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EXHIBIT 10
PROMISSORY NOTE, LOAN AGREEMENT, AND COMMERCIAL SECURITY AGREEMENT
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PROMISSORY NOTE
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$5,000,000.00 01-05-1999 12-22-2000 096501 326 8279584877 73609
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References in the shaded area are for Lender's use only and do not limit the applicability of this document
to any particular loan or item.
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Borrower: Xxxxxxx Communications Corporation, a Utah Lender: Bank One, Utah, NA
corporation Commercial Banking
0000 Xxxxxxxx Xxx 00 X. Xxxxxxxx
Xxxx Xxxx Xxxx, XX 00000 Xxxx Xxxx Xxxx, XX 00000
===========================================================================================================
Principal Amount: $5,000,000.00 Date of Note: January 5, 1999
PROMISE TO PAY. For value received, Xxxxxxx Communications Corporation, a Utah
corporation ("Borrower") promises to pay to Bank One, Utah, NA ("Lender"), or
order, in lawful money of the United States of America, the principal amount of
Five Million & 00/100 Dollars ($5,000,000.00) ("Total Principal Amount") or so
much as may be outstanding, together with interest on the unpaid outstanding
principal balance from the date advanced until paid in full.
PAYMENT. This Note shall be payable as follows: Interest shall be due and
payable monthly as it accrues, commencing on February 1, 1999 and continuing on
the same day of each month thereafter during the term of this Note, and the
outstanding principal balance of this Note, together with all accrued but unpaid
interest, shall be due and payable on December 22, 2000. The annual interest
rate for this Note is computed on a 365/360 basis; that is, 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. Borrower will pay Lender at the address
designated by Lender from time to time in writing. If any payment of principal
of or interest on this Note shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day. As used
herein, the term "Business Day" shall mean any day other than a Saturday, Sunday
or any other day on which national banking associations are authorized to be
closed. Unless otherwise agreed to, in writing, or otherwise required by
applicable law, payments will be applied first to accrued, unpaid interest, then
to principal, and any remaining amount to any unpaid collection costs, late
charges and other charges, provided, however, upon delinquency or other default,
Lender reserves the right to apply payments among principal, interest, late
charges, collection costs and other charges at its discretion. The books and
records of Lender shall be prima facie evidence of all outstanding principal of
and accrued but unpaid interest on this Note. If this Note is governed by or is
executed in connection with a loan agreement, this Note is subject to the terms
and provisions thereof.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to fluctuation
based upon the Prime Rate of interest in effect from time to time (the "Index")
(which rate may not be the lowest, best or most favorable rate of interest which
Lender may charge on loans to its customers). "Prime Rate" shall mean the rate
announced from time to time by Lender as its prime rate. Each change in the rate
to be charged on this Note will become effective without notice on the same day
as the Index changes. Except as otherwise provided herein, the unpaid principal
balance of this Note will accrue interest at a rate per annum which will from
time to time be equal to the sum of the Index, minus 0.250%. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
fee all or a portion of the principal amount owed hereunder earlier than it is
due. All prepayments shall be applied to the indebtedness owing hereunder in
such order and manner as Lender may from time to time determine in its sole
discretion.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $25.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment of principal or interest when due under this
Note or any other indebtedness owing now or hereafter by Borrower to Lender; (b)
failure of Borrower or any other party to comply with or perform any term,
obligation, covenant or condition contained in this Note or in any other
promissory note, credit agreement, loan agreement, guaranty, security agreement,
mortgage, deed of trust or any other instrument, agreement or document, whether
now or hereafter existing, executed in connection with this Note (the Note and
all such other instruments, agreements, and documents shall be collectively
known herein as the "Related Documents"); (c) Any representation or statement
made or furnished to Lender herein, in any of the Related Documents or in
connection with any of the foregoing is false or misleading in any material
respect; (d) Borrower or any other party liable for the payment of this Note,
whether as maker, endorser, guarantor, surety or otherwise, becomes insolvent or
bankrupt, has a receiver or trustee appointed for any part of its property,
makes an assignment for the benefit of its creditors, or any proceeding is
commenced either by any such party or against it under any bankruptcy or
insolvency laws; (e) the occurrence of any event of default specified in any of
the other Related Documents or in any other agreement now or hereafter arising
between Borrower and Lender; (f) the occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing now or hereafter by
Borrower to any third party; or (g) the liquidation, termination, dissolution,
death or legal incapacity of Borrower or any other party liable for the payment
of this Note, whether as maker, endorser, guarantor, surety, or otherwise.
LENDER'S RIGHTS. Upon default, Lender may at its option, without further notice
or demand (i) declare the entire unpaid principal balance on this Note, all
accrued unpaid interest and all other costs and expenses for which Borrower is
responsible for under this Note and any other Related Document immediately due,
(ii) refuse to advance any additional amounts under this Note, (iii) foreclose
all liens securing payment hereof, (iv) pursue any other rights, remedies and
recourses available to the Lender, including without limitation, any such
rights, remedies or recourses under the Related Documents, at law or in equity,
or (v) pursue any combination of the foregoing. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable
interest rate on this Note 3.000 percentage points, and (b) add any unpaid
accrued interest to principal and such sum will bear interest therefrom until
paid at the rate provided in this Note (including any increased rate). The
interest rate will not exceed the maximum rate permitted by applicable law.
Lender may hire an attorney to help collect this Note if Borrower does not pay
and Borrower will pay Lender's reasonable attorneys' fees and all other costs of
collection, unless prohibited by applicable law. This Note has been delivered to
Lender and accepted by Lender in the State of Utah. Subject to the provisions on
arbitration, this Note shall be governed by and construed in accordance with the
laws of the State of Utah without regard to any conflict of laws or provisions
thereof.
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PURPOSE. Borrower agrees that no advances under this Note shall be used for
personal, family, or household purposes and that all advances hereunder shall be
used solely for business, commercial, agricultural or other similar purposes.
JURY WAIVER. THE BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) 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 THE BORROWER AND LENDER ARISING OUT OF OR IN ANY
WAY RELATED TO THIS NOTE, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP
BETWEEN LENDER AND BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER
TO PROVIDE THE FINANCING EVIDENCED BY THIS NOTE.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Unless a lien would be prohibited by law or would render a
nontaxable account taxable, Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or any other account), including without
limitation all accounts held jointly with someone else and all accounts Borrower
may open in the future. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Borrower may
request advances and make payments hereunder from time to time, provided that it
is understood and agreed that the aggregate principal amount outstanding from
time to time hereunder shall not at any time exceed the Total Principal Amount.
The unpaid principal balance of this Note shall increase and decrease with each
new advance or payment hereunder, as the case may be. Subject to the terms
hereof, Borrower may borrow, repay and reborrow hereunder. Advances under this
Note, as well as directions for payment from Borrower's accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing.
Borrower agrees to be liable for all sums either: (a) advanced in accordance
with the instructions of an authorized person or (b) credited to any of
Borrower's accounts with Lender.
ARBITRATION. Lender and Borrower 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 this Note, any Related Document 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 ("AAA"). Any arbitration proceeding held pursuant to this
arbitration provision shall be conducted in the city nearest the Borrower's
address having an AAA regional office, or at any other place 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 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 a 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 the Uniform Commercial Code. 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 either party.
Judgment upon any award rendered by any arbitrator may be entered in any court
having jurisdiction. 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, and the commencement of
an arbitration proceeding shall be deemed the commencement of any 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.
ADDITIONAL PROVISION REGARDING LATE CHARGES. In the "Late Charge" provision set
forth above, the following language is hereby added after the word "greater":
"up to the maximum amount of One Thousand Five Hundred Dollars ($1500.00) per
late charge".
ADDENDUM. An addendum, titled "ADDENDUM", is attached to this document and by
this reference is made a part of this document just as if all the provisions,
terms and conditions of the ADDENDUM had been fully set forth in this document.
AVAILABILITY FEE. Borrower shall pay to Lender an availability fee (the
"Availability Fee") with respect to each calendar quarter during the term of the
Note, based on the unused amount of the Note. The Availability Fee shall be an
amount equal to A x (B - C) x (D / E), where A equals 1/8%; B equals the
original amount of the Note; C equals the average daily outstanding principal
balance of the Loan during the calendar quarter; D equals the actual number of
days elapsed during the calendar quarter; and E equals (360 or 365, depending on
interest accrual basis]. Each Availability Fee shall be due and payable to
Lender quarterly, in arrears, within fifteen (15) days after Borrower's receipt
of an invoice for the Availability Fee from the Lender.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this Note, or
release any party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this Note without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
Xxxxxxx Communications Corporation, a Utah corporation
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X /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, CFO
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ADDENDUM
THIS ADDENDUM is executed with respect to the Promissory Note in the original
principal amount of $5,000,000.00 dated January 5, 1999 and maturing on December
22, 2000 ("Note"), made by Xxxxxxx Communications Corporation, a Utah
corporation ("Borrower") payable to the order of Bank One, Utah, NA ("Lender")
and is hereby incorporated into and made a part of the Note.
1. The paragraph in the Note having the caption "VARIABLE INTEREST RATE" is
hereby deleted in its entirety.
2. The following terms shall have the following meanings when used in this
Addendum. Capitalized terms not otherwise defined herein shall have the meanings
of such terms in the Note.
"Interest Period" means a period commencing on the date selected by Borrower and
ending on the last day of the period selected by Borrower as provided herein.
Each Interest Period shall be of a duration of either one, two, three, or six
months, as selected by Borrower as provided herein; provided, however, that: (i)
Interest Periods commencing on the same date shall be of the same duration; (ii)
Whenever the last day of an Interest Period would otherwise occur on a day other
than a Business Day, the last day of the Interest Period shall be extended to
occur on the next succeeding Business Day, provided, however, that if the
extension would cause the last day of the Interest Period to occur in the next
following calendar month, the last day of the Interest Period shall occur on the
next preceding Business Day; and (iii) No Interest Period shall extend beyond
the maturity of the Note.
"Libor Rate" means the sum of (i) two and one-half percent (2.50%) per annum,
and (ii) the offered rate for the period equal to or next greater than the
Interest Period for U.S. Dollar deposits of not less than $1,000,000.00 as of
11:00 A.M. City of London, England time two London Business Days prior to the
first date of the Interest Period as shown on the display designated as "British
Bankers Assoc. Interest Settlement Rates" on the Telerate System ("Telerate"),
Page 3750 or 3740, or such other page or pages as may replace such pages on
Telerate for the purpose of displaying such rate. Provided, however, that if
such rate is not available on Telerate then such offered rate shall be otherwise
independently determined by Lender from an alternate, substantially similar
independent source available to Lender or shall be calculated by Lender by a
substantially similar methodology as that theretofore used to determine such
offered rate in Telerate.
"Libor Rate Amount" means some or all of the indebtedness that bears or is
requested to bear interest at the Libor Rate.
"London Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions are generally authorized or obligated by law or
executive order to close in the City of London, England.
"Variable Interest Rate" means the rate per annum equal to the sum of (i) one
quarter percent (.25%) per annum, minus (ii) the rate announced from time to
time by Bank One, NA as its prime rate ("Index"), which may not be the lowest,
best or most favorable rate of interest which Lender may charge on loans to its
customers. Each change in the Variable Interest Rate will become effective
without notice on the same day as the Index changes.
"Variable Rate Amount" means some or all of the indebtedness that bears or that
is requested to bear interest at the Variable Interest Rate.
3. Notwithstanding any provision of the Note or the Related Documents to the
contrary, Borrower may elect that, as of any Business Day designated by
Borrower, upon notice that is received by Lender not later than noon (Salt Lake
City, Utah local time) two (2) Business Days prior to such designated date,
interest on a Libor Rate Amount shall accrue at a Libor Rate during an Interest
Period. Each such notice shall specify (i) such designated date, (ii) the amount
of such Libor Rate Amount, and (iii) the Interest Period. In addition, Borrower
may as of any designated Business Day, upon notice that is received by Lender
not later than noon (Salt Lake City, Utah local time) two (2) Business Days
prior to such designated Business Day, convert a Libor Rate Amount into a
Variable Rate Amount or continue a Libor Rate Amount as a Libor Rate Amount for
a new Interest Period, provided, that Borrower may make such conversion or
continuation only on the last day of the Interest Period. Each such notice of
conversion or continuation shall specify (A) the date of such conversion or
continuation, (B) the amount to be converted or continued, and (C) the Interest
Period. Any amount not complying with the foregoing requirements for an amount
bearing interest at the Libor Rate shall bear interest at the Variable Interest
Rate. Any Libor Rate Amount not continued as a Libor Rate Amount in compliance
with the foregoing requirements shall, after the end of the Interest Period,
bear interest at the Variable Interest Rate, whether or not Borrower has
expressly elected to convert the Libor Rate Amount to a Variable Rate Amount.
Lender shall be entitled to fund and maintain its funding of all or any part of
the Note in any manner it sees fit.
4. Borrower shall pay to Lender from time to time such amounts as Lender may
determine to be necessary to compensate Lender for any costs incurred by Lender
which Lender determines are attributable to its making or maintaining any Libor
Rate hereunder or its obligation to make any such Libor Rate hereunder, or any
reduction in any amount receivable by Lender under the Note in respect of any
such rates or such obligation (such increases in costs and reductions in costs
and reductions in amounts receivable being herein called "Additional Costs"),
resulting from any change after the date of the Note in U. S. federal, state,
municipal, or foreign laws or regulations (including Regulation D), or the
adoption or making after such date of any interpretations, directives, or
requirements applying to a class of banks including Lender of or under any U. S.
federal, state, municipal, or any foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof ("Regulatory Change"),
which: (1) changes the basis of taxation of any amounts payable to Lender under
the Note in respect of any such Libor Rate (other than taxes imposed on the
overall net income of the Lender); or (2) imposes or modifies any reserve,
special deposit, compulsory loan, or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of Lender (including any such Libor Rate or any deposits referred to
in the definition of any Libor Rate); or (3) imposes any other condition
affecting this Note (or any of such extensions of credit or liabilities). Lender
will notify the Borrower of any event occurring after the date of the Note which
will entitle Lender to compensation pursuant to this paragraph as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Determinations by Lender for purposes of this paragraph of the
effect of any Regulatory Change in its costs of making or maintaining Libor Rate
or on amounts receivable by it in respect of Libor Rate, and of the additional
amounts required to compensate Lender in respect of any Additional Costs, shall
be presumed prima facie correct.
5. In respect of any Libor Rate Amount, in the event that Lender shall have
determined that dollar deposits of the relevant amount for the relevant Interest
Period for such Libor Rate Amount are not available or that, by reason of
circumstances affecting such market, adequate and reasonable means do not exist
for ascertaining the Libor Rate applicable to such Interest Period in the manner
provided in the definition of such term, as the case may be, Lender shall
promptly give notice of such determination to the Borrower and (i) any notice of
new Libor Rate Amounts (or conversion of existing Libor Rate Amounts or Variable
Rate Amounts to Libor Rate Amounts) previously given by the Borrower and not yet
borrowed (or
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converted, as the case may be) shall be deemed a notice that such amounts shall
bear interest at the Variable Interest Rate, and (ii) the Borrower shall be
obligated either to prepay or to convert any outstanding Libor Rate Amounts on
the last day of the then current Interest Period or Periods with respect
thereto, as Borrower shall elect.
6. If at any time any new law, treaty or regulation enacted after the date
hereof, or any change after the date hereof in any existing law, treaty or
regulation, or any interpretation thereof after the date hereof by any
governmental or other regulatory authority charged with the administration
thereof, shall make it unlawful for Lender to fund any Libor Rate Amounts which
it is committed to make hereunder with moneys obtained in the London interbank
market, the commitment of Lender to fund Libor Rate Amounts shall, upon the
happening of such event forthwith be suspended for the duration of such
illegality, and Lender shall by written notice to the Borrower declare that the
commitment with respect to such loans has been so suspended and, if and when
such illegality ceases to exist, such suspension shall cease and Lender shall
similarly notify the Borrower. If any such change shall make it unlawful for
Lender to continue in effect the funding in the applicable London interbank
market of any Libor Rate Amount previously made by it hereunder, Lender shall,
upon the happening of any such event, notify the Borrower in writing stating the
reasons therefor, and the Borrower shall, on the earlier of (i) the last day of
then current Interest Period or (ii) if required by such law, regulation or
interpretation, on such date as shall be specified in such notice, either
convert all Libor Rate Amounts to Variable Rate Amounts or prepay all Libor Rate
Amounts to Lender in full, as Borrower shall elect.
7. Notwithstanding any provision of the Note to the contrary, all accrued
interest on each Libor Rate Amount shall be due and payable (i) monthly on the
date in each month during the Interest Period which is the numerical equivalent
of the first day of the Interest Period (or if no such date in any month, then
on the last day of such month) and (ii) on the last day of the Interest Period.
Interest on Variable Rate Amounts shall be due and payable monthly as provided
in the Note.
8. The paragraph of the Note having the caption "PREPAYMENT" is hereby deleted
in its entirety and the following paragraph is hereby substituted in lieu
thereof:
PREPAYMENT. Borrower may prepay all or any portion of a Variable Rate Amount at
any time without payment of premium or penalty. Borrower may prepay all or any
portion of a Libor Rate Amount, provided that if Borrower makes any such
prepayment other than on the last day of the Interest Period, Borrower shall pay
all accrued interest on the principal amount prepaid with such prepayment and,
on demand, shall reimburse Lender and hold Lender harmless from all losses and
expenses incurred by Lender as a result of such prepayment, including, without
limitation, any losses and expenses arising from the liquidation or reemployment
of deposits acquired to fund or maintain the principal amount prepaid. Such
reimbursement shall be calculated as though Lender funded the principal amount
prepaid through the purchase of U.S. Dollar deposits in the London, England
interbank market having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the Libor Rate for such Interest Period,
whether in fact that is the case or not. Lender's determination of the amount of
such reimbursement shall be conclusive in the absence of manifest error.
9. Except as expressly modified by this Addendum, all of the terms and
conditions of the Note continue unchanged and in full force and effect.
Dated with effect as of the date of the Note.
LENDER:
BANK ONE, UTAH, NA
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
Its: Vice President
BORROWER:
XXXXXXX COMMUNICATIONS CORPORATION
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Its: CFO
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LOAN AGREEMENT
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$5,000,000.00 01-05-1999 12-22-2000 096501 326 8279584877 73609
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References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
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Borrower: Xxxxxxx Communications Corporation, a Utah Lender: Bank One, Utah, NA
corporation Commercial Banking
0000 Xxxxxxxx Xxx 00 X. Xxxxxxxx
Xxxx Xxxx Xxxx, XX 00000 Xxxx Xxxx Xxxx, XX 00000
==========================================================================================================
THIS LOAN AGREEMENT between Xxxxxxx Communications Corporation, a Utah
corporation ("Borrower") and Bank One, Utah, NA ("Lender") is made and executed
as of January 5, 1999. This Agreement governs all loans, credit facilities
and/or other financial accommodations described herein and, unless otherwise
agreed to in writing by Lender and Borrower, all other present and future loans,
credit facilities and other financial accommodations provided by Lender to
Borrower. All such loans, credit facilities and other financial accommodations,
together with all renewals, extensions and modifications thereof, are referred
to in this Agreement individually as the "Loan" and collectively as the "Loans."
Borrower understands and agrees that: (a) in granting, renewing, or extending
any Loan, Lender is relying upon Borrower's representations, warranties, and
agreements, as set forth in this Agreement; and (b) all such Loans shall be and
shall remain subject to the following terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of January 5, 1999, and shall
continue thereafter until all Loans and other obligations owing by Borrower to
Lender hereunder have been paid in full and Lender has no commitments or
obligations to make further Advances under the Loans to Borrower.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code as adopted in
the State of Utah. All references to dollar amounts shall mean amounts in lawful
money of the United States of America.
Agreement. The word "Agreement" means this Loan Agreement, as may be amended
or modified from time to time, together with all exhibits and schedules
attached hereto from time to time.
Account. The word "Account" means a trade account receivable of Borrower for
goods sold or leased or for services rendered by Borrower in the ordinary
course of its business.
Account Debtor. The words "Account Debtor" mean the person or entity
obligated upon an Account.
Advance. The word "Advance" means any advance or other disbursement of Loan
proceeds under this Agreement.
Borrower. The word "Borrower" means Xxxxxxx Communications Corporation, a
Utah corporation.
Borrowing Base. The words "Borrowing Base" mean the sum of (i) 75.000% of
the aggregate amount of Eligible Accounts, plus (ii) 45.000% of the
aggregate amount of Eligible Inventory.
Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral for any Loan, whether real or
personal property, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
Committed Sum. The words "Committed Sum" mean an amount equal to
$5,000,000.00.
Eligible Accounts. The words "Eligible Accounts" mean, at any time, all of
Borrower's Accounts which contain terms and conditions acceptable to Lender
and in which Lender has a first lien security interest, less the amount of
all returns, discounts, credits, and offsets of any nature; provided,
however, unless otherwise agreed to by Lender in writing, Eligible Accounts
do not include:
(a) Accounts with respect to which the Account Debtor is an officer, an
employee or agent of Borrower and to which the Account Debtor is a
subsidiary of, or affiliated with or related to Borrower or its
shareholders, officers, or directors.
(b) All Accounts with respect to which Borrower has furnished a payment
and/or performance bond and that portion of any Accounts for or
representing retainage, if any, until all prerequisites to the immediate
payment of such retainage have been satisfied.
(c) Accounts with respect to which goods are placed on consignment or
subject to a guaranteed sale or other terms by reason of which the
payment by the Account Debtor may be conditional.
(d) Accounts with respect to which the Account Debtor is not a resident
of, or whose principal place of business is located outside of, the
United States or its territories, except to the extent such Accounts are
supported by insurance, bonds or other assurances satisfactory to Lender
in its sole and absolute discretion.
(e) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(f) Accounts which are subject to dispute, counterclaim, or setoff.
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(g) Accounts with respect to which all goods have not been shipped or
delivered, or all services have not been rendered, to the Account
Debtor.
(h) Accounts with respect to which Lender, in its sole discretion, deems
the creditworthiness or financial condition of the Account Debtor to be
unsatisfactory.
(i) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or
debtor-in-relief acts; or who has had appointed a trustee, custodian, or
receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or fails
generally to pay its debts (including its payrolls) as such debts become
due.
(j) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States,
except to the extent an acknowledgement of assignment to Lender of any
such Accounts in compliance with the Federal Assignment of Claims Act
and other applicable laws has been received by Lender.
Eligible Inventory. The words "Eligible Inventory" mean, at any time,
the aggregate value of all of Borrower's Inventory as defined below
except:
(a) Inventory which is not owned by Borrower free and clear of all
security interests, liens, encumbrances, and claims of third parties,
except Lender's security interest.
(b) Inventory which Lender, in its sole and absolute discretion, deems
to be obsolete, unsalable, damaged, defective, or unfit for further
processing.
(c) Inventory which has been returned or rejected.
(d) Inventory which is held by others on consignment, sale on approval
or otherwise not in Borrower's physical possession, except upon the
written consent of Lender.
(e) Inventory located outside the United States.
For purposes of this Agreement, Eligible Inventory shall be valued at
the lower of cost or market value.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
Grantor. The word "Grantor" means and includes each and all of the persons or
entities granting a Security Interest in any Collateral for any of the Loans.
Guarantor. The word "Guarantor" means and includes without limitation, each and
all of the guarantors, sureties, and accommodation parties for any of the Loans.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the
Note, including all principal and accrued interest thereon, together with all
other liabilities, costs and expenses for which Borrower is responsible under
this Agreement or under any of the Related Documents. In addition, the word
"indebtedness" includes all other obligations, debts and liabilities, plus any
accrued interest thereon, owing by Borrower, or any one or more of them, to
Lender of any kind or character, now existing or hereafter arising, as well as
all present and future claims by Lender against Borrower, or any one or more of
them, and all renewals, extensions, modifications, substitutions and
rearrangements of any of the foregoing; whether such Indebtedness arises by
note, draft, acceptance, guaranty, endorsement, letter of credit, assignment,
overdraft, indemnity agreement or otherwise; whether such Indebtedness is
voluntary or involuntary, due or not due, direct or indirect, absolute or
contingent, liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be liable primarily br
secondarily or as debtor, maker, comaker, drawer, endorser, guarantor, surety,
accommodation party or otherwise.
Inventory. The word "Inventory" means all raw materials and all tangible
personal property, goods, merchandise and other personal property now owned or
hereafter acquired by Borrower which is held for sale or lease in the ordinary
course of Borrower's business, excluding all work in progress, spare parts,
packaging materials, supplies and any advertising costs capitalized into
inventory.
Lender. The word "Lender" means Bank One, Utah, NA, its successors and assigns.
Line of Credit. The words "Line of Credit" mean the credit facility described in
the Section titled "LINE OF CREDIT" below.
Note. The word "Note" means any and all promissory note or notes which evidence
Borrower's Loans in favor of Lender, as well as any amendment, modification,
renewal or replacement thereof.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for taxes,
assessments, or similar charges either (i) not yet due, or (ii) being contested
in good faith by appropriate proceedings and for which Borrower has established
adequate reserves; (c) purchase money liens or purchase money security interests
upon or in any property acquired or held by Borrower in the ordinary course of
business to secure any indebtedness permitted under this Agreement; and (d)
liens and security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing.
Related Documents. The words "Related Documents" mean and include without
limitation the Note and all credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages, deeds of trust, and all
other instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the Note.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings or
other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.
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Security Interest. The words "Security Interest" mean and include without
limitation any type of security interest, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
LINE OF CREDIT. Subject to the other terms and conditions herein, Lender hereby
establishes a Line of Credit for Borrower through which Lender agrees to make
advances to Borrower from time to time from the effective date of this Agreement
until the maturity date of the Note evidencing the Line of Credit, provided the
aggregate amount of such advances outstanding at any time does not exceed the
lesser of the amount equal to the Borrowing Base or an amount equal to the
Committed Sum. Within the foregoing limits, Borrower may borrow, partially or
wholly prepay, and reborrow under this Agreement.
Borrowing Base Compliance. If at any time the aggregate principal amount
outstanding under the Line of Credit shall exceed the applicable Borrowing
Base, Borrower shall pay to Lender an amount equal to the difference between
the outstanding principal balance under the Line of Credit and the Borrowing
Base.
Representations and Warranties Concerning Accounts. With respect to the
Accounts, Borrower represents and warrants to Lender: (a) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; and (b) All Account information listed on reports and schedules
delivered to Lender will be true and correct, subject to immaterial
variance.
Representations and Warranties Concerning Inventory. With respect to the
Inventory, Borrower represents and warrants to Lender: (a) All Inventory
represented by Borrower to be Eligible Inventory for purposes of this
Agreement conforms to the requirements of the definition of Eligible
Inventory; (b) All Inventory values listed on schedules delivered to Lender
will be true and correct, subject to immaterial variance; (c) The value of
the Inventory will be determined on a consistent accounting basis; (d)
Except as reflected in the Inventory schedules delivered to Lender, all
Eligible Inventory is now and at all times hereafter will be of good and
merchantable quality, free from defects; and (e) Lender, its assigns, or
agents shall have the right at any time and at Borrower's expense to inspect
and examine the Inventory and to check and test the same as to quality,
quantity, value, and condition.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each request for an Advance, as
of the date of any renewal, extension or modification of any Loan, and at all
times any Loans or Lender's commitment to make Loans hereunder is outstanding:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Utah and is
duly qualified and in good standing in all other states in which Borrower is
doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged
or presently proposes to engage.
Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents to which Borrower is a party have been duly
authorized by all necessary action by Borrower; do not require the consent
or approval of any other person, regulatory authority or governmental body;
and do not conflict with, result in a violation of, or constitute a default
under (a) any provision of its articles of incorporation or organization, or
bylaws, or any agreement or other instrument binding upon Borrower or (b)
any law, governmental regulation, court decree, or order applicable to
Borrower. Borrower has all requisite power and authority to execute and
deliver this Agreement and all other Related Documents to which Borrower is
a party.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely discloses Borrower's financial condition as of the
date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement and all other Related Documents to which
Borrower is a party constitute legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their respective
terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by equitable
principles.
Properties. Except for Permitted Liens, Borrower is the sole owner of, and
has good title to, all of Borrower's properties free and clear of all
Security Interests, and has not executed any security documents or financing
statements relating to such properties. All of Borrower's properties are
titled in Borrower's legal name, and Borrower has not used, or filed a
financing statement under, any other name for at least the last six (6)
years.
Compliance. Except as disclosed in writing to Lender (a) Borrower is
conducting Borrower's businesses in material compliance with all applicable
federal, state and local laws, statutes, ordinances, rules, regulations,
orders, determinations and court decisions, including without limitation,
those pertaining to health or environmental matters, and (b) Borrower
otherwise does not have any known material contingent liability in
connection with the release into the environment, disposal or the improper
storage of any toxic or hazardous substance or solid waste.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which may
in any one case or in the aggregate materially adversely affect Borrower's
financial condition or properties, other than litigation, claims, or other
events, if any, that have been disclosed to and acknowledged by Lender in
writing.
Taxes. All tax returns and reports of Borrower that are or were required to
be filed, have been filed, and all taxes, assessments and other governmental
charges have been paid in full, except those that have been disclosed in
writing to Lender which are presently being or to be contested by Borrower
in good faith in the ordinary course of business and for which adequate
reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to and approved by
Lender in writing, Borrower has not entered into any Security Agreements,
granted a Security Interest or permitted the filing or attachment of any
Security Interests on or affecting any of the Collateral, except in favor of
Lender.
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Licenses, Trademarks and Patents. Borrower possesses and will continue to
possess all permits, licenses, trademarks, patents and rights thereto which
are needed to conduct Borrower's business and Borrower's business does not
conflict with or violate any valid rights of others with respect to the
foregoing.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes approved by Lender and such proceeds
will not be used for the purchasing or carrying of "margin stock" as defined
in Regulation U issued by the Board of Governors of the Federal Reserve
System.
Ineligible Securities. No portion or any advance or Loan made hereunder
shall be used directly or indirectly to purchase ineligible securities, as
defined by applicable regulations of the Federal Reserve Board, underwritten
by Lender or any other affiliate of Banc One Corporation during the
underwriting period and for 30 days thereafter.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to
any such plan, (ii) Borrower has not withdrawn from any such plan or
initiated steps to do so, (iii) no steps have been taken to terminate any
such plan, and (iv) there are no unfunded liabilities other than those
previously disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business, or
Borrower's chief executive office if Borrower has more than one place of
business, is located at 0000 Xxxxxxxx Xxx, Xxxx Xxxx Xxxx, XX 00000. Unless
Borrower has designated otherwise in writing this location is also the
office or offices where Borrower keeps its records concerning the
Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which such
information is dated or certified; and none of such information is or will
be incomplete by omitting to state any material fact necessary to make such
information not misleading.
Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in extending the Loans to Borrower. Borrower
further agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect during the
term of this Agreement.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Depository Relationship. Establish and maintain its primary operating
account(s) with Lender.
Litigation: Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor, and (c) the creation, occurrence or assumption by Borrower of any
actual or contingent liabilities not permitted under this Agreement.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit Lender to examine, audit and make and take away copies or
reproductions of Borrower's books and records at all reasonable times. If
Borrower now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software programs
for the generation of such records) in the possession of a third party,
Borrower, upon request of Lender, shall notify such party to permit Lender
free access to such records at all reasonable times and to provide Lender
with copies of any records it may request, all at Borrower's expense.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrower's financial condition and business operations as Lender
may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least thirty (30) days' prior written notice to Lender. In connection with
all policies covering assets in which Lender holds or is offered a Security
Interest for the Loans, Borrower will provide Lender with such loss payable
or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the name
of the insurer; (b) the risks insured; (c) the amount of the policy; (d) the
properties insured; (e) the then current property values on the basis of
which insurance has been obtained, and the manner of determining those
values: and (f) the expiration date of the policy.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Fees and Charges. In addition to all other agreed upon fees and
charges, pay the following: Origination Fee $12,500.00 and Documentation Fee
$250.00.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessments, taxes,
governmental charges, levies and liens, of every kind and nature, imposed
upon Borrower or its properties, income, or profits, prior to the date on
which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's properties, income, or
profits; provided however, Borrower will not be required to pay and
discharge any such assessment, tax, charge, levy,
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lien or claim so long as (a) the legality of the same shall be contested in
good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting principles. Borrower, upon demand of Lender, will
furnish to Lender evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate governmental
official to deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Borrower's
properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely manner,
and promptly notify Lender if Borrower learns of the occurrence of any event
which constitutes an Event of Default under this Agreement or under any of
the Related Documents.
Operations. Conduct its business affairs in a reasonable and prudent manner
and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including without limitation, compliance with the
Americans With Disabilities Act, all applicable environmental statutes,
rules, regulations and ordinances and with all minimum funding standards and
other requirements of ERISA and other laws applicable to Borrower's employee
benefit plans.
Compliance Certificate. Unless waived in writing by Lender, provide Lender
30 days after each quarter with a certificate executed by Borrower's chief
financial officer, or other officer or person acceptable to Lender, (a)
certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and that,
as of the date of the certificate, no Event of Default exists under this
Agreement, and (b) demonstrating compliance with all financial covenants set
forth in this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects
with all federal, state and local environmental laws, statutes, regulations
and ordinances; not cause or permit to exist, as a result of an intentional
or unintentional action or omission on its part or on the part of any third
party, on property owned and/or occupied by Borrower, any environmental
activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions
of a permit issued by the appropriate federal, state or local governmental
authorities; and furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien,
citation, directive, letter or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional action
or omission on Borrower's part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural
resources.
Borrowing Base Certificate. Contemporaneously with each request for an
Advance under the Line of Credit, Borrower shall deliver to Lender a
borrowing base certificate, in form and detail satisfactory to Lender, along
with such supporting documentation as Lender may request, including without
limitation, an accounts receivable aging report and/or a list or schedule of
Borrower's accounts receivable, inventory and/or equipment.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loans and to perfect all
Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Maintain Basic Business. Engage in any business activities substantially
different than those in which Borrower is presently engaged.
Continuity of Operations. Cease operations, liquidate, dissolve or merge or
consolidate with or into any other entity.
Indebtedness. Create, incur or assume additional indebtedness for borrowed
money, including capital leases, or guarantee any indebtedness owing by
others, other than (a) current unsecured trade debt incurred in the ordinary
course of business, (b) indebtedness owing to Lender, (c) borrowings
outstanding as of the date hereof and disclosed to Lender in writing, and
(d) any borrowings otherwise approved by Lender in writing.
Liens. Mortgage, assign, pledge, grant a security interest in or otherwise
encumber Borrower's assets, except as allowed as a Permitted Lien.
Transfer of Assets. Transfer, sell or otherwise dispose of any of Borrower's
assets other than in the ordinary course of business.
Change in Management. Permit a change in the senior executive or management
personnel of Borrower.
Transfer of Ownership. Permit the sale, pledge or other transfer of any
ownership interest in Borrower.
Dividends. Pay any dividends on Borrower's capital stock or purchase,
redeem, retire or otherwise acquire any of Borrower's capital stock or alter
or amend Borrower's capital structure.
CONDITIONS PRECEDENT TO ADVANCES. Lender's obligation to make any Advances or to
provide any other financial accommodations to or for the benefit of Borrower
hereunder shall be subject to the conditions precedent that as of the date of
such advance or disbursement and after giving effect thereto (a) all
representations and warranties made to Lender in this Agreement and the Related
Documents shall be true and correct as of and as if made on such date, (b) no
material adverse change in the financial condition of Borrower or any Guarantor
since the effective date of the most recent financial statements furnished to
Lender, or in the value of any Collateral, shall have occurred and be
continuing, (c) no event has occurred and is continuing, or would result from
the requested advance or disbursement, which with notice or lapse of time, or
both, would constitute an Event of Default, (d) no Guarantor has sought, claimed
or otherwise attempted to limit, modify or revoke such Guarantor's guaranty of
any Loan, and (e) Lender has received all Related Documents appropriately
executed by Borrower and all other proper parties.
ADDITIONAL AFFIRMATIVE COVENANT - TANGIBLE NET WORTH RATIO. Borrower further
covenants and agrees with Lender that, while this Agreement is in effect,
Borrower will comply at all times with the following ratio: Maintain at all
times, Tangible Net Worth in excess of 55% of total assets.
ADDITIONAL AFFIRMATIVE COVENANT - DEBT SERVICE COVERAGE. Borrower further
covenants and agrees with Lender that, while this Agreement is in effect,
Borrower will comply at all times with the following ratio: Maintain at all
times a ratio (a) net income, after taxes, plus
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depreciation, amortization and depletion, less any Distributions, for the twelve
month period then ending, to (b) current maturities of long-term debt plus
current maturities of capital leases for the following twelve month period, of
not less than 2.5 to 1.00.
For purposes of this Agreement and to the extent the following terms are
utilized in this Agreement: The term "Tangible Net Worth" shall mean borrower's
total assets excluding all intangible assets (including, without limitation,
goodwill, trademarks, patents, copyrights, organization expenses, and similar
intangible items) less total liabilities excluding Subordinated Debt. The term
"Subordinated Debt" shall mean all indebtedness owing by Borrower which has been
subordinated by written agreement to all indebtedness now or hereafter owing by
Borrower to Lender, such agreement to be in form and substance acceptable to
Lender. The term "Working Capital: shall mean Borrower's liquid Assets plus
inventory, less current liabilities. The term "Liquid Assets", shall mean
borrower's unencumbered cash, marketable securities and accounts receivable net
of reserves. The term "Adjusted Net Income" means earnings before interest,
taxes, depreciation and amortization, plus lease expense, and depletion, less
any distributions. The term "Distributions", shall mean all dividends and other
distributions made by borrower to its shareholders, partners, owners or members,
as the case may be, other than salary, bonuses and other compensation for
services expended in the current accounting period. The term "Fixed Charges"
mean interest expense plus lease expense, current maturities of long-term debt
and current maturities of capital leases. The term "Cash Flow" shall mean net
income after taxes, and exclusive of extraordinary items, plus depreciation and
amortization. Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph shall be made in
accordance with generally accepted accounting principles, applied on a
consistent basis, and certified by Borrower as being true and correct.
ADDITIONAL NEGATIVE COVENANT - INDEBTEDNESS. Borrower further covenants and
agrees with Lender that while this Agreement is in effect Borrower shall not,
without the prior written consent of Lender, create, incur or assume additional
indebtedness for borrowed money, including capital leases, or guaranty any
indebtedness owing by others, other than (A) current unsecured trade debt
incurred in the ordinary course of business, (B) indebtedness owing to Lender,
(C) borrowings outstanding as of the date hereof and disclosed to Lender in
writing, (D) capital lease indebtedness of up to $1,000,000.00, in the aggregate
per Fiscal year.
ADDENDUM. An addendum, titled "ADDENDUM", is attached to this document and by
this reference is made a part of this document just as if all the provisions,
terms and conditions of the ADDENDUM had been fully set forth in this document.
RIGHT OF SETOFF. Unless a lien would be prohibited by law or would render a
nontaxable account taxable, Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or any other account), including without
limitation all accounts held jointly with someone else and all accounts Borrower
may open in the future. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due on
any of the Indebtedness.
Other Defaults. Failure of Borrower, any Guarantor or any Grantor to comply
with or to perform when due any other term, obligation, covenant or
condition contained in this Agreement, the Note or in any of the other
Related Documents, or failure of Borrower to comply with or to perform any
other term, obligation, covenant or condition contained in any other
agreement now existing or hereafter arising between Lender and Borrower.
False Statements. Any warranty, representation or statement made or
furnished to Lender under this Agreement or the Related Documents is false
or misleading in any material respect.
Default to Third Party. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Borrower, Grantor
or any Guarantor to any third party under any agreement or undertaking.
Bankruptcy or Insolvency. If the Borrower, Grantor or any Guarantor: (i)
becomes insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or admits in writing its inability
to pay its debts as they become due; (ii) generally is not paying its debts
as such debts become due; (iii) has a receiver, trustee or custodian
appointed for, or take possession of, all or substantially all of the assets
of such party or any of the Collateral, either in a proceeding brought by
such party or in a proceeding brought against such party and such
appointment is not discharged or such possession is not terminated within
sixty (60) days after the effective date thereof or such party consents to
or acquiesces in such appointment or possession; (iv) files a petition for
relief under the United States Bankruptcy Code or any other present or
future federal or state insolvency, bankruptcy or similar laws (all of the
foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an
involuntary petition for relief is filed against such party under any
Applicable Bankruptcy Law and such involuntary petition is not dismissed
within sixty (60) days after the filing thereof, or an order for relief
naming such party is entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief of
debtors now or hereafter existing is requested or consented to by such
party; (v) fails to have discharged within a period of sixty (60) days any
attachment, sequestration or similar writ levied upon any property of such
party; or (vi) fails to pay within thirty (30) days any final money judgment
against such party.
Liquidation, Death and Related Events. If Borrower, Grantor or any Guarantor
is an entity, the liquidation, dissolution, merger or consolidation of any
such entity or, if any of such parties is an individual, the death or legal
incapacity of any such individual.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any creditor
of any Grantor against any collateral securing the Indebtedness, or by any
governmental agency.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, Lender may,
at its option, without further notice or demand, (a) terminate all commitments
and obligations of Lender to make Loans to Borrower, if any, (b) declare all
Loans and any other Indebtedness immediately due and payable, (c) refuse to
advance any additional amounts under the Note or to provide any other financial
accommodations under this Agreement, or (d) exercise all the rights and remedies
provided in the Note or in any of the Related Documents or available at law, in
equity, or otherwise; provided, however, if any Event of Default of the type
described in the "Bankruptcy or Insolvency" subsection above shall occur, all
Loans and any other Indebtedness shall automatically become due and payable,
without any notice, demand or action by Lender. Except as may be prohibited by
applicable law, all of Lender's rights and remedies shall be cumulative and may
be exercised singularly or concurrently. Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or of any
Grantor shall not affect Lender's right to declare a default and to exercise its
rights and remedies.
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MISCELLANEOUS PROVISIONS.
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Utah. Subject to the provisions on arbitration, this
Agreement shall be governed by and construed in accordance with the laws of
the State of Utah without regard to any conflict of laws or provisions
thereof.
JURY WAIVER. THE UNDERSlGNED AND LENDER (BY ITS ACCEPTANCE HEREOF) 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 THE UNDERSIGNED AND LENDER
ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, AND ANY OTHER RELATED
DOCUMENT, OR ANY RELATIONSHIP BETWEEN LENDER AND THE BORROWER. THIS
PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING
DESCRIBED HEREIN OR IN THE OTHER RELATED DOCUMENTS.
ARBITRATION. Lender and Borrower 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 this Agreement, any Related Document
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 ("AAA"). Any arbitration
proceeding held pursuant to this arbitration provision shall be conducted in
the city nearest the Borrower's address having an AAA regional office, or at
any other place 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
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 a 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 the Uniform Commercial Code. 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 either party. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. 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, and the commencement of an arbitration
proceeding shall be deemed the commencement of any 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.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's sale
or transfer, whether now or later, of one or more participation interests in
the Loans to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the Loan, and
Borrower hereby waives any rights to privacy it may have with respect to
such matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including reasonable attorneys' fees, incurred in connection with
the preparation, execution, enforcement, modification and collection of this
Agreement or in connection with the Loans made pursuant to this Agreement.
Lender may hire one or more attorneys to help collect the Indebtedness if
Borrower does not pay, and Borrower will pay Lender's reasonable attorneys'
fees.
Notices. All notices required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in the
United States mail, first class, postage prepaid, addressed to the party to
whom the notice is to be given at the address shown above. Any party may
change its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is to
change the party's address. To the extent permitted by applicable law, if
there is more than one Borrower, notice to any Borrower will constitute
notice to all Borrowers. For notice purposes, Borrower will keep Lender
informed at all times of Borrower's current address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and enforceable.
Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute the same document. Signature pages may be detached from the
counterparts to a single copy of this Agreement to physically form one
document.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
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Time Is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, or between Lender and any
Grantor or Guarantor, shall constitute a waiver of any of Lender's rights or
of any obligations of Borrower or of any Grantor as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent in subsequent instances where such consent is
required, and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
FINAL AGREEMENT. Borrower understands that this Agreement and the related loan
documents are the final expression of the agreement between Lender and Borrower
and may not be contradicted by evidence of any alleged oral agreement.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND
BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS EXECUTED AS OF THE DATE SET
FORTH ABOVE.
BORROWER:
Xxxxxxx Communications Corporation, a Utah corporation
X /s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx, CFO
LENDER:
Bank One, Utah, NA
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Authorized Officer
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ADDENDUM
Borrower: Xxxxxxx Communications Corporation Lender:Bank One, Utah, NA
0000 Xxxxxxxx Xxx Xxxxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000 00 Xxxx Xxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
================================================================================
This ADDENDUM is attached to and by this reference made a part of the Business
Loan Agreement, dated January 5, 1999, and executed in connection with a loan or
other financial accommodations between Bank One, Utah, NA and Xxxxxxx
Communications Corporation.
ADDITIONAL PROVISIONS - FINANCIAL STATEMENTS. Furnish Lender with, as soon as
available, but in no event later than ninety (90) days after the end of each
fiscal year, Borrower's balance sheet, income statement, statement of changes in
financial position, and 10K for the year ended, audited by certified public
accountant(s) reasonably acceptable to Lender, and as soon as available, but in
no event later than thirty (30) days after the end of each fiscal quarter,
Borrower's balance sheet, income statement, statement of changes in financial
position, and 10Q for the period ended, prepared and certified, subject to year
end review adjustments, as correct to the best knowledge and belief by
Borrower's chief financial officer of other officer or person acceptable to
Lender. All financial reports required to be provided under this Agreement shall
be prepared in accordance with generally accepted accounting principals, applied
on a consistent basis, and certified by Borrower as being true and correct.
ADDITIONAL AFFIRMATIVE COVENANT - CERTAIN REPORTS. Notwithstanding any other
provision to the contrary herein or in the Related Documents, Borrower shall
deliver to Lender within thirty (30) days after each month, if an outstanding
balance of the Line of Credit existed at anytime during the month greater than
$2,000,000.00; (i) a borrowing base certificate; (ii) an aging and listing of
all accounts receivable prepared in accordance with generally accepted
accounting principals which itemizes each account debtor by name and address and
which states the total amount payable to Borrower and contains a breakdown
indicating future amounts due and when due, current amounts due, amounts thirty
(30) days past due, sixty (60) days past due, and ninety (90) days or more past
due, and reflecting any credit adjustments, returns and allowances; (iii) an
aging and listing of all accounts payable-trade prepared in a similar manner;
(iv) an inventory listing.
ADDITIONAL PROVISIONS - INSPECTION. Notwithstanding any other provision to the
contrary herein or in the Related Documents, Borrower further covenants and
agrees with Lender that, while this Agreement is in effect, Borrower shall have
(i) an inspection of accounts receivable, accounts payable, and inventory done
by Lender's auditor before April 1, 1999, and thereafter, (ii) an annual
inspection of accounts receivable, accounts payable, and inventory done by
Lender's auditor within thirty (30) days of Borrower's fiscal year end, all at
Borrower's sole cost and expense, such expense not to exceed $750.00.
ADDITIONAL AFFIRMATIVE COVENANT - CURRENT RATIO. Borrower further covenants and
agrees with Lender that, while this Agreement is in effect, Borrower will comply
at all times with the following ratio: Maintain, as of the end of each fiscal
quarter, a ratio of (a) current assets, to (b) current liabilities, including
without limitation, outstanding balances on Loans with Lender, of not less than
2.0 to 1.0.
Dated with effect as of the date of the Loan Agreement.
LENDER:
BANK ONE, UTAH, NA
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx
Its: Vice President
BORROWER:
XXXXXXX COMMUNICATIONS CORPORATION
BY: /s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
Its: CFO
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COMMERCIAL SECURITY AGREEMENT
--------------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$5,000,000.00 01-05-1999 096501 326 8279584877 73609
--------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to
any particular loan or item.
--------------------------------------------------------------------------------------------------------------
Borrower: Xxxxxxx Communications Corporation, a Utah Lender: Bank One, Utah, NA
corporation Commercial Banking
0000 Xxxxxxxx Xxx 00 X. Xxxxxxxx
Xxxx Xxxx Xxxx, XX 00000 Xxxx Xxxx Xxxx, XX 00000
==============================================================================================================
THIS COMMERCIAL SECURITY AGREEMENT is entered into by Xxxxxxx Communications
Corporation, a Utah corporation (referred to below as "Grantor") for the benefit
of Bank One, Utah, NA (referred to below as "Lender"). For valuable
consideration, Grantor grants to Lender a security interest in the Collateral to
secure the Indebtedness and agrees that Lender shall have the rights stated in
this Agreement with respect to the Collateral, in addition to all other rights
which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code as adopted in
the State of Utah ("Code"). All references to dollar amounts shall mean amounts
in lawful money of the United States of America.
Agreement. The word "Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Commercial
Security Agreement from time to time.
Collateral. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
All rights to payment of money now owned or hereafter acquired by the
Borrower whether due or to become due and whether or not earned by
performance and including but not limited to accounts, contract rights,
contract rights, chattel paper, instruments, general intangibles and
choses in action. All inventory now owned or hereafter acquired by
Borrower and whether or not held for sale or lease or to be furnished
under contracts of service including without limitation, all goods in
process, raw materials, parts, components, merchandise, demonstrators,
supplies, and things held for sale, resale or manufacture. All proceeds
of Receivables and Inventory.
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All proceeds (including, without limitation, insurance proceeds)
from the sale, lease, destruction, loss, or other disposition of any of
the property described in this Collateral section.
(d) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
Event of Default. The words "Event of Default" mean and include any of the
Events of Default set forth below in the section titled "Events of Default."
Grantor. The word "Grantor" means Xxxxxxx Communications Corporation, a Utah
corporation, its successors and assigns (which is a debtor under the Code).
Guarantor. The word "Guarantor" means and includes without limitation, each and
all of the guarantors, sureties, and accommodation parties in connection with
the Indebtedness
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the
Note, including all principal and accrued interest thereon, together with all
other liabilities, costs and expenses for which Grantor is responsible under
this Agreement or under any of the Re!ated Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus any
accrued interest thereon, owing by Grantor, or any one or more of them, to
Lender of any kind or character, now existing or hereafter arising, as well as
all present and future claims by Lender against Grantor, or any one or more of
them, and all renewals, extensions, modifications, substitutions and
rearrangements of any of the foregoing; whether such Indebtedness arises by
note, draft, acceptance, guaranty, endorsement, letter of credit, assignment,
overdraft, indemnity agreement or otherwise; whether such Indebtedness is
voluntary or involuntary, due or not due, direct or indirect, absolute or
contingent, liquidated or unliquidated; whether Grantor may be liable
individually or jointly with others; whether Grantor may be liable primarily or
secondarily or as debtor, maker, comaker, drawer, endorser, guarantor, surety,
accommodation party or otherwise.
Lender. The word "Lender" means Bank One, Utah, NA, its successors and assigns
(which is a secured party under the Code).
Note. The word "Note" means the promissory note dated January 5, 1999, in the
principal amount of $5,000,000.00 from Xxxxxxx Communications Corporation, a
Utah corporation to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of and substitutions for such
promissory note.
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Related Documents. The words "Related Documents" mean and include without
limitation the Note and all credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Note.
OBLIGATIONS OF GRANTOR. Grantor represents, warrants and covenants to Lender as
follows:
Perfection of Security Interest. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby irrevocably appoints Lender as its
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor, file
a carbon, photographic or other reproduction of any financing statement or
of this Agreement for use as a financing statement. Grantor will reimburse
Lender for all expenses for the perfection and the continuation of the
perfection of Lender's security interest in the Collateral. Grantor has
disclosed to Lender all tradenames and assumed names currently used by
Grantor, all tradenames and assumed names used by Grantor within the
previous six (6) years and all of Grantor's current business locations.
Grantor will notify Lender in writing at least thirty (30) days prior to the
occurrence of any of the following: (i) any changes in Grantor's name,
tradename(s) or assumed name(s), or (ii) any change in Grantor's business
location(s) or the location of any of the Collateral.
No Violation. The execution and delivery of this Agreement will not violate
any law or agreement, governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear
to be on the Collateral.
Location of the Collateral. Grantor, upon request of Lender, will deliver to
Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including without
limitation the following: (a) all real property owned or being purchased by
Grantor; (b) all real property being rented or leased by Grantor; (c) all
storage facilities owned, rented, leased, or being used by Grantor: and (d)
all other properties where Collateral is or may be located. Except in the
ordinary course of its business, Grantor shall not remove the Collateral
from its existing locations without the prior written consent of Lender.
Removal of Collateral. Grantor shall keep the Collateral (or to the extent
the Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such
other locations as are acceptable to Lender. Except in the ordinary course
of its business, including the sales of inventory, Grantor shall not remove
the Collateral from its existing locations without the prior written consent
of Lender. To the extent that the Collateral consists of vehicles, or other
titled property, Grantor shall not take or permit any action which would
require application for certificates of title for the vehicles outside the
State of Utah, without the prior written consent of Lender.
Transactions Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and only to
buyers who qualify as a buyer in the ordinary course of business. A sale in
the ordinary course of Grantor's business does not include a transfer in
partial or total satisfaction of a debt or any bulk sale. Grantor shall not
pledge, mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in right
to the security interests granted under this Agreement. Unless waived by
Lender, all proceeds from any disposition of the Collateral (for whatever
reason) shall be held in trust for Lender and shall not be commingled with
any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that it is the owner of the
Collateral and holds good and marketable title to the Collateral, free and
clear of all liens and encumbrances except for the lien of this Agreement.
No financing statement covering any of the Collateral is on file in any
public office other than those which reflect the security interest created
by this Agreement or to which Lender has specifically consented. Grantor
shall defend Lender's rights in the Collateral against the claims and
demands of all other persons.
Collateral Schedules and Locations. Insofar as the Collateral consists of
inventory, Grantor shall deliver to Lender, as often as Lender shall
require, such lists, descriptions, and designations of such Collateral as
Lender may require to identify the nature, extent, and location of such
Collateral. Such information shall be submitted for Grantor and each of its
subsidiaries or related companies.
Maintenance and Inspection of Collateral. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit or
permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall have
the right at all reasonable times to examine, inspect, and audit the
Collateral wherever located. Grantor shall immediately notify Lender of all
cases involving the return, rejection, repossession, loss or damage of or to
any Collateral; of any request for credit or adjustment or of any other
dispute arising with respect to the Collateral; and generally of all
happenings and events affecting the Collateral or the value or the amount of
the Collateral.
Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments and governmental charges or levies upon the Collateral and
provide Lender evidence of such payment upon its request. Grantor may
withhold any such payment or may elect to contest any lien if Grantor is in
good faith conducting an appropriate proceeding to contest the obligation to
pay and so long as Lender's interest in the Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien which is not
discharged within fifteen (15) days, Grantor shall deposit with Lender cash,
a sufficient corporate surety bond or other security satisfactory to Lender
in an amount adequate to provide for the discharge of the lien plus any
interest, costs, reasonable attorneys' fees or other charges that could
accrue as a result of foreclosure or sale of the Collateral. In any contest
Grantor shall defend itself and Lender and shall satisfy any final adverse
judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the
contest proceedings.
Compliance With Governmental Requirements. Grantor is conducting and will
continue to conduct Grantor's businesses in material compliance with all
federal, state and local laws, statutes, ordinances, rules, regulations,
orders, determinations and court decisions applicable
31
18
to Grantor's businesses and to the production, disposition or use of the
Collateral, including without limitation, those pertaining to health and
environmental matters such as the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (collectively, together with any
subsequent amendments, hereinafter called "CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling
Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous Substance Waste Amendments of 1984 (collectively, together with
any subsequent amendments, hereinafter called "RCRA"). Grantor represents
and warrants that (i) none of the operations of Grantor is the subject of a
federal, state or local investigation evaluating whether any material
remedial action is needed to respond to a release or disposal of any toxic
or hazardous substance or solid waste into the environment; (ii) Grantor has
not filed any notice under any federal, state or local law indicating that
Grantor is responsible for the release into the environment, the disposal on
any premises in which Grantor is conducting its businesses or the improper
storage, of any material amount of any toxic or hazardous substance or solid
waste or that any such toxic or hazardous substance or solid waste has been
released, disposed of or is improperly stored, upon any premises on which
Grantor is conducting its businesses; and (iii) Grantor otherwise does not
have any known material contingent liability in connection with the release
into the environment, disposal or the improper storage, of any such toxic or
hazardous substance or solid waste. The terms "hazardous substance" and
"release", as used herein, shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal", as used herein, shall have the
meanings specified in RCRA; provided, however, that to the extent that the
laws of the State of Utah establish meanings for such terms which are
broader than that specified in either CERCLA or RCRA, such broader meanings
shall apply. The representations and warranties contained herein are based
on Grantor's due diligence in investigating the Collateral for hazardous
wastes and substances. Grantor hereby (a) releases and waives any future
claims against Lender for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Lender against any and all claims and
losses resulting from a breach of this provision of this Agreement. This
obligation to indemnify shall survive the payment of the Indebtedness and
the termination of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all
risk insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least thirty (30) days' prior written
notice to Lender and not including any disclaimer of the insurer's liability
for failure to give such a notice. Each insurance policy also shall include
an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Grantor or any other
person. In connection with all policies covering assets in which Lender
holds or is offered a security interest, Grantor will provide Lender with
such loss payable or other endorsements as Lender may require. If Grantor at
any time fails to obtain or maintain any insurance as required under this
Agreement, Lender may (but shall not be obligated to) obtain such insurance
as Lender deems appropriate, including if it so chooses "single interest
insurance," which will cover only Lender's interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness. Application of insurance proceeds
to the payment of the Indebtedness will not extend, postpone or waive any
payments otherwise due, or change the amount of such payments to be made and
proceeds may be applied in such order and such amounts as Lender may elect.
Solvency of Grantor. As of the date hereof, and after giving effect to this
Agreement and the completion of all other transactions contemplated by
Grantor at the time of the execution of this Agreement, (i) Grantor is and
will be solvent, (ii) the fair salable value of Grantor's assets exceeds and
will continue to exceed Grantor's liabilities (both fixed and contingent),
(iii) Grantor is paying and will continue to be able to pay its debts as
they mature, and (iv) if Grantor is not an individual, Grantor has and will
have sufficient capital to carry on Grantor's businesses and all businesses
in which Grantor is about to engage.
Lien Not Released. The lien, security interest and other security rights of
Lender hereunder shall not be impaired by any indulgence, moratorium or
release granted by Lender, including but not limited to, the following: (a)
any renewal, extension, increase or modification of any of the Indebtedness;
(b) any surrender, compromise, release, renewal, extension, exchange or
substitution granted in respect of any of the Collateral; (c) any release or
indulgence granted to any endorser, guarantor or surety of any of the
Indebtedness; (d) any release of any other collateral for any of the
Indebtedness; (e) any acquisition of any additional collateral for any of
the Indebtedness; and (f) any waiver or failure to exercise any right, power
or remedy granted herein, by law or in any of the Related Documents.
Request for Environmental Inspections. Upon Lender's reasonable request from
time to time, Grantor will obtain at Grantor's expense an inspection or
audit report(s) addressed to Lender of Grantor's operations from an
engineering or consulting firm approved by Lender, indicating the presence
or absence of toxic and hazardous substances, underground storage tanks and
solid waste on any premises in which Grantor is conducting a business;
provided, however, Grantor will be obligated to pay for the cost of any such
inspection or audit no more than one time in any twelve (12) month period
unless Lender has reason to believe that toxic or hazardous substance or
solid wastes have been dumped or released on any such premises. If Grantor
fails to order or obtain an inspection or audit within ten (10) days after
Lender's request, Lender may at its option order such inspection or audit,
and Grantor grants to Lender and its agents, employees, contractors and
consultants access to the premises in which it is conducting its business
and a license (which is coupled with an interest and is irrevocable) to
obtain inspections and audits. Grantor agrees to promptly provide Lender
with a copy of the results of any such inspection or audit received by
Grantor. The cost of such inspections and audits by Lender shall be a part
of the Indebtedness, secured by the Collateral and payable by Grantor on
demand.
Landlord's Waivers. Grantor agrees that upon the request of Lender, Grantor
shall cause each landlord of real property leased by Grantor at which any of
the Collateral is located from time to time to execute and deliver
agreements satisfactory in form and substance to Lender by which such
landlord waives or subordinates any rights it may have in the Collateral.
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender's
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security interest in such Collateral. If Lender at any time has possession of
any Collateral, whether before or after an Event of Default, Lender shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral if Lender takes such action for that purpose as Grantor shall request
or as Lender, in Lender's sole discretion, shall deem appropriate under the
circumstances, but failure to honor any request by Grantor shall not of itself
be deemed to be a failure to exercise reasonable care. Lender shall not be
required to take any steps necessary to preserve any rights in the Collateral
against prior parties, nor to protect, preserve or maintain any security
interest given to secure the Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and be payable on demand by
Lender. Such right shall be in addition to all other rights and remedies to
which Lender may be entitled upon the occurrence of an Event of Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Grantor to make any payment when due on
the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement, the
Note, any of the other Related Documents or in any other agreement now
existing or hereafter arising between Lender and Grantor.
False Statements. Any warranty, representation or statement made or
furnished to Lender under this Agreement, the Note or any of the other
Related Documents is false or misleading in any material respect.
Default to Third Party. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Grantor or any
Guarantor to any third party under any agreement or undertaking.
Bankruptcy or Insolvency. If the Grantor or any Guarantor: (i) becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment
for the benefit of creditors, or admits in writing its inability to pay its
debts as they become due; (ii) generally is not paying its debts as such
debts become due; (iii) has a receiver, trustee or custodian appointed for,
or take possession of, all or substantially all of the assets of such party
or any of the Collateral, either in a proceeding brought by such party or in
a proceeding brought against such party and such appointment is not
discharged or such possession is not terminated within sixty (60) days after
the effective date thereof or such party consents to or acquiesces in such
appointment or possession; (iv) files a petition for relief under the United
States Bankruptcy Code or any other present or future federal or state
insolvency, bankruptcy or similar laws (all of the foregoing hereinafter
collectively called "Applicable Bankruptcy Law") or an involuntary petition
for relief is filed against such party under any Applicable Bankruptcy Law
and such involuntary petition is not dismissed within sixty (60) days after
the filing thereof, or an order for relief naming such party is entered
under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter
existing is requested or consented to by such party; (v) fails to have
discharged within a period of sixty (60) days any attachment, sequestration
or similar writ levied upon any property of such party; or (vi) fails to pay
within thirty (30) days any final money judgment against such party.
Liquidation, Death and Related Events. If Grantor or any Guarantor is an
entity, the liquidation, dissolution, merger or consolidation of any such
entity or, if any of such parties is an individual, the death or legal
incapacity of any such individual.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Code. In addition and without limitation, Lender may exercise
any one or more of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or
any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time of
repossession, Grantor agrees Lender may take such other goods, provided that
Lender makes reasonable efforts to return them to Grantor after
repossession.
Sell the Collateral. Lender shall have full power to sell, lease, transfer,
or otherwise dispose of the Collateral or the proceeds thereof in its own
name or that of Grantor. Lender may sell the Collateral (as a unit or in
parcels) at public auction or private sale. Lender may buy the Collateral,
or any portion thereof, (i) at any public sale, and (ii) at any private sale
if the Collateral is of a type customarily sold in a recognized market or is
of a type which is the subject of widely distributed standard price
quotations. Lender shall not be obligated to make any sale of Collateral
regardless of a notice of sale having been given. Lender may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender will give Grantor reasonable
notice of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition of the Collateral
is to be made. The requirements of reasonable notice shall be met if such
notice is given at least ten (10) days prior to the date any public sale, or
after which a private sale, of any of such Collateral is to be held. All
expenses relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for sale
and selling the Collateral, shall become a part of the Indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note
rate from date of expenditure until repaid.
Appoint Receiver. To the extent permitted by applicable law, Lender shall
have the following rights and remedies regarding the appointment of a
receiver: (a) Lender may have a receiver appointed as a matter of right, (b)
the receiver may be an employee of Lender and may serve
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without bond, and (c) all fees of the receiver and his or her attorney shall
become part of the Indebtedness secured by this Agreement and shall be
payable on demand, with interest at the Note rate from date of expenditure
until repaid.
Collect Revenues, Apply Accounts. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may transfer any Collateral into its own name or that of
its nominee and receive the payments, rents, income, and revenues therefrom
and hold the same as security for the Indebtedness or apply it to payment of
the Indebtedness in such order of preference as Lender may determine.
Insofar as the Collateral consists of accounts, general intangibles,
insurance policies, instruments, chattel paper, choses in action, or similar
property, Lender may demand, collect, receipt for, settle, compromise,
adjust, xxx for, foreclose, or realize on the Collateral as Lender may
determine. For these purposes, Lender may, on behalf of and in the name of
Grantor, receive, open and dispose of mail addressed to Grantor; change any
address to which mail and payments are to be sent; and endorse notes,
checks, drafts, money orders, documents of title, instruments and items
pertaining to payment, shipment, or storage of any Collateral. To facilitate
collection, Lender may notify account debtors and obligors on any Collateral
to make payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining on
the Indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement. Grantor shall be
liable for a deficiency even if the transaction described in this subsection
is a sale of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and remedies of
a secured creditor under the provisions of the Code, as may be amended from
time to time. In addition, Lender shall have and may exercise any or all
other rights and remedies it may have available at law, in equity, or
otherwise. Grantor waives any right to require Lender to proceed against any
third party, exhaust any other security for the Indebtedness or pursue any
other right or remedy available to Lender.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
by this Agreement or the Related Documents or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by
Lender to pursue any remedy shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to
perform, shall not affect Lender's right to declare a default and to
exercise its remedies.
MISCELLANEOUS PROVISIONS.
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement and supercedes all prior written and oral agreements
and understandings, if any, regarding same. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Utah. Subject to the provisions on arbitration in any
Related Document, this Agreement shall be governed by and construed in
accordance with the laws of the State of Utah without regard to any conflict
of laws or provisions thereof.
JURY WAIVER. THE UNDERSIGNED AND LENDER (BY ITS ACCEPTANCE HEREOF) 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 THE UNDERSIGNED AND LENDER
ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, AND ANY OTHER RELATED
DOCUMENT, OR ANY RELATIONSHIP BETWEEN LENDER AND THE BORROWER. THIS
PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING
DESCRIBED HEREIN OR IN THE OTHER RELATED DOCUMENTS.
Attorneys' Fees; Expenses. Grantor will upon demand pay to Lender the amount
of any and all costs and expenses (including without limitation, reasonable
attorneys' fees and expenses) which Lender may incur in connection with (i)
the perfection and preservation of the collateral assignment and security
interests created under this Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from, or other realization upon,
the Collateral, (iii) the exercise or enforcement of any of the rights of
Lender under this Agreement, or (iv) the failure by Grantor to perform or
observe any of the provisions hereof.
Termination. Upon (i) the satisfaction in full of the Indebtedness and all
obligations hereunder, (ii) the termination or expiration of any commitment
of Lender to extend credit that would become Indebtedness hereunder, and
(iii) Lender's receipt of a written request from Grantor for the termination
hereof, this Agreement and the security interests created hereby shall
terminate. Upon termination of this Agreement and Grantor's written request,
Lender will, at Grantor's sole cost and expense, return to Grantor such of
the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof and execute and deliver to Grantor such
documents as Grantor shall reasonably request to evidence such termination.
Indemnity. Grantor hereby agrees to indemnify, defend and hold harmless
Lender, and its officers, directors, shareholders, employees, agents and
representatives (each an "Indemnified Person") from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred by or
asserted against, any Indemnified Person (whether or not caused by any
Indemnified Person's sole, concurrent or contributory negligence) arising in
connection with the Related Documents, the Indebtedness or the Collateral
(including, without limitation, the enforcement of the Related Documents and
the defense of any Indemnified Person's action and/or inactions in
connection with the Related Documents), except to the limited extent that
the Claims against the Indemnified Person are proximately caused by such
Indemnified Person's gross negligence or willful misconduct. The
indemnification provided for in this Section shall survive the termination
of this Agreement and shall extend and continue to benefit each individual
or entity who is or has at any time been an Indemnified Person hereunder.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Notices. All notices required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in the
United States mail, first class, postage prepaid, addressed to the party to
whom the notice is to be given at the address shown above. Any party may
change its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is to
change the party's address. To the extent
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permitted by applicable law, if there is more than one Grantor, notice to
any Grantor will constitute notice to all Grantors. For notice purposes,
Grantor will keep Lender informed at all times of Grantor's current
address(es).
Power of Attorney. Grantor hereby irrevocably appoints Lender as its true
and lawful attorney-in-fact, such power of attorney being coupled with an
interest, with full power of substitution to do the following in the place
and stead of Grantor and in the name of Grantor: (a) to demand, collect,
receive, receipt for, xxx and recover all sums of money or other property
which may now or hereafter become due, owing or payable from the Collateral;
(b) to execute, sign and endorse any and all claims, instruments, receipts,
checks, drafts or warrants issued in payment for the Collateral; (c) to
settle or compromise any and all claims arising under the Collateral, and,
in the place and stead of Grantor, to execute and deliver its release and
settlement for the claim; and (d) to file any claim or claims or to take any
action or institute or take part in any proceedings, either in its own name
or in the name of Grantor, or otherwise, which in the discretion of Lender
may seem to be necessary or advisable. This power is given as security for
the Indebtedness, and the authority hereby conferred is and shall be
irrevocable and shall remain in full force and effect until renounced by
Lender.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and enforceable.
Successor Interests. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns; provided, however,
Grantor's rights and obligations hereunder may not be assigned or otherwise
transferred without the prior written consent of Lender.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right to thereafter demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JANUARY 5,
1999.
GRANTOR:
Xxxxxxx Communications Corporation, a Utah corporation
X /s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx, CFO
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