Exhibit 10.30
LOAN AGREEMENT
DATED AUGUST 14, 2001
BETWEEN
CRESSON PRODUCTIONS, INC,
A NEVADA CORPORATION
AND
iEXALT, INC.,
A NEVADA CORPORATION
LOAN AGREEMENT
This Loan and Security Agreement (this "Agreement") is made and
entered into as of August 14, 2001 by and between iExalt, Inc., a Nevada
corporation (the "Company"), and Cresson Productions, Inc., a Nevada
corporation, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Lender").
ARTICLE 1
AMOUNT AND TERMS OF CREDIT
1.1. SECURED TERM LOAN. Subject to the terms and conditions of this
Agreement, at the Closing, (i) Lender agrees to lend and the Company agrees
to borrow an amount equal to the amount set forth on the attached Lender
Schedule in a minimum amount of one hundred forty thousand dollars ($140,000)
(herein called "Initial Loan"), and (ii) Lender agrees to deliver to Company
after Closing the additional amounts set forth on the Lender Schedule
opposite Lender's name (herein called Lender's "Subsequent Loans"; the
Initial Loan and all Subsequent Loans that are funded to the Company pursuant
to the terms hereunder are called the "Loans", pursuant to a promissory note
in the form of Exhibit A, with appropriate insertions (herein called Lender's
"Note") to be dated as of the Closing Date (as defined herein). In the event
that additional amounts are loaned hereunder, the Company and Lender shall
amend the Lender's Schedule accordingly.
1.2 CLOSING AND FUNDING OF THE INITIAL LOAN AND THE SUBSEQUENT LOANS. The
funding of the Initial Loan (the "Closing") shall occur upon the satisfaction
of all conditions to Closing specified in Sections 4.1 and 4.2 hereof (the
"Closing Date"), and may be accomplished via the exchange of all requisite
documentation by overnight mail, messenger, e-mail or telecopy, as deemed
necessary and appropriate by Lender. The funding of the Subsequent Loans to
the Company shall occur upon the satisfaction of the Subsequent Loans
Conditions (as defined herein).
1.3. DOCUMENTATION EXPENSES. Each party shall pay all reasonable fees and
expenses relating to the negotiation and preparation of this Agreement and
the consummation of the transactions contemplated hereby including, without
limitation, (a) the cost of producing and re-producing this Agreement, the
Note and the Security Documents, (b) the legal fees and (c) Any reasonable
out-of-pocket expenses, and (d) all expenses (including reasonable attorneys'
fees of counsel to Lender at any time and all recording and filing fees)
incurred by Lender relating to any amendments, supplements, waivers, releases
or consents pursuant to the provisions of this Agreement, the Note or the
Security Documents (including in connection with any work-out, restructuring
or similar proceeding relating to the performance of the obligations of the
Company hereunder or thereunder).
1.4 PLACEMENT FEE. The Company will issue a Warrant Certificate for four
hundred twenty thousand shares (420,000) shares of the Company's common stock
(the "Placement Fee") to Lender for securing and/or arranging the Loans. The
Warrant Certificate will entitle the holder to subscribe for and purchase
from the Company four hundred twenty thousand (420,000) shares of the
Company's common stock at an exercise price of $0.07 per share. The Warrant
Certificate will be earned at Closing and vested upon the Company's execution
of the Loan Documents. The form of the Warrant Certificate will be
substantially the same as that form attached hereto as Exhibit B.
ARTICLE 2
NOTE PAYMENTS
2.1. INTEREST PAYMENTS. The principal balance due and owing on the Loans
shall bear interest as stated in the Note and shall be due and payable as
stated in the Note.
2.2. PRINCIPAL PAYMENTS. Principal payments shall be due and payable as
stated in the Note.
2.3. VOLUNTARY PREPAYMENT. The Company may from time to time, without premium
or penalty, prepay the Loans in whole or in part. Any prepayment of the full
amount of the Loans shall include all accrued interest thereon. All payments
and prepayments of the Loans shall be first applied to accrued and unpaid
interest on the unpaid principal balance of the Loans, and the remainder, if
any, to any unpaid principal balance.
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ARTICLE 3
WARRANTIES AND REPRESENTATIONS
The Company represents and warrants to Lender as follows:
3.1. CORPORATE ORGANIZATION AND AUTHORITY.
(a) THE COMPANY AND EACH MATERIAL SUBSIDIARY [AS DEFINED HEREIN] IS A
CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF ITS JURISDICTION OF INCORPORATION;
(b) the Company has duly taken all action necessary to authorize the
execution and delivery by it of the Loan Documents and to authorize the
consummation of the transactions contemplated thereby and the performance of
its obligations thereunder;
(c) the Company is duly authorized to borrow funds hereunder;
(d) except as set forth on Schedule 3.1(d), the Company is duly licensed or
qualified and is in good standing as a foreign corporation in each
jurisdiction wherein the nature of the business transacted by it or the
nature of the property owned or leased by it makes such licensing or
qualification necessary; and
(e) the Company does not presently have any Subsidiary or own any stock in
any other corporation or association except the following entities:
(i) CleanWeb, Inc., a Texas corporation, (ii) ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a
Tennessee corporation, (iii) Global Christian Network, Inc., a Nevada
corporation [to be acquired March 2001], (iv) Solutions Global, Inc., a
West Virginia corporation d/b/a ▇▇▇▇▇▇.▇▇▇, (v) Capital Artists Agency,
Incorporated, a Tennessee corporation [to be acquired March 2001], (vi)
PremierCare, L.L.C., a Delaware limited liability company, (vii)
Christian ▇▇▇▇▇▇▇▇.▇▇▇, a Tennessee corporation, (viii) Word Cross
Enterprises, Inc., an Ohio corporation d/b/a Christian Happenings, (ix)
▇▇▇▇▇▇ Communications Group, Inc., a California corporation d/b/a
Christian Times, GCN Combination Corporation, a Nevada corporation, (x)
Integral Behavioral Health Services, Inc., an Ariziona corporation [7%
equity interest] and (xi) iExalt Operating, Inc., a Texas corporation
d/b/a [aa] ▇▇▇▇▇▇.▇▇▇, [bb] iExalt Electronic Publishing, [cc] NavPress
Software, [dd] iExalt Radio, [ee] Life Perspectives Radio, [ff]
iSermons, [gg] ▇▇▇▇▇▇▇ Marketing, and [hh] Rapha.
3.2. FINANCIAL STATEMENTS. The Company has heretofore delivered to Lender
true, correct and complete copies of the Initial Financial Statements. The
Initial Financial Statements fairly present the Company's consolidated
financial position at the respective dates thereof and the consolidated
results of the Company's operations and the Company's consolidated cash flows
for the respective periods thereof. Since the date of the annual Initial
Financial Statements no Material Adverse Change has occurred, except as
reflected in the quarterly Initial Financial Statements. All Initial
Financial Statements were prepared in accordance with GAAP.
3.3. FULL DISCLOSURE. Except to the extent set forth in Schedule 3.3 and
except to the extent that any previous filings have been corrected in the
Company's Form 10-KSB/A and Form 10-QSB/A filed with the Securities and
Exchange Commission and NASDAQ, all filings of the Company with the
Securities and Exchange Commission and the NASDAQ ("SEC Filings") have been
timely made, are true and correct and are not being investigated, challenged
or supplemented or amended in any way except for the currently contemplated
S-1 registration of the Secondary Offering. The Initial Financial Statements
do not, nor does any other written statement furnished by the Company to the
Lender in connection with the negotiation of the Loans and the issuance of
the Note, contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein or herein not
misleading. There is no fact peculiar to the Company that the Company has not
disclosed to Lender in writing that materially
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affects adversely nor, so far as the Company can now foresee, will materially
affect adversely the properties, business, prospects, profits or condition
(financial or otherwise) of the Company.
3.3.A. PRESENT MATERIAL INDEBTEDNESS. The Company has disclosed its
significant debts to Lender, which significant debts are (i) a $550,000 loan
owed to Chase Bank; (ii) a $150,000 loan owed to Chase Bank; (iii) a $545,000
loan owed to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇; (iv) a $180,000 loan owed to ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇; (v) a $90,000 loan owed to Mr. ▇▇▇▇▇ ▇▇▇▇▇▇; (vi) a $90,000 loan
owed to ▇▇. ▇▇▇▇▇ ▇▇▇▇, and (vii) a $75,000 bridge loan owed to ▇▇. ▇▇▇▇▇
▇▇▇▇▇. In addition, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇ each have a $250,000 convertible
debenture obligating the Company.
3.4. PENDING LITIGATION. Except as set forth in the SEC Filings or that do
not involve amounts in excess of $250,000 collectively and except as
disclosed on Schedule 3.4: (a) there are no proceedings or governmental
investigations pending or, to the best knowledge of the Company, threatened
against or affecting the Company in any court or before any governmental
authority or arbitration board or tribunal, (b) there are no outstanding
judgments, injunctions, writs, rulings or orders by any such court,
governmental authority, arbitration board or tribunal against the Company or
any of the Company's stockholders, partners, directors or officers that could
cause a Material Adverse Change, and (c) the Company is not in default with
respect to any contract or agreement to which it is a party or any order of
any court or governmental authority or arbitration board or tribunal.
Company has disclosed to Lender that there are currently
disagreements or disputes with each of the following persons or entities,
which disagreements or disputes could conceivably lead to litigation in the
future:
(i) the indebtedness owed Chase Bank
(ii) the indebtedness owed Thomson & Kernaghan
(iii) the indebtedness owed ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
3.5. NO CONFLICTS. The borrowing under the Loans and the issuance of the Note
and compliance by the Company with all of the provisions of this Agreement,
the Note and the other Loan Documents do not and will not (i) violate any
provisions of any law or any order of any court or governmental authority or
agency, (ii) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under the Certificate of
Incorporation or Bylaws of the Company or any indenture or other contract or
agreement or instrument to which the Company is a party or by which it may be
bound, (iii) result in the acceleration of any Indebtedness owed by the
Company, or (iv) result in the imposition of any liens or encumbrances on any
property of the Company, except as expressly contemplated or permitted in the
Loan Documents.
3.6. NO DEFAULTS. No Default or Event of Default as defined herein has
occurred and is continuing, other than those identified associated with
Permitted Indebtedness. The Company is not in default in the payment of
principal or interest on any Indebtedness and is not in default under any
instrument or instruments or agreements under and subject to which any
Indebtedness has been issued and no event has occurred and is continuing
under the provisions of any such instrument, contract or agreement which with
the lapse of time or the giving of notice, or both, would constitute an event
of default thereunder, except as disclosed. The Company is in material
compliance with all laws, regulations, orders and Environmental Legal
Requirements affecting its business and operations except such non-compliance
as would not materially adversely affect the Company's properties, business,
prospects, profits or condition (financial or otherwise) and has not received
any notice of any violation or potential violation which has not been cured
or remedied.
3.7. GOVERNMENTAL CONSENT. Except for the approvals or consents obtained and
disclosed, no approval, consent or withholding of objection on the part of
any regulatory body, state, Federal or local, is necessary in connection with
the execution and delivery by the Company of this Agreement, the Note or the
Loan Documents or compliance by the Company with any of the provisions of
this Agreement, the Note or the Loan Documents.
3.8. TAXES. All tax returns required to be filed by the Company in any
jurisdiction have, in fact, been filed, and all taxes, assessments, fees and
other governmental charges upon the Company or upon any of its properties,
income or franchises, which are shown to be due and payable in such returns
have been paid. The Company does not know of any proposed additional tax
assessment against it for which adequate provision has not been made on its
accounts. The provisions for taxes on the books of the Company are adequate
for all open years, and for its current fiscal period. There are no
outstanding agreements or waivers extending the statutory period of
limitations applicable to any tax return of the Company.
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3.9. USE OF PROCEEDS. The Company will use the Loan proceeds as follows:
to provide working capital for its operations and for other general
business purposes PROVIDED THAT none of the transactions contemplated in this
Agreement (including, without limitation thereof, the use of proceeds from
the Loans) will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued
pursuant thereto, including, without limitation, Regulations T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.
None of the proceeds from the Loans will be used to purchase, or refinance
any borrowing, the proceeds of which were used to purchase any "security"
within the meaning of the Securities Exchange Act of 1934, as amended.
3.10. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. The consummation of
the transactions provided for in this Agreement and compliance by the Company
with the provisions thereof and the Note issued hereunder will not involve
any prohibited transaction within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, ("ERISA") or Section 4975 of the
Internal Revenue Code of 1986, as amended. Neither the Company nor any person
who is under common control with the Company within the meaning of Section
4001(b) of ERISA maintains or has ever maintained any (a) "employee pension
benefit plans" as defined in ERISA or (b) duty or obligation to contribute to
any plan or trust under the Multiemployer Pension Plan Act Amendments of
1980, as amended. In the case of any multiemployer plans to which the Company
contributes or participates in, there is no withdrawal liability to the
Company from any of such plans.
3.11. NO OTHER LIENS. Except for Permitted Liens, specifically including a
security interest evidenced by a UCC filing filed by Chase Bank, Woodcrest
Capital, LLC, and any minor letter of credit (under $180,000 obligation), and
purporting to encumber the assets of an entity formally known as "iExalt,
Inc., a Texas corporation," none of the Company's assets or properties have
been pledged, transferred or otherwise granted as security. The Company
agrees that it will notify and give Lender copies of all documents involving
any Permitted Lien.
3.12. ENFORCEABLE OBLIGATIONS. This Agreement is, and the other Loan
Documents when duly executed and delivered will be, legal, valid and binding
obligations of the Company, enforceable in accordance with their terms except
as such enforcement may be limited by bankruptcy, insolvency or similar laws
of general application relating to the enforcement of creditors' rights.
3.13. OTHER OBLIGATIONS AND RESTRICTIONS. The Company has no outstanding
Liabilities of any kind (including contingent obligations, tax assessments,
and unusual forward or long-term commitments) which are, in the aggregate,
material to the Company or material with respect to the Company's
consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in the Disclosure Schedule. Except as shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule, the
Company is not subject to or restricted by any franchise, contract, deed,
charter restriction, or other instrument or restriction which could cause a
Material Adverse Change.
3.14. LABOR DISPUTES AND ACTS OF GOD. Except as disclosed in the Disclosure
Schedule, neither the business nor the properties of the Company has been
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the
public enemy or other casualty (whether or not covered by insurance), which
could cause a Material Adverse Change.
3.15. NAMES AND PLACES OF BUSINESS. The Company has not, during the preceding
five years, had, been known by, or used any other trade or fictitious name,
except as disclosed in the Disclosure Schedule. Except as otherwise indicated
in the Disclosure Schedule, the chief executive office and principal place of
business of the Company is (and for the preceding years has been) located at
the address of the Company set out on the signature pages hereto. Except as
indicated in the Disclosure Schedule, the Company does not have any other
office or place of business.
3.16. GOVERNMENT REGULATION. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 (as any of the preceding acts have been
amended) or any other law which regulates the incurring by the Company of
Indebtedness, including laws relating to common contract carriers or the sale
of electricity, gas, steam, water or other public utility services.
3.17. SOLVENCY. Upon giving effect to the issuance of the Note, the execution
of the Loan Documents by the Company and the consummation of the transactions
contemplated hereby, the Company will be solvent (as such term is used in
applicable bankruptcy, liquidation, receivership, insolvency or similar laws).
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3.18. TITLE TO PROPERTIES; LICENSES. The Company has good and marketable
title to all of the Collateral and to all of its material properties and
assets, free and clear of all Liens, encumbrances, or adverse claims other
than Permitted Liens and Other Liens and free and clear of all impediments to
the use of such properties and assets in the Company's business. Except as
set forth in Schedule 3.1(b), the Company possesses all licenses, permits,
franchises, patents, copyrights, trademarks and trade names, and other
intellectual property (or otherwise possesses the right to use such
intellectual property without violation of the rights of any other Person)
which are necessary to carry out its business as presently conducted and as
presently proposed to be conducted hereafter, and the Company is not in
violation in any material respect of the terms under which it possesses such
intellectual property or the right to use such intellectual property. The
amount of Liabilities secured by Permitted Liens encumbering Collateral on
the date hereof (excluding only inchoate Liens for taxes not yet due and
payable) does not exceed $50,000.
3.19. OUTSTANDING INDEBTEDNESS. The amount of the Company's Permitted
Indebtedness on the date hereof does not exceed the aggregate of
$4,000,000.00.
3.20. SECURITY DOCUMENT REPRESENTATIONS AND WARRANTIES. Capitalized terms
used in this section, not otherwise defined in this Agreement, and defined in
the Security Documents shall when used in this section have the meanings
given them in the Security Documents.
(a) OWNERSHIP FREE OF LIENS. No effective financing statement
or other registration or instrument similar in effect covering all or
any part of the Collateral is on file in any recording office except
any that have been filed in favor of Lender relating to the Security
Documents and any that have been filed to perfect or protect any
Permitted Lien or any Other Lien. None of the Collateral is in the
possession of any Person other than the Company or the Lender, except
for Collateral being transported in the ordinary course of business.
(b) RECEIVABLES. Each Receivable represents the valid and
legally binding indebtedness of a bona fide account debtor arising from
the sale or lease by the Company of goods or the rendition by the
Company of services and is not subject to contra-accounts, setoffs,
defenses or counterclaims by or available to account debtors obligated
on the Receivables, except for those for which adequate reserves have
been taken in substantially the same amount as is shown on the Initial
Financial Statements.
(c) GENERAL INTANGIBLES. Each General Intangible included
within the Collateral that is material to the Company's business
represents the valid and legally binding obligation of each other
Person who is a party thereto or who is otherwise stated to be
obligated thereunder, subject to no contra-accounts, setoffs, defenses,
counterclaims, discounts, allowances, rebates, credits or adjustments
by or available to account debtors obligated thereon (in this
subsection collectively called "adjustments"), except (i) in the case
of General Intangibles under which money is owing to the Company, for
those adjustments for which adequate reserves have been taken in
substantially the same amount as is shown on the Initial Financial
Statements, and (ii) in the case of other General Intangibles, for
those adjustments which do not materially impair the value to the
Company or the enforcement by the Company of such General Intangibles.
(d) DOCUMENTS AND INSTRUMENTS. All Documents and Instruments
included within the Collateral are valid and genuine. Any such Document
or Instrument has only one original counterpart which constitutes
collateral within the meaning of the UCC or the law of any applicable
jurisdiction, and all such original counterparts (other than checks
delivered in payment of Receivables in the ordinary course of business)
have been delivered into the possession of such Person designated by
Lender as agent pursuant to the Security Agreement.
(e) GOODS. None of the Collateral that constitutes goods is
covered by any Document (other than Documents which are subject hereto
and have been delivered to Lender), is subject to any landlord's lien
or similar Lien (other than Permitted Liens and Other Liens), has been
related to, attached to, or used in connection with any real property
so as to constitute a fixture upon such real property (except for real
property that is subject to a Lien in favor of Lender), is installed in
or affixed to other goods so as to be an accession to such other goods
(unless such other goods are included in the Collateral), or has been
produced in violation of the Fair Labor Standards Act, as amended. All
such goods are insured to the extent required under this Agreement.
(f) ADDRESS. The chief executive office and principal place of
business and the office where all records concerning the Collateral are
kept at the Company's address set forth on its signature page hereto.
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3.20. INCLUSION OF SUBSIDIARIES. As used in this Article 3 (with the
exception of Sections 3.1, 3.2, 3.9, 3.15 and 3.17), the term "the Company"
shall include all Subsidiaries of the Company.
The representations and warranties contained in this Agreement, the Note and
the other Loan Documents are made by the Company as an inducement to Lender
to make its Loan, and the Company understands that Lender is relying on such
representations and warranties, and that such representations and warranties
are true and correct at the time of the first disbursement hereunder and
shall remain true and correct at all times thereafter so long as any part of
the Loans shall remain outstanding. The Closing shall constitute (i) an
automatic warranty and representation by the Company to Lender that there
does not then exist a Default or an Event of Default and (ii) a reaffirmation
as of the date of said request of all of the warranties and representations
of the Company contained in this Agreement.
ARTICLE 4
CONDITIONS TO DISBURSEMENT
4.1. DOCUMENTS TO BE DELIVERED. Lender has no obligation to make its Initial
Loan or to distribute the Subsequent Loans to the Company unless Lender shall
have received all of the following, at Lender's office as set forth on the
Lender Schedule, duly executed and delivered and in form, substance and date
satisfactory to Lender:
(a) This Agreement.
(b) Representation that Certificates from Company, would be available
if required:
i. An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of the Company prepared by Company's
independent counsel, which shall contain the names and signatures of
the officers of the Company authorized to execute Loan Documents and
which shall certify to the truth, correctness and completeness of the
following exhibits attached thereto: (1) a copy of resolutions duly
adopted by the Board of Directors of the Company and in full force and
effect at the time this Agreement is entered into, authorizing the
execution of this Agreement and the other Loan Documents delivered or
to be delivered in connection herewith and the consummation of the
transactions contemplated herein and therein, a copy of the charter
documents of the Company and all amendments thereto, certified by the
appropriate official of the Company's state of organization, and a copy
of any bylaws of the Company; and
ii. A "Compliance Certificate" of the Chairman of the Board or
President and of the chief financial officer of the Company prepared by
Company's independent counsel, of even date with the Loan, in which
such officers certify to the satisfaction of the conditions set out in
subsections (a), (b), (c) and (d) of Section 4.2.
(e) CERTIFICATE (OR CERTIFICATES) OR REPRESENTATION FROM THE COMPANY OF
THE DUE FORMATION, VALID EXISTENCE AND GOOD STANDING OF THE COMPANY AND ITS
MATERIAL SUBSIDIARIES IN THEIR RESPECTIVE STATE OF ORGANIZATION, ISSUED BY THE
APPROPRIATE AUTHORITIES OF SUCH JURISDICTION, AND CERTIFICATES OF THE COMPANY'S
[AND ITS MATERIAL SUBSIDIARIES'] GOOD STANDING OR DUE QUALIFICATION TO DO
BUSINESS, ISSUED BY APPROPRIATE OFFICIALS IN ANY STATES IN WHICH THE COMPANY
OWNS PROPERTY SUBJECT TO SECURITY DOCUMENTS. IN PLACE OF ACTUAL CERTIFICATES,
LENDER WILL ACCEPT SPECIFIC, WRITTEN REPRESENTATIONS AND WARRANTIES BY THE
COMPANY THAT ANY MATERIAL SUBSIDIARY HAS BEEN DULY FORMED, IS VALIDLY IN
EXISTENCE AND IN GOOD STANDING AS DESCRIBED ABOVE.
(f) The Initial Financial Statements.
(h) Certificates or binders or representation from the Company,
evidencing the Company's insurance in effect on the date hereof.
(i) A warrant agreement, duly executed by the Company and
substantially in the form as set forth in Exhibit B (the "Warrant").
4.2. ADDITIONAL CONDITIONS PRECEDENT. Lender has no obligation to distribute
its Subsequent Loans to Company unless the following conditions precedent
have been satisfied:
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(a) All representations and warranties made by the Company in any
Loan Document shall be true on and as of the date of the Loan (except to the
extent that the facts upon which such representations are based have been
changed by the extension of credit hereunder) as if such representations and
warranties had been made as of the date of the Loan.
(b) No Default shall exist at the date of the Loan.
(c) No Material Adverse Change shall have occurred since the date of
the Initial Financial Statements.
(d) The Company shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed or
complied with by it on or prior to the date of the Loan.
(e) The making of the Loan shall not be prohibited by any law and
shall not subject the Lender to any penalty or other onerous condition under
or pursuant to any such law.
(f) Lender shall have received all documents and instruments that
Lender has then requested, in addition to those described in Section 4.1
(including corporate documents and records; documents evidencing governmental
authorizations, consents, approvals, licenses and exemptions; certificates of
public officials and of officers and representatives of the Company; and all
reports, records, certificates and other documents requested in relation to
any Security Document delivered pursuant hereto), as to the accuracy and
validity of or compliance with all representations, warranties and covenants
made by the Company in this Agreement and the other Loan Documents, the
satisfaction of all conditions contained herein or therein, and all other
matters pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to Lender in form, substance and date.
ARTICLE 4A
SUBSEQUENT LOANS
4.1A. DISTRIBUTION OF SUBSEQUENT LOANS TO THE COMPANY. So long as the Initial
Loan has been repaid or, if not due, the Company is not otherwise in default
and the Subsequent Loans Conditions are satisfied, the Subsequent Loans shall
be funded to the Company by the Lender.
4.1B. SUBSEQUENT LOANS CONDITIONS. After the funding of the Initial Loan, the
Company may draw up to $100,000.00 proceeds for each 30 day period
thereafter, provided and after the Company satisfies the following Subsequent
Loans Conditions:
(a) the Company is not in default under the Note, nor any of the
Loan Documents; and
(b) the Company is in full compliance with all applicable and
materially mandated SEC filings, rules, and regulations; and
(c) the Company is cash flow positive, as determined by Lender;
and
(d) the Company is earnings positive, as determined by Lender; and
(e) Lender determines, in Lender's sole discretion, that the
Company is still an acceptable credit risk; and
(f) Lender determines, in Lender's sole discretion, that the
Company is not a going concern risk.
ARTICLE 5
COMPANY COVENANTS
From and after the date hereof and continuing so long as any amount remains
unpaid on the Note, unless Lender have previously agreed otherwise:
5.1. CORPORATE EXISTENCE, ETC. The Company will preserve and keep in force
and effect its corporate existence, its rights and franchises and all
licenses and permits that it currently has, that are necessary to the proper
conduct of its
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business and will qualify to do business in all states or jurisdictions where
required by applicable law, except where the failure to so qualify will not
cause a Material Adverse Change.
5.2. INSURANCE.
(a) The Company will at all times maintain casualty and liability
insurance coverage in accordance with the Insurance Schedule or by
financially sound and reputable insurers in such forms and amounts and
against such risks as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties with limits and scope of coverage reasonably acceptable to
Lender. All policies evidencing such insurance shall name the Lender as an
additional insured and shall contain a loss payable endorsement to the Lender
in form and substance acceptable to Lender that will become effective upon
the occurrence of an Event of Default. Within seven days after the occurrence
of an Event of Default, the Company shall cause any insurance policies
covering Collateral to be endorsed to provide for payment of losses to the
Lender, to provide that such policies may not be canceled or reduced or
affected in any material manner for any reason without fifteen days prior
notice to Lender, to provide for any other matters specified in any
applicable Security Document or which Lender may reasonably require, and to
provide for insurance against fire, casualty and any other hazards normally
insured against, in the amount of the full value (less a reasonable
deductible not to exceed amounts customary in the industry for similarly
situated businesses and properties) of the property insured.
(b) Each policy for liability insurance shall provide for all losses
after the occurrence of an Event of Default to be paid on behalf of Lender
and the Company as their respective interests may appear, and each policy
insuring loss or damage to Collateral shall provide for all losses to be paid
directly to the Lender. Each such policy shall in addition (A) within seven
days after the occurrence of an Event of Default, name the Company and the
Lender as insured parties thereunder (without any representation or warranty
by or obligation upon the Lender) as their interests may appear, (B) within
seven days after the occurrence of an Event of Default, be amended to contain
the agreement by the insurer that any loss thereunder shall be payable to the
Lender notwithstanding any action, inaction or breach of representation or
warranty by the Company, (C) provide that there shall be no recourse against
Lender for payment of premiums or other amounts with respect thereto and (D)
provide that at least thirty (30) days' prior written notice of cancellation
or of lapse shall be given to Lender by the insurer. The Company will, if so
requested by Lender, deliver to Lender original or duplicate policies of such
insurance and, as often as Lender may reasonably request, a report of a
reputable insurance broker with respect to such insurance. The Company will
also, at the request of Lender, duly execute and deliver instruments of
assignment of such insurance policies and cause the respective insurers to
acknowledge notice of such assignment. Lender is hereby authorized to enforce
payment under all such insurance policies and to compromise and settle any
claims thereunder, in its own name or in the name of the Company.
(c) Reimbursement under any liability insurance maintained by the
Company pursuant to this Section 5.2 may be paid directly to the Person who
has incurred the liability covered by such insurance. With respect to any
loss involving damage to Collateral as to which subsection (d) of this
Section 5.2 is not applicable, the Company will make or cause to be made the
necessary repairs to or replacements of such Collateral, and any proceeds of
insurance maintained by the Company pursuant to this Section 5.2 shall be
paid to the Company by Lender as reimbursement for the costs of such repairs
or replacements as such repairs or replacements are made or acquired.
(d) Upon the occurrence and during the continuance of an Event of
Default, all insurance payments in respect of such Collateral shall be paid
to Lender and applied as specified in Section 4.3 of the Security Agreement.
5.3. TAXES, CLAIMS FOR LABOR AND MATERIALS. The Company will pay or discharge
or cause to be paid or discharged, before the same shall become delinquent
(i) all taxes, assessments and governmental charges levied or imposed upon it
or upon the income, profits or property of the Company, and (ii) all lawful
claims for labor, materials and supplies which, if unpaid might by law become
a Lien upon the property of the Company; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceeding. The
Company will promptly pay and discharge when due all other Liabilities now or
hereafter owed by it.
5.4. MAINTENANCE, ETC. The Company will maintain, preserve and keep all
Collateral and all other property used or useful in the conduct of its
business in good repair and working order, ordinary wear and tear excepted,
in compliance with all applicable laws, and from time to time will, as
determined in the reasonable judgment of the Company, make all necessary
repairs, replacements, renewals and additions thereto needed to enable the
business and operations carried on in connection therewith to be promptly and
advantageously conducted at all times.
9
5.5. NATURE OF BUSINESS. The Company will not engage in any business if, as a
result, the general nature of the business that would then be engaged in by
the Company would be substantially changed from the general nature of the
business engaged in by the Company on the date of this Agreement.
5.6. PENDING OR THREATENED SUITS. The Company will promptly notify Lender, in
writing, of any pending, or threatened administrative, judicial or
governmental suit, claim or proceeding, in law or in equity, which seek
damages or other relief against the Company in excess of $50,000 or that
could cause a Material Adverse Change.
5.7. SEC FILINGS. The Company shall at all times make all materially mandated
SEC Filings required pursuant to the Securities Exchange Act of 1934, as
amended, and the rules of any stock exchange upon which the Company shall
have listed its securities, and shall notify Lender of any inquiries from the
SEC or any stock exchange with respect to all of its SEC Filings. The Company
shall promptly prepare, file and pursue and keep effective, once filed, its
registration statement with the SEC for its secondary offering, unless the
board of directors of the Company determines that keeping the registration
effective is not in the best interests of the stockholders of the Company.
The Company shall provide Lender with copies of all such SEC Filings.
5.7A SECONDARY OFFERING. The Company will use its best efforts to raise funds
in an approximate amount of at least $2,000,000.00 in a Secondary Offering or
private placement within two years, or such time as the parties may mutually
agree.
5.8. REPORTS. The Company will keep proper books of record and account in
which full and correct entries will be made of all dealings or transactions
of or in relation to the business and affairs of the Company in accordance
with GAAP, and will furnish to Lender throughout the term hereof, at the
Company's expense (in duplicate if so specified below or otherwise requested):
(a) Within forty-five (45) days after the end of each month during the term
hereof, reports detailing accounts receivable aging and cash collections as
of the last day of the preceding calendar month;
(b) As soon as available, and in any event within ninety-one (91) days after
the end of each Fiscal Year, complete consolidated and consolidating
financial statements of the Company together with all notes thereto, prepared
in reasonable detail in accordance with GAAP, together with an unqualified
opinion, based on an audit using generally accepted auditing standards, by
independent certified public accountants selected by the Company and
acceptable to Lender, [▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C. are accepted to the parties
through filing of year 2001 form 10-K] stating that such consolidated financial
statements have been so prepared. These financial statements shall contain a
consolidated and consolidating balance sheet as of the end of such Fiscal Year
and consolidated and consolidating statements of earnings, of cash flows, and
of changes in owners' equity for such Fiscal Year, each setting forth in
comparative form the corresponding figures for the preceding Fiscal Year.
(c) As soon as available, and in any event within forty-five (45) days after
the end of each Fiscal Quarter, the Company's consolidated and consolidating
balance sheet as of the end of such Fiscal Quarter and consolidated and
consolidating statements of the Company's earnings and cash flows for the
period from the beginning of the then current Fiscal Year to the end of such
Fiscal Quarter, all in reasonable detail and prepared in accordance with
GAAP, subject to changes resulting from normal year-end adjustments. In
addition the Company will, together with each such set of financial
statements and each set of financial statements furnished under subsection
(b) of this section, furnish a certificate in the form of Exhibit B signed by
the chief financial officer of Borrower stating that such financial
statements are accurate and complete (subject to normal year-end adjustments)
and stating that no Default exists at the end of such Fiscal Quarter or at
the time of such certificate or specifying the nature and period of existence
of any such Default.
5.9. PAYMENT AND PERFORMANCE. The Company will pay all amounts due under the
Loan Documents in accordance with the terms thereof and will observe, perform
and comply with every covenant, term and condition expressed or implied in
the Loan Documents.
5.10. OTHER INFORMATION AND INSPECTIONS. After 72 hours prior written notice,
the Company will furnish to Lender any information that Lender may from time
to time reasonably request concerning any provision of the Loan Documents,
any Collateral, or any matter in connection with the Company's businesses,
properties, prospects, financial condition and operations. The Company will
permit representatives appointed by Lender (including independent
accountants, auditors, agents, attorneys, appraisers and any other Persons)
to visit and inspect during normal business hours any of the Company's
property, including its books of account, other books and records, and any
facilities or other business assets, and to make extra copies therefrom and
photocopies and photographs thereof,
10
and to write down and record any information such representatives obtain, and
the Company shall permit Lender or its representatives to investigate and
verify the accuracy of the information furnished to the Lender in connection
with the Loan Documents and to discuss all such matters with its officers,
employees and representatives. Lender agrees that it will take all reasonable
steps to keep confidential any proprietary information given to it by the
Company, provided, however, that this restriction shall not apply to
information which (i) has at the time in question entered the public domain,
(ii) is required to be disclosed by Law (whether valid or invalid), (iii) is
disclosed to Lender's Affiliates, auditors, attorneys or agents (provided
such Persons are obligated to hold such information in confidence on the
terms provided in this section), (iv) is furnished to Lender or to any
purchaser or prospective purchaser of participations in any Loan or Loan
Document (provided each such purchaser or prospective purchaser first agrees
to hold such information in confidence on the terms provided in this
section), or (v) is disclosed in the course of enforcing its rights and
remedies during the existence of an Event of Default.
5.11. NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS The Company will
promptly notify Lender in writing, stating that such notice is being given
pursuant to this Agreement after the applicable cure period, upon:
a. occurrence of any Material Adverse Change,
b. the occurrence of any Default,
c. the acceleration of the maturity of any Indebtedness owed by
the Company or of any default by the Company under any
indenture, mortgage, agreement, contract or other instrument
to which the Company is a party or by which the Company or any
of its properties is bound, if such acceleration or default
could cause a Material Adverse Change, and
d. any claim of $100,000 or more, any notice of potential
liability under any Environmental Legal Requirements which
might exceed such amount, or any other material adverse claim
asserted against the Company or with respect to the Company's
properties.
e. the occurrence of any of the foregoing the Company will take
all necessary or reasonably appropriate steps to remedy
promptly any such Material Adverse Change, Default,
acceleration, or default to protect against any such adverse
claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing. The
Company will also notify Lender and Lender's counsel in
writing at least twenty Business Days prior to the date that
the Company changes its name or the location of its chief
executive office or principal place of business or the place
where it keeps its books and records concerning the
Collateral, furnishing with such notice any necessary
financing statement amendments or requesting Lender and its
counsel to prepare the same.
5.13. PERFORMANCE ON BORROWER'S BEHALF. If the Company fails to pay any
taxes, insurance premiums, expenses, attorneys' fees or other amounts it is
required to pay under any Loan Document, Lender may pay the same. The Company
shall immediately upon written notice of any such payment reimburse Lender
for any such payments and each amount paid by Lender shall constitute an
Obligation owed hereunder which is due and payable on the date such amount is
paid by Lender.
5.14. INTEREST. The Company hereby promises to Lender to pay interest at the
Default Rate on all Obligations (including Obligations to pay fees or to
reimburse or indemnify Lender) that the Company has in this Agreement
promised to pay to the Lender and that are not paid when due. Such interest
shall accrue from the date such Obligations become due until they are paid.
5.15. COMPLIANCE WITH AGREEMENTS AND LAW. The Company will perform all
material obligations it is required to perform under the terms of each
indenture, mortgage, deed of trust, security agreement, lease, franchise,
agreement, contract or other instrument or obligation to which it is a party
or by which it or any of its properties is bound. The Company will conduct
its business and affairs in compliance with all laws applicable thereto and
will maintain in good standing all licenses that may be necessary or
appropriate to carry on its business, except where the failure to do any of
the above would not constitute a Material Adverse Change.
5.16. ENVIRONMENTAL MATTERS; ENVIRONMENTAL REVIEWS.
(a) The Company will comply in all material respects with all
Environmental Legal Requirements now or hereafter applicable to the Company, as
well as all contractual obligations and agreements with respect to environmental
remediation or other environmental matters, and shall obtain, at or prior to the
time required by applicable Environmental Legal Requirements, all environmental,
health and safety permits, licenses and other
11
authorizations necessary for its operations and will maintain such
authorizations in full force and effect, except where the failure to obtain
such permits, licenses and authorizations would not constitute a Material
Adverse Change. The Company will not do anything or permit anything to be
done that will subject any of its properties to any remedial obligations
under, or result in noncompliance with applicable permits and licenses issued
under, any applicable Environmental Legal Requirements, assuming disclosure
to the applicable governmental authorities of all relevant facts, conditions
and circumstances. Upon Lender's reasonable request, at any time and from
time to time, the Company will provide at its own expense an environmental
inspection of the Company's material real properties and audit of their
environmental compliance procedures and practices, in each case from an
engineering or consulting firm approved by Lender.
(b) The Company will promptly furnish to Lender all written notices
of violation, orders, claims, citations, complaints, penalty assessments,
suits or other proceedings received by the Company or otherwise has notice,
pending or threatened against the Company by any governmental authority with
respect to any alleged violation of or non-compliance with any Environmental
Legal Requirements or any permits, licenses or authorizations in connection
with the Company's ownership or use of its properties or the operation of its
business.
(c) The Company will promptly furnish to Lender all requests for
information, notices of claim, demand letters, and other notifications,
received by the Company in connection with the Company's ownership or use of
its properties or the conduct of its business, relating to potential
responsibility with respect to any investigation or clean-up of Hazardous
Material at any location.
5.17. EVIDENCE OF COMPLIANCE. The Company will furnish to Lender at the
Company's expense all evidence that Lender from time to time reasonably
request in writing as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by the Company in the Loan
Documents, the satisfaction of all conditions contained therein, and all
other matters pertaining thereto.
5.18. AGREEMENT TO DELIVER SECURITY DOCUMENTS. The Company agrees to deliver,
to further secure the Obligations whenever requested by Lender in its
reasonable discretion, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements, continuation statements, extension
agreements, acknowledgments, and other Security Documents in form and
substance satisfactory to Lender for the purpose of granting, confirming,
protecting and perfecting Liens or security interests in any real or personal
property that was intended to be Collateral pursuant to any Security Document
previously executed and not then released.
5.19. INDEBTEDNESS. The Company will not in any manner owe or be liable for
Indebtedness except Permitted Indebtedness; PROVIDED THAT the aggregate
outstanding principal amount of Permitted Indebtedness (excluding any
purchase money Indebtedness permitted by clause (e) of the definition of
Permitted Indebtedness) at any time shall not exceed $10,000,000 (the amount
of such Permitted Indebtedness that is allowed hereunder and that exists,
from time to time, being herein referred to as "Total Allowed Debt") and
PROVIDED THAT the Total Allowed Debt shall be decreased by any amounts that
are used to repay Permitted Indebtedness upon any such repayment.
In addition, the Company shall not take, acquire, or incur any senior debt
without Lender's prior written approval, which approval shall not be
unreasonably withheld.
5.20. LIMITATION ON LIENS. Except for Permitted Liens and Other Liens
existing on the Closing Date, the Company will not create, assume or permit
to exist any Lien upon any of the properties or assets that it now owns or
hereafter acquires. Furthermore, within thirty (30) days of the Closing, the
Company shall use its best efforts to obtain documents releasing and
terminating all other Liens that have not yet been released (or assigning
such Other Liens to the Lender) and Lender shall have received all such
provided documents within such thirty (30) day period.
5.21. LIMITATION ON MERGERS. Without the approval of Lender
[which will not be unreasonably withheld], the Company will not merge or
consolidate with or into any other Person, except that any Subsidiary of the
Company may be merged into or consolidated with the Company so long as the
Company is the surviving business entity.
5.22. LIMITATION ON SALES OF PROPERTY. Without the approval of Lender
[which will not be unreasonably withheld], the Company will not sell,
transfer, lease, exchange, alienate or dispose of any of its material assets
or properties or any material interest therein, or discount, sell, pledge or
assign any notes payable to it, accounts receivable or future income, except,
to the extent not otherwise forbidden under the Security Documents except for:
(a) equipment that is worthless or obsolete or which is replaced by
equipment of equal suitability and value; and
(b) inventory that is sold in the ordinary course of business on
ordinary trade terms.
12
5.23. LIMITATION ON DIVIDENDS AND REDEMPTIONS. The Company shall not declare
or make any dividends or other Distribution.
5.24. LIMITATION ON INVESTMENTS AND NEW BUSINESSES. The Company will not make
any expenditure or commitment or incur any obligation or enter into or engage
in any transaction except in the ordinary course of business, (b) engage
directly or indirectly in any business or conduct any operations except in
connection with or incidental to its present businesses and operations, or
(c) make any acquisitions of or capital contributions to or other Investments
in any Person or property, other than Permitted Investments. Notwithstanding
anything else in this Section 5.24, the Company may pursue alliance
relationships with third parties.
5.25. LIMITATION ON CREDIT EXTENSIONS. Except for Permitted Investments, the
Company will not extend credit, make advances or make loans other than normal
and prudent extensions of credit to customers buying goods and services in
the ordinary course of business, which extensions shall not be for longer
periods than those extended by similar businesses operated in a normal and
prudent manner.
5.26. TRANSACTIONS WITH AFFILIATES. The Company shall not engage in any
material transaction with any of its Affiliates on terms which are less
favorable to it than those which would have been obtainable at the time in
arm's-length dealing with Persons other than such Affiliates.
5.27. GENERAL COVENANTS APPLICABLE TO SECURITY AGREEMENT COLLATERAL.
Capitalized terms used in this Section and not otherwise defined herein and
that are defined in the Security Agreement shall have the meanings given them
in the Security Agreement.
(a) CHANGE OF NAME, LOCATION, OR STRUCTURE; ADDITIONAL FILINGS. The
Company recognizes that financing statements pertaining to the Collateral
have been or may be filed where the Company maintains any Collateral, has its
records concerning any Collateral or has its chief executive office or chief
place of business. Without limitation of any other covenant herein, the
Company shall not cause or permit any change to be made in its name, identity
or corporate structure, or any change to be made to a jurisdiction other than
as otherwise provided herein or in any other Loan Document or as represented
herein in (i) the location of any Collateral, (ii) the location of any
records concerning any Collateral or (iii) in the location of the Company's
chief executive office or principal place of business, unless the Company
shall have first notified Lender of such change at least forty-five (45) days
prior to the effective date of such change, taken all action requested by
Lender (under the following subsection (b) or otherwise) for the purpose of
further confirming and protecting Lender's security interests and rights
under the Loan Documents and the perfection and priority thereof, and if
requested by Lender, provided to the Lender a legal opinion to its
satisfaction confirming that such change will not adversely affect in any way
Lender's security interests and rights under this Agreement or the perfection
or priority thereof. In any notice furnished pursuant to this subsection, the
Company will expressly state that the notice is required by this Agreement
and contains facts that may require additional filings of financing
statements or other notices for the purposes of continuing perfection of the
Lender' security interest in the Collateral.
(b) OWNERSHIP AND LIENS. The Company will maintain good and
marketable title to all Collateral, free and clear of all Liens, encumbrances
or adverse claims except for the security interest created by this Agreement
and any Permitted Liens and any Other Liens, and the Company will not grant
or allow any such Liens, encumbrances or adverse claims to exist. The Company
will not grant or allow to remain in effect, and the Company will cause to be
terminated, any financing statement or other registration or instrument
similar in effect covering all or any part of the Collateral, except any
which have been filed in favor of the Lender relating to this Agreement or
the Security Documents that have been filed to perfect or protect any
Permitted Lien. The Company (i) will insure that all of the Collateral --
whether goods, Documents, Instruments, or otherwise -- is and remains in the
possession of the Company (or a bailee or agent selected by Lender who is
holding such Collateral for the benefit of Lender), except for goods being
transported in the ordinary course of business, and (ii) will not sell,
assign (by operation of law or otherwise), transfer, exchange, lease or
otherwise dispose of any of the Collateral.
(c) FURTHER ASSURANCES. The Company will defend Lender's right,
title and special property and security interest in and to the Collateral
against the claims of any Person (other Lender). The Company will not take or
fail to take any action that would in any manner impair the value or
enforceability of Lender's security interest in any Collateral. The Company
will, at its expense as from time to time requested by Lender, promptly
execute and deliver all further instruments, agreements, filings and
registrations, and take all further action to the fullest extent permitted by
Law, in order: (i) to confirm and validate this Agreement and the Security
Documents and Lender's rights and remedies hereunder and thereunder, (ii) to
correct any errors or omissions in the descriptions herein and therein of the
Secured Obligations or the Collateral or in any other provisions hereof and
thereof, (iii) to perfect, register and protect the security interests and
rights created or purported to be created hereby and thereby or to maintain
or upgrade in rank the priority of such security interests and rights, (iv)
to enable any Lender to exercise
13
and enforce its rights and remedies hereunder and thereunder in respect of
the Collateral, or (v) to otherwise give Lender the full benefits of the
rights and remedies described in or granted under this Agreement. As part of
the foregoing the Company will, whenever requested by Lender (i) execute and
file any financing statements, continuation statements, and other filings or
registrations relating to Lender security interests and rights hereunder and
under the Security Documents, and any amendments thereto, and (ii) ▇▇▇▇ its
books and records relating to any Collateral to reflect that such Collateral
is subject to this Agreement, the Security Documents and the security
interests hereunder and thereunder. To the extent requested by Lender from
time to time, the Company will use its best efforts to obtain from any
material account debtor or other obligor on the Collateral the acknowledgment
of such account debtor or obligor that such Collateral is subject to this
Agreement and the Security Documents.
(d) IMPAIRMENT OF SECURITY INTEREST. The Company will not take or
fail to take any action that would in any manner impair the value or
enforceability of Lender's first priority security interest in any Collateral.
(e) COMPROMISE OF COLLATERAL. The Company will not adjust, settle,
compromise, amend or modify any of its rights in the Collateral.
(f) RECEIVABLES & GENERAL INTANGIBLES. The Company will use its best
efforts, except as otherwise expressly provided herein, to collect in
compliance with applicable Law and at its own expense all amounts due or to
become due under each Receivable and General Intangible that is included
within the Collateral. In connection with such collections, the Company may
(and, at Lender's direction, will) take such action (not otherwise forbidden
hereunder) as the Company or Lender may reasonably deem necessary or
advisable to enforce collection or performance of each such Receivable or
General Intangible. Except for actions and omissions in the ordinary course
of business that do not in the aggregate cause material losses or reductions,
the Company (i) will duly perform and cause to be performed all of its
obligations with respect to the goods or services, the sale or lease or
rendering of which gave rise or will give rise to each such Receivable or
General Intangible, and (ii) will not (whether through failure to duly
perform its obligations under any contracts, instruments, and agreements are
related to any such Receivable or General Intangible, or by any written
instrument, or otherwise) take or allow any action or omission which causes
any such Receivable or General Intangible to become subject to any
contra-accounts, setoffs, defenses, counterclaims, discounts, allowances,
rebates, credits or adjustments by or available to account debtors obligated
on such Receivable or General Intangible.
(g) DOCUMENTS AND INSTRUMENTS. The Company will at all times cause
any Documents or Instruments that are included within the Collateral to be
valid and genuine. The Company will cause all Instruments included within the
Collateral to have only one original counterpart. Upon request by Lender, the
Company will promptly deliver to a bailee or agent selected by Lender who is
holding any such Collateral for the benefit of the Lender all originals of
Documents or Instruments that are included within the Collateral. The Company
will not (whether through failure to duly perform its obligations under any
contracts, instruments, and agreements that are related to any Documents or
Instruments that are included within the Collateral, or by any written
instrument, or otherwise) take or allow any action or omission that causes
any Documents or Instruments that are included within the Collateral to
become subject to any contra-accounts, setoffs, defenses, counterclaims,
discounts, allowances, rebates, credits or adjustments by or available to the
Persons obligated thereon. Upon request by Lender, the Company will ▇▇▇▇ each
chattel paper that is included within the Collateral with a legend indicating
that such chattel paper is subject to the security interest granted by the
applicable Security Document.
(h) EQUIPMENT. The Company will use its best efforts to maintain,
preserve, protect and keep all Equipment included within the Collateral in
good condition, repair and working order and will use its best efforts to
cause such Equipment to be used and operated in a good and workmanlike manner
to the extent commercially reasonable, in accordance with applicable law and
in a manner which will not make void or cancelable any insurance with respect
to such Equipment. The Company will promptly make or cause to be made all
repairs, replacements and other improvements to or in connection with such
Equipment which are necessary or desirable or that Lender may request to such
end. The Company will promptly furnish to Lender a statement respecting any
loss or damage to any of such Equipment with an aggregate value in excess of
$25,000. Except for transportation of Equipment in the ordinary course of
business, the Company will not allow any Equipment included within the
Collateral to be located in any jurisdiction other than those in which is
filed an effective financing statement which perfects Lender's security
interest in such Equipment. The Company will not cause or permit the removal
of any item of Equipment from the Company's possession, control and risk of
loss, and the Company will not sell, assign (by operation of law or
otherwise), transfer, exchange, lease or otherwise dispose of any Equipment,
other than in connection with the following (which the Company may elect to
do):
(i) sale or other disposal, other than during the continuance
of an Event of Default, of any item of Equipment that is worn out or
obsolete and that has been replaced by an item of equal suitability and
value, owned by the Company and made subject to the security interest
under any Security Document, but which is otherwise free and clear of
any Liens, encumbrances or adverse claims, and/or
(ii) possession of Equipment by a bailee or agent selected by
Lender who is holding such Equipment for the benefit of the Lender.
14
The Company will not permit any of the Collateral that constitutes Equipment
to at any time become so related to attached to, or used in connection with
any particular real property so as to become a fixture upon such real
property, or to be installed in or affixed to other goods so as to become an
accession to such other goods unless such other goods are also included in
the Collateral.
5.28. INCLUSION OF SUBSIDIARIES. As used in this Article 5 (with the
exception of Sections 5.8, 5.9, 5.14, and 5.27), the term "the Company" shall
include all Subsidiaries of the Company.
ARTICLE 6
DEFAULTS AND REMEDIES
6.1. EVENTS OF DEFAULT. Any one or more of the following shall constitute an
"Event of Default" as the term is used herein:
(a) The Company fails to pay any Obligation when due and payable,
whether at a date for the payment of a fixed installment or as a contingent
or other payment becomes due and payable or as a result of acceleration or
otherwise, within five days after the same becomes due; or
(b) Default shall occur in the observance or performance of any
nonmonetary covenant or agreement contained herein or in the other Loan
Documents that is not remedied within 30 days after notice thereof to the
Company by Lender; or
(c) If any representation or warranty made by the Company herein or
in any Loan Document, or made by the Company in any statement or certificate
furnished by the Company pursuant hereto, is untrue or incorrect in any
material respect as of the date of the making thereof or subsequently becomes
untrue or incorrect and such inaccuracy is not immediately disclosed to
Lender; or
(d) The Company fails to duly observe, perform or comply with any
agreement with any Person or any term or condition of any instrument, if such
agreement or instrument is materially significant to such the Company, and
such failure is not remedied within the applicable period of grace (if any)
provided in such agreement or instrument; or
(e) The Company fails to pay any portion, when such portion is due,
of any of its Indebtedness in excess of $100,000, or breaches or defaults in
the performance of any agreement or instrument by which any such Indebtedness
is issued, evidences, governed, or secured, and any such failure, breach or
default continues beyond any applicable period of grace provided therefor; or
(f) The Company becomes insolvent or bankrupt, is generally not
paying its debts as they become due or makes an assignment for the benefit of
creditors, or the Company causes or suffers an order for relief to be entered
with respect to it under applicable Federal bankruptcy law or applies for or
consents to the appointment of a custodian, trustee, liquidator, or receiver
for the Company; or
(g) A custodian, trustee, liquidator, or receiver is appointed for
the Company or for the major part of the property of either and is not
discharged within 30 days after such appointment; or
(h) Final judgment or final judgments for the payment of money
aggregating in excess of $100,000 (except for payments of amounts which are
covered by insurance) is or are outstanding against the Company or against
any property or assets of either and any one of such judgments has remained
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period
of 60 days from the date of its entry; or
(i) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar
law or laws for the relief of debtors, are instituted by or against the
Company and, if instituted against the Company, are consented to or are not
dismissed within 60 days after such institution; or
(j) Any Change of Control occurs; or
(m) Any Material Adverse Change occurs, and Lender gives written
notice thereof to the Company.
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6.2. REMEDIES. Upon the occurrence of an Event of Default described in
subsections (f), (g) or (i) of Section 6.1 with respect to the Company, all
of the Obligations shall thereupon be immediately due and payable, without
demand, presentment, notice of demand or of dishonor and nonpayment, protest,
notice of protest, notice of intention to accelerate, declaration or notice
of acceleration, or any other notice or declaration of any kind, all of which
are hereby expressly waived by the Company. Upon any such acceleration, any
obligation of Lender hereunder to make any further Loans shall be permanently
terminated. During the continuance of any other Event of Default, Lender at
any time and from time to time may, without notice to the Company, do either
or both of the following: terminate any obligation of Lender to make Loans
hereunder, and declare any or all of the Obligations immediately due and
payable, and all such Obligations shall thereupon be immediately due and
payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of
any kind, all of which are hereby expressly waived by the Company. In
addition, Lender may pursue any or all of the rights available to it at law
or in equity or as provided herein and in the Notes, including, without
limitation, all rights and remedies of a secured party under the UCC. In
connection therewith, the Company agrees that a ten (10) day notice period is
commercially reasonable for the conduct of a public or private sale under the
UCC, and the Company hereby irrevocably makes, constitutes and appoints
Lender or any other Person designated by Lender for that purpose as the
Company's true and lawful attorney and agent-in-fact to sign the name of the
Company on any continuation statement or other document necessary to further
perfect the Lender's security interest or foreclose and/or take possession of
the Collateral. Furthermore, upon the occurrence of an Event of Default, the
Default Rate shall commence to accrue.
6.3 COSTS OF REMEDIES. Any and all costs and expenses (including reasonable
attorney's fees) incurred by Lender in pursuing its remedies hereunder shall
be an additional indebtedness due and owing by the Company to Lender and
shall be governed by this Agreement, the Note and the other Loan Documents.
ARTICLE 7
CERTAIN DEFINITIONS
"Affiliate" shall mean a Person (a) that, directly or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, another Person (b) that beneficially owns or holds 10% or more
of any class of the voting interests of such Person, or (c) 10% or more of
the voting interests of which is beneficially owned or held by such Person.
The term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting interests, by contract or otherwise.
"Business Day" means a day. Other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Fort Worth, Texas.
"Change of Control" means the occurrence of either of the following events:
(a) any Person or two or more Persons acting as a group shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934, as amended, and
including holding proxies to vote for the election of directors other than
proxies held by the Company's management or their designees to be voted in
favor of Persons nominated by the Company's Board of Directors) of 50% or
more of the outstanding voting securities of the Company, measured by voting
power (including both common stock and any preferred stock or other equity
securities entitling the holders thereof to vote with the holders of common
stock in elections for directors of the Company) or (b) one-third or more of
the directors of the Company shall consist of Persons not nominated by the
Company's Board of Directors (not including as Board nominees any directors
which the Board is obligated to nominate pursuant to shareholders agreements,
voting trust arrangements or similar arrangements).
"Closing" and "Closing Date" are defined in Section 1.2.
"Collateral" means all property of any kind that is subject to a Lien in
favor of Lender or which, under the terms of any Security Document, is
purported to be subject to such a Lien.
"Commitment Period" means the period from and including the Closing Date
until and including the date which is 10 Business Days after the Closing Date.
"Deed of Trust" means that certain deed of trust of even date herewith
delivered by the Company to the Lender in connection with this Agreement and
listed on the Security Schedule.
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"Default" shall mean any event or condition, the occurrence of which would,
with the lapse of time or the giving of notice, or both, constitute an Event
of Default as defined in Section 6.1.
"Default Rate" shall mean 18% per annum calculated on the basis of a 365 day
year.
"Distribution" means (i) any dividend or other distribution made by the
Company on or in respect of any stock, partnership interest, or other equity
interest in the Company (including any option or warrant to buy such an
equity interest), or (ii) any payment made by the Company to purchase,
redeem, acquire or retire any stock, partnership interest, or other equity
interest in the Company (including any such option or warrant).
"Environmental Legal Requirement" shall mean any applicable law relating to
public health, safety or the environment, including, without limitation,
relating to releases, discharges or emissions to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use and handling
of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage
or management of solid or hazardous wastes or to exposure to toxic or
hazardous materials, to the handling, transportation, discharge or release of
gaseous or liquid substances and any regulation, order, notice or demand
issued pursuant to such statute or ordinance, in each case applicable to the
property of the Company or the operation, construction or modification of any
thereof, including without limitation the following: the Clean Air Act, the
Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Comprehensive Environmental Response Compensation
and Liability Act as amended by the Superfund Amendments and Reauthorization
Act of 1986, the Resource Conservation and Recovery Act as amended by the
Solid and Hazardous Waste Amendments of 1984, the Occupational Safety and
Health Act, the Emergency Planning and Community Right-to-Know Act of 1986,
the Solid Waste Disposal Act, and any state statutes addressing similar
matters, and any state statute providing for financial responsibility for
cleanup or other actions with respect to the release or threatened release of
hazardous substances and any state nuisance statute.
"Equipment" means all equipment (as defined in the UCC) in whatever form,
wherever located, and whether now or hereafter existing, and all parts
thereof, all accessions thereto, and all replacements therefor.
"ERISA" is defined in Section 3.12.
"Fiscal Quarter" means a three-month period ending on March 31, June 30,
September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any year.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or
any generally recognized successor) and which, in the case of the Company,
are applied for all periods after the date hereof in a manner consistent with
the manner in which such principles and practices were applied to the Initial
Financial Statements. If any change in any accounting principle or practice
is required by the Financial Accounting Standards Board (or any such
successor) in order for such principle or practice to continue as a generally
accepted accounting principle or practice, all reports and financial
statements required hereunder with respect to the Company shall be prepared
in accordance with such change.
"Hazardous Materials" means any substances regulated under any Environmental
Legal Requirement whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Indebtedness" of any Person means Liabilities in any of the following
categories:
(a) Liabilities for borrowed money (including accrued and unpaid
interest),
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
(d) Liabilities that would under GAAP be shown on such Person's
balance sheet as a liability, and are payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),
17
(e) Liabilities owing under direct or indirect guaranties of
Liabilities of any other Person or otherwise constituting obligations to
purchase or acquire or to otherwise protect or insure a creditor against loss
in respect of Liabilities of any other Person (such as obligations under
working capital maintenance agreements, agreements to keep-well, or
agreements to purchase Liabilities, assets, goods, securities or services),
but excluding endorsements in the ordinary course of business of negotiable
instruments in the course of collection,
(f) Liabilities (for example, repurchase agreements, mandatorily
redeemable preferred stock and sale/leaseback agreements) consisting of an
obligation to purchase or redeem securities or other property, if such
Liabilities arises out of or in connection with the sale or issuance of the
same or similar securities or property,
(g) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefore, or
(h) Liabilities with respect to other obligations to deliver goods
or services in consideration of advance payments therefore;
provided, however, that the "Indebtedness" of any Person shall not include
(i) Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 90 days past the original invoice or
billing date therefore and (ii) indemnifications by such Person contained in
the Loan Documents or pursuant to the documents described herein.
"INITIAL FINANCIAL STATEMENTS" MEANS THE AUDITED QUARTERLY FINANCIAL STATEMENT
OF THE COMPANY DATED AS OF NOVEMBER 30, 2000 AND UNAUDITED PERIODIC FINANCIAL
STATEMENTS, INCLUDING BALANCE SHEETS OF THE COMPANY AND STATEMENTS OF INCOME AND
CHANGES IN CASH FLOW, FOR THE PERIOD FROM NOVEMBER 30, 2000, JANUARY 31, 2001,
MARCH 31,2001, AND MAY 31, 2001.
"Insurance Schedule" means any Schedule describing policies of insurance
attached hereto.
"Investment" means any investment, made directly or indirectly, in any Person
or any property, whether by purchase, acquisition of shares of capital stock,
indebtedness or other obligations or securities or by loan, advance, capital
contribution or otherwise and whether made in cash, by the transfer of
property, or by any other means.
"Law" means any statute, law, regulation, ordinance, rule, treaty, judgment,
order, decree, permit, concession, franchise, license, agreement or other
governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"Lender Schedule" means Schedule so named and attached hereto.
"Liabilities" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Lien" means, with respect to any property or assets, any right or interest
therein of a creditor to secure Liabilities owed to it or any other
arrangement with such creditor which provides for the payment of such
Liabilities out of such property or assets or which allows such creditor to
have such Liabilities satisfied out of such property or assets prior to the
general creditors of any owner thereof, including any lien, mortgage,
security interest, pledge, deposit, production payment, rights of a vendor
under any title retention or conditional sale agreement or lease
substantially equivalent thereto, tax lien, mechanic's or materialman's lien,
or any other charge or encumbrance for security purposes, whether arising by
Law or agreement or otherwise, but excluding any right of offset which arises
without agreement in the ordinary course of business. "Lien" also means any
filed financing statement, any registration of a pledge (such as with an
issuer of uncertificated securities), or any other arrangement or action
which would serve to perfect a Lien described in the preceding sentence,
regardless of whether such financing statement is filed, such registration is
made, or such arrangement or action is undertaken before or after such Lien
exists.
"Loans" has the meaning given to such term in Section 1.1.
"Loan Documents" means this Agreement, the Note, the Security Documents, the
Warrant, the Registration Rights Agreement, the Look-Up Agreement, and all
amendments, modifications and restatements of such documents and instruments.
18
"Material Adverse Change" means a material and adverse change, from the state
of affairs presented in the Initial Financial Statements or as represented or
warranted in any Loan Document, to (a) the Company's financial condition, (b)
the Company's operations, properties or prospects, considered as a whole, (c)
the Company's ability to timely pay the Obligations, (d) the enforceability
of the material terms of any Loan Documents, or (e) the Collateral or Lender'
Liens on the Collateral.
"Maximum Loan Amount" means the amount equal to $6,000,000.
"Maximum Rate" means, at any time and with respect to any Lender, the maximum
rate of nonusurious interest under applicable law that such Lender may
contract for, take, charge or receive with respect to the Obligations.
"Note" has the meaning given to such term in Section 1.1.
"Obligations" means all Liabilities from time to time owing by the Company to
any Lender under or pursuant to this Agreement, the Note or any Security
Document (including any modifications, amendments or restatements of any such
documents or instruments). "Obligation" means any part of the Obligations.
"Other Liens" means any Lien on the Company's property other than Permitted
Liens.
"Permitted Indebtedness" means the following:
(a) the Obligations.
(b) unsecured Indebtedness between the Company and its Subsidiaries
arising in the ordinary course of business.
(c) Indebtedness owed by the Company or its Subsidiaries that is
subordinated to the Obligations upon terms and conditions satisfactory to
Lender.
(d) outstanding Indebtedness of the Company and of any of the
Company's Subsidiaries on the Closing Date, but excluding any renewals or
extensions of such Liabilities.
(e) purchase money Indebtedness, provided that the original
principal amount of any such Indebtedness shall not be in excess of the
purchase price of the asset (including but not limited to equipment and
assets comprising television stations) acquired thereby and such Indebtedness
shall be secured only by the acquired asset.
"Permitted Investments" means
(a) property used in the ordinary course of business of Restricted
Persons;
(b) current assets arising from the sale or lease of goods and
services in the ordinary course of business by the Company or from sales
permitted under Section 5.23; and
"Permitted Liens" means:
(a) statutory Liens for taxes, assessments or other governmental
charges or levies which are not yet delinquent or which are being contested
in good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP;
(b) landlords', operators', carriers', warehousemen's, repairmen's,
mechanics', materialmen's, or other like Liens that do not secure
Indebtedness, in each case only to the extent arising in the ordinary course
of business and only to the extent securing obligations that are not
delinquent or that are being contested in good faith by appropriate
proceedings and for which adequate reserves have been maintained in
accordance with GAAP;
(c) minor defects and irregularities in title to any property, so
long as such defects and irregularities neither secure Indebtedness nor
materially impair the value of such property or the use of such property for
the purposes for which such property is held;
19
(d) deposits of cash or securities to secure the performance of
bids, trade contracts, leases, statutory obligations and other obligations of
a like nature (excluding appeal bonds) incurred in the ordinary course of
business;
(e) Liens under the Security Documents;
(f) Liens securing purchase money Indebtedness, provided that such
Indebtedness shall be secured only by the acquired asset;
(g) Liens securing Indebtedness outstanding under the instruments
and agreements described in the attached Schedules;
(h) with respect only to property subject to any particular Security
Document, Liens burdening such property which are expressly allowed by such
Security Document.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Property" means that certain real property that is subject to the Lien
pursuant to the Deed of Trust.
"Restricted Person" means the Company and any Subsidiary of the Company.
"Security Agreement" means the security agreement of even date herewith
delivered by the Company to the Lender in connection with this Agreement and
listed on the Security Schedule.
"Security Documents" means the instruments listed in the Security Schedule
and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation
statements, extension agreements and other agreements or instruments now,
heretofore, or hereafter delivered by the Company to Lender in connection
with this Agreement or any transaction contemplated hereby to secure or
guarantee the payment of any part of the Obligations or the performance of
the Company's other duties and obligations under the Loan Documents.
"Security Schedule" means the so named Schedule attached hereto..
"Subsidiary" means, with respect to any Person, any corporation, association,
partnership, limited liability company, joint venture, or other business or
corporate entity, enterprise or organization which is directly or indirectly
(through one or more intermediaries) controlled by or owned fifty percent or
more by such Person.
"Total Allowed Debt" means the aggregate outstanding principal amount of
Permitted Indebtedness.
"UCC" means the Uniform Commercial Code in effect in the State of Texas, as
amended.
ARTICLE 8
ADDITIONAL CONDITIONS
8.1. DETERMINATION OF FACTS. Lender shall, at all times, have the right to
establish, to its satisfaction and in its reasonable discretion, the
existence or non-existence of any fact that is a condition to this Agreement.
8.2. PROTECTION OF THE LOAN. Lender shall have the right, but not the
obligation, to perform any and all acts that Lender may deem reasonably
necessary to assure the protection of the Loans, including, but not limited
to, action during the continuance of an Event of Default, and the
commencement of, appearance in or defense of any action or proceeding
purporting to affect the rights, obligations or duties of the Company
(provided that the claim against the Company in any such suit exceeds
$100,000 individually or in the aggregate) or the Lender. Any expense paid or
incurred (including reasonable attorneys' fees) or any advance made by the
Lender in connection therewith shall be paid by the Company to Lender upon
demand.
ARTICLE 9
MISCELLANEOUS PROVISIONS
20
9.1. WAIVERS AND AMENDMENTS; ACKNOWLEDGMENTS.
(a) WAIVERS AND AMENDMENTS. No failure or delay (whether
by course of conduct or otherwise) by Lender in
exercising any right, power or remedy that Lender may
have under any of the Loan Documents shall operate as
a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by
Lender of any such right, power or remedy preclude
any other or further exercise thereof or of any other
right, power or remedy. No waiver of any provision of
any Loan Document and no consent to any departure
therefrom shall ever be effective unless it is in
writing and signed as provided below in this section,
and then such waiver or consent shall be effective
only in the specific instances and for the purposes
for which given and to the extent specified in such
writing. No notice to or demand on the Company shall
in any case of itself entitle the Company to any
other or further notice or demand in similar or other
circumstances. This Agreement and the other Loan
Documents set forth the entire understanding between
the parties hereto with respect to the transactions
contemplated herein and therein and supersede all
prior discussions and understandings with respect to
the subject matter hereof and thereof, and no waiver,
consent, release, modification or amendment of or
supplement to this Agreement or the other Loan
Documents shall be valid or effective against any
party hereto unless the same is in writing and signed
by (i) if such party is the Company, by the Company,
and (ii) if such party is the Lender, by the Lender.
(b) ACKNOWLEDGMENTS AND ADMISSIONS. The Company hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in
the negotiation, execution and delivery of the Loan Documents, (ii) it has
made an independent decision to enter into this Agreement and the other Loan
Documents, without reliance on any representation, warranty, covenant or
undertaking by Lender, whether written, oral or implicit, other than as
expressly set out in this Agreement or in another Loan Document delivered on
or after the date hereof, (iii) there are no representations, warranties,
covenants, undertakings or agreements by Lender as to the Loan Documents
except as expressly set out in this Agreement or in another Loan Document
delivered on or after the date hereof, (iv) Lender has no fiduciary
obligation toward the Company with respect to any Loan Document or the
transactions contemplated thereby, (v) the relationship pursuant to the Loan
Documents between the Company and the Lender is and shall be solely that of
debtor and creditor, respectively, (vi) no partnership or joint venture
exists with respect to the Loan Documents between the Company and the Lender,
(vii) should an Event of Default occur or exist, Lender will determine in its
sole discretion and for its own reasons what remedies and actions it will or
will not exercise or take at that time, (viii) without limiting any of the
foregoing, the Company is not relying upon any representation or covenant by
Lender, or any representative thereof, and no such representation or covenant
has been made, that Lender will, at the time of an Event of Default, or at
any other time, waive, negotiate, discuss, or take or refrain from taking any
action permitted under the Loan Documents with respect to any such Event of
Default or any other provision of the Loan Documents, and (ix) Lender has
relied upon the truthfulness of the acknowledgments in this section in
deciding to execute and deliver this Agreement and to become obligated
hereunder.
(c) JOINT ACKNOWLEDGMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
9.2. SET-OFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and continuance of any Event of Default or any condition, event or
act which,
21
with the giving of notice or lapse of time, or both, would constitute such an
Event of Default, the Lender is hereby authorized at any time or from time to
time, without prior notice to the Company or to any other Person, any such
prior notice being hereby expressly waived, to set-off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by any office of the Lender or its Affiliates to or
for the credit of the account of the Company, regardless of the currency of
such deposits or other indebtedness, against and on account of the
obligations and liabilities of the Company to the Lender under this Agreement
and the other Loan Documents, including, without limitation, all claims of
any nature or description arising out of or connected with this Agreement and
the other Loan Documents, irrespective of whether or not the Lender shall
have made any demand hereunder and although such obligations, liabilities or
claims, or any of them, shall be contingent or unmatured. The Lender shall
provide Company with notice of such set-off within a reasonable time after
the occurrence of any such set-off.
9.3. SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. The Company's various
representations, warranties, covenants and agreements in the Loan Documents
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the performance hereof and thereof, including the making or
granting of the Loan and the delivery of the Note and the other Loan
Documents, and shall further survive until all of the Obligations are paid in
full to the Lender and all of Lender's obligations to the Company are
terminated. All statements and agreements contained in any certificate or
other instrument delivered by the Company to Lender under any Loan Document
shall be deemed representations and warranties by the Company or agreements
and covenants of the Company under this Agreement. The representations,
warranties, indemnities, and covenants made by the Company in the Loan
Documents, and the rights, powers, and privileges granted to the Lender in
the Loan Documents, are cumulative, and, except for expressly specified
waivers and consents, no Loan Document shall be construed in the context of
another to diminish, nullify, or otherwise reduce the benefit to the Lender
of any such representation, warranty, indemnity, covenant, right, power or
privilege. In particular and without limitation, no exception set out in this
Agreement to any representation, warranty, indemnity, or covenant herein
contained shall apply to any similar representation, warranty, indemnity, or
covenant contained in any other Loan Document, and each such similar
representation, warranty, indemnity, or covenant shall be subject only to
those exceptions which are expressly made applicable to it by the terms of
the various Loan Documents.
9.4. INDEMNITY. THE COMPANY AGREES TO INDEMNIFY LENDER, UPON DEMAND, FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, BROKER'S FEES, CLAIMS, LOSSES,
DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS, SUITS, SETTLEMENTS, COSTS,
EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES OF ATTORNEYS,
ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE WHATSOEVER (IN THIS
SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") THAT TO ANY EXTENT (IN
WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST LENDER
GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE
COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE
ENFORCEMENT OR DEFENSE THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR
CONTEMPLATED THEREIN (WHETHER ARISING IN CONTRACT OR IN TORT OR BY STATUTE OR
OTHERWISE). AMONG OTHER THINGS, THE FOREGOING INDEMNIFICATION COVERS ALL
LIABILITIES AND COSTS INCURRED BY LENDER RELATED TO ANY BREACH OF A LOAN
DOCUMENT BY THE COMPANY, ANY BODILY INJURY TO ANY PERSON OR DAMAGE TO ANY
PERSON'S PROPERTY, OR ANY VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL
LEGAL REQUIREMENTS BY LENDER OR ANY OTHER PERSON OR ANY LIABILITIES OR DUTIES
OF LENDER OR ANY OTHER PERSON WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR
RELEASED INTO THE ENVIRONMENT.
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY LENDER,
provided only that Lender shall be entitled under this section to receive
indemnification for that portion, if any, of any liabilities and costs that
is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including the
Company or any of its Affiliates) ever alleges such gross negligence or
willful misconduct by Lender, the indemnification provided for in this
section shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the term "Lender" shall include
each director, officer, agent, trustee, attorney, employee, representative
and affiliate of or for Lender.
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9.5. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto or thereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same instrument.
9.6. NOTICES. Any notices to be served pursuant hereto will be deemed
properly delivered if delivered personally, by United States certified or
registered mail, postage prepaid, or by Federal Express or comparable
overnight courier service fare prepaid, or by legible facsimile transmission,
to set forth on its signature page hereto or to such other address as the
Company may direct in writing and to Lender at its address set forth on the
Lender's Schedule or at such other address as Lender may direct in writing.
Such notices shall be deemed received the same day if delivered personally or
by legible facsimile, three business days after delivery by certified or
registered mail, and the next business day if delivered by overnight courier.
9.7. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT THAT THE LAW
OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT, THE LOAN
DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS OF
THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES
OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. CHAPTER 346 OF
THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN
ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) DOES NOT APPLY TO THIS AGREEMENT
OR TO THE NOTE. THE COMPANY HEREBY IRREVOCABLY SUBMITS ITSELF TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE
STATE OF TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE
UPON IT IN ANY LEGAL PROCEEDING RELATING TO THE LOAN DOCUMENTS OR THE
OBLIGATIONS BY ANY MEANS ALLOWED UNDER TEXAS OR FEDERAL LAW. IN ADDITION TO
THE PLACES OF PAYMENT SPECIFIED IN THE NOTES, THE COMPANY AND LENDER
STIPULATE AND AGREE THAT TARRANT COUNTY, TEXAS IS AN APPROPRIATE AND
ACCEPTABLE VENUE FOR ANY STATE OR FEDERAL COURT ACTION CONCERNING THE LOAN
DOCUMENTS.
NOTWITHSTANDING THE FOREGOING, ANY DISPUTE ARISING FROM THIS AGREEMENT OR ANY
DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT SHALL BE
GOVERNED IN ACCORDANCE WTH THE RULES OF PROCEDURE FOR CHRISTIAN CONCILIATION,
OF THE INSTITUTE FOR CHRISTIAN CONCILIATION [PEACEMAKER MINISTRIES]. BOTH
PARTIES REALIZE AND AGREE THAT ARBITRATION WILL BE THE EXCLUSIVE REMEDY FOR
ANY AND ALL DISPUTES, AND MAY NOT LATER LITIGATE THESE OR ANY OTHER RELATED
MATTERS IN ANY COURT.
9.8. CONSTRUCTION. This Agreement shall not be construed more strictly
against Lender than against the Company merely by virtue of the fact that the
same has been prepared by counsel for Lender, it being recognized that both
the Company and the Lender have contributed substantially and materially to
the preparation of this Agreement.
9.9. CAPTIONS. The captions of various articles herein are for convenience
only and are not to be utilized in construing the content or meaning of the
substantive provisions hereof.
23
9.10. POTENTIAL INVALIDITY. In the event of any inconsistency among the terms
hereof (including incorporated terms) or between such terms and the terms of
the Note, the terms of this Agreement shall govern and prevail. The whole or
partial invalidity, illegality or unenforceability of any provision hereof or
the Note at any time, whether pursuant to the terms of then applicable law or
otherwise, shall not affect:
(a) in the instance of partial invalidity, illegality or unenforceability,
the validity, legality or enforceability of such provision at such time
except to the extent of such partial invalidity, illegality or
unenforceability; or
(b) the validity, legality or enforceability of such provision at any other
time or of any other provision hereof at that or any other time.
9.11. INTERPRETATION. All words herein which are expressed in the masculine
or neuter gender shall be deemed to include the masculine, feminine and
neuter genders. Any word herein that is expressed in the singular or plural
shall be deemed, whenever appropriate in the context, to include the plural
and the singular.
9.12. AGREEMENT BINDING ON SUCCESSORS. This Agreement shall be binding upon
and shall inure to the benefit of the Company and Lender, their respective
successors, permitted assigns, grantees and legal representatives. The
Company may not assign any of its rights or delegate any of its duties under
this Agreement, Notes or any other Loan Documents.
9.13. LIMITATION ON INTEREST. The Lender and the Company and any other
parties to the Loan Documents intend to contract in strict compliance with
applicable usury law from time to time in effect. In furtherance thereof such
Persons stipulate and agree that none of the terms and provisions contained
in the Loan Documents shall ever be construed to create a contract to pay,
for the use, forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be charged by applicable law from
time to time in effect. Neither the Company nor any present or future
guarantors, endorsers, or other Persons hereafter becoming liable for payment
of any Obligation shall ever be liable for unearned interest thereon or shall
ever be required to pay interest thereon in excess of the maximum amount that
may be lawfully contracted for, charged, or received under applicable law
from time to time in effect, and the provisions of this section shall control
over all other provisions of the Loan Documents which may be in conflict or
apparent conflict herewith. The Lender expressly disavows any intention to
contract for, charge, or collect excessive unearned interest or finance
charges in the event the maturity of any Obligation is accelerated. If
maturity of any Obligation is accelerated for any reason, any Obligation is
prepaid and as a result any amounts held to constitute interest are
determined to be in excess of the legal maximum, or Lender or any other
holder of any or all of the Obligations shall otherwise collect moneys which
are determined to constitute interest that would otherwise increase the
interest on any or all of the Obligations to an amount in excess of that
permitted to be charged by applicable law then in effect, then all sums
determined to constitute interest in excess of such legal limit shall,
without penalty, be promptly applied to reduce the then outstanding principal
of the related Obligations or, at Lender's or such holder's option, promptly
returned to the Company or the other payor thereof upon such determination.
In determining whether or not the interest paid or payable, under any
specific circumstance, exceeds the maximum amount permitted under applicable
law, Lender and the Company (and any other payors thereof) shall to the
greatest extent permitted under applicable law, characterize any
non-principal payment as an expense, fee or premium rather than as interest,
exclude voluntary prepayments and the effects thereof, and amortize, prorate,
allocate, and spread the total amount of interest throughout the entire
contemplated term of the instruments evidencing the Obligations in accordance
with the amounts outstanding from time to time thereunder and the maximum
legal rate of interest from time to time in effect under applicable law in
order to lawfully contract for, charge, or receive the maximum amount of
interest permitted under applicable law. In the event applicable law provides
for an interest ceiling under Chapter 303 of the Texas Finance Code (the
"Texas Finance Code") as amended, for that day, the ceiling shall be the
"weekly ceiling" as defined in the Texas Finance Code, provided that if any
applicable Law permits greater interest, the Law permitting the greatest
interest shall apply. As used in this section the term "applicable law" means
the laws of the State of Texas or the Laws of the United States of America,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
9.14. EXCULPATION. Nothing in the Loan Documents shall be construed to
constitute Lender a trustee, joint venturer, or other fiduciary of the
Company.
9.15. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES. THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT
OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR ANY TRANSACTION
CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH,
24
BEFORE OR AFTER MATURITY; WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
"SPECIAL DAMAGES", AS DEFINED BELOW, CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS
SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR
PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS
OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO
ANY OTHER PARTY HERETO.
9.16. ATTORNEY REPRESENTATION. Each party hereto understands and agrees that
(i) J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ represents only the Company and (ii). W. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, P.C. represents only the Lender only. Furthermore, each party hereto
hereby acknowledges that (i) such party has either consulted with or had the
opportunity to consult with independent legal counsel regarding the
transactions contemplated in this Agreement and in the other Loan Documents
and (ii) such party and its legal counsel (if applicable) have had a chance
to review this Agreement and the other Loan Documents.
9.17. FACSIMILE SIGNATURES. For purposes of the parties' execution of this
Agreement, it is expressly agreed that a facsimile or telecopy of a party's
signature hereto shall be as valid, binding and enforceable as the original.
Likewise, each party agrees that an e-mail communication acknowledging
receipt of this document, and containing an express statement that the sender
of the e-mail agrees to the document's terms and conditions, shall be as
valid and enforceable as that sender or party's original signature on this
document.
9.18 OTHER DOCUMENTS. The parties hereto shall execute such other and further
documents as may be necessary, appropriate or convenient to effectuate the
purposes of this agreement.
IN WITNESS OF THE FOREGOING, the Company and Lender have executed or
caused this Agreement to be executed by their duly authorized officers as of
the day and year first above written.
BORROWER:
iEXALT, INC., a Nevada corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
Address:
iExalt, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LENDER:
Cresson Productions, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
-----------------------------
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
25
LENDER'S SCHEDULE
NAME AND ADDRESS AMOUNT FUNDING
---------------- ------ -------
Cresson Productions, Inc. $140,000 Initial Loan: $140,000 at signing Loan
Documents. Subsequent Loans: After a
total of $140,000 has been drawn by the
Company, the Company may continue to
draw $100,000 each 30 day period
thereafter, upon Company's written
notification and request to Lender,
which written notification and request
must be made at least 5 days but not
more than 10 days prior to the
expiration of 30 days from the date of
the last occurring funding of any
regularly scheduled Loan proceeds.
26
EXHIBIT A
PROMISSORY NOTE
$140,000 August 14, 2001
FOR VALUE RECEIVED, the undersigned, iExalt, Inc., a Nevada
corporation ("Borrower"), hereby promises to pay to the order of Cresson
Productions, Inc., a Nevada Corporation ("Payee"), in lawful money of the
United States of America in immediately available funds, the principal sum of
one hundred forty thousand Dollars ($140,000.00), or, if less, the aggregate
unpaid principal amount of the Loans made under this Note by Payee to
Borrower pursuant to the terms of the
Loan Agreement and attached Lender's
Schedule (as hereinafter defined), together with interest on the unpaid
principal balance thereof as hereinafter set forth, both principal and
interest payable as herein provided in lawful money of the United States of
America at the offices of Payee at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
as from time to time may be designated by the holder of this Note.
All principal and interest on the outstanding principal balance
shall be payable in accordance with the following terms (i) accrued interest
will be payable monthly and (ii) principal will be repaid 180 days from the
date of funding. Both principal and interest payments hereunder may be paid
at the election of either Payee or Borrower, as the case may be, in cash or
shares of Borrower's common stock, which stock will be valued for purposes of
payment hereunder at the lesser of [a] $.20 per share or [b] seventy-five
percent (75%) of the average of the stock's closing price in the last 5
trading days; The principal amount of the Loan (exclusive of any past due
principal or interest) from time to time outstanding shall bear interest on
each day outstanding at the rate of eleven percent (11.0%) per annum,
calculated on the basis of actual days elapsed and a year of 365 days. All
past due principal of and interest on this Note shall bear interest on each
day outstanding at the rate of eighteen percent (18.0%) per annum, calculated
on the basis of actual days elapsed and a year of 365 days.
Borrower shall have the right to prepay, without premium or penalty,
at any time, any part or all of the indebtedness evidenced by this Note upon
five (5) days advance notice to Payee. Any prepayment shall include interest
accrued to the date of such prepayment, and all prepayments of principal
shall be applied first against accrued interest and then principal.
This Note (a) is issued and delivered under that certain
Loan
Agreement of even date herewith among Borrower and Lender (as defined
therein; including Payee) (herein, as from time to time supplemented, amended
or restated, called the "
Loan Agreement"), and is a "Note" as defined
therein, (b) is subject to the terms and provisions of the
Loan Agreement,
which contains provisions for payments and prepayments hereunder and
acceleration of the maturity hereof upon the happening of certain stated
events, and (c) is secured by and entitled to the benefits of certain
Security Documents (as identified and defined in the
Loan Agreement).
Payments on this Note shall be made and applied as provided herein and in the
Loan Agreement. Reference is hereby made to the
Loan Agreement for a
description of certain rights, limitations of rights, obligations and duties
of the parties hereto and for the meanings assigned to terms used and not
defined herein and to the Security Documents for a description of the nature
and extent of the security thereby provided and the rights of the parties
thereto.
All remedies afforded by law shall be cumulative, and all shall be
available to Payee at all times until this Note has been paid and performed
in full. No delay or omission of Payee to exercise any right or power under
this Note shall impair such right or power or be construed to be a waiver of
any Default or Event of Default or acquiescence therein, and any single or
partial exercise of any such right or power shall not preclude any other or
further exercise thereof or the exercise of any other right or power, and no
waiver whatsoever shall be valid unless it is in a writing signed by Payee
and then only to the extent specifically set forth in such writing.
The terms and provisions of this Note shall inure to the benefit of
any assignee, transferee, or holder of this Note, and in the event of such
transfer or assignment, each of the rights, powers, privileges and benefits
conferred upon Payee by this Note shall automatically be vested in such
transferee, assignee, or holder.
The terms and provisions of this Note shall be binding upon Borrower
and its successors, assigns, and transferees, but any such assignment or
transfer shall not relieve Borrower of its obligations under this Note.
27
The invalidity or unenforceability of any of the provisions of this
Note shall not affect the validity or enforceability of the remainder hereof.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented hereby
is proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Note jointly and severally
agree to pay reasonable attorneys' fees and collection costs to the holder
hereof in addition to the principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of dishonor
and nonpayment of this Note, protest, notice of protest, notice of intention
to accelerate the maturity of this Note, declaration or notice of
acceleration of the maturity of this Note, diligence in collecting, the
bringing of any suit against any party and any notice of or defense on
account of any extensions, renewals, partial payments or changes in any
manner of or in this Note or in any of its terms, provisions and covenants,
or any releases or substitutions of any security, or any delay, indulgence or
other act of any trustee or any holder hereof, whether before or after
maturity.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum amount of interest which, under applicable
law, may be contracted for, charged, or received on this Note, and this Note
is expressly made subject to the provisions of the
Loan Agreement which more
fully set out the limitations on how interest accrues hereon. In the event
applicable law provides for an interest ceiling under Chapter 303 of the
Texas Finance Code (the "Texas Finance Code") as amended, for that day, the
ceiling shall be the "weekly ceiling" as defined in the Texas Finance Code
and shall be used in this Note for calculating the Maximum Rate and for all
other purposes. The term "applicable law" as used in this Note shall mean the
laws of the State of Texas or the laws of the United States, whichever laws
allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE FEDERAL LAW.
BORROWER:
iEXALT, INC., A NEVADA CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
28
EXHIBIT B
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain Loan Agreement dated as of
_____________ (as from time to time amended, the "Agreement"), by and among
iExalt, Inc., a Nevada corporation (the "Company") and that lender named therein
and listed on the Lender's Schedule attached to the Agreement ("Lender"), which
Agreement is in full force and effect on the date hereof. Terms that are defined
in the Agreement are used herein with the meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 5.8 of the
Agreement. Together herewith the Company is furnishing to Lender the Company's
audited financial statements (the "Financial Statements") dated as of ________
(the "Reporting Date"). The Company hereby represents, warrants, and
acknowledges to Lender that:
1. the officer of the Company signing this instrument is the duly
elected, qualified and acting ____________ of the Company and as such
is the Company's chief financial officer;
2. the Financial Statements are accurate and complete and satisfy the
requirements of the Agreement;
3. on the Reporting Date the Company was, and on the date hereof the
Company is, in full compliance with the disclosure requirements of
Section 5.11 of the Agreement, and no Default otherwise existed on the
Reporting Date or otherwise exists on the date of this instrument;
4. The representations and warranties of the Company set forth in the
Agreement and the other Loan Documents are true and correct on and as
of the date hereof (except to the extent that the facts on which such
representations and warranties are based have been changed by the
extension of credit under the Agreement), with the same effect as
though such representations and warranties had been made on and as of
the date hereof.
THE OFFICER OF THE COMPANY SIGNING THIS INSTRUMENT HEREBY CERTIFIES
THAT HE HAS REVIEWED THE LOAN DOCUMENTS AND THE FINANCIAL STATEMENTS AND HAS
OTHERWISE UNDERTAKEN SUCH INQUIRY AS IS IN HIS OPINION NECESSARY
TO ENABLE HIM TO EXPRESS AN INFORMED OPINION WITH RESPECT TO THE ABOVE
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF THE COMPANY AND, TO THE
BEST OF HIS KNOWLEDGE, SUCH REPRESENTATIONS, WARRANTIES, AND
ACKNOWLEDGMENTS ARE TRUE, CORRECT AND COMPLETE.
IN WITNESS WHEREOF, THIS INSTRUMENT IS EXECUTED AS OF _________________.
iEXALT, INC.
By:
------------------------------
__________________, CFO
29
EXHIBIT C
WARRANT AGREEMENT
30