LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of June 27, 1996, by
and between COM TECH INTERNATIONAL CORPORATION (referred to herein as the
"Borrower"), and SAGE RESOURCES, INC. (referred to herein as the "Lender").
R E C I T A L S
A. Lender has agreed to lend up to Five Hundred Thousand Dollars
($500,000) to Borrower pursuant to a Secured Promissory Note dated June 27, 1996
(the "Note").
NOW, THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:
1. DEFINITIONS.
(a) As used herein, the following terms shall have the meanings
set forth below:
"Agreement" shall mean this Loan Agreement, as the same may be
amended and supplemented as hereinafter provided.
"Assignment, Pledge and Security Agreement" means that certain
Assignment, Pledge and Security Agreement of even date between Borrower
and Lender.
"Event of Default" shall mean the occurrence of any of the
events listed in paragraph 6(a) and the expiration of any applicable
notice and cure period provided therein.
"Interest Rate" shall mean ten percent (10%) per annum.
"Loan" shall mean the loan from Lender to Borrower described
in this Agreement in the principal amount of the Loan Amount.
"Loan Amount" shall mean the amount of Five Hundred Thousand
Dollars ($500,000).
"Loan Documents" shall mean this Agreement, the Assignment,
Pledge and Security Agreement, and the Note.
"Maturity Date" shall mean the date of Closing as contemplated
in the proposed Stock Purchase Agreement between Lender and the
Shareholders of Borrower unless such Closing does not occur within
thirty (30) days from the date hereof. If such Closing does not occur
within the thirty (30) day time frame, the maturity date will be ninety
(90) days thereafter.
"Person" shall mean any natural person, any unincorporated
association, any corporation, any partnership, any joint venture, any
trust, any other legal entity, or any governmental authority.
(b) Accounting Terms. For purposes of this Agreement, all
accounting terms not otherwise defined herein or in the Recitals shall
have the meanings assigned to them in conformity with generally
acceptable accounting practices and principles.
2. THE LOAN
(a) Agreement to Lend and Borrow. Subject to the terms and
conditions of this Agreement, Lender agrees to lend to Borrower and
Borrower agrees to borrow from Lender the Loan Amount. The Loan
proceeds shall be used for working capital liquidity for Borrower's
business ventures;
(b) Evidence of Indebtedness. The Loan shall be evidenced by
the Note. In the event of any inconsistency between the Note and this
Agreement, the provisions of this Agreement shall prevail;
(c) Security for Obligations. The Loan shall be secured by an
Assignment, Pledge and Security Agreement whereby Borrower shall pledge
to Lender its rights, title and interest in the Datamax Joint Venture,
as described in the Telecommunications Service Agreement dated March
20, 1996, including but not limited to (a) shares or other interests in
the Joint Venture already issued to COM TECH, (b) COM TECH's rights to
participate as a shareholder based on contributions of cash and or
services or both, and (c) all rights granted to COM TECH to carry and
terminate traffic from the Datamax Joint Venture or its affiliates and
subsidiaries;
(d) Interest. Interest at the Interest Rate shall accrue and
become due and payable pursuant to the terms of the Note. Interest
shall be calculated on the basis of a 360-day year and 30-day month;
(e) Payment of Principal and Interest. If the Closing
contemplated by the proposed Stock Purchase Agreement between the
Shareholders of Borrower and Lender does not occur, the outstanding
principal balance of the Loan, together with all unpaid accrued
interest thereon, and all other amounts payable by Borrower with
respect to the Note or pursuant to the terms of any other Loan
Documents, shall be due and payable in lawful money of the United
States of America at #00 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, XX
00000, or such other address as Lender may direct in writing, in same
day funds, not later than the Maturity Date in accordance with the
Note. If the Closing described above does occur, the outstanding
balance of the Loan will be deducted at such Closing from Lender's $3.5
million new equity financing requirement described in said Stock
Purchase Agreement in accordance with the Note;
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(f) Prepayment of Principal. Borrower shall have the right
to prepay the Loan, in whole or in part, at any time, without premium
or penalty.
3. LOAN CLOSING
(a) Closing. The transactions contemplated in this Agreement
shall close on June 27, 1996, or at such later date and time as the
parties shall agree;
(b) Conditions Precedent. Lender's obligation to disburse the
Loan and to perform the remainder of its obligations under this
Agreement are expressly conditioned upon Borrower's delivery to Lender
of the following documents, in form and content satisfactory to Lender,
duly executed (and acknowledged where necessary) by the appropriate
parties thereto:
(i) This Agreement;
(ii) The Note; and
(iii) The Assignment, Pledge and Security Agreement.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender that the following statements are true, correct and complete
as of the date hereof, and will be true, correct and complete as of the date of
closing:
(a) Organization, Standing and Qualification. COM TECH is duly
organized, validly existing and in good standing under the laws of the
State of Washington and is authorized and qualified to own and operate
its properties and assets and conduct its business in all jurisdictions
where such properties and assets are owned and operated and such
business is conducted. COM TECH has duly filed any and all certificates
and reports required to be filed to date by the laws of Washington and
to the best of COM TECH's knowledge any other applicable law. COM TECH
has all franchises, permits, licenses, and any similar authority
material to the conduct of COM TECH's business in its present
condition, the lack of which could materially adversely affect the
business, properties, prospects, or its financial condition. COM TECH
is not in default in any material respect under any of such franchises,
permits, licenses or other similar authority.
(b) Capitalization. As of the date of Closing, the authorized
capital stock of COM TECH consists of 1 million shares of common stock,
no par value, of which 200,000 shares are issued and outstanding. All
of the outstanding shares of COM TECH common stock were duly authorized
and validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 4(b), there are no outstanding subscriptions,
options, warrants, calls, contracts, demands, commitments, convertible
securities or other rights, agreements or arrangements of any character
or nature whatsoever relating to COM TECH's issuance of common stock or
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other securities. No holder of any COM TECH security is entitled to
any preemptive or similar rights to purchase any COM TECH securities.
(c) Subsidiaries. Except as disclosed in Schedule 4(c),
COM TECH has no subsidiaries, no investment in any entity, and no
participation in any joint venture, partnership or other similar
arrangement.
(d) Corporate Records. COM TECH's minute books and other
corporate record books are in good order, complete, accurate, up to
date, with all necessary signatures for the Datamax Joint Venture and
this Loan Agreement.
(e) No Defaults. Except as disclosed in Schedule 4(e), COM
TECH is not in default under or in violation of any provisions of its
Articles of Incorporation or Bylaws or any restriction, lien,
encumbrance, indenture, contract, lease, sublease, loan agreement, note
or other obligation or liability relating to COM TECH's business.
(f) No Conflict. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will conflict with or result in a breach of or constitute a default
under any provision of COM TECH's Articles of Incorporation or Bylaws,
any law, rule, regulation, judgment, decree, order or other such
requirement, or under any material restriction, lien, encumbrance,
indenture, contract, lease, sublease, loan agreement, note or other
material obligation or liability to which COM TECH is a party or by
which it is bound, or to which any of its assets are subject, or result
in the creation of any lien or encumbrance upon such assets.
(g) Consents and Approvals. COM TECH's execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not require COM TECH to obtain any consent,
approval or action of, or make any filing with or give notice to any
corporation, person or firm or any public, governmental or judicial
authority except: (i) such as have been duly obtained or made, as the
case may be, and are in full force and effect on the date hereof, (ii)
those which the failure to obtain or make would have no material
adverse effect on the transactions contemplated hereby or on COM TECH's
business or financial condition, and (iii) any filings required under
the Securities Act, or any applicable state securities laws.
(h) Related-Party Transactions. Except as disclosed in
Schedule 4(h), no COM TECH employee, officer, or director or member of
his or her immediate family is indebted to COM TECH, nor is COM TECH
indebted (or committed to make loans or extend or guarantee credit) to
any of such individuals. None of such individuals has any direct or
indirect ownership interest in any firm or corporation with which COM
TECH is affiliated or with which COM TECH has a business relationship,
or any firm or corporation that competes with COM TECH, except that
employees, officers, or directors of COM TECH and members of their
immediate families may own stock in publicly traded companies that may
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56246.3
compete with COM TECH. No member of the immediate family of any COM
TECH officer or director is directly or indirectly interested in any
material contract with COM TECH.
(i) Safety Laws. COM TECH is not in violation of any
applicable statute, law or regulation relating to occupational health
and safety (including, but not limited to, OSHA and any similar state
laws), and COM TECH is not aware of any material expenditures that are
or will be required to comply with any such existing statute, law or
regulation.
(j) Environmental Compliance. All property owned, leased or
occupied by COM TECH is free from, and has always been free from, all
material, waste, substances, pollutants, or contaminants which may pose
a risk of injury or threat to the health of the environment and is not
now, and has never been in violation of any federal, state or local
law, statue, ordinance, or requirement pertaining to health, industrial
hygiene, or environmental conditions.
(k) Compliance With Law. To the best of COM TECH's knowledge,
neither COM TECH nor any of its directors, officers, fiduciaries,
agents or employees, is in violation of any applicable law, rule,
regulation or requirement of any governmental authority in any way
relating to COM TECH's business.
(l) Financial Statements. COM TECH's Financial Statements for
the periods ending December 31, 1993, December 31, 1994, and December
31, 1995, are correct and complete and present fairly in all material
respects COM TECH's financial condition as of the dates described
therein, and have been prepared in accordance with Generally Accepted
Accounting Principles consistently applied. COM TECH's books and
records are complete in all material respects and are in an auditable
condition such that a complete audit of COM TECH can be performed as of
the Closing without unreasonable cost or expense.
(m) Properties and Assets. The properties and assets presently
owned by COM TECH and shown on its books include all properties and
assets of every kind, class and description, real and personal,
tangible and intangible, known and unknown, used in COM TECH's business
and necessary to the conduct of its business as presently conducted.
Except as disclosed on Schedule 4(m), COM TECH has good and
indefeasible title to and possession of all such known properties and
assets, free and clear of all liens, claims, security interests,
encumbrances, restrictions and rights, title and interests in others,
and there are no existing agreements, options or commitments or rights
with, to or in any third party to acquire any of COM TECH's properties
or assets or any interest therein, except for those entered into in the
ordinary course of business and not materially adversely affecting COM
TECH's properties, assets or rights. COM TECH's assets on the closing
date shall include all of the assets described hereinabove or otherwise
reflected on the Financial Statements, adjusted only for inventory and
other assets acquired or disposed of in the ordinary course of business
after December 31, 1995 and before the closing date.
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(n) Intellectual Property. To COM TECH's knowledge, COM TECH
has full rights of use for all unregistered trademarks and service
marks and does not infringe on any third party rights, and COM TECH
owns or has acquired by license or otherwise all U.S. or foreign,
inventions, franchises, discoveries, ideas, research, engineering,
methods, practices, processes, systems, formulae, designs, drawings,
products, projects, improvements, developments, know-how, and trade
secrets which are used in or necessary for the conduct of its business
(collectively the "Proprietary Rights"), without conflict or
infringement in any material respect of any patent, copyright, trade
secret or other lawful proprietary right of any other party, and
subject to no restriction, lien, encumbrance, right, title or interest
in others. All of the foregoing Proprietary Rights that are not in the
public domain stand solely in COM TECH's name and not in the name of
any stockholder, director, officer, agent, partner or employee or
anyone else known to COM TECH, and none of the same has any right,
title, interest, restriction, lien or encumbrance therein or thereon or
thereto. COM TECH's ownership and use of the proprietary rights do not
and will not infringe upon, conflict with or violate in any material
respect any patent, copyright, trade secret or other lawful proprietary
right of any other party, and no claim is pending or, to the best
knowledge of COM TECH, threatened to the effect that the operations of
COM TECH infringe upon or conflict with the asserted rights of any
other person under any Proprietary Right, and there is no reasonable
basis for any such claim (whether or not pending or threatened). No
claim is pending or, to the best of COM TECH's knowledge, threatened to
the effect that any such Proprietary Rights owned or licensed by COM
TECH, or which COM TECH otherwise has the right to use, is invalid or
unenforceable by COM TECH, and, to the best of COM TECH's knowledge,
there is no reasonable basis for any such claim (whether or not pending
or threatened). COM TECH has not granted or assigned to any other
person or entity any right to manufacture, have manufactured, assemble
or sell the products or proposed products or to provide COM TECH's
services or proposed services. To the best of COM TECH's knowledge, all
patents, copyrights, trademarks, service marks and federal, state and
foreign registrations thereof, are valid and in full force and effect
and are not subject to any taxes, maintenance fees, or actions falling
due within ninety (90) days after the date hereof.
(o) Material Contracts. COM TECH does not have any material
obligation, contract, agreement, lease, sublease, commitment or
understanding of any kind, nature or description, oral or written,
fixed or contingent, due or to become due, existing or inchoate, other
than as disclosed on COM TECH's Financial Statements or as provided on
Schedule 4(o), or consisting of customer purchase orders or service
contracts, all of which are either reflected in the Financial
Statements for the periods such were in effect, or which impose upon
COM TECH a liability of less than $5,000 individually or $25,000 in the
aggregate.
(p) No Undisclosed Liabilities. COM TECH does not have any
material liabilities or obligations, including, without limitation,
contingent liabilities for the performance of any obligation, except
for liabilities or obligations which are disclosed or fully provided
for in COM TECH's Financial Statements.
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56246.3
(q) Litigation. Except as disclosed on Schedule 4(q), there
are no suits or proceedings at law or in equity, or before or by any
governmental agency or arbitrator, pending, or to COM TECH's knowledge,
threatened, anticipated or contemplated, which, if decided against COM
TECH, would have a material adverse effect on its business or financial
condition, and there are no unsatisfied or outstanding judgments,
orders, decrees or stipulations which in any way affect COM TECH or its
properties or assets or to which it is or may become a party. There are
no claims against COM TECH pending, or to COM TECH's knowledge
threatened, anticipated, or contemplated which, if valid, would
constitute or result in a breach of any representation, warranty or
agreement set forth herein.
(r) Taxes. COM TECH has duly filed all federal, state, local
and other tax returns and reports required to be filed by COM TECH on
or prior to the date hereof with respect to all taxes withheld by or
imposed upon COM TECH. All such returns or reports reflect in all
material respects COM TECH's liability for such taxes as computed
therein for the periods indicated, and all taxes shown on such returns
or reports and all assessments received by COM TECH have been paid, or
fully reserved for, to the extent that such taxes have become due.
There are no waivers or agreements by COM TECH for the extension of
time for the assessment of such taxes. There are no material questions
of taxation which are, as of the date hereof, the subject of dispute
with any taxing authority. With respect to any period through the date
hereof for which tax returns have not yet been filed, or for which
taxes are not yet due or owing, COM TECH has made adequate reserves,
determined in accordance with Generally Accepted Accounting Principles,
for all liabilities for taxes as set forth in its Financial Statements.
COM TECH is not presently the subject of any tax audit by any taxing
authority.
(s) Employee Benefit Plans. COM TECH does not have any
employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (A)
sponsored by COM TECH, (B) to which COM TECH contributes on behalf of
its employees, (C) with respect to which COM TECH participates on
behalf of its employees, or (D) previously sponsored or contributed to
by COM TECH on behalf of its employees within the three years preceding
the date hereof.
(t) No Adverse Change. Since December 31, 1995 there has
not been:
(i) any material adverse change in the properties,
assets, business, affairs, material contracts or prospects of
COM TECH and, to COM TECH's knowledge, no such changes
currently are threatened, anticipated or contemplated;
(ii) any actual or, to COM TECH's knowledge,
threatened, anticipated or contemplated damage, destruction,
loss, conversion, termination, cancellation, default or taking
by eminent domain or other action by governmental authority,
which has affected or may hereafter affect the properties,
assets, business, affairs, contracts or prospects of COM TECH;
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56246.3
(iii) any material and adverse dispute pending or, to
COM TECH's knowledge, threatened, anticipated or contemplated,
of any kind with any customer, supplier, source of financing,
employee, landlord, subtenant or licensee of COM TECH, or any
pending or, to COM TECH's knowledge, threatened, anticipated
or contemplated occurrence or situation of any kind, nature or
description which is reasonably likely to result in any
material reduction in the amount, or any change in the terms
or conditions, of business with any substantial customer,
supplier or source of financing;
(iv) any pending or, to COM TECH's knowledge,
threatened, anticipated or contemplated occurrence or
situation of any kind, nature or description peculiar to the
business of COM TECH and materially and adversely affecting
its properties, assets, business, affairs or prospects; or
(v) any material reduction of capital, or any
redemption of stock or dividend or distribution by COM TECH.
(u) Accuracy of Information Furnished. COM TECH has not made
any material misstatement of fact or omitted to state any material fact
necessary or desirable to make complete, accurate and not misleading
the representations, warranties and agreements set forth herein.
(v) Availability of Documents. Borrower has made available to
Lender copies of all documents, including without limitation all
agreements, contracts, commitments, insurance policies, leases, plans,
instruments, undertakings, authorizations, permits, licenses, patents,
trademarks, tradenames, service marks, copyrights and applications
therefor, referred to herein. Such copies are true and complete and
include all amendments, supplements and modifications thereto or
waivers currently in effect thereunder.
(w) Other Loan Documents. Each of the representations and
warranties of Borrower contained in any of the other Loan Documents is
true and correct in all material respects. All of such representations
and warranties are incorporated herein for the benefit of Lender.
5. COVENANTS OF BORROWER. As an inducement to Lender to execute
this Agreement and to disburse the Loan, Borrower hereby covenants as set forth
in this paragraph 5, which covenants shall remain in effect so long as the Note
shall remain unpaid;
(a) Lender Inspections. Throughout the term of the Loan,
Borrower will permit Lender and Lender's representatives, inspectors
and consultants to audit, examine and copy all contracts and records
(including, but not limited to, financial and accounting records
pertaining to the Loan) and to discuss the affairs, finances and
accounts of Borrower with representatives of Borrower;
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56246.3
(b) Financial Statements and Reports. As soon as available, and in any
event within sixty (60) days of the end of each fiscal quarter of Borrower,
Borrower shall furnish to Lender a copy of its unaudited financial statements;
(c) Representations and Warranties. Until repayment of the Note, the
representations and warranties of paragraph 4 shall remain true and complete;
(d) Further Assurances. Borrower shall execute and deliver from time to
time, promptly after any request therefor by Lender, any and all instruments,
agreements and documents and shall take such other action as may be necessary or
desirable in the opinion of Lender to maintain, perfect or insure Lender's
security provided for herein and in the other Loan Documents, all as Lender
shall reasonably require, and Borrower shall pay all fees and expenses
(including reasonable attorneys' fees) related thereto;
(e) Notice of Litigation. Borrower will give, or cause to be given, prompt
written notice to Lender of (i) any action or proceeding which is instituted by
or against it in any Federal or state court or before any commission or other
regulatory body, Federal, state or local, foreign or domestic, or any such
proceedings which are threatened against it which, if adversely determined,
could have a material and adverse effect upon its business, operations,
properties, assets, management, ownership or condition (financial or otherwise),
and (ii) any other action, event or condition of any nature which may have a
material and adverse effect upon its business, operations, management, assets,
properties, ownership or condition (financial or otherwise), or which, with
notice or lapse of time or both, would constitute an Event of Default or a
default under any other contract, instrument or agreement to which it is a party
or to which it or any of its properties or assets may be bound or subject;
(f) Line of Credit Payment. Contemporaneously with the closing of this
Loan, Borrower will pay in full Borrower's $50,000 Key Bank Line of Credit and
provide to Lender adequate and sufficient evidence of Key Bank's release of the
assets securing such Line of Credit;
(g) No Impairment. The Borrower will not, by amendment of its Certificate
of Incorporation or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Loan Documents, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of the Lender hereunder.
6. EVENTS OF DEFAULT AND REMEDIES
(a) Events of Default. The occurrence of any one or more
of the following shall constitute an Event of Default under this
Agreement:
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56246.3
(i) Failure by Borrower to pay any monetary amount
when due under any Loan Document;
(ii) Failure by Borrower to perform any obligation
not involving the payment of money, or to comply with any
other term or condition applicable to Borrower, under any Loan
Document and the expiration of thirty (30) days after written
notice of such failure by Lender to Borrower;
(iii) Failure by Borrower to perform any obligation,
or to comply with any other term or condition applicable to
Borrower, under any agreement entered into between the
Shareholders of Borrower and Lender;
(iv) Any representation or warranty by Borrower in
any Loan Document is materially false, incorrect, or
misleading as of the date made;
(v) The occurrence of any event (including, without
limitation, a change in the financial condition, business, or
operations of Borrower for any reason whatsoever) that
materially and adversely affects the ability of Borrower to
perform any of its obligations under the Loan Documents;
(vi) Borrower (1) is unable or admits in writing its
inability to pay its monetary obligations as they become due,
(2) makes a general assignment for the benefit of creditors,
or (3) applies for, consents to, or acquiesces in, the
appointment of a trustee, receiver, or other custodian for
Borrower or the property of Borrower or any part thereof, or
in the absence of such application, consent, or acquiescence,
a trustee, receiver, or other custodian is appointed for
Borrower or the property of Borrower or any part thereof, and
such appointment is not discharged within sixty (60) days;
(vii) Commencement of any case under the Bankruptcy
Code, Title 11 of the United States Code, or commencement of
any other bankruptcy arrangement, reorganization,
receivership, custodianship, or similar proceeding under any
federal, state, or foreign law by or against Borrower and with
respect to any such case or proceeding that is involuntary,
such case or proceeding is not dismissed with prejudice within
sixty (60) days of the filing thereof;
(viii) Any litigation or proceeding is commenced
before any governmental authority against or affecting
Borrower or the property of Borrower or any part thereof and
such litigation or proceeding is not defended diligently and
in good faith by Borrower;
(ix) All or any part of the property of Borrower is
attached, levied upon, or otherwise seized by legal process,
and such attachment, levy, or seizure is not quashed, stayed,
or released within twenty (20) days of the date thereof;
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56246.3
(x) The occurrence of any Event of Default, as such
term is defined in any other Loan Document.
(b) Remedies. Notwithstanding any provision to the contrary
herein or any of the other Loan Documents, upon the happening of any
Event of Default under this Agreement, or upon an Event of Default
under any of the other Loan Documents, Lender shall have, at its
option, and in addition to any other remedies provided in the Loan
Document breached by Borrower, (i) the option to declare all
outstanding indebtedness to be immediately due and payable without
presentment, demand, protest or notice of any kind; (ii) the right, at
its option, to apply any of Borrower's funds in its possession to the
outstanding indebtedness under the Note, whether or not such
indebtedness is then due; and (iii) the right to exercise all rights
and remedies available to it under any or all of the Loan Documents.
Nothing contained in this Agreement or in any of the Loan Documents
shall in any way restrict or limit the rights, remedies and recourse to
all assets for Borrower for all amounts due and payable with respect to
the Loan and all other amounts due under the Loan Documents.
7. MISCELLANEOUS
(a) Assignment. Borrower shall not assign any of its rights
under this Agreement;
(b) Notices. All notices, requests, demands and consents to be
made hereunder to the parties hereto shall be in writing and shall be
delivered by hand or sent by registered mail or certified mail, postage
prepaid, return receipt requested, through the United States Postal
Service to the addresses shown below or such other address which the
parties may provide to one another in accordance herewith. Such
notices, requests, demands and consents, if sent by mail shall be
deemed given two (2) business days after deposit in the United States
mail, and if delivered by hand, shall be deemed given when delivered:
To Lender: Sage Resources, Inc.
#00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
To Borrower: COM TECH International Corp.
0000 0xx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
(c) Exclusive Dealing. For a period of thirty (30) days,
Borrower shall not directly or indirectly, through any representative
or otherwise, solicit or entertain offers from, negotiate with, or in
any manner encourage, discuss, accept, or consider any proposal of any
other person relating to the acquisition of Borrower's common stock or
Borrower's assets or businesses, in whole or in part, whether through
direct purchase,
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56246.3
merger, consolidation, or other business combination (other than sales
of inventory in the ordinary course);
(d) Authority to File Notices. Borrower irrevocably appoints
Lender as its attorney-in-fact, with full power of substitution, to
file for record, at the Borrower's cost and expense and in Borrower's
name, any notices that Lender considers necessary or desirable to
protect its security in the Datamax Joint Venture;
(e) Inconsistencies with the Loan Documents. In the event
of any inconsistencies between the terms of this Agreement and any
terms of any of the Loan Documents, the terms of this Agreement shall
govern and prevail;
(f) Lender Approval of Instruments and Parties. All
proceedings taken in accordance with transactions provided for herein,
all surveys, appraisals and documents required or contemplated by this
Agreement and the persons responsible for the execution and preparation
thereof, shall be satisfactory to and subject to approval by Lender.
Lender's counsel shall be provided with copies of all documents which
they may reasonably request in connection with the Agreement;
(g) Lender Determination of Facts. Lender shall at all times
be free to establish independently, to its satisfaction, the existence
or nonexistence of any fact or facts, the existence or nonexistence of
which is a condition of this Agreement;
(h) Incorporation of Preamble, Recitals and Exhibits. The
preamble, recitals and exhibits hereto are hereby incorporated into
this Agreement;
(i) Payment of Expenses. Borrower shall pay all taxes and
assessments and all expenses, charges, costs and fees provided for in
this Agreement or relating to the Loan, including, without limitation,
fees of any consultants, documentation and processing fees, printing
and duplicating expenses, and air freight charges. Borrower shall also
pay a maximum of $5,000 for all attorney fees and expenses related to
the making of this Loan. Borrower hereby authorizes Lender to disburse
the proceeds of the Loan to pay such expenses, charges, costs and fees
notwithstanding that Borrower may not have requested a disbursement of
such amount. Such disbursement shall be added to the outstanding
principal balance of the Note. The authorization hereby granted shall
be irrevocable, and no further direction or authorization from Borrower
shall be necessary for Lender to make such disbursements. However, the
provision of this paragraph shall not prevent Borrower from paying such
expense, charges, costs and fees from its own funds. All such expenses,
charges, costs and fees shall be Borrower's obligation regardless of
whether or not Borrower has requested and met the conditions for the
disbursement of the Loan;
(j) Disclaimer by Lender. Borrower is not and shall not be
an agent of Lender for any purpose. Lender is not a joint venture
partner with Borrower or with the constituent partners in Borrower in
any manner whatsoever. Approvals granted by
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56246.3
Lender for any matters covered under this Agreement shall be narrowly
construed to cover only the parties and facts identified in any written
approval or, if not in writing, such approvals shall be solely for the
benefit of Borrower;
(k) Indemnification. To the fullest extent permitted by law,
Borrower agrees to protect, indemnify, defend and save harmless Lender,
its directors, officers, agents and employees for, from and against any
and all liability, expense or damage of any kind or nature and for,
from and against any suits, claims or demands, including reasonable
legal fees and expenses on account of any matter or thing or action or
failure to act by Lender, whether in suit or note, arising out of this
Agreement or in connection herewith. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Lender believes is
covered by this indemnity, Lender shall give Borrower notice of the
matter and an opportunity to defend it, at Borrower's sole cost and
expense, with legal counsel satisfactory to Lender. Lender may also
require Borrower to so defend the matter. The obligations on the part
of Borrower under this paragraph 7(k) shall survive the closing of the
Loan and the repayment thereof;
(l) Titles and Headings. The headings at the beginning of each
paragraph of this Agreement are solely for convenience and are not part
of this Agreement. Unless otherwise indicated, each reference in this
Agreement to a paragraph or an exhibit is a reference to the respective
paragraph herein or exhibit hereto;
(m) Change, Discharge, Termination, or Waiver. No provision of
this Agreement may be changed, discharged, terminated, or waived except
in writing signed by the party against whom enforcement of the change,
discharge, termination, or waiver is sought. No failure on the part of
Lender to exercise and no delay by Lender in exercising any right or
remedy under the Loan Documents or under the law shall operate as a
waiver thereof;
(n) Choice of Law. This Agreement and the transaction
contemplated hereunder shall be governed by and construed in accordance
with the laws of the State of California without giving effect to
conflict of laws principles;
(o) Time is of the Essence. Time is of the essence of this
Agreement;
(p) Attorneys' Fees. Borrower agrees to pay all costs of
enforcement and collection and preparation for any Event of Default or
any action taken by Lender (including, without limitation, reasonable
attorneys' fees) whether or not any action or proceeding is brought
(including, without limitation, all such costs incurred in connection
with any bankruptcy, receivership, or other court proceedings, whether
at the trial or appellate level), together with interest thereon from
the date of demand at the default interest rate;
(q) Consent to Jurisdiction. Borrower and Lender hereby
irrevocably consent and agree that any legal action, suit or proceeding
arising out of or in any way in
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56246.3
connection with this Agreement, or which is an appeal therefrom, may be
instituted or brought in the Federal District Court for the District of
California and Borrower and Lender hereby irrevocably consent and
submit to, for themselves and in respect of their property, generally
and unconditionally, the jurisdiction of such Court, and to all
proceedings in such Court. Further, Borrower and Lender irrevocably
consent to actual receipt of any summons and/or legal process at their
respective addresses as set forth in this Agreement as constituting in
every respect sufficient and effective service of process in any such
legal action or proceeding. Borrower and Lender further agree that
final judgment in any such legal action, suit or proceeding shall be
conclusive and may be enforced in any other jurisdiction, whether
within or outside the United States of America, by suit under judgment,
a certified or exemplified copy of which will be conclusive evidence of
the fact and the amount of the liability;
(r) Provisional Remedies; Self Help; and Foreclosure. No
provision of paragraph 7(q) shall limit the right of any party to
exercise self-help remedies, to foreclose against any real or personal
property collateral, or to obtain any provisional or ancillary remedies
(including but not limited to injunctive relief or the appointment of a
receiver) from a court of competent jurisdiction. The institution and
maintenance of any remedy permitted above shall not constitute a waiver
of the rights to submit any controversy or claim to arbitration. The
statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding;
(s) Integration. The Loan Documents contain the complete
understanding and agreement of Borrower and Lender and supersede all
prior representations, warranties, agreements, arrangements,
understandings, and negotiations;
(t) Binding Effect. The Loan Documents will be binding
upon, and inure to the benefit of, Borrower and Lender and their
respective successors and assigns. Borrower may not delegate its
obligations under the Loan Documents;
(u) Survival. The representations, warranties, and covenants
of the Borrower and the Loan Documents shall survive the execution and
delivery of the Loan Documents and the making of the Loan;
(v) Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be deemed an original, but all such
counterparts together shall constitute but one agreement.
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56246.3
IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to
be duly executed and delivered as of the date first above written.
"BORROWER"
COM TECH INTERNATIONAL CORP.
By: _________________________________
Name: _______________________________
Title: ______________________________
"LENDER"
SAGE RESOURCES, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
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56246.3
Schedule 4(b)
Arrangements Relating to Common Stock
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56246.3
Schedule 4(c)
COM TECH Arrangements
1. COM TECH is a participant in the Datamax Joint Venture dated March 20, 1996.
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56246.3
Schedule 4(e)
Defaults
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56246.3
Schedule 4(h)
Related Party Transactions
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56246.3
Schedule 4(m)
Properties and Asset
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56246.3
Schedule 4(o)
Material Contracts
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56246.3
Schedule 4(q)
Litigation
1. COM TECH is involved in a dispute with Fox Communication with a maximum
potential liability of $100,000, plus attorneys' fees and expenses.
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56246.3
