LOAN AGREEMENT
This is a Loan Agreement (this "Agreement") dated as of September 18, 1995,
among
UNIDIAL INCORPORATED (the "Lender")
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and
UNIQUEST COMMUNICATIONS, INC. (the "Borrower")
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Recitals
The Lender would like to provide to the Borrower, and the Borrower would like to
avail itself of, the Revolving Credit, subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, the Borrower and the Lender agree as follows:
SECTION I
Definitions
As used in this Agreement, the following terms shall have the following meanings
and the meanings assigned to them shall be equally applicable to both the
singular and plural forms of the terms defined:
"Accounts Receivable" shall mean all (a) rights to payment for any good s sold
or services performed, whether such right to payment exists on the date of this
Agreement or is created thereafter, and whenever and wherever acquitted, whether
or not such right to payment has been earned by performance, and whether or not
such right to payment is evidenced by any document, instrument or chattel paper,
and all claims against common carriers for goods and Inventory lost in transit;
and (b) the proceeds or products of any of the foregoing. The amount of an
Account Receivable shall be the amount of the receivable net of all discounts.
"Borrower Documents" shall mean, collectively, this Agreement, the Revolving
Credit Note, the Guaranty, the Stock Pledge Agreement, the Security Agreement
and any other document to be executed by the Borrower which relates to this
Agreement.
"Capital Expenditure" shall mean any expenditure by, or obligation incurred by,
a Person for an asset which will be used in a year or years subsequent to the
year in which the expenditure is made or obligation is incurred, and which asset
is properly classified in relevant financial statements of such Person as
equipment, real property or improvements, fixed assets or a similar type of
capitalized asset, all in accordance with GAAP.
"Client Lists" shall mean all of Borrower's right, title and interest in and to
any and all of its client lists or customer lists.
"Collateral" shall mean the Borrower's Client Lists.
"Contract Rights" shall mean all of the Borrower's right, title and interest in,
to and under the (i) Independent Agent Agreement dated July 25, 1994 between the
Lender and the Borrower; and (ii) the Distributor Agreement between the Borrower
and Automated Solutions, Inc., dated August 31, 1995.
"CPA Firm" shall mean the Borrower's firm of certified public accountants which
regularly performs accounting services for the Borrower, provided that such firm
is satisfactory to the Lender in the Lender's discretion.
"Current Assets" shall mean the amount of the Borrower's total current assets,
determined on a consolidated basis in accordance with GAAP.
"Current Liabilities" shall mean the amount of the Borrower's total current
liabilities, determined on a consolidated basis in accordance with GAAP.
"Dividend" shall mean any amount declared or paid, or set apart by the Borrower
for the purpose of payment of, (a) any dividend or other distribution on or in
respect of any shares of any class of the Borrower's capital stock, or (b) the
purchase, retirement, reacquisition or redemption of any shares of any class of
the Borrower's capital stock, or (c) any distribution by way of reduction of
capital, or (d) any other distribution on or in respect of any shares of any
class of the Borrower's capital stock.
"Event of Default" shall mean any one of the occurrences which are Events of
Default under Section IX of this Agreement.
"Funded Debt" shall mean any obligation of Borrower payable in whole or in part
more than one (1) year from the date of creation thereof, which under generally
accepted accounting principles is to be shown on the balance sheet of borrower
as a liability, including capitalized lease obligations.
"GAAP" shall mean generally accepted accounting principles applied on a basis
consistent with prior periods.
"Guarantors" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
"Guaranty" shall mean that Guaranty Agreement dated September 18, 1995, executed
by the Guarantors in favor of the Lender.
"Indebtedness" shall mean all obligations, contingent or otherwise, which, in
accordance with GAAP, should be classified on the obligor's balance sheet as
liabilities.
"Net After Tax Income" for any period shall mean either (a) if the CPA Firm has
prepared compiled financial statements for that period accompanied by an
unqualified opinion, the amount shown in the income statement (prepared and
compiled by the CPA Firm) as net income of the Borrower after deduction of
and/or allowance for all state and federal income taxes paid or payable, less
all items of extraordinary income; or (b) in all other cases, the net income of
the Borrower, after exclusion of all items of extraordinary income, after
deduction of all direct and indirect expenses, and after deduction of and/or
allowance for all state and federal income taxes paid or payable, all as
determined in accordance with GAAP.
"Net Cash Flow" shall mean the sum of (a) Net After Tax Income, plus (b) all
non-cash charges (such as deferred taxes, depreciation and amortization of good
will) which, in determining Net After Tax Income for any period, were deducted
from the Borrower's gross income for such period, minus the sum of (1) the
aggregate amount of Capital Expenditures for that period, plus (2) any
Dividends, for that period, plus (3) all Principal Repayments for that period,
all in accordance with GAAP.
"Net Income" shall mean either (a) if the CPA Firm has prepared audited
financial statements for the period in question, accompanied by an unqualified
opinion, the amount shown in the income statement (prepared and audited by the
CPA Firm) as net income, less all items of extraordinary income; or (b) in all
other cases, the net income of the Borrower, after exclusion of all items of
extraordinary income and after deduction of all direct and indirect expenses,
all as determined in accordance with GAAP.
"Net Worth" shall mean the sum of the Borrower's retained earnings, profit after
tax and amount for capital stock. In determining Net Worth, the amounts
representing retained earnings, profit after tax and capital stock shall be
determined for the Borrower in accordance with GAAP.
"Person" shall mean any individual, partnership, association, trust, corporation
or other entity.
"Prime Rate" shall mean the prime rate as published by the Wall Street Journal.
The prime rate listed in the Wall street Journal for the last business day of
each month shall be the Prime Rate for that entire month and shall be applied to
the average daily balance outstanding for that month.
"Principal Repayments" shall mean all expenditures by, or obligations existing
with respect to or incurred by, a Person for the repayment of any principal of,
on, or in connection with any Funded Debt, including (for purposes of
illustration, and not for purposes of limitation) principal payments required as
the short term portion of any Funded Debt, and principal payments required on or
in connection with the Revolving Credit Loan, all in accordance with GAAP.
"Request for Disbursement" shall mean either (a) a written request by the
Borrower for a Revolving Credit Loan in form, substance and detail satisfactory
to the Lender, signed by an authorized Person as provided in Section 3.04 or (b)
an oral request on behalf of the Borrower, as provided in Section 3.04, for a
Revolving Credit Loan providing the same information as is included in Annex D
to this Agreement.
"Revolving Credit" shall have the meaning given it in Section II of this
Agreement.
"Revolving Credit Loan" shall mean any single extension of credit by the Lender
to the Borrower pursuant to Section 3.01 of this Agreement, and the total of all
existing Revolving Credit Loans outstanding at any one time within the
limitations of Section 3.02 of this Agreement.
"Revolving Credit Note" shall mean the promissory note dated September 18,1995
by the Borrower, in the face principal amount of Three Hundred Thousand Dollars
$300,000.00, and substantially in the form of Annex A attached hereto, and any
note delivered in renewal, replacement, substitution, extension or novation
thereof.
"Security Agreement" shall mean the Security Agreement dated as of September 18,
1995, between the Borrower and the Lender referred to in Section 5.01 of this
Agreement, and substantially in the form attached hereto as Annex B, as amended
from time to time.
"Shareholders" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, holder of 7,300 shares
(certificate number 001) and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III, holder of 2,000 shares
(certificate number 002).
"Tangible Net Worth" shall mean the New Worth of the Borrower minus the value of
any intangible assets, including, without limitation, organization expenses,
patents, trademarks, copyrights, goodwill, research and development, training
cost and unamortized debt discount.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
the Commonwealth of Kentucky.
"Unmatured Default" shall mean the happening of any material breach under this
Agreement, including but not limited to failure to pay any installment of
principal of interest of the Revolving Credit Note when due, or a breach of the
financial covenants under this Agreement, or other similar material breach the
happening of which, together with the giving of any required notice or the
passage of any required period of time, would constitute an Event of Default.
SECTION II
The Revolving Credit
The Lender hereby establishes the Revolving Credit in favor of the Borrower as
follows:
2.01 Amount of Revolving Credit. The maximum principal amount of the
Revolving Credit shall be Three Hundred Thousand Dollars ($300,000.00).
2.02 Term of Revolving Credit. The Revolving Credit is effective as of the
date of this Agreement, and, unless the Revolving Credit is sooner
terminated or extended as provided in this Agreement, shall continue in
effect until July 1, 1997. Unless sooner extended or terminated, the
Revolving Credit shall terminate on July 1, 1997, and thereafter the
Borrower shall not be entitled to obtain any additional Revolving
Credit Loans hereunder.
2.03 Termination of Revolving Credit. The Lender shall have the right, at
its sole option and absolute discretion, to terminate the Revolving
Credit upon the occurrence of any Event of Default and upon giving the
Borrower notice of termination. The termination of the Revolving Credit
shall not in any way release the Borrower form its obligations under
this Agreement, nor shall it terminate this Agreement. The provisions
of this Agreement and the security interests created by the Security
Agreement shall continue in full force and effect until all amounts
owed by the Borrower to the Lender, including interest, penalties, and
other charges, shall have been paid in full.
2.04 Extension of Revolving Credit. The Lender is under no duty to extend
the period of the Revolving Credit beyond July 1, 1997. Before, at or
after the termination of the Revolving Credit, the Lender may extend
the term of the Revolving Credit, on a basis and with terms and
conditions satisfactory to the Lender in its sole discretion, for one
or more successive one year terms. Any such extension must be done in a
writing signed by the Lender and specifically providing for an
extension of the Revolving Credit in order to be binding on the Lender.
Upon any extension of the period of the Revolving Credit, the Security
Agreement and the other Borrower Documents shall remain in effect and
shall continue to apply to the Revolving Credit Note, as extended, (or
to a renewal or replacement note for the Revolving Credit Note, or its
replacement), until that Revolving Credit Note, as extended, (or to a
renewal or replacement not for the Revolving Credit Note, or its
replacement), until that Revolving Credit Note, as extended, renewed or
replaced, shall have been paid in full.
SECTION III
The Revolving Credit Loans
3.01 Revolving Credit Loans. Subject to the terms and conditions of this
Agreement, so long as the Revolving Credit remains in effect and is not
terminated, and no Unmatured Default or Event of Default has occurred,
the Lender shall grant the Borrower such Revolving Credit Loans as the
Borrower may request from time to time in accordance with the
provisions of this Agreement. The unpaid principal balance of the
aggregate of the Revolving Credit Loans shall bear interest at an
annual rate equal to the Prime Rate as published in the Wall Street
Journal for the last business day of each month, which shall be the
Prime Rate for the entire month and shall be applied to the average
daily balance outstanding for that month, plus two percent (2.0%), from
the date the first Revolving Credit Loan is made pursuant to this
Agreement until the entire principal balance of the aggregate of the
Revolving Credit Loans has been paid. The interest rate applicable to
the Revolving Credit Loans shall be adjusted on the last business day
of each month. The Revolving Credit Loans shall be evidenced by and
payable in accordance with the terms of the Revolving Credit Note and
on the terms of this Agreement. In the event of any discrepancy between
the terms of the executed Revolving Credit Note and this Agreement, the
terms of the Revolving Credit Note shall prevail.
3.02 Maximum Amount. At no time shall the aggregate unpaid principal balance
of all Revolving Credit Loans made pursuant to this Agreement which are
outstanding at any one time exceed THREE HUNDRED THOUSAND DOLLARS
($300,000.00).
3.03 Purposes of the Revolving Credit Loans. Proceeds of the Revolving
Credit Loans shall be used by the Borrower for general business
purposes which shall be approved by the Lender, specifically, the
Borrower shall use the proceeds from its initial draw to make the
following payments:
Automated Solutions license fee $150,000.00
Accounts payable 8,856.00
Wages payable 16,363.00
Commissions payable 17,781.00
Working Capital and Cash Reserves 7,000.00
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Total of Anticipated Initial Draw Proceeds $200,000.00
3.04 Procedures and Conditions. Each Revolving Credit Loan obtained by the
Borrower shall be subject to the following terms and conditions:
(a) Each Revolving Credit Loan obtained by the Borrower shall be in the
minimum principal sum of One Thousand Dollars ($1,000.00).
(b) Whenever the Borrower desires to obtain a Revolving Credit Loan it
shall deliver to the Lender a Request for Disbursement (either
orally or in writing) (unless waived by the Lender in writing)
before the day on which it wishes to have the fund made available.
Each such Request for Disbursement shall specify the amount of the
Revolving Credit Loan requested, the date on which the Borrower
desires the funds to be made available, and the purpose for which
the Revolving Credit Loan is requested. The Borrower hereby
authorizes the treasurer of the Borrower, and any person designated
by the board of directors of the Borrower pursuant to a resolution
which has been certified to the Lender by the corporate secretary
or an assistant corporate secretary of the Borrower, to make either
an oral or a written Request for Disbursement. As long as the
Lender believes in good faith that the person actually making any
oral Request for Disbursement is, in fact, such treasurer or other
person designated by the Borrower's board of directors, then any
Revolving Credit Loan made as a result of the Request for
Disbursement shall be deemed to have been made pursuant to a valid
and authorized Request for Disbursement, regardless of whether the
maker of the Request for Disbursement was truly who he or she
claimed to be.
(c) The Borrower shall not be entitled to obtain any Revolving Credit
Loan if any Event of Default or Unmatured Default shall exist at
the time of the making of the Request of Disbursement, or would
exist upon the making of the Revolving Credit Loan requested, even
if the Lender does not elect to terminate the Revolving Credit as a
Borrower with notice of any determination by the Lender to refuse
to make additional advances of the Revolving Credit Loan because of
the existence of an Unmatured Default as soon as practicable
following any such determination, and the Lender acknowledges that
the Borrower shall again be entitled to advances of the Revolving
Credit Loan if, in such event, such Unmatured Default is cured
prior to the occurrence of any Event of Default.
(d) The Borrower shall not be entitled to obtain any Revolving Credit
Loan if immediately after making the Revolving Credit Loan were to
be made, the aggregate of the unpaid principal balance of the
Revolving Credit Loans would exceed the maximum amount permitted
under Section 3.02.
(e) All Revolving Credit Loans shall be made in strict compliance with
the terms and provisions of this Agreement, unless the Lender
elects in its sole discretion to waive nay of those terms and
conditions. The waiver of any terms and conditions with respect to
any one Revolving Credit Loan shall not constitute a waiver of the
same or any other terms or conditions with respect to any other
Revolving Credit Loan.
(f) Each request by the Borrower for a Revolving Credit Loan hereunder
shall constitute the making of the following representations and
warranties by the Borrower to the Lender:
1) That the Borrower is then, and at the time the Revolving
Credit Loan actually is made will be, entitled under this
Agreement to obtain that Revolving Credit Loan; and
2) That all of the covenants, agreements, representations and
warranties made by the Borrower in this Agreement, and in
the Security Agreement and in any writing delivered to the
Lender by or on behalf of the Borrower, are true, correct
and complete in all material respects, and have been
complied in all material respects (to the extent required by
the terms thereof) with, as of such dates.
3.05 Notation of Disbursements and Payments. Disbursements of, and payments
of principal with respect to, Revolving Credit Loans shall be evidenced
by notations by the Lender in its books and records showing the date
and amount of each advance and each payment of principal. The principal
amount outstanding under the Revolving Credit Note from time to time
shall also be recorded by the Lender in its books and records. The
aggregate amount of all disbursements of Revolving Credit Loans made
and shown on the Lender's books and records, over all of the payments
of principal made by the Borrower and recorded on the Lender's books
and records, shall be prima facie evidence of the outstanding principal
balance due under the Revolving Credit Note.
SECTION IV
Payments of the Revolving Credit Loans
4.01 Optional and Mandatory Revolving Credit Note Principal Payment.
(a) The Borrower may make optional prepayments of principal of
Revolving Credit Loans from time to time. Those payments of
principal of Revolving Credit Loans may not be reborrowed once
repaid.
(b) The Borrower shall pay to the Lender the outstanding principal
balance of all Revolving Credit Loans on July 1, 1997, unless this
Agreement is sooner extended or terminated in accordance with this
Agreement.
4.02 Revolving Credit Note Interest Payments. The Borrower shall pay all
accrued but unpaid interest on the outstanding principal balance of all
Revolving Credit Loans on November 1, 1995, and on the first day of
each calendar month thereafter during such time as any principal
balance of Revolving Credit Loans remains unpaid.
SECTION V
Security for the Revolving Credit Loans
5.01 Security for the Revolving Credit Loans. The Revolving Credit Note and
the Revolving Credit Loans evidenced thereby are and shall be secured
by and entitled to the benefits of all of the following:
(a) Right of Offset. The Revolving Credit Loans shall be secured by
the right of offset provided in Section 10.01 of this Agreement.
(b) Security Interest in the Borrower's Collateral. The Revolving
Credit Loans shall also be secured by a security interest granted
by the Borrower in the Borrower's Collateral, pursuant to the
Security Agreement substantially in the form attached to this
Agreement as Annex B.
SECTION VI
Conditions Precedent
6.01 Conditions Precedent to the Revolving Credit Loans. The Lender's
obligation to provide the Borrower with the first Revolving Credit Loan
shall be conditioned upon the fulfillment of all the following
conditions:
(a) Resolutions. The Borrower shall have furnished the Lender with a
certified copy of the resolutions of its board of directors (1)
authorizing the execution of the following documents: this
Agreement, the Revolving Credit Note, the Security Agreement, and
any other documents, instruments and agreements referred to herein
which are required to be executed and delivered by the Borrower
and (2) authorizing consummation of the transactions contemplated
by, and performance of this Agreement.
(b) Opinion of Counsel. The Borrower shall have furnished the Lender,
at the Borrower's expense, with the legal opinion of ▇▇▇ ▇.
▇▇▇▇▇▇, Esq., as counsel for the Borrower addressed to the Lender,
dated the date of the Revolving Credit Note, satisfactory to the
Lender and its counsel and substantially in the form attached
hereto as Annex E.
(c) Certificates of Incumbency. The Borrower shall have furnished the
Lender with a certificate of its secretary certifying the names of
the officers of the Borrower authorized to sign the Borrower
Documents, together with the true signatures of such officers.
(d) Executed Agreements. The Borrower shall have duly executed or
shall have caused the Guarantors and Shareholders to execute each
of the following documents and shall have delivered to the Lender
the following:
1. this Agreement;
2. the Revolving Credit Note;
3. the Security Agreement;
4. the Guaranty Agreement;
5. the Stock Pledge Agreement;
6. such financing statements or other documents
for filing with public officials with
respect to the Security Agreement as the
Lender may request.
(e) Representations and Warranties. Each and every representation and
warranty made by or on behalf of the Borrower at the time of or
after the execution of this Agreement relating to the Borrower
Documents or the transactions contemplated thereby shall be true,
complete and correct on and as of the date such Revolving Credit
Loan is to be made.
(f) No Defaults. There shall exist no Event of Default or Unmatured
Default which has not been cured to the Lender's satisfaction.
(g) No Change in the Borrower's Condition. There shall have been no
material adverse change in the condition, financial or otherwise,
or the Borrower from that existing on the date of the financial
statements described in Section 8.06 of this Agreement.
(h) Documentation. The Borrower shall have complied with Section 3.04
of this Agreement in all respects, and delivered all documents and
instruments required thereby.
(i) Recordings and Filings. All financing statements or other
instruments as the Lender may reasonably request have been
executed and delivered by the Borrower and filed or recorded in
such public offices as the Lender may request to perfect and
maintain the perfection of the security interests which secure the
Revolving Credit Loans.
(j) Assurances and Opinions for Property Outside Kentucky. The Lender
shall have received reports of searches of personal property
records from the appropriate reporting agency in the State of Utah
and in any state outside Utah in which any Collateral is located;
which do not disclose any security interest in the Collateral
existing as of the date of this Agreement that is prior to the
Lender's security interest in such Collateral, on or after the
perfection of the Lender's security interest in such Collateral.
The Lender may obtain such reports, but the Borrower shall pay all
costs associated with obtaining them.
(k) Insurance Certificates. The Lender shall have received the
certificates of insurance required by Section 7.01 of this
Agreement.
(l) Counsel Fees. The Borrower shall have paid the Lender's counsel
fees and expenses in accordance with Section XI of this Agreement.
6.02 Conditions Precedent to Subsequent Revolving Credit Loans. The Lender's
obligation to make Revolving Credit Loans after the first Revolving
Credit Loan shall be conditioned upon the fulfillment prior to the
making of each such Revolving Credit Loan of the conditions set out in
paragraphs (f), (g), (h) and (i) of Section 6.01 of this Agreement and
to the further condition that the representations set out in Section
3.04(f) are true, complete and correct.
6.03 Conditions Subsequent. The Lender's obligation to continue to make
Revolving Credit Loans shall be conditioned upon the fulfillment on or
before September 20, 1995, of each of the following conditions:
(a) Assurances and Opinions for Property Outside Utah. The Lender
shall have received reports of searches of personal property
records from the appropriate reporting agency in the State of Utah
and in any state outside Utah in which any Collateral is located;
which do not disclose any security interest in the Collateral
existing as of the date of this Agreement that is prior to the
Lender's security interest in such Collateral, on or after the
perfection of the Lender's security interest in such Collateral.
The Lender may obtain such reports, but the Borrower shall pay all
costs associated with obtaining them.
SECTION VII
General Covenants
During the term of this Agreement, the Borrower shall comply with, all of the
following provisions:
7.01 Insurance. The Borrower shall maintain insurance as follows:
(a) Liability Insurance. The Borrower at its own cost and expense,
shall procure, maintain and carry in full force and effect general
liability, public liability, workers' compensation liability,
environmental hazard liability and property damage insurance with
respect to the actions and operations of the Borrower to such
extent, in such amounts and with such deductibles as are carried
by prudent businesses similarly situated, but in any event not
less than the amounts of coverage per person and per occurrence,
and with the deductibles, as are provided in the Borrower's
insurance in effect on the date of this Agreement. Without
limiting the foregoing, such insurance shall insure against any
liability for loss, injury, damage or claims caused by or arising
out of or in connection with the operation of the Borrower's
business including injury to or death of the Borrower's employees,
agents or any other persons and damage to or destruction of public
or private property.
(b) Physical Damage Insurance. The Borrower at its own cost and
expense, shall insure all of its insurable properties to such
extent, against such hazards (including, without limitation,
environmental hazards), in the amount of coverage and with such
deductibles as are carried by prudent businesses similarly
situated, but in any event insuring against such hazards and with
such coverages and deductibles as are provided in the Borrower's
insurance in effect on the date of this Agreement, and in any
event in amounts of coverage not less than the insurable value of
the property insured.
(c) General Insurance Requirements.
(1) All insurance which the Borrower is required to maintain
shall be satisfactory to the Lender in form amount and
insurer. Such insurance shall provide that any loss
thereunder shall be payable notwithstanding any action,
inaction, breach of warranty or condition, breach of
declarations, misrepresentation or negligence of the
Borrower. Each policy shall contain an agreement by the
insurer that, notwithstanding lapse of a policy for any
reason, or right of cancellation by the insurer or any
cancellation by the Borrower such policy shall continue in
full force for the benefit of the Lender for at least
thirty (30) days after written notice thereof to the Lender
and the Borrower, and no alteration in any such policy
shall be made except upon thirty (30) days written notice
of such proposed alteration to the Lender and the Borrower
and written approval by the Lender. At or before the making
of the first Loan, the Borrower shall provide the Lender
with certificates evidencing its due compliance with the
requirements of this section.
(2) Prior to the expiration date of any policy of insurance
maintained pursuant to this Agreement, the Borrower shall
provide the Lender with a certificate of insurance
evidencing the acquisition of a new policy, or an extension
or renewal of an existing policy, evidencing the Borrower's
due compliance with this section.
7.02 Taxes and Other Payment Obligations.
(a) The Borrower shall pay and discharge, or cause to be paid and
discharged, before any of them become in arrears, all taxes,
assessments, governmental charges, levies, and claims for labor,
materials or supplies which if unpaid might become a lien or
charge upon any of their property, and all of their other debts,
obligations and liabilities.
(b) The Borrower may refrain from paying any amount it would be
required to pay pursuant to subparagraph (a) of this section if
the validity or amount thereof is being contested in good faith by
appropriate proceedings timely instituted which shall operate to
prevent the collection or enforcement of the obligation contested,
provided that if the Borrower is engaged in such a contest, it
shall have set aside on its books appropriate reserves with
respect thereto. If the validity or amount of any such obligations
in excess of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) shall be
contested pursuant to the provisions of this subparagraph, the
Borrower shall notify the Lender immediately upon the institution
of the proceedings contesting the obligation.
7.03 Financial Statements.
(a) Annual Statements. As soon as available, and in any event within
one hundred twenty (120) days after the end of each fiscal year,
the Borrower shall furnish to the Lender a compiled balance sheet,
income statement, and statement of profit and loss, showing
sources and uses of income, for such fiscal year, together with
comparative figures for the last preceding fiscal year prepared by
the CPA Firm, and also together with the unqualified opinion of
the CPA Firm in form and substance satisfactory to the Lender.
Together with such annual compiled financial statements and
opinion, the Borrower shall furnish the Lender with the CPA Firm's
statement that the CPA Firm has reviewed the provisions of this
Agreement and nothing has come to the CPA Firm's attention to
cause it to believe that any Event of Default or Unmatured Default
exists as of the date of the statement, or, if such is not the
case, specifying such Event or Default or Unmatured Default and
the nature thereof, and the action the Borrower will take to
correct it.
(b) Monthly Statements. As long as the Lender has submitted
appropriate billing reports in a timely manner, as soon as
available, and in any event within thirty (30) days after the
close of each calendar month, the Borrower shall furnish the
Lender with a balance sheet, income statement, and statement of
profit and loss, showing sources and uses of income, for such
month, together with comparative figures for both the month just
ended and the portion of the fiscal year then ended, unaudited but
accompanied by a certificate signed by the chief financial officer
of the Borrower stating that such statements have been properly
prepared in accordance with GAAP and are materially correct.
(c) Additional Financial Information. The Borrower shall deliver to
the Lender:
(1) Promptly upon receipt thereof, all detailed reports, if any
(excluding working drafts), submitted to the Borrower by
the CPA Firm in connection with each annual compilation of
the Borrower's books by the CPA Firm.
(2) Within thirty (30) days after the respective dates of
filing the corporate federal income tax returns of the
Borrower for each year, a written statement signed by the
CPA Firm that the firm has prepared or reviewed the
Borrower's federal income tax returns for such year and in
the firm's opinion the provisions for federal taxes based
on the Borrower's income, as recorded in the accounts,
represents an adequate estimate of the liability of the
Borrower for federal taxes based on income.
(3) Promptly upon their becoming available, copies of all
financial statements, reports, notices of meetings and
proxy statements which the Borrower shall send to its
stockholders.
(4) Within ten (10) days after the filing thereof in the office
of the Secretary of Stare of the State of Utah, certified
copies of all amendments to the Borrower's Articles of
Incorporation.
(5) Such additional information with respect to its financial
condition as may be reasonably requested by the Lender from
time to time.
7.04 Financial Records. The Borrower shall maintain a standard modern system
of accounting in which full, true and correct entries shall be made of
all dealings or transactions in relation to its business and affairs in
accordance with generally accepted accounting principles applied on a
basis consistent with prior years and, without limitation, making
appropriate accruals for estimated contingent losses and liabilities.
7.05 Properties. The Borrower shall maintain its fixed assets in good
condition, subject only to normal wear and tear, and make all necessary
and proper repairs, renewals and replacements. The Borrower shall
comply with all material leases and other material agreements in order
to prevent loss or forfeiture, unless compliance is being contested in
good faith by appropriate proceedings timely instituted which shall
operate to prevent enforcement of the loss or forfeiture. The Lender
shall have the right to inspect the Borrower's fixed assets at all
reasonable times, and from time to time.
7.06 Corporate Existence and Good Standing. The Borrower shall preserve its
corporate existences in good standing and shall be and remain qualified
to do business and in good standing in all states and countries in
which it is required to be so qualified.
7.07 Notice Requirements.
(a) Default. The Borrower shall cause its President, or in his absence
an officer of the Borrower designated by it, to notify the Lender
in writing within three (3) days, after the Borrower, or any of
the Borrower's officers or directors, has notice of any Event of
Default or Unmatured Default or has notice that any representation
or warranty made in this Agreement, or in any related document or
instrument, for any reason was not true and complete and not
misleading in any material respect when made. Such notice shall
specify the nature of such Event of Default or Unmatured Default
and the action the Borrower has taken or will take to correct it.
(b) Material Litigation. The Borrower promptly shall notify the Lender
in writing of the institution or existence of any litigation or
administrative proceeding to which the Borrower may be or become a
party which might involve any material risk of any judgment or
liability which (1) would be in excess of TWENTY-FIVE THOUSAND
Dollars ($25,000.00), or (2) would otherwise result in any
material adverse change in the Borrower's business, assets or
condition, financial or otherwise.
(c) Other Information. From time to time, upon request by the Lender,
the Borrower shall furnish to the Lender such information
regarding the Borrower's business, assets and condition, financial
or otherwise, as the Lender may reasonably request. The Lender
shall have the right during reasonable business hours to examine
all of the Borrower's business and financial books and records and
to make notes and abstracts therefrom, to make an independent
examination of the Borrower's books and records for the purpose of
verifying the accuracy of reports delivered by the Borrower and
ascertaining compliance with this Agreement.
7.08 Revolving Credit Note and Security Agreement. The Borrower shall pay
the Revolving Credit Note in accordance with its terms, and the
Borrower shall comply with the provisions of the Security Agreement.
7.09 Compliance with Law. The Borrower shall comply in all material respects
with (a) all valid and applicable statutes, rules and regulations of
the United States of America, of the States thereof and their counties,
municipalities and other subdivisions and of any other jurisdiction
applicable to the Borrower; (b) the orders, judgments and decrees of
all courts or administrative agencies with jurisdiction over the
Borower; or its business; and (c) the provisions of licenses issued to
the Borrower except where compliance therewith shall be currently
contested in good faith by appropriate proceedings, timely instituted,
which shall operate to stay any order with respect to such
non-compliance.
7.10 Liens. Except for liens permitted in this Agreement, the Borrower shall
not (a) create or incur or suffer to be created or incurred or to exist
any encumbrance, mortgage, pledge, lien, charge, restriction or other
security interest of any kind upon any of the Collateral, whether owned
or held on the date of this Agreement or acquired thereafter, or upon
the income or profits therefrom, or (b) transfer any such Collateral or
the income or profits therefrom for the purpose of subjecting the same
to payment of indebtedness or performance of any other obligation
except payments made in accordance with Section 7.02 of this Agreement
or payments made to the Lender in accordance with the terms and
provisions of this Agreement, or (c) acquire, or agree or have an
option to acquire, any Collateral upon conditional sale or other title
retention or purchase money security agreement, device or arrangement,
or (d) sell or transfer, assign, or pledge any Collateral, with or
without recourse. The Borrower may incur or create, or suffer to be
incurred or created or to exist, the following liens without violating
the provisions of this Section 7.10:
(1) Statutory liens to secure claims for labor, material or
supplies to the extent that payment thereof shall not at
the time be required to be made in accordance with Section
7.02 of this Agreement.
(2) Deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance,
old age pensions or other social security, or in connection
with contest, to the extend the payment thereof shall not
at that time be required to be made in accordance with
Section 7.02 of this Agreement.
(3) Statutory liens for taxes or assessments or governmental
charges or levies if payment shall not at the time be
required to be made in accordance with Section 7.02 of this
Agreement.
(4) Purchase money liens or security interests with respect to
property acquired by the Borrower with the Lender's prior
written consent, which shall not be unreasonably withheld.
(5) Statutory liens (and contractual liens that provide to the
secured party no greater rights than equivalent statutory
liens) to secure payment of rent or lease payments with
respect to leases of real property to the extent that such
payments shall not at the time be required to be made in
accordance with Section 7.02 of this Agreement.
7.11 Letters of Credit. Without the Lender's prior written consent which
shall not be unreasonably withheld, the Borrower shall not have
outstanding any letters of credit upon which the Borrower is the
obligor or guarantor.
7.12 Articles of Incorporation and Bylaws. Without the Lender's prior
written consent, which shall not be withheld or delayed unreasonably,
the Borrower shall not make any changes in or amendments to its
articles of incorporation.
7.13 Dividends; Acquisition of Stock; New Shares.
(a) Except as provided in subparagraph (b) of this Section 7.13 and
without the prior written consent of the Lender, the Borrower
shall not declare and pay, or set apart any sum for the purpose of
payment of, any Dividend.
(b) Without violating the provisions of subparagraph (a) of this
Section 7.13, and so long as no Event of Default or Unmatured
Default has occurred and is continuing, the Borrower may declare
and pay, or set apart any sums for the purposes of payment of
Dividends, with the Lender's prior written consent, which consent
shall not be unreasonably withheld.
7.14 Mergers, Sales, Transfers and Other Dispositions of Assets. Without the
Lender's prior written consent, which shall not be unreasonably
withheld or delayed, the Borrower shall not:
(a) Be a party to any consolidation, reorganization (including without
limitation those types referred to in ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Internal Revenue Code of 1986, as amended), "stock-swap" or
merger;
(b) Sell or otherwise transfer any material part of its assets;
(c) Purchase all or a substantial part of the capital stock or assets
of any corporation or other business enterprise;
(d) Effect any change in its capital structure;
(e) Liquidate or dissolve or take any action with a view toward
liquidation or dissolution.
7.15 Loans. The Borrower shall not make any loan or advance any funds
whatsoever to any business, entity, party or individual, in excess of
TEN THOUSAND DOLLARS ($10,000.00) and the aggregate of any advances
outstanding shall not exceed FIFTY THOUSAND DOLLARS ($50,000.00) at any
one time.
7.16 Verification of Financial Information. The Lender may at any time other
than in connection with an annual compilation, and from time to time,
require that any determinations of financial information provided by
the Borrower to the Lender be verified by the CPA Firm at the
Borrower's expense.
7.17 UniDial ▇▇▇▇▇▇▇▇. The Borrower shall generate monthly
telecommunications revenues on its accounts with
Lender at or above the amounts specified in Schedule 7.17 which is
attached hereto and incorporated herein.
7.18 Gross Revenue. The Borrower shall generate monthly gross revenues at or
above the amounts specified in Schedule 7.18 which is attached hereto
and incorporated herein by reference.
7.19 Net Income. The Borrower shall have net income (or loss) at or above
the amounts specified in Schedule 7.19 which is attached hereto and
incorporated herein.
7.20 Business Ownership. The Shareholders' equity ownership of the Borrower
shall not fall below (i) 80% of the combined voting power of all
classes of the Borrower's capital stock entitled to vote, or (ii) 80%
of the total value of shares of all classes of the Borrower's capital
stock outstanding.
SECTION VIII
Representations and Warrants
To induce the Lender to enter into this Agreement and to make Revolving
Credit Loans, the Borrower represents and warrants to the Lender as follows
(which warranties and representations shall be deemed to be remade and restated
in full (subject only to changes of circumstances which (1) are fully disclosed
by the Borrower to the Lender in writing, describing the changed circumstances,
and (2) do not result in any violation of any condition, provision, promise
and/or covenant of this Agreement, or otherwise result in an Unmatured Default
or an Event of Default) whenever a Revolving Credit Loan is requested by the
Borrower):
8.01 Corporate Organization and Existence. The Borrower is a corporation
duly organized, validly existing, and in good standing under the laws
of the State of Utah. The Borrower has all necessary power and
authority to carry on its business conducted on the date of this
Agreement. The Borrower is qualified to do business as foreign
corporation, and is in good standing, in all states and in all foreign
countries in which it owns and property or carries on substantial
activities or is otherwise required to be so qualified, and is duly
authorized, qualified and licensed under all laws, regulations
ordinances or orders of public authorities to carry on its business in
the places and in the manner conducted on the date of this Agreement.
8.02 Right to Act. No registration with or consent or approval of any
governmental agency of any kind is required for the execution,
delivery, performance and enforceability of the Borrower Documents. The
Borrower has full power and authority, corporate and otherwise, to
execute, deliver and perform the Borrower Documents.
8.03 No Conflicts. The Borrower's execution, delivery and performance of the
Borrower Documents do not, and will not, (a) violate any existing
provision of the articles of incorporation or bylaws of the Borrower or
any law, rule, regulation, or judgment, order or decree applicable to
the Borrower or (b) otherwise constitute a default, or result in the
imposition of any lien under (1) any existing contract or other
obligation binding upon the Borrower or its property, with or without
the passage of time or the giving of notice or both; (2) any law, rule
or regulation applicable to the Borrower or its business; or (3) any
judgment, order or decree of any court or administrative agency
applicable to the Borrower or its business.
8.04 Authorization. The execution, delivery and performance by the Borrower
of the Borrower Documents has been duly authorized, and the Borrower
Documents have been duly executed and delivered and constitute legal,
valid and binding obligations enforceable against the Borrower.
8.05 Litigation and Taxes.
(a) Except for those matters described in the financial statements
referenced in Section 8.06 of this Agreement, there is not
litigation, at law or in equity, or any proceeding before any
federal, state or municipal court, board or other governmental or
administrative agency pending, or to the knowledge of the
Borrower, threatened which is likely to involve any material
judgment or liability against the Borrower or which might
otherwise result in any material adverse change in the Borrower's
business, assets or condition, financial or otherwise. No
judgment, decree or order of any federal, state or municipal
court, board or other governmental or administrative agency has
been issued against the Borrower or any of its assets which has,
or might have, a material adverse effect on the Borrower's
business, assets or condition, financial or otherwise.
(b) The Borrower has filed all tax returns which are required to be
filed and has paid, or made adequate provision for the payment of,
all taxes which have or may become due pursuant to such returns or
pursuant to assessments received. The Borrower knows of no
material additional assessments for which adequate reserves have
not been established, and the Borrower has made adequate provision
for all current taxes.
8.06 Financial Statements. The Borrower's most recent consolidated financial
statements of the type described in paragraphs (a), (b) and (c) of
Section 7.03 and dated September 30, 1995, have been furnished to the
Lender. Those financial statements are true and complete, have been
prepared in accordance with generally accepted accounting principles,
do not omit reference to any material contingent liabilities of any
kind, and fairly present the financial condition of the Borrower as of
the date of the financial statements.
8.07 Compliance with Contractual Obligations, Laws and Judgments.
(a) The Borrower is not in default in the payment, performance,
observance or fulfillment of any of the material obligations,
covenants or conditions contained in any lease, indenture,
mortgage, deed of trust, promissory note, agreement or undertaking
to which it is a party or by which its assets are bound.
(b) The Borrower has not violated any applicable statute, regulation
or ordinance of the United States of America or of any state,
municipality or any other subdivision, jurisdiction or agency
thereof, in any respect materially and adversely affecting the
Borrower's business, property, assets, operations or conditions,
financial or otherwise.
(c) The Borrower is not in default with respect to any judgment,
order, writ, injunction, decree or demand of any court, arbitrator
or governmental agency or body.
8.08 No Undisclosed Liabilities or Guaranties. The Borrower does not have
any material liabilities, direct or contingent, except as disclosed or
referred to in the financial statements referred to in Section 8.06 of
this Agreement or incurred by Borrower after such date and not
prohibited by the express terms of this Agreement, nor has the Borrower
guaranteed, or otherwise become responsible for, the material
obligations of any person.
8.09 Title to Properties. The Borrower has good and marketable title to all
of its property and assets of all character, free and clear of all
mortgages, liens, and encumbrances except (a) encumbrances granted to
the Lender, (b) minor irregularities in title which do not materially
interfere with the use and enjoyment by the Borrower of such properties
and assets in the normal course of business as presently conducted, or
materially impair the value thereof for such business.
8.10 Trademarks and Permits. The Borrower possesses adequate licenses,
patents, copyrights, trademarks and trade name to conduct its
businesses as now conducted. Neither the Borrower nor any of its
officers, directors or employees has received notice or has knowledge
of any claim that the Borrower has violated any other person's license,
patent, copyright, trademark or trade name, or that the Borrower's
licenses, patents, copyrights, trademarks or trade names are currently
being infringed. The Borrower has all governmental permits,
certificates, consents and franchises necessary to carry on their
businesses as now conducted and to own or lease and operate their
properties as now owned, leased or operated. All such governmental
permits, certificates, consents and franchises are valid, and in
effect, and the Borrower is not in violation thereof, and none of them
contains any term, provision, condition or limitation more burdensome
than generally applicable to persons engaged in the same or similar
business.
8.11 Disclosure. Neither this Agreement, nor any agreement, document,
certificate or statement furnished to the Lender by or on behalf of the
Borrower in connection with the transactions contemplated by this
Agreement contains any untrue statement of any material fact or omits
to state any material fact necessary to make the
statements contained herein or therein not misleading. There is not
fact known to the Borrower which materially and adversely affects, or
in the future is likely to materially and adversely affect, the
Borrower's business, operations, affairs or condition, financial or
otherwise, which has not been disclosed to the Lender.
SECTION IX
Events of Default
The occurrence of any one or more of the following shall constitute an
Event of Default under this Agreement (an "Event of Default"):
9.01 Failure to Pay. If the Borrower shall fail to pay in full an y
installment of principal or interest on the Revolving Credit Note, or
payments required by Section IV of this Agreement, within five (5) days
after notice that such payment has become due and is unpaid.
9.02 No Notice Required. If the obligor with respect to the following
provisions shall fail to observe, perform or comply with any term,
obligation, covenant, agreement, condition or other provision contained
in Sections 6.03, 7.02, 7.06, 7.07, 7.10, 7.12, 7.13, 7.14, 7.15, 7.16,
11.01, or 12.14 of this Agreement; if the obligor with respect to the
following provisions shall for three consecutive months, fail to
observe, perform or comply with any term, obligation, covenant,
agreement, condition or other provision contained in any two of the
following three Sections: 7.17, 7.18 and/or 7.19 of this Agreement; or
any Event of Default occurs under the Security Agreement.
9.03 Notice Required. If the obligor with respect to any term, obligation,
covenant, agreement, condition or other provision (other than those
referred to in Sections 9.01 or 9.02 hereof) contained or referred to
in this Agreement shall fail to observe, perform or comply with those
provisions, and such failure shall not have been fully corrected within
fifteen (15) days after the Lender has given written notice thereof to
the Borrower.
9.04 Falsity of Representation or Warranty. If any representation or
warranty or other statement of fact contained in any of the Borrower
Documents or in any writing, certificate, report or statement at any
time furnished the Lender by or on behalf of the Borrower pursuant to
or in connection with this Agreement or the Revolving Credit Loans
shall have been false or misleading in any material respect or which
shall omit a material fact, whether or not made with knowledge, at the
time it was made.
9.05 Judgments. If a final judgment or judgments for the payment of money in
excess of the sum of Twenty-Five Thousand Dollars ($25,000.00) in the
aggregate, or with respect to property with a value in excess of such
amount, shall be rendered against the Borrower and such judgment or
judgments shall remain unsatisfied for a period of thirty (30)
consecutive days after the entry thereof and within that thirty (30)
days has not been (a) stayed pending appeal, or (b) discharged.
9.06 Adverse Financial Change. If there should be any material adverse
change in the financial condition of the Borrower as determined in the
Lender's reasonable discretion, from their respective financial
conditions as shown on the financial statements referred to in Section
8.06 of this Agreement, and such adverse change is not fully corrected
to Lender's reasonable satisfaction within thirty (30) days after
notice with respect thereto from the Lender.
9.07 Other Obligations to the Lender and its Affiliates. If the Borrower
shall fail to observe perform or comply with the terms, obligations,
covenants, agreements, conditions or other provisions of any agreement,
document or instrument other than this Agreement and the other Borrower
Documents which the Lender or any of its affiliates has entered into
with the Borrower and which involves Indebtedness to the Lender or any
of its affiliates.
9.08 Dissolution or Termination of Existence. If the Borrower or any person,
firm or corporation affiliated with it, takes any action that is
intended to result in the termination, dissolution or liquidation of
the Borrower.
9.09 Solvency.
(a) If the Borrower shall (1) have an order of relief entered in any
proceeding filed by it under the federal bankruptcy laws (as in
effect on the date of this Agreement or as they may be amended
from time to time); (2) admit its inability to pay its debts
generally as they become due; (3) become insolvent in that its
total assets are in the aggregate worth less than all of its
liabilities and it is unable to pay its debts generally as they
become due; (4) make a general assignment for the benefit of
creditors; (5) file a petition, or admit (by answer, default or
otherwise) the material allegations of any petition filed against
it, in bankruptcy under the federal bankruptcy laws (as in effect
on the date of this Agreement or as they may be amended from time
to time), or under any other law for the relief of debtors, or for
the discharge, arrangement or compromise of their debts; or (6)
consent to the appointment of a receiver, conservator, trustee or
liquidator of all or part of its assets.
(b) If a petition shall have been filed against the Borrower in
proceedings under the federal bankruptcy laws (as in effect on the
date of this Agreement, or as they may be amended from time to
time), or under any other laws for the relief o f debtors, or for
the discharge, arrangement or compromise of their debts, or an
order shall be entered by any court of competent jurisdiction
appointing a receiver, conservator, trustee or liquidator of all
or part of the Borrower's assets, and such petition or order is
not dismissed or stayed within sixty (60) consecutive days after
entry thereof.
SECTION X
Remedies Upon Default
Notwithstanding anything to the contrary, if any Event of Default under
this Agreement occurs, the Lender, in its sole discretion, and without notice to
the Borrower, may (a) terminate the Revolving Credit, and the Lender shall be
under no further obligation to grant any Revolving Credit Loan to the Borrower,
(b) declare the entire unpaid balance of the Revolving Credit Note, and all
other obligations of the Borrower under this Agreement to be immediately due and
payable in full, without any presentment, demand or notice of any kind, all of
which are hereby waived by the Borrower. In addition, upon the occurrence of any
Event of Default, and at any time thereafter, unless all Events of Default have
been remedied to the full satisfaction of the Lender or waived in a writing
signed by the Lender specifically providing the waiver, the Lender shall have
all of the following rights and remedies and it may exercise one or more of them
singly or in conjunction with others.
10.01 Right to Offset. The Lender shall have the right to set off against, or
appropriate and apply toward the payment of, the obligations of the
Borrower to the Lender, pursuant to this Agreement or as evidenced by
the Revolving Credit Note whether such obligations shall have matured
in due course or by acceleration, and any and all sums and indebtedness
then held or owed by the Lender to or for the credit or account of the
Borrower. For such purpose the Borrower hereby pledges to and grants a
security interest in such other sums and indebtedness of the Lender to
secure all of the Borrower's obligations under this Agreement and the
Revolving Credit Note. Such offsets following an Event of Default may
occur without notice to or demand upon the Borrower or any other
person, all of such notices and demands being hereby waived.
10.02 Enforcement of Rights. The Lender shall have the right, to proceed to
protect and enforce its rights by suit in equity, action at law or
other appropriate proceedings either for specific performance of any
covenant or condition contained in any of the Borrower Documents, or in
aid of the exercise of any power granted in any of the Borrower
Documents.
10.03 Rights Under Security Instruments. The Lender shall also have all
rights and remedies granted it under any and all of the Security
Agreement securing or intending to secure the Borrower's obligations
under the Revolving Credit Note, or any other indebtedness or
obligation of the Borrower under Borrower Documents.
10.04 Cumulative Remedies. All of the rights and remedies of the Lender upon
occurrence of an Event of Default shall be cumulative to the greatest
extent permitted by law, may be exercised successively or concurrently,
from time to time, and shall be in addition to all of those rights and
remedies afforded the Lender at law, or in
equity, or in bankruptcy. Notwithstanding the foregoing, the Lender
shall be entitled to recover from the cumulative exercise of all
remedies an amount no greater than the sum of (a) the outstanding
principal amount of all Revolving Credit Loans, (b) all accrued but
unpaid interest with respect to the principal amount of the Revolving
Credit Loans, (c) any other amounts that the Borrower is required by
this Agreement to pay to the Lender (for example, and without
limitation, the reimbursement of expenses and legal fees, and late
charges), and (d) any costs, expenses or damages which the Lender is
otherwise permitted to recover by the terms of this Agreement. Any
exercise of any right or remedy shall not be deemed to be an election
of that right or remedy to the exclusion of any other right or remedy.
SECTION XI
Fees and Expenses
11.01 Transactions Expenses. The Borrower shall pay to the Lender upon demand
all reasonable out-of-pocket expenses incurred by the Lender in
connection with the transactions contemplated by this Agreement
including, but not limited to, the Lender's reasonable attorneys' fees
incurred in preparing the Borrower Documents and any and all costs and
fees incurred in connection with the recording or filing of any
documents or instruments in any public office, pursuant to or as a
consequence of this Agreement, or to perfect or protect any security
for the Revolving Credit Loans. The Borrower shall also pay to the
Lender upon demand all reasonable out-of-pocket expenses incurred from
time to time in the administration of the Revolving Credit Loan,
including, without limitation, any reasonable out-of-pocket expenses
(including, but not limited to, attorneys fees) incurred by the Lender
if any of the Borrower Documents should be amended, extended and/or
renewed from time to time.
11.02 Enforcement Expenses. If any Event of Default shall occur under this
Agreement, or any default shall occur under any of the Borrower
Documents or any related documents, the Borrower shall pay to the
Lender, to the extent allowable by applicable law, such amounts as
shall be sufficient to reimburse the Lender fully for all of its costs
and expenses incurred in enforcing its rights and remedies under the
Borrower Documents and any related documents, including without
limitation the Lender's reasonable attorneys' fees and court costs.
Such amounts shall be deemed to be included in the obligations secured
by the Security Agreement.
SECTION XII
Miscellaneous Provisions
12.01 Banking Days. If any provision of this Agreement or any of the other
Borrower Documents requires that the Borrower make any payment, or
otherwise perform any act, on a day on which the Lender is not open for
business, then that payment or action shall be deemed to be due on the
first day thereafter that the Lender is open for business.
12.02 Term of this Agreement. The term of this Agreement shall commence as of
the date hereof, and continue until all Revolving Credit Loans and
accrued but unpaid interest thereon shall have been paid in full and
the Borrower shall have paid or performed all of its other obligations
hereunder.
12.03 No Waivers. Failure or delay by the Lender in exercising any rights
shall not be deemed to be or operate as a waiver of that right, nor
shall any right be exclusive of any other right referred to in this
Agreement, or in any other related document, or available at law or in
equity, by statute or otherwise. Any single or partial exercise of any
right shall not preclude the further exercise of that right. Every
right of the Lender shall continue in full force and effect until such
right is specifically waived in a writing signed by the Lender.
12.04 Course of Dealing. No course of dealing between the Borrower and the
Lender shall operate as a waiver of any of the Lender's rights under
any of the Borrower Documents.
12.05 Waivers by the Borrower. The Borrower herby waives, to the extent
permitted by applicable law, (a) all presentments, demands for
performances, notices of nonperformance (except to the extent
specifically
required by this Agreement or any other of the Borrower Documents),
protest, notices of protest and notices of dishonor in connection with
the Revolving Credit Note (b) any requirement of diligence or
promptness on the part of the Lender in enforcement of its rights under
the provision of any of the Borrower Documents, and (c) any requirement
of marshaling assets or proceeding against persons or assets in any
particular order.
12.06 Severability. If any part, term or provision of this Agreement is held
by any court to be unenforceable or prohibited by any law applicable to
this Agreement, the rights and obligations of the parties shall be
construed and enforced with that part, term or provision limited so as
to make it enforceable to the greatest extent allowed by law, or, if it
is totally unenforceable, as if this Agreement did not contain that
particular part, term or provision.
12.07 Time of the Essence. Time shall be of the essence in performance of all
of the Borrower's obligations under the Borrower Documents.
12.08 Benefit and Binding Effect. This Agreement shall inure to the benefit
of the Lender, its successors and assigns, and all obligations of the
Borrower and shall bind their respective successors and, if and to the
extent assignment is otherwise permitted by this Agreement, their
assigns.
12.09 Further Assurances. The Borrower shall sign such financing statements
of other documents or instruments as the Lender may reasonably request
from time to time more fully to create, perfect, continue, maintain or
terminate the rights and security interest intended to be granted or
created pursuant to this Agreement or the Security Agreement.
12.10 Incorporation by Reference. All schedules, annexes or other attachments
to this Agreement are incorporated into this Agreement as if set out in
full at the first place in this Agreement that reference is made
thereto.
12.11 Entire Agreement; No Oral Modifications. This Agreement, the schedules
and annexes hereto, and the documents and instruments referred to
herein constitute the entire agreement of the parties with respect to
the subject matter hereof, and supersede all prior understandings with
respect to the subject matter hereof. No change, modification, addition
or termination of this Agreement or any of the Borrower Documents shall
be enforceable unless in writing and signed by the party against who
enforcement is sought.
12.12 Headings. The headings used in this Agreement are included for ease of
reference only and shall not be considered in the interpretation or
construction of this Agreement.
12.13 Governing Law. This Agreement and the related documents and instruments
shall be governed by and construed in accordance with the laws of the
Commonwealth of Kentucky, except to the extent that the laws of any
other state, province or country where the Collateral is located
require that the laws of such other state, province or country shall
govern the creation, perfection or enforcement of the Lender's rights
and security interests in such Collateral.
12.14 Assignments. The Borrower may not assign its rights under this
Agreement to any other party. Any attempted assignment shall be a
default under this Agreement and shall be null and void. The Lender
shall have the right and ability to sell, assign or transfer all or any
part of its rights and/or obligations under this Agreement, and/or to
participate its rights and obligations under this Agreement with other
lenders, and/or to sell participation or participating interests in its
rights and/or obligations under this Agreement. In furtherance thereof,
the Lender shall have the right to provide to any Person who expresses
an interest in becoming such a buyer, assignee, transferee, participant
and/or purchaser, or who actually does become such a buyer, assignee,
transferee, participant, and/or purchaser, such information concerning
the financial, business and other affairs of the Borrower as the Lender
may reasonably deem appropriate in the circumstances. The Borrower
hereby authorizes all such disclosures.
12.15 Multiple Counterparts.
(a) This Agreement may be signed by each party upon a separate copy,
and in such case one counterpart of this Agreement shall consist
of enough of such copies to reflect the signature of each party.
(b) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms thereof
to produce or account for more than one of such counterparts.
12.16 Notices.
(a) Any requirement of the Uniform Commercial Code or other applicable
law of reasonable notice shall be met if such notice is given at
least five (5) business days before the time of sale, disposition
or other event or thing giving rise to the requirement of notice.
(b) Except as provided in subsection (c) below, all notices or
communications under this Agreement shall be in writing and shall
be hand-delivered, sent by courier, or mailed to the parties
addressed as follows, and any notice so addressed and (1)
hand-delivered, shall be deemed to have been given when so
delivered, or (2) mailed by registered or certified mail, return
receipt requested, shall be deemed to have been given when mailed,
or (3) delivered to a recognized shall package overnight courier
to the address of the intended recipient with shipping prepaid,
shall be deemed to have been given when so delivered to such
courier:
(1) If to the Borrower:
UNIQUEST COMMUNICATIONS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
And copy to:
▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Suite 700
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(2) If to the Lender:
UNIDIAL INCORPORATED
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
And copy to:
▇▇▇▇▇, ▇▇▇▇ & HEYBURN, PLLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Mr. C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(c) The Borrower and the Lender may at any time, and from time to
time, change the address or addresses to which notice shall be
mailed by written notice setting forth the changed address or
addresses.
12.17 Survival of Covenants. All covenants, agreements, warranties and
representations made by the Borrower herein shall survive the making of
each Revolving Credit Loan and the execution and delivery of the
Borrower Documents, and shall be deemed to be remade and restated by
the Borrower each time the Borrower requests a Revolving Credit Loan.
12.18 Consent to Jurisdiction and Venue. The Borrower consents to one or more
actions being instituted and maintained in the Jefferson County,
Kentucky, Circuit Court to enforce this agreement and/or one or more of
the other borrower documents, and waives any objection to any such
action based upon lack of personal or subject matter jurisdiction or
improper venue. The Borrower agrees that any process or other legal
summons in connection with any such action or proceeding may be served
by mailing a copy thereof by certified mail, or any substantially
similar form of mail, addressed to the Borrower as provided in Section
12.16 above.
12.19 Acknowledgment. The Borrower acknowledges that the Borrower has
received a copy of this Agreement and each of the other Borrower
Documents, as fully executed by the parties thereto. The Borrower
acknowledges that the Borrower (a) has READ THIS AGREEMENT AND THE
OTHER BORROWER DOCUMENTS OR HAS CAUSED SUCH DOCUMENTS TO BE EXAMINED BY
THE BORROWER'S REPRESENTATIVES OR ADVISORS; (b) is thoroughly familiar
with the transactions contemplated in this Agreement and the other
Borrower Documents; and (c) has had the opportunity to ask such
questions to representatives of the Lender, and receive answers
thereto, concerning the terms and conditions of the transactions
contemplated in this Agreement and the other Borrower Documents as the
Borrower deems necessary in connection with the Borrower's decision to
enter into this Agreement.
IN WITNESS WHEREOF, the Borrower and the Lender have signed this
Agreement as of the date set forth in the preamble hereto, but actually on the
date(s) set forth below.
UNIDIAL INCORPORATED
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary/Treasurer
Date: _____________________
UNIQUEST COMMUNICATIONS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Date: _____________________
STATE OF UTAH
COUNTY OF SALT LAKE
The foregoing instrument was acknowledged before me by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, the President of UniQuest Communications, Inc., a Utah corporation,
on behalf of the Corporation, on February 24, 1996.
Notary Public /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Commission expires: May 30, 1999
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
Vice President, Treasurer
Date: 2/24/96
------------------------------
STATE OF UTAH
COUNTY OF SALT LAKE
The foregoing instrument was acknowledged before me by ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, III, the Vice President, Treasurer of UniQuest Communications, Inc.,
a Utah corporation, on behalf of the Corporation, on February 24, 1996.
Notary Public /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Commission expires: May 30, 1999
Schedule 7.17
UniDial ▇▇▇▇▇▇▇▇
Oct-95 162,750
Nov-95 156,910
Dec-95 179,590
Jan-96 191,560
Feb-96 182,740
Mar-96 249,540
Apr-96 266,360
May-96 325,010
Jun-96 374,710
Jul-96 446,630
Aug-96 482,600
Schedule 7.18
Gross Revenues
Oct-95 175,658
Nov-95 171,335
Dec-95 195,371
Jan-96 208,888
Feb-96 197,398
Mar-96 268,373
Apr-96 296,708
May-96 359,630
Jun-96 421,443
Jul-96 499,568
Aug-96 542,268
Schedule 7.19
Net Income (Loss)
Oct-95 (12,388)
Nov-95 (12,750)
Dec-95 (12,152)
Jan-96 (10,207)
Feb-96 (13,375)
Mar-96 (11,780)
Apr-96 (5,613)
May-96 (1,885)
Jun-96 6,190
Jul-96 9,422
Aug-96 13,544