LOAN AGREEMENT
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THIS LOAN AGREEMENT (the "Agreement") is made and entered into
effective as of the 28th day of December, 1999, by and among BANK ONE,
KENTUCKY, NA, a national banking association and its successors and
assigns, whose address is 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 (the "Bank"); UNIFIED FINANCIAL SERVICES, INC., a
Delaware corporation whose address is 000 Xxxxxxxxx Xxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxx, Xxxxxxxx 00000 ("Unified"); and COMMONWEALTH PREMIUM
FINANCE CORPORATION, a Kentucky corporation whose address is 000
Xxxxxxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000
("Commonwealth") (Unified and Commonwealth are hereinafter collectively
referred to as "Borrowers").
RECITALS
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WHEREAS, Unified has applied to Bank for a loan in the amount of
Two Million Two Hundred Ninety-Three Thousand Seven Hundred Fifty and
00/100 Dollars ($2,293,750.00) (the "Term Loan"), which loan shall be
secured by certain assets of Unified.
WHEREAS, Commonwealth has applied to Bank to renew an existing
revolving line of credit loan in an amount not to exceed the maximum
principal sum of Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00) (the "Renewal Revolving Credit Loan"), which loan shall
be secured by certain assets of Commonwealth and guaranteed by Unified.
WHEREAS, one of the conditions to the making of the Term Loan and
the Renewal Revolving Credit Loan by Bank is that Unified and
Commonwealth must enter into this Agreement setting forth the terms and
conditions of the Term Loan and the Renewal Revolving Credit Loan, all
of which terms and conditions Unified and Commonwealth acknowledge are
supported by good, valuable and sufficient consideration.
NOW, THEREFORE, in consideration of the mutual covenants, the
financial accommodations extended to Borrowers, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree to and affirm the foregoing
recitals and further agree as follows:
ARTICLE I
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CERTAIN DEFINITIONS
1.01 "ADVANCE" means any disbursement of funds to Unified under
the Term Note pursuant to Section 2.01 hereof or to Commonwealth under
the Renewal Revolving Credit Note pursuant to Section 2.02 hereof.
1.02 "AGREEMENT" means this Loan Agreement, as amended,
supplemented or modified from time to time.
1.03 "BUSINESS DAY" means any Domestic Business Day on which Bank
is open for business.
1.04 "BORROWING BASE" means the computation of Eligible Net
Premiums as calculated in the Borrowing Base Certificate and Advance
Request attached hereto as EXHIBIT 1.04.
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1.05 "COLLATERAL" means all property which is subject to,
becomes subject to, or is to be subject to the Liens granted by the
Security Agreements or which otherwise becomes security for the Loan.
1.06 "DEFAULT" OR "EVENT OF DEFAULT" means any of the events
specified in Article VII herein, whether or not any requirement for the
giving of notice, the lapse of time, or both, or any other condition,
has been satisfied.
1.07 "DOMESTIC BUSINESS DAY" means any day other than a Saturday,
Sunday or other day on which commercial banks in Lexington, Kentucky,
are authorized or required to close under the laws of the Commonwealth
of Kentucky or of the United States.
1.08 "GUARANTY" means the guaranty dated of even date of the
Renewal Revolving Credit Loan and all of Commonwealth's obligations
under the Loan Documents made, executed and delivered by Unified.
1.09 "INTEREST COVERAGE RATIO" means a ratio calculated as
follows: net income for the applicable period plus interest expenses
for such period plus income tax expenses for such period divided by
total interest expenses for such period.
1.10 "INSURANCE PREMIUM FINANCING AGREEMENT ("IPFA")" means the
contract among Commonwealth, the insurance agent and the insured/
borrower in which the insured/borrower grants to Commonwealth a
security interest in all unearned premiums which may be payable under
the insurance policies.
1.11 "LIEN" means any mortgage, deed of trust, pledge, security
interest, hypothecation, conditional assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority, or
other security agreement, or preferential arrangement, charge, or
encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having a similar economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of
the foregoing), but excluding leases of operating equipment or furniture
in the ordinary course of business.
1.12 "LOAN DOCUMENTS" means this Agreement, the Notes, the
Guaranty, the Security Agreements, the UCC-1's, and any additional
documents required to be delivered by Unified or
Page 2 of 26
Commonwealth under this Agreement, or otherwise evidencing, securing
and/or relating to the Loans.
1.13 "LOANS" means the Term Loan extended by Bank to Unified and
the Renewal Revolving Credit Loan extended by Bank to Commonwealth.
1.14 "NET PREMIUMS" means the total premiums on IPFA plus all
accrued interest and other finance charges derived thereunder less all
initial premium payments made by insured/borrower thereunder.
1.15 "NOTES" means the Term Note evidencing the Term Loan
extended by Bank to Unified and the Renewal Revolving Credit Note
evidencing the Renewal Revolving Credit Loan extended by Bank to
Commonwealth.
1.16 "OBLIGATIONS" means the indebtedness evidenced by the Notes
and all obligations relating to any of the other Loan Documents.
1.17 "PERSON" means any individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority, or other entity of whatever
nature.
1.18 "PRIME RATE" means the variable prime, or primary index,
rate of Bank as announced from time to time by Bank at its principal
office, whether or not such rate is published and which rate may not
necessarily be Bank's lowest or best rate.
1.19 "RENEWAL REVOLVING CREDIT LOAN" shall have the meaning
assigned to such term in Section 2.02.
1.20 "RENEWAL REVOLVING CREDIT NOTE" means the note executed by
Commonwealth evidencing the renewal of a revolving line of credit loan
extended by Bank to Commonwealth in an amount not to exceed the maximum
principal sum of Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00).
1.21 "SECURITY AGREEMENTS" means the Stock Pledge and Security
Agreement from Unified to Bank dated of even date in which Unified
pledges to Bank a first and prior lien on certain securities of Unified
described in Schedule "A" attached thereto, and a Security Agreement
from Commonwealth to Bank dated of even date whereby Commonwealth
assigns and pledges to Bank a first and prior lien on certain assets of
Commonwealth described in Exhibit "A" attached thereto.
1.22 "TERM LOAN" means shall have the meaning assigned to such
term in Section 2.01.
Page 3 of 26
1.23 "TERM NOTE" means the note executed by Unified evidencing
the loan extended by Bank to Unified in the amount of Two Million Two
Hundred Ninety-Three Thousand Seven Hundred Fifty and 00/100 Dollars
($2,293,750.00).
The definitions set forth above in this Article I are in addition
to, and not in lieu of, any other definitions set forth elsewhere in
this Agreement or the other Loan Documents.
ARTICLE II
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AMOUNT AND TERMS OF THE LOANS,
THE COLLATERAL, THE GUARANTY, ETC.
2.01 The Term Loan.
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a. Terms and Amount. Bank will enter into the Term Loan
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as evidenced by the Term Note in the amount of TWO MILLION TWO HUNDRED
NINETY-THREE THOUSAND SEVEN HUNDRED FIFTY AND 00/100 DOLLARS
($2,293,750.00). The interest rate per annum on the outstanding
principal balance of the Term Loan throughout the term of the Term Loan
shall be equal to the Prime Rate. Interest on the Term Note shall be
computed by applying the ratio of the annual interest rate over a year
of 360 days, multiplied by the outstanding principal balance, multiplied
by the actual number of days the principal balance is outstanding.
Under no circumstances will the interest rate on the Term Note be more
than the maximum rate allowed by applicable law. Unified shall make
monthly payments of principal in the amount of $100,000 plus all accrued
but unpaid interest beginning on January 28, 2000, and continuing
thereafter on the 28th day of each month until June 30, 2000 (the
"Maturity Date"), at which time all outstanding principal, all accrued
but unpaid interest and all other fees, charges and expenses payable
under the Term Note and the other Loan Documents shall be due and
payable.
b. Purpose of the Loan. The purpose of the Term Loan
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is to refinance preexisting debt of subsidiary companies and begin the
payment and amortization of the same.
c. No Prepayment Premium. Unified may prepay the Term
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Note, in whole or in part, without premium or penalty.
d. Collateral. As security for the payment of the Term
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Loan and in order to secure Unified's obligations to Bank, as well as
all other sums as are recoverable by Bank under the Term Loan and any of
the other Loan Documents, Unified shall execute and deliver to Bank a
Stock Pledge and Security Agreement whereby Unified pledges and conveys
to Bank a security interest in all of Unified's shares of stock in
Equity Underwriting Group, Inc.
e. Renewal. Unified acknowledges that Bank has not
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committed to any renewals or extensions of the Term Loan.
Page 4 of 26
2.02 The Renewal Revolving Credit Loan.
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a. Terms and Amount. Bank will enter into the Renewal
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Revolving Credit Loan as evidenced by the Renewal Revolving Credit Note
in the amount of TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
($2,500,000.00). The interest rate per annum on the outstanding
principal balance of the Renewal Revolving Credit Loan throughout the
term of the Renewal Revolving Credit Loan shall be equal to the Prime
Rate. Interest on the Renewal Revolving Credit Note shall be computed
by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Under no
circumstances will the interest rate on the Renewal Revolving Credit
Note be more than the maximum rate allowed by applicable law.
Commonwealth shall make monthly payments of all accrued but unpaid
interest beginning on January 28, 2000, and continuing thereafter on the
28th day of each month until June 30, 2000 (the "Maturity Date"), at
which time all outstanding principal, all accrued but unpaid interest
and all other fees, charges and expenses payable under the Renewal
Revolving Credit Note and the other Loan Documents shall be due and
payable.
b. Purpose of the Loan. The purpose of the Renewal
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Revolving Credit Loan is solely to provide Commonwealth with working
capital for the financing and/or acquisition of IPFAs and the payments
of premiums to insurance companies.
c. Notice and Manner of Borrowing. On the last day of
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each calendar month and on each such Business Day that Commonwealth
requests an Advance, Commonwealth shall submit to Bank a Borrowing Base
Certificate and Advance Request substantially in the form attached
hereto as EXHIBIT 1.04. Provided that (i) all of the applicable
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conditions set forth in Article III hereof have been fulfilled to
Banks's satisfaction and (ii) Commonwealth has provided Bank with the
Borrowing Base Certificate and Advance Request by 10:00 a.m., Bank will
make Advances under the Renewal Revolving Credit Loan available to
Commonwealth in immediately available funds by crediting the amount
thereof to Commonwealth's account with Bank on the same Business Day.
d. No Prepayment Premium. Commonwealth may prepay the
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Renewal Revolving Credit Note, in whole or in part, without premium or
penalty.
e. Guaranty of Unified. Unified shall guarantee the
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payment of the Renewal Revolving Credit Loan and all of Commonwealth's
obligations under the Renewal Revolving Credit Note and any of the other
Loan Documents pursuant to the terms of the Guaranty.
f. Collateral. As security for the payment of the
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Renewal Revolving Credit Loan and in order to secure Commonwealth's
obligations to Bank, as well as all other sums as are recoverable by
Bank under the Renewal Revolving Credit Loan and any of the other Loan
Documents, Commonwealth shall execute and deliver to Bank a Security
Agreement whereby Commonwealth assigns, pledges and conveys to Bank a
security interest in all of Commonwealth's assets including, but not
limited to, the IPFAs. As further security for the payment of the
Renewal Revolving Credit Loan and in order to secure Commonwealth's
obligations to Bank, as well as all other sums as are recoverable by
Bank under the Guaranty, the Renewal Revolving Credit Loan and
Page 5 of 26
any of the other Loan Documents, Unified shall execute and deliver to
Bank a Stock Pledge and Security Agreement whereby Unified pledges and
conveys to Bank a security interest in all of Unified's shares of stock
in Equity Underwriting Group, Inc.
g. Renewal. Commonwealth acknowledges that Bank has
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not committed to any further renewals or extensions of the Renewal
Revolving Credit Loan.
h. Readvances of Principal Amounts Paid Prior to
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Maturity. Any amounts of principal paid to Bank prior to the Maturity
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Date set forth in Section 2.02(a) hereof shall be available for any
subsequent Advance or borrowing by Commonwealth hereunder.
2.03 Provisions Applicable to Both Loans.
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a. Method of Payment. Borrowers shall make each
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payment under this Agreement and under the Notes in lawful money of the
United States, to Bank at its Lexington office or such other place as
may be designated by Bank, in immediately available funds during normal
business hours of Bank. Whenever any payment to be made under this
Agreement or under the Notes shall be stated to be due on a Saturday,
Sunday or a public holiday or banking holiday, such payment shall be
made on the next succeeding Business Day and such extension of time
shall in such case be included in the computation of the payment of
interest.
b. Costs and Fees. Borrowers shall pay to Bank its
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costs and expenses (including, without limitation, its attorneys' fees,
court costs, litigation and other expenses) incurred or paid by Bank in
negotiating, documenting, administering and enforcing this Agreement and
the Loan Documents and in establishing, maintaining, protecting,
perfecting or enforcing any of Bank's rights or Borrowers' obligations
including, without limitation, any and all such costs and expenses
incurred or paid by Bank in defending Bank's title or right to the
Collateral or in collecting or enforcing payment of the Obligations and
the liquidation of the Collateral, and all costs of filing financing,
continuation or termination statements with respect to the Collateral.
c. Late Payments and Late Charges. If any payment
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required under either of the Notes is not paid within ten (10) days
after such payment is due, then, at the option of Bank, Unified or
Commonwealth, as applicable, shall pay a late charge equal to five
percent (5.0%) of the amount of such payment or $25.00, whichever is
greater, up to the maximum amount of $750.00 per late charge to
compensate Bank for administrative expenses and other costs of
delinquent payments. This late charge may be assessed without notice,
shall be immediately due and payable and shall be in addition to all
other rights and remedies available to Bank.
d. Default Interest Rate. Upon the occurrence of any
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Event of Default and during the continuation thereof, and after
maturity, including maturity upon acceleration, Bank, at its option,
may, if permitted under applicable law, do one or both of the following:
(i) increase the interest rate under the Term Note or the Renewal
Revolving Credit Note, as applicable, to the rate that is three percent
(3.0%) above the rate that would otherwise be payable thereunder, and
(ii) add any unpaid accrued interest to principal and such sum shall
bear interest therefrom until paid at the rate provided
Page 6 of 26
in the Term Note or the Renewal Revolving Credit Note, as applicable,
(including any increased rate). The interest rate under the Notes shall
not exceed the maximum rate permitted by applicable law under any
circumstances.
ARTICLE III
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CONDITIONS PRECEDENT
The obligation of Bank to make the initial Advance and any
subsequent Advances under either the Term Note or the Renewal Revolving
Credit Note are subject to (1) the performance of the respective
obligations of Unified and Commonwealth to be performed hereunder at,
prior to or subsequent to the making the Loans, and (2) the satisfaction
of all of the following conditions:
3.01 Loan Documents. All of the Loan Documents shall be duly
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executed by Borrowers and delivered to Bank, all of which shall be in
form and substance reasonably satisfactory to Bank and to counsel for
Bank.
3.02 Lien Report. At the sole cost of Borrowers, Bank shall
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receive a lien report confirming that Bank has a first and prior lien on
all of the property pledged to Bank as Collateral. Said lien report
shall include a summary of all liens and encumbrances against any of the
property pledged to Bank by either Unified or Commonwealth as
Collateral.
3.03 Certificate of Borrowers. Each of the Borrowers shall
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deliver to Bank a Certificate for Borrower, substantially in the form of
EXHIBIT 3.03 hereto with all attachments thereto.
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3.04 Opinions of Counsel. At the sole cost of Borrowers, Bank
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shall receive separate opinions of each of Borrowers' counsel,
substantially in the form of EXHIBIT 3.04 hereto.
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3.05 Representations and Warranties. Each and every
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representation and warranty made by Borrowers contained in Article IV
hereof and in any of the Loan Documents shall be substantially true,
complete and accurate as of the making of the Loans.
3.06 Delivery of Financial Information. Bank shall receive, on
---------------------------------
or before the making of the Loans, all available financial information
of Borrowers as set forth in Section 5.02 hereof.
3.07 No Defaults. No Event of Default shall exist as of the
-----------
making of the Loans which has not been cured to Bank's satisfaction.
3.08 No Change in Condition. There shall have been no material
----------------------
adverse change in the condition, financial or otherwise, of any of the
Borrowers since the date of the most recent financial statement that has
been furnished to Bank.
3.09 Compliance with Applicable Laws. Each of the Borrowers is
-------------------------------
in compliance, in all material respects, with any and all laws
applicable to their respective businesses.
Page 7 of 26
3.10 Additional Closing Deliveries and Payments. Borrowers
------------------------------------------
shall deliver the following to Bank at the Closing, all of which shall
be in form and substance satisfactory to Bank:
(i) all appropriate financing statements (Form UCC-1)
covering the Collateral;
(ii) executed copies of all documents set forth on Bank's
document checklist for this transaction including, but not limited to,
the Loan Documents; and
(iii) payment by Borrowers of all of Bank's fees and
expenses incurred in connection with the Loans including, but not
limited to, all reasonable fees and expenses of Bank's counsel and all
recording fees and taxes, if any.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES
Borrowers jointly and severally represent and warrant to Bank, as
of the date hereof and as of the date of each subsequent Advance, as
follows:
4.01 Organization and Qualification. Unified is a corporation
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duly organized, validly existing and in good standing under the laws of
the State of Delaware, Commonwealth is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Kentucky, and each has the lawful power to engage in the business each
presently conducts; and each is duly licensed or qualified and in good
standing in each jurisdiction where the nature of the business
transacted by it makes such licensing or qualification necessary.
4.02 Power and Authority. Each of the Borrowers has the power
-------------------
and authority to enter into and carry out the Loan Documents delivered
by it in connection herewith, to execute and deliver such Loan
Documents, and to perform each of its obligations under the Loan
Documents. Each of the Borrowers has the power and authority to make
the borrowings contemplated hereby and all such actions have been fully
authorized by all necessary proceedings on the part of such Borrower.
4.03 Validity and Binding Effect. This Agreement and the other
---------------------------
Loan Documents have been duly and validly executed and delivered by the
Borrowers and each of the Borrowers' performance under such Loan
Documents has been duly authorized. This Agreement and the other Loan
Documents constitute legal, valid and binding obligations of the
Borrowers enforceable in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization
or other laws affecting creditors' remedies. No authorization,
approval, exemption or consent by any governmental or public body or
other authority is required in connection with the authorization,
execution, delivery and carrying out of the terms of the Loan Documents
by any of the Borrowers.
4.04 No Conflict. Neither the execution and delivery of the
-----------
Loan Documents nor the Borrowers' consummation of the transactions
herein or therein contemplated or compliance with the terms and
provisions hereof or thereof will conflict with or result in any default
under or breach or
Page 8 of 26
violation of (a) the terms and conditions of the Certificate or Articles
of Incorporation, as the case may be, or the By-Laws of either of the
Borrowers; (b) any state or federal law or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality
applicable to either of the Borrowers; or (c) any agreement or
instrument to which either of the Borrowers is a party or to which
either of the Borrowers is subject or which will constitute a default
thereunder or which will result in the creation or enforcement of any
lien, charge or encumbrance whatsoever upon any of the Collateral.
4.05 Ownership of Collateral. Each of the Borrowers has good
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and marketable title to all of the personal property serving as
Collateral pledged to Bank by such Borrower as security for the Loans.
Unified has good and marketable title to all of the Collateral pledged
to Bank by Unified as security for the Renewal Revolving Credit Loan.
4.06 Litigation. Except as disclosed in writing to Bank prior
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to the date of this Agreement, there are no actions, suits, proceedings
or investigations pending or threatened against either of the Borrowers
at law or in equity before any court or before any federal, state,
municipal or any governmental department, commission, board, agency or
instrumentality, whether or not covered by insurance, which,
individually or in the aggregate, may result in any materially adverse
effect on the business, property or assets or the condition, financial
or otherwise, of either of the Borrowers or impair either of the
Borrowers' ability to perform their obligations under the Loan
Documents. Neither of the Borrowers is in violation of or in default
with respect to any order, writ, injunction or any decree of any court
or any federal, state, municipal or other governmental department,
commission or bureau, agency or instrumentality which may result in any
such impairment.
4.07 No Liens and Encumbrances on Collateral. Other than those
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Liens which have been previously disclosed to Bank in writing, there are
no security interests, liens, claims, mortgages, or encumbrances upon or
against the Collateral pledged to Bank by Borrowers except the liens in
favor of Bank granted herein. Assuming Bank receives all of the Loan
Documents which have been properly executed, duly authorized and
properly recorded, Bank shall possess a valid and first priority lien in
the Collateral pledged to Bank by Borrowers.
4.08 Tax Returns and Taxes. Each of the Borrowers has filed,
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in a timely fashion and will in the future file in a timely fashion, all
tax returns or reports (federal, state and local) required to be filed
and has paid, and will pay in the future, all taxes, assessments, fees
and governmental charges and levies shown or required to be shown
thereon to be due, including interest and penalties. Each of the
Borrowers will pay in the future, all real estate and personal property
taxes, license fees and/or assessments due with respect to the
Collateral. Each of the Borrowers knows of no material additional
assessments for which adequate reserves have not been established, and
each of the Borrowers has made adequate provisions for all current real
estate and personal property taxes relating to the Collateral.
4.09 General Validity. No representation or warranty by either
----------------
of the Borrowers contained herein or made by either of the Borrowers in
any other Loan Document contains any untrue statement of material fact
or omits to state a material fact necessary in order to make such
representation or
Page 9 of 26
warranty not misleading in light of the circumstances under which it was
made. There are no facts which materially and adversely affect the
business, operations, affairs or condition of either of the Borrowers
other than those facts disclosed to Bank in writing prior to the time of
closing or as set forth herein.
4.10 Financial Statements; No Adverse Change. The financial
---------------------------------------
statements and other documents of the Borrowers previously furnished to
Bank are true, complete and accurate and are not misleading in any
material respect. There have been no material adverse changes in the
financial condition of either of the Borrowers since the date of the
most recent financial statements that have been furnished to Bank. All
financial statements and other financial information furnished to Bank
accurately represent the financial condition of the Borrowers as of
their respective dates in all material respects. Neither of the
Borrowers has any material liabilities, direct or contingent, except as
disclosed in its respective financial statements.
4.11 Accuracy of Information. All factual information
-----------------------
furnished by Borrowers in writing to Bank for purposes of, or in
connection with, this Agreement or the other Loan Documents is true,
complete and accurate in every material respect on the date that such
information was provided to Bank and as of the date of execution and
delivery of this Agreement to Bank.
ARTICLE V
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AFFIRMATIVE COVENANTS
5.01 Affirmative Covenants Other Than Reporting Requirements for
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Both Borrowers. Borrowers jointly and severally covenant that, so long
--------------
as either of the Borrowers may borrow or request Advances hereunder and
until payment in full of the Notes and all accrued but unpaid interest
thereon or unless otherwise consented to in writing by Bank, each will
do the following:
a. Preservation of Company Existence, etc. Each of the
---------------------------------------
Borrowers shall maintain its existence as a corporation, and its
respective licenses or qualifications and good standing in each
jurisdiction in which its ownership, use or lease of property or the
nature of its business or both makes such licenses or qualifications
necessary.
b. Payment of Liabilities, Including Taxes, etc. Each
---------------------------------------------
of the Borrowers shall duly pay and discharge all obligations to which
they are subject or which are asserted against them, promptly as and
when the same shall become due and payable, including all taxes,
assessments and governmental charges upon them or any of their
properties, assets, income or profits, prior to the date on which
penalties attach thereto, except to the extent that such obligations,
including taxes, assessments or charges, are being contested in good
faith by appropriate proceedings diligently conducted and for which such
reserve or other appropriate provisions, if any, has been made as
required by Bank.
c. Compliance with Loan Documents, etc. Each of the
------------------------------------
Borrowers shall substantially comply in all material respects with the
terms and conditions of the Loan Documents and all other related
agreements to which any is a party.
Page 10 of 26
d. Collateral Maintenance. At Borrowers' sole cost,
----------------------
each of the Borrowers shall maintain, keep and preserve all tangible
Collateral pledged to Bank in good working order and condition (ordinary
wear and tear and insured casualty damages excepted).
e. Keeping of Records and Books of Account. Each of
---------------------------------------
the Borrowers shall maintain and keep proper books of record and account
in accordance with sound accounting practices applied on a consistent
basis and in which full, true and correct entries shall be made of all
of its dealings and business and financial affairs.
f. Operation of Business. Each of the Borrowers shall
---------------------
maintain, conduct and operate its business in substantially the same
manner as it has been heretofore maintained, conducted and operated.
g. Insurance. At Borrowers' sole cost, each of the
---------
Borrowers shall maintain, or cause to be maintained, insurance with
financially sound and reputable insurance companies reasonably
acceptable to Bank and in such amounts and covering such risks as are
reasonably acceptable to Bank including, without limitation, liability,
property, business interruption, and errors and omissions coverage.
All insurance policies shall (i) provide that Bank is to receive
thirty (30) days written notice prior to non-renewal or cancellation,
and (ii) be evidenced by a certificate of insurance to be held by Bank.
In the event Borrower fails to provide, maintain and keep in force
the policies of insurance required by this Agreement, Bank may procure
such insurance for such risks covering Bank's interest, and Borrowers
shall pay all premiums, with interest, promptly upon demand by Bank.
h. Compliance with Laws. Each of the Borrowers has at
--------------------
all times heretofore and will hereafter comply in all material respects
with all applicable laws, rules, regulations and orders including,
without limitation, all applicable covenants and restrictions of record
and all valid laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, certificates,
franchises, permits, licenses, authorizations, directions and
requirements including, without limitation, the Americans with
Disabilities Act and regulations thereunder and all laws, ordinances,
rules and regulations of all federal, states, county, municipal and
other governments, departments, commissions, boards, courts,
authorities, officials and officers.
i. Right of Inspection. At any reasonable time and
-------------------
from time to time, each of the Borrowers shall permit Bank and any agent
or representative thereof to examine and make copies of and abstracts
from either of the Borrowers' records and books of account, and visit
its properties and to discuss its affairs, finances, and accounts with
any of its respective officers and directors and its independent
accountants. Without limiting the foregoing rights of Bank, each of the
Borrowers agrees that without any prior notice to either of the
Borrowers and not more frequently than two (2) times per calendar year,
Bank and its agents and employees may, at Borrowers' sole cost, conduct
Page 11 of 26
an audit of each of the Borrowers' records and books to determine each
of the Borrowers' compliance with this Agreement and the other Loan
Documents.
5.02 Reporting Requirements for Commonwealth. Commonwealth
---------------------------------------
covenants that, so long as either of the Borrowers may borrow or request
Advances hereunder and until payment in full of the Notes and all
accrued but unpaid interest thereon or unless otherwise consented to in
writing by Bank, Commonwealth will furnish, or cause to be furnished, to
Bank the following:
a. Annual Audited Financial Statements. Within one
-----------------------------------
hundred twenty (120) days after the end of each fiscal year, audited
financial statements for Commonwealth prepared and certified by a firm
of independent public accountants of recognized standing acceptable to
Bank, in form and content acceptable to Bank in its reasonable
discretion, which shall include an unqualified annual audit report
consisting of a balance sheet, statement of income, statement of
shareholders' equity, statement of cash flows and notes to financial
statements. All of the foregoing shall be in reasonable detail and
stating in comparative form the respective amounts for the corresponding
date and period in the prior fiscal year and all such financial
statements shall be prepared in accordance with generally accepted
accounting principles and certified as correct by the chief financial
officer or president of Commonwealth.
b. Quarterly Financial Statements. Within sixty (60)
------------------------------
days after the end of each fiscal quarter, company prepared financial
statements for Commonwealth, in form and content acceptable to Bank in
its reasonable discretion, which shall include a balance sheet as of the
end of each such period and an income statement for the period from the
beginning of the current fiscal year to the end of such period. The
statement shall be certified as correct by the chief financial officer
or president of Commonwealth.
c. Covenant Compliance Certificate. Within sixty (60)
-------------------------------
days after the end of each fiscal quarter, a Covenant Compliance
Certificate, in the same form as attached hereto as EXHIBIT 5.02 C.,
---------------
prepared by Commonwealth and certified as correct by the chief financial
officer or president of Commonwealth.
d. Company Activity Summary. Within sixty (60) days
------------------------
after the end of each fiscal quarter, company prepared schedules
summarizing the business activities of Commonwealth and certified as
correct by the chief financial officer or president of Commonwealth.
e. Schedule of Cash Receivables from Contracts. Within
-------------------------------------------
sixty (60) days after the end of each fiscal quarter, company prepared
schedules of cash receivables from contracts with insureds certified as
correct by the chief financial officer or president of Commonwealth.
f. Schedule of Past Due Accounts. Within sixty (60)
-----------------------------
days after the end of each fiscal quarter, company prepared account
receivable aging summaries for all accounts that are more than ninety
(90) days past due certified as correct by the chief financial officer
or president of Commonwealth.
Page 12 of 26
g. Monthly Borrowing Base Certificate. Within fifteen
----------------------------------
(15) days after the end of each month or simultaneously with any request
for an Advance, a Borrowing Base Certificate and Advance Request
substantially in the form attached hereto as EXHIBIT 1.04.
------------
h. Notice of Litigation. Promptly after the commencement
--------------------
thereof but in any event within thirty (30) days after the service
thereof, notice of all actions, suits, and proceedings before any court
or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting any of the Borrowers
which, if determined adversely, could reasonably be expected to have a
material and adverse effect on any of the Borrowers' respective
financial conditions, properties, or operations.
i. Notice of Events of Default. As soon as possible
---------------------------
and in any event within ten (10) days after the occurrence of any Event
of Default, a written notice setting forth the details of such Event of
Default and the action which is proposed to be taken by Commonwealth
with respect thereto.
5.03 Reporting Requirements for Unified. Unified covenants
----------------------------------
that, so long as either of the Borrowers may borrow or request Advances
hereunder and until payment in full of the Notes and all accrued but
unpaid interest thereon or unless otherwise consented to in writing by
Bank, Unified will furnish, or cause to be furnished, to Bank the
following:
a. Annual Audited Financial Statements. Within one
-----------------------------------
hundred twenty (120) days after the end of each fiscal year, audited
financial statements for Unified prepared and certified by a firm of
independent public accountants of recognized standing acceptable to
Bank, in form and content acceptable to Bank in its reasonable
discretion, which shall include an unqualified annual audit report
consisting of a balance sheet, statement of income, statement of
shareholders' equity, statement of cash flows and notes to financial
statements. All of the foregoing shall be in reasonable detail and
stating in comparative form the respective amounts for the corresponding
date and period in the prior fiscal year and all such financial
statements shall be prepared in accordance with generally accepted
accounting principles and certified as correct by the chief financial
officer or president of Unified.
b. Quarterly Financial Statements. Within sixty (60)
------------------------------
days after the end of each fiscal quarter, company prepared financial
statements for Unified, in form and content acceptable to Bank in its
reasonable discretion, which shall include a balance sheet as of the end
of each such period and an income statement for the period from the
beginning of the current fiscal year to the end of such period. The
statement shall be certified as correct by the chief financial officer
or president of Unified.
5.04 Minimum Interest Coverage Ratio for Commonwealth. Commonwealth
------------------------------------------------
shall maintain a minimum Interest Coverage Ratio (as defined herein)
of 1.75:1.0, which shall be calculated and reported on a calendar
quarter basis.
Page 13 of 26
ARTICLE VI
----------
NEGATIVE COVENANTS
Borrowers jointly and severally covenant that, so long as either
of the Borrowers may borrow or request Advances hereunder and until
payment in full of the Notes and all accrued but unpaid interest thereon
or unless otherwise consented to in writing by Bank, which consent shall
not be unreasonably withheld, neither of the Borrowers shall permit or
cause any of the following:
6.01 Liens. Create, incur, assume or suffer to exist any
-----
mortgage, security interest, lien or encumbrance whatsoever on any of
the Collateral or assign all or any part of the Collateral to any party
other than Bank, except:
a. Bank Liens. Liens in favor of Bank;
----------
b. Tax Liens and Contested Liens. Liens for taxes or
-----------------------------
assessments or other government charges or levies if not yet due and
payable or, if due and payable, if they are being contested in good
faith by appropriate proceedings diligently conducted;
c. Statutory Liens. Liens imposed by law, such as
---------------
mechanics, materialmen, landlords, warehousemen and carrier Liens, and
other similar Liens, securing obligations incurred in the ordinary
course of business which are not past due or which are being contested
in good faith by appropriate proceedings diligently conducted and for
which appropriate reserve or other appropriate provisions, if any, have
been established as required by Bank;
d. Liens Not Due and Payable. Liens under workers'
-------------------------
compensation, unemployment insurance, social security, or similar
legislation for sums which are not past due;
e. Certain Judgment Liens. Liens consisting of judgment
----------------------
or judicial attachment liens (including prejudgment attachment) in
existence less than sixty (60) days after the entry thereof or the
enforcement of which is effectively stayed or payment of which is
covered in full (subject to deductible) by insurance; and
f. Ordinary Course Liens. Liens, deposits, or pledges
---------------------
to secure the performance of public or statutory obligations, surety,
stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business.
6.02 Liquidation, Merger or Sale of Assets. (a) Liquidate,
-------------------------------------
merge or consolidate with or into any other Person or take any action in
furtherance of any thereof; (b) permit any other Person to consolidate
with or merge into either of the Borrowers; (c) sell, convey, assign,
lease or otherwise transfer or dispose of, in a single transaction or a
series of related transactions, a material part of either of the
Borrowers' assets; (d) change either of the Borrowers' name; or (e)
sell, convey or otherwise transfer any of the Collateral other than in
the ordinary course of business.
Page 14 of 26
6.03 Debt Limitations of Commonwealth. Commonwealth shall not
--------------------------------
create, incur, assume or suffer to exist any additional indebtedness in
excess of $50,000, without the prior written consent of Bank, except:
a. Bank Debt. Debt payable to Bank under this
---------
Agreement and the Revolving Credit Note; or
b. Accounts Payable, etc. Accounts payable to trade
----------------------
creditors in accordance with prior practice including, without
limitation, amounts payable under service contracts and for goods or
services incurred in the ordinary course of business that are paid
within the specified time, unless contested in good faith and by
appropriate proceedings diligently conducted.
6.04 No Dividends by Commonwealth. Commonwealth shall not
----------------------------
declare or pay any dividends, payable in cash, property, stock or
otherwise, with respect to Commonwealth's outstanding common stock
throughout the term of this Agreement without the prior written consent
of Bank.
ARTICLE VII
-----------
EVENTS OF DEFAULT
Each of the following shall be an Event of Default under this
Agreement:
7.01 Payment Default. Either of the Borrowers fails to pay any
---------------
installment of interest on the Notes after its due date without notice
from Bank, or any other sum due to Bank under any of the Loan Documents,
within ten (10) days following notice that the same is due and payable.
7.02 Default in Other Obligations to Bank. The occurrence of a
------------------------------------
material default and the expiration of the applicable cure period, if
any, under any of the Loan Documents or any other obligation of either
of the Borrowers to or with Bank, whether now or hereafter arising.
7.03 Breach of Representation or Warranty. Any representation
------------------------------------
or warranty made or deemed made by any of the Borrowers in this
Agreement, the Loan Documents, or in any certificate, document, opinion,
or financial or other statement furnished at any time under or in
connection with any Loan Document proves to have been incorrect in any
material respect on or as of the date made or deemed made.
7.04 Breach of Covenant. Any of the Borrowers fails to perform
------------------
or observe any term, covenant or agreement on their part to be performed
or observed in any of the Loan Documents (other than a failure to pay
any sum to Bank when due) to which any of them is a party and such
failure shall continue for a period of thirty (30) days after written
notice to Unified or Commonwealth, as applicable, from Bank describing
the nature of the failure; provided, however, that an Event of Default
shall occur immediately and without the thirty (30) day cure period if
any such failures relate to the provisions contained in Sections 6.02 or
9.21 of this Agreement.
Page 15 of 26
7.05 Insolvency. Either of the Borrowers (i) is unable to, or
----------
admits in writing its inability to, pay its debts as such debts become
due; (ii) makes an assignment for the benefit of creditors, petitions or
applies to any tribunal for the appointment of a custodian, receiver or
trustee for them or a substantial part of its assets; (iii) commences
any proceeding under any bankruptcy, reorganization, arrangements,
readjustment of debt, dissolution, or liquidation law or statute of any
jurisdiction whether now or hereafter in effect; (iv) has any such
petition or application filed or any such proceeding commenced against
it in which an order for relief is entered or adjudication or
appointment is made and which remains undismissed for a period of sixty
(60) days or more; (v) by any act or omission, indicates its consent to,
approval of, or acquiescence in any such petition, application, or
proceeding, or order for relief, or the appointment of a custodian,
receiver, or trustee for all or any substantial part of its properties;
(vi) suffers any such custodianship, receivership, or trusteeship to
continue undischarged for a period of sixty (60) days or more; or (vii)
becomes insolvent in that its total assets are in the aggregate less
than all of its liabilities.
7.06 Unpaid Judgments. One or more final judgments, decrees,
----------------
or orders for the payment of money in excess of Fifty Thousand Dollars
($50,000.00) in the aggregate shall be rendered against any of the
Borrowers and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of thirty (30) consecutive days
without being vacated, discharged, satisfied or stayed or bonded pending
appeal.
7.07 Invalid Documents. Any of the Loan Documents shall at any
-----------------
time after their execution and delivery and for any reason, other than
payment in full of the obligations so secured, cease (i) to create a
valid and perfected first priority security interest in and to the
Collateral; or (ii) to be in full force and effect, and such matter is
not fully corrected or resolved to Bank's satisfaction within thirty
(30) days after written notice with respect thereto from Bank.
7.08 Sale of Collateral. Any of the Borrowers sells, transfers
------------------
or conveys any interest whatsoever in any of the Collateral (unless such
Collateral is replaced in the ordinary course of business or is
obsolete) without the prior written consent of Bank.
7.09 Unauthorized Liens on Collateral. Any further Lien is
--------------------------------
placed on any of the Collateral which is the subject of the Loan
Documents (except to the extent and in the manner provided for in this
Agreement), without the prior written consent of Bank.
7.10 Termination of Borrower. If either of the Borrowers takes
-----------------------
any action that is intended to result in such Borrower's termination,
dissolution or liquidation.
ARTICLE VIII
------------
REMEDIES OF BANK IN THE EVENT OF DEFAULT
8.01 Acceleration, etc. Upon the occurrence of any Event of
------------------
Default set forth above and without further notice to Borrowers, Bank
may (i) declare its obligation to make Advances under the Notes and this
Agreement to be terminated, whereupon the same shall forthwith
terminate; (ii) declare the outstanding principal balance owing under
the Notes, all accrued but unpaid interest
Page 16 of 26
thereon, and all other amounts payable under any of the Loan Documents
or otherwise to be forthwith due and payable, whereupon the Notes, all
such interest, and all such amounts shall become and be immediately due
and payable without presentment, demand, protest, or further notice of
any kind, all of which are hereby expressly waived by Borrowers, without
any action on the part of Bank; (iii) avail itself of any and all
remedies available to it in any of the Loan Documents including, without
limitation, the appointment of receivers for the Collateral; and (iv)
avail itself of any and all other or additional remedies available by
law or in equity.
8.02 Enforcement of Rights. Upon the occurrence of any Event
---------------------
of Default, Bank shall have the right to proceed to protect and enforce
its rights by suit in equity, action at law and/or other appropriate
proceedings either for specific performance of any covenant or condition
contained in this Agreement or in any of the other Loan Documents, or in
aid of the exercise of any power granted in this Agreement or any of the
other Loan Documents.
8.03 Foreclosure, Repossession and Sale of Collateral. Bank
------------------------------------------------
shall have full power and authority to proceed to exercise any one or
more of the rights accorded to it by the Uniform Commercial Code of the
Commonwealth of Kentucky or otherwise accorded to it by law, including
the foreclosure and repossession of the Collateral. Upon the occurrence
of any Event of Default, the rights of either of the Borrowers to use,
sell, substitute, exchange or exercise any other rights relating to the
Collateral and all proceeds thereof and income therefrom shall
automatically terminate without notice and Bank shall thereafter be
entitled to foreclose, take possession of, receive, sell and collect the
same. The Collateral and the proceeds of any sale thereof may be
applied by Bank, in its sole discretion, against the Notes or any other
liabilities or obligations owed to Bank, and Bank may first apply the
proceeds of such disposition to any and all expenses including, without
limitation, advertising and storage costs and reasonable attorneys' fees
and legal costs, incurred by Bank in connection with or arising out of
such disposition. Bank may send any written notice required by this
Section 8.03 in the manner set forth in Section 9.04 hereof. Borrowers
agree that ten (10) days notice by Bank to such Borrower is reasonable
notice of any sale of Collateral consisting of personal property. Bank
shall have the right to sell that portion of the Collateral which is
personal property at either public or private sale and shall have the
right to bid upon and purchase any of the Collateral at any sale.
8.04 Right to Proceed in Any Order. Upon the occurrence of any
-----------------------------
Event of Default, Bank shall be entitled to exercise any and all of its
rights and remedies in any order against the Borrowers and the
Collateral as Bank determines in its sole discretion.
8.05 Waiver of Marshaling of Assets. Borrowers waive any
------------------------------
requirement of marshaling of assets and all other legal or equitable
doctrines which might otherwise require Bank to proceed against any
Persons or any Collateral in any particular order.
8.06 Remedies Cumulative; No Waiver of Rights by Bank. Upon
------------------------------------------------
the occurrence of any Event of Default, Bank may choose to exercise and
enforce any of its rights or remedies, or decline to exercise and
enforce any of its rights or remedies, in Bank's sole discretion. The
failure of Bank to exercise and enforce any rights or remedies shall not
prevent Bank from thereafter exercising or
Page 17 of 26
enforcing any such rights or remedies, nor shall such failure release
any Person or property with respect to which Bank has any rights or
remedies or in any way limit or diminish Bank's rights with respect to
any such property or Person. All of Bank's rights and remedies shall be
cumulative to the greatest extent permitted by law, may be exercised
successively or concurrently, at any time and from time to time, and
shall be in addition to all of those rights and remedies afforded Bank
at law, in equity, or in bankruptcy. 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. Bank shall be entitled to
recover from the cumulative exercise of all remedies the sum of: (a) the
outstanding principal amount of the Notes; (b) all accrued but unpaid
interest with respect to the principal amount of the Notes; (c) any
other amounts that either of the Borrowers are required by the Loan
Documents to pay to Bank (for example and without limitation, the
reimbursement of all reasonable expenses, legal fees and late charges);
and (d) any costs, expenses or damages which Bank is otherwise permitted
to recover under the terms of the Loan Documents, or at law or in
equity.
8.07 Application of Payments and Proceeds of Sale. All payments
--------------------------------------------
from Borrowers to Bank under the Notes or any of the other Loan
Documents, and all payments to Bank from the sale or other disposition
of Collateral, shall be applied by Bank in its discretion as follows:
(a) to the payment of the costs and expenses of Bank and the reasonable
fees and expenses of its counsel in connection with the administration
or enforcement of Bank's rights and remedies against either of the
Borrowers, the Collateral and sale or collection thereof; (b) to the
payment in full of all loan obligations referred to under the Loan
Documents applying such amounts first to accrued but unpaid interest and
then to principal; and (c) the balance, if any, to Borrowers or to any
third party entitled thereto.
8.08 No Obligation to Preserve Collateral. Upon the occurrence
------------------------------------
of any Event of Default, Bank may, at its option, demand, xxx for,
collect, preserve or make any compromise or settlement it deems
desirable with reference to the Collateral. Bank shall not be bound to
take any steps necessary to preserve the Collateral against other
parties, which steps each of the Borrowers expressly agree to undertake.
8.09 Right of Set Off. Upon the occurrence and during the
----------------
continuance of any Event of Default, Bank is hereby authorized, at any
time and from time to time, without notice to any of the Borrowers (any
such notice being expressly waived), to set off and apply any and all
deposit balances (other than trust, restricted or fiduciary accounts) at
any time held and other indebtedness at any time owing by Bank to or for
the credit or the account of any Borrower against any and all of the
obligations of any Borrower now or hereafter existing under this
Agreement, the Notes or any other Loan Document, irrespective of whether
or not Bank shall have made any demand under this Agreement or the Notes
or such other Loan Document and although such obligations may be
unmatured. Bank agrees to promptly notify such Borrower after any such
set off and application, provided that the failure to give such notice
shall not affect the validity of such set off and application. The
rights of Bank under this section are in addition to other rights and
remedies (including, without limitation, other rights of set off) which
Bank may have.
Page 18 of 26
8.10 Cash Collateral. All income and proceeds from any of the
---------------
Collateral shall be considered "cash collateral" as defined under the
terms of the United States Bankruptcy Code and Borrowers shall not have
the right to use any of the cash collateral without first receiving
leave from a bankruptcy court of competent jurisdiction and venue.
ARTICLE IX
----------
MISCELLANEOUS
9.01 No Implied Waiver; Cumulative Remedies; Writing Required.
--------------------------------------------------------
No delay or failure of Bank in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps
to enforce such a right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
The rights and remedies provided hereunder are cumulative and not
exclusive of any rights or remedies (including, without limitation, the
right of specific performance) which Bank would otherwise have. Any
waiver, permit, consent or approval of any kind or character on the part
of Bank of any breach or default under this Agreement, the Notes or any
other Loan Documents or any such waiver of any provision or condition
hereof or thereof must be in writing and shall be effective only to the
extent specifically set forth in such writing. Borrowers acknowledge
that with respect to this Agreement and its terms, Borrowers are neither
authorized nor entitled to rely on any representations, modifications or
assurances in any form or as to any subject from any officer of Bank
unless and until such representation, modification or assurance is set
forth in writing and signed by such officer of Bank.
9.02 Taxes. Borrowers agree to pay or cause to be paid any and
-----
all stamp, document, transfer or recording taxes, and similar
impositions payable or hereafter determined to be payable in connection
with this Agreement and any other Loan Document or other documents,
instruments or transactions pursuant to or in connection herewith, and
agree to save Bank harmless from and against any and all present or
future claims or liabilities with respect to or resulting from any delay
in paying or omission to pay, any such taxes or similar impositions.
9.03 Holidays. Whenever any payment or action to be made or
--------
taken hereunder or under the Notes shall be stated to be due on a day
which is not a Business Day, such payment or action shall be made or
taken on the next succeeding Business Day.
9.04 Notices. All notices and other communications given to or
-------
made upon any party hereto in connection with this Agreement or any of
the other Loan Documents shall, except as herein or therein otherwise
expressly provided, be in writing and mailed, faxed or delivered to the
addresses set forth below the signatures of the parties hereto or at
such other address as shall be specifically designated by any such
party. All such notices or other communications shall be effective, if
mailed, when deposited in the U.S. mail, first class postage prepaid; if
faxed, when faxed; or if delivered, when delivered.
9.05 [intentionally omitted]
Page 19 of 26
9.06 Time of Essence. Time shall be of the essence as to all
---------------
provisions of this Agreement.
9.07 Severability. The provisions of this Agreement are
------------
severable, and if any clause or provision of this Agreement shall be
held invalid or unenforceable in whole or in part, then such clause or
provision shall be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or
enforceability or the remaining provisions hereof.
9.08 Governing Law. This Agreement, the Notes and the other
-------------
Loan Documents and the rights and obligations of the parties hereto and
thereto shall be governed by and construed and enforced in accordance
with the substantive law of the Commonwealth of Kentucky.
9.09 Survival. All representations, warranties, covenants and
--------
agreements contained herein, in the Loan Documents or any other
agreement, certificate or instrument delivered pursuant hereto or made
in writing in connection herewith or therewith shall survive the
execution and delivery hereof and thereof, the making of the Loan
hereunder and the issuance of the Notes and shall continue in full force
and effect so long as Borrowers may borrow or request Advances and until
payment in full of Borrowers' obligations hereunder and under the Notes.
Provided, however, those provisions contained in Sections 9.11, 9.12,
9.18 and 9.20 shall survive the payment of the Notes.
9.10 Benefit and Binding Effect of Agreement. This Agreement
---------------------------------------
shall be binding upon and inure to the benefit of Bank, Borrowers and
their respective successors and assigns, except that Borrowers may not
assign or transfer their rights hereunder or any interest herein without
the prior written consent of Bank.
9.11 JURY WAIVER. BORROWERS AND BANK HEREBY VOLUNTARILY,
-----------
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY
RELATED TO THIS DOCUMENT, ANY OTHER LOAN DOCUMENT OR ANY RELATIONSHIP
BETWEEN BANK AND BORROWERS. THIS PROVISION IS A MATERIAL INDUCEMENT TO
BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN
DOCUMENTS.
9.12 Jurisdiction and Venue; Service. Subject to Section 9.20,
-------------------------------
the parties agree that the sole proper venue for the determination of
any litigation commenced by Bank against any Borrower or any Borrower
against Bank on any basis shall be in a court of competent jurisdiction
which is located in Fayette County, Kentucky, and the parties hereby
expressly declare that any other venue shall be improper and Borrowers
expressly waive any right to a determination of any such litigation
against Bank by a court in any other venue. Each Borrower further
agrees that service of process by any judicial officer or by registered
or certified U.S. mail shall establish personal jurisdiction over
Borrowers and Borrowers waive any rights under the laws of any state to
object to jurisdiction within the Commonwealth of Kentucky. Provided,
however, nothing contained in this section shall prevent Bank from
bringing an action within another state in order to enforce its rights
in the Collateral which may be located in another state. Initiating
such proceedings or taking such action in any other
Page 20 of 26
state shall in no event constitute a waiver of the agreement contained
herein that the laws of the Commonwealth of Kentucky shall govern the
rights and obligations of the parties hereunder or of the submission
herein made by each Borrower to personal jurisdiction within the
Commonwealth of Kentucky. The aforesaid means of obtaining personal
jurisdiction and perfecting service of process are not intended to be
exclusive, but are cumulative and in addition to all other means of
obtaining personal jurisdiction and perfecting service of process now or
hereafter provided by the laws of the Commonwealth of Kentucky or by any
other state in an action brought by Bank in such state.
9.13 No Third Party Beneficiaries. All conditions on the
----------------------------
obligations of any party hereunder, including the obligation of Bank to
make Advances, are imposed solely and exclusively for the benefit of the
other parties to this Agreement and Bank's successors and assigns. No
other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that
Bank will refuse or decline to make Advances in the absence of strict
compliance with any or all thereof, and no other Person shall, under any
circumstances, be deemed to be a beneficiary of such conditions, any and
all of which may be freely waived in whole or in part by the respective
party to whom the performance of any such condition shall run at any
time if, in the sole discretion of such party, it deems it desirable to
do so, or if it fails to do so for any other reason.
9.14 Relationship of the Parties. All of the parties herein
---------------------------
intend that the relationship between them be solely that of creditor and
debtor. Nothing contained in the Loan Documents shall be deemed or
construed to create a partnership, fiduciary relationship, joint venture
or co-ownership by or between the parties herein. Bank shall not in
anyway be responsible or liable for the debts, losses, obligations or
duties of either of the Borrowers. All obligations to pay property or
other taxes, assessments, insurance on the Collateral and all other fees
and charges arising from the ownership and operation of the assets of
Borrowers shall be the sole responsibility of Borrowers.
9.15 Bank's Performance of Borrowers' Covenants and Duties.
-----------------------------------------------------
Should Borrowers fail to perform any of their covenants, duties and
agreements in accordance with the terms hereof and an Event of Default
shall thereby result, Bank may, at its election and at Borrowers' sole
expense, perform or attempt to perform such covenant, duty or agreement
on behalf of Borrowers, but in no event shall Bank have any obligation
to do so. Borrowers shall, at the request of Bank, promptly pay, upon
demand, any reasonable amount expended by Bank in such performance or
attempted performance to Bank, together with interest thereon at the
default rate under the Notes from the date such amount was requested by
Bank to be paid until paid; provided that Bank does not assume and shall
never have, except by a subsequent, express written undertaking by Bank,
any liability for the performance of any duties of Borrowers under or in
connection with all or any part of the Collateral. Bank shall be
subrogated to all rights, titles, liens and security interests securing
the payment of any debt, claim, tax or assessment for the payment of
which Bank may make an advance or that Bank may pay.
9.16 Course of Dealing; Waiver. No course of dealing in
-------------------------
respect of, or any omission or delay in the exercise of, any right,
power, remedy or privilege by Bank shall operate as a waiver
Page 21 of 26
thereof, nor shall any right, power, remedy or privilege of Bank be
exclusive of any other right, power, remedy or privilege referred to
herein or in any related document or now or hereafter available at law,
in equity, in bankruptcy, by statute or otherwise. No waiver or consent
granted by Bank with respect to any of the Loan Documents or related
writing shall be binding upon Bank, unless specifically granted in
writing by a duly authorized officer of Bank, which writing shall be
strictly construed.
9.17 Absence of Oral Representations. Each of the Borrowers
-------------------------------
represents and warrants that no promises, assurances or commitments have
been made to either of them by Bank or have been relied on by either of
them regarding any extension, renewal or future financing. Each of the
Borrowers understands and agrees that Bank is entitled to enforce all of
the Loan Documents strictly in accordance with their terms, and any
commitment or obligation to extend or renew any financing or provide
additional financing shall not be binding on Bank, except to the extent
contained in a writing signed by every Person who is to be bound
thereby. Borrowers further acknowledge that (i) Bank does not presently
anticipate renewing, extending or further modifying the financing
referenced in this Agreement, and (ii) Bank anticipates the Notes will
be fully paid in accordance with its terms on or before maturity.
Borrowers each agree and represent to Bank (which representation
Borrowers acknowledge Bank is relying on in executing this Agreement)
that they will not rely on any (i) commitment or representation from
Bank with respect to any future financing including, but not limited to,
renewals, extensions and modifications, unless signed in writing by
Bank, and (ii) waiver of any right existing at any time, and from time
to time, either now or in the future, except to the extent evidenced by
a writing signed by the person affecting such waiver.
9.18 Indemnity. Borrowers shall indemnify and hold Bank
---------
harmless against any loss suffered or liability incurred by Bank on
account of any damage to the person or property of the parties hereto or
to third parties by reason of the operation of Borrowers' businesses, or
otherwise arising out of or connected to the conduct of any Borrower or
their officers, managers, directors, employees or agents, in connection
with any matters which are the subject of this Agreement.
9.19 References. Any and all references in this Agreement to
----------
any document or documents shall be references to such document or
documents as the same may from time to time be modified, amended,
renewed, consolidated or extended, with the consent of Bank.
9.20 Arbitration. Borrowers and the Bank agree that, upon the
-----------
written demand of either party, whether made before or after the
institution of any legal proceedings but prior to the rendering of any
judgment in that proceeding, all disputes, claims and controversies
between them, whether individual, joint, or class in nature, arising
from any of the Loan Documents or otherwise including, without
limitation, contract disputes and tort claims, shall be resolved by
binding arbitration pursuant to the Commercial Rules of the American
Arbitration Association. Any arbitration proceeding held pursuant to
this arbitration provision shall be conducted at the city nearest
Commonwealth's address having a AAA office or at any other location
selected by mutual agreement of the parties. No act to take or dispose
of any Collateral shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This
arbitration provision shall not limit the right of either party during
any dispute, claim or controversy to seek, use and employ ancillary, or
preliminary
Page 22 of 26
rights and/or remedies, judicial or otherwise, for the purposes of
realizing upon, preserving, protecting, foreclosing upon or proceeding
under forcible entry and detainer for possession of, any real or
personal property, and any such action shall not be deemed an election
of remedies. Such remedies include, without limitation, obtaining
injunctive relief or a temporary restraining order, invoking power of
sale under any deed of trust or mortgage, obtaining a writ of attachment
or imposition of a receivership, or exercising any rights relating to
personal property, including exercising the right of set-off, or taking
or disposing of such property with or without judicial process pursuant
to Article 9 of the Uniform Commercial Code or when applicable, a
judgment by confession of judgment. Any disputes, claims or
controversies concerning the lawfulness or reasonableness of an act, or
exercise of any right or remedy concerning any Collateral, including any
claim to rescind, reform or otherwise modify any agreement relating to
the Collateral, shall also be arbitrated; provided, however, that no
arbitrator shall have the right or the power to enjoin or restrain any
act of any party. Judgment upon any award rendered by any arbitrator
may be entered in any court having jurisdiction. Nothing in this
arbitration provision shall preclude any party from seeking equitable
relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches and similar doctrines which would
otherwise be applicable in a legal action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of a legal
action for these purposes. The Federal Arbitration Act (Title 9 of the
United States Code) shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
9.21 Assignments. Borrowers may not assign their respective
-----------
rights under any of the Loan Documents to any other party. Any
attempted assignment shall be a default under this Agreement and shall
be null and void. The Bank shall have the right and ability, upon not
less than fifteen (15) days prior written notice to (but without the
requirement for any consent from) Borrower, 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 institutional lenders, and/or to sell participation or
participating interests in its rights and/or obligations under this
Agreement to other institutional lenders. In furtherance thereof, the
Bank 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 condition, business and other affairs of the Borrowers as
the Bank may deem appropriate in the circumstances. Borrowers hereby
authorize all such disclosures.
9.22 Waivers by Borrowers. Borrowers hereby waive, to the
--------------------
extent permitted by applicable law, (a) all presentments, demands for
performance, notices of nonperformance (except to the extent
specifically required by the Loan Documents), protests, notices of
protest and notices of dishonor in connection with the Notes; and (b)
any requirement of diligence or promptness on the part of Bank in
enforcement of its rights under the provisions of any of the Loan
Documents.
9.23 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.
Page 23 of 26
9.24 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.
9.25 Counterpart Execution. 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. 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.
9.26 Acknowledgment. Borrowers acknowledge that Borrowers have
--------------
received a copy of each of the Loan Documents, as fully executed by the
parties thereto. Borrowers acknowledge that Borrowers (a) have READ THE
LOAN DOCUMENTS OR HAVE CAUSED SUCH DOCUMENTS TO BE EXAMINED BY THE
BORROWERS' REPRESENTATIVES OR ADVISORS; (b) are thoroughly familiar with
the transactions contemplated in this Agreement and the other Loan
Documents; and (c) have had the opportunity to ask such questions to
representatives of the Bank, and receive answers thereto, concerning the
terms and conditions of the transactions contemplated in the Loan
Documents as the Borrowers deem necessary in connection with their
decision to enter into this Agreement.
9.27 Year 2000 Compliance.
--------------------
(a) Representation and Warranties. Borrowers represent
-----------------------------
and warrant to Bank as follows: (i) as of the date of any request for an
Advance under the Loan Documents; (ii) as of the date of any renewal,
extension or modification of the Loan Documents; and (iii) at all times
that the Loan Documents or Bank's commitment to make advances under the
Loan Documents is outstanding all devices, systems, machinery,
information technology, computer software and hardware, and other date
sensitive technology (jointly and severally the "Systems") necessary for
them to carry on their businesses as presently conducted and as
contemplated to be conducted in the future are Year 2000 Compliant or
will be Year 2000 Compliant with a period of time calculated to result
in no material disruption of any of their business operations. For
purposes of these provisions, "Year 2000 Compliant" means that such
Systems are designed to be used prior to, during and after the Gregorian
calendar year 2000 A.D. and will operate during such time period without
error relating to date data, specifically including any error relating
to, or the product of, date data which represents or referenced
different centuries or more than on century.
(b) Affirmative Covenants. Borrowers covenant and agree
---------------------
with Bank that, while any Loan Document is in effect, Borrowers will:
i. Furnish such additional information, statements
and other reports with respect to their activities, course of action and
progress towards becoming Year 2000 Compliant as Bank may request from
time to time;
ii. In the event of any change in circumstances that
causes or will likely cause any of their representations and warranties
with respect to either of them being or becoming Year 2000 Compliant to
no longer be true (hereinafter referred to as a "Change in
Circumstances")
Page 24 of 26
promptly, and in any event within ten (10) days of receipt of
information regarding a Change in Circumstances, provide Bank with
written notice (the "Notice") that describes in reasonable detail the
Change in Circumstances and how such Change in Circumstances caused or
will likely cause Borrowers' representations and warranties with respect
to being or becoming Year 2000 Compliant to no longer be true.
Borrowers shall, within ten (10) days of a request, also provide Bank
with any additional information that Bank requests in connection with
the Notice and/or Change of Circumstances; and
iii. Give any representative of the Bank access
during all business hours, and permit such representative to examine,
copy or make excerpts from, any and all books, records and documents in
the possession of any Borrower and relating to its affairs, and to
inspect any of the properties and Systems and to project test the
Systems to determine if they are Year 2000 Compliant in an integrated
environment, all at the sole cost and expense of Bank.
9.28 Entire Agreement. This Agreement constitutes the entire
----------------
agreement and the understanding between and among the parties with
respect to the subject matter hereof and this Agreement supersedes all
previous and contemporaneous negotiations and agreements between the
parties and no parole evidence of any prior or other agreements shall be
permitted to contradict or vary the terms hereof. Borrowers acknowledge
that there have been no promises for additional extensions of time for
payment of the Notes nor have there been any agreements made to provide
additional funding to any party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the date first set forth above.
BANK ONE, KENTUCKY, NA,
a national banking association
BY: /s/ Xxxx Xxxxxx
--------------------------------------
TITLE: First Vice President
-----------------------------------
"BANK"
UNIFIED FINANCIAL SERVICES, INC.,
a Delaware corporation
BY: /s/ Xxxx X. Xxxx
--------------------------------------
TITLE: Executive Vice President
-----------------------------------
"UNIFIED"
Page 25 of 26
COMMONWEALTH PREMIUM FINANCE
CORPORATION, a Kentucky corporation
BY: /s/ Xxxx X. Xxxxx
--------------------------------------
TITLE: Vice President
-----------------------------------
"COMMONWEALTH"
Page 26 of 26
