantic Seller
Note Payment has been paid in full.
Bell Atlantic Sellers: collectively, Bell Atlantic - Delaware, Inc., a
Delaware corporation, Bell Atlantic - Maryland, Inc., a Maryland corporation,
Bell Atlantic - New Jersey, Inc., a New Jersey
A-1
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corporation, Bell Atlantic - Pennsylvania, Inc., a Pennsylvania corporation,
Bell Atlantic - Virginia, Inc., a Virginia corporation, Bell Atlantic -
Washington, D.C., Inc., a New York corporation, Bell Atlantic - West Virginia,
Inc., a West Virginia corporation, and Subordinated Lender.
Bell Atlantic System: the Property to be sold to Borrower pursuant to the
terms and conditions of the Bell 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 Bell 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.
A-3
<PAGE>
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
<PAGE>
(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.
A-5
<PAGE>
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 Bell Atlantic Sellers derived from the operation of the Bell
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 Bell 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.
A-6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AQUIS COMMUNICATIONS GROUP, INC.
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 INCLUDED IN THIS REPORT ON
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,650
<SECURITIES> 0
<RECEIVABLES> 3,637
<ALLOWANCES> (625)
<INVENTORY> 1,775
<CURRENT-ASSETS> 8,529
<PP&E> 18,481
<DEPRECIATION> 5,447
<TOTAL-ASSETS> 42,922
<CURRENT-LIABILITIES> 8,573
<BONDS> 24,650
152
0
<COMMON> 0
<OTHER-SE> 9,656
<TOTAL-LIABILITY-AND-EQUITY> 42,922
<SALES> 128
<TOTAL-REVENUES> 6,422
<CGS> 258
<TOTAL-COSTS> 6,835
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 929
<INCOME-PRETAX> (1,342)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,342)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,342)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
