Exhibit 4.1
INTERIM
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Loan Agreement") is entered into by and between
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iEXALT, INC., a Nevada corporation ("Borrower"), whose address is 12000
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Aerospace Avenue, Suite 375, Houston, Texas 77034, and J.A.K. IV LP ("Lender"),
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whose address is P.O. Box 1752, Alvin, Texas 77512:
1. Credit Facilities. Subject to the terms and conditions set forth in
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this Loan Agreement and the other agreements, instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the Loans, as
hereinafter defined (collectively, together with the Loan Agreement, referred to
hereinafter as the "Loan Documents"), Lender hereby agrees to provide to
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Borrower the credit facility or facilities herein below (whether one or more,
the "Credit Facilities"):
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Operating Capital. Lender agrees to finance Borrower's operating
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capital needs, up to and including an amount not to exceed One Million
dollars ($1,000,000), as necessary so that Borrower can continue to operate
its business in a normal and customary manner. However, Lender shall not be
obligated to provide any new financing in excess of $1,000,000 ("Operating
Capital Limit") on or after September 30, 2002. It is understood that the
Operating Capital Limit specifically excludes any amounts funded prior to
May 30, 2002, by the Lender, or any affiliated party, as defined in Exhibit
A.
Advances. All advances under the Credit Facilities shall be
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collectively called the "Loans". Lender reserves the right to require
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Borrower to give Lender not less than three (3) business days prior notice
of each requested advance under the Credit Facilities, specifying (i) the
aggregate amount of such requested advance, (ii) the requested date of such
advance, and (iii) the purpose for such advance, (iv) a signed Advance
Authorization request by the Management Committee (see Section 8 of this
document), with such advances to be requested in a form satisfactory to
Lender. Lender agrees the Advance contemplated herein is a material
condition of this Loan Agreement, and thus agrees to fund such advance,
without delay, as deemed necessary to the Management Committee and not to
exceed the Operating Capital Limit, provided the Borrower is not in
default, as defined herein. Such Advance request shall be in a reasonable
form more fully described in Exhibit B.
Term. The Term of this Loan Agreement shall be twelve (12) months from
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the effective date as defined herein.
2. Promissory Notes. The Loans shall be evidenced by one or more
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promissory notes or an Application (whether one or more, together with any
renewals, extensions and increases thereof, the "Notes") duly executed by
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Borrower and payable to the order of Lender, in form and substance acceptable to
Lender. Interest on the Notes shall accrue at the annual rate of 14% set forth
therein. The principal of and interest on the Notes shall be due and payable in
accordance with the terms and conditions set forth in the Notes and in this Loan
Agreement. It is understood that this Loan Agreement reflects a consolidation of
multiple existing Loans or Notes, entered into by the Borrower and related
parties. This consolidation is more fully defined in Exhibit A attached hereto.
The Maker/Lender of those Loans or Notes shall have consented to all terms
herein as a condition of this Loan Agreement.
3. Collateral. As collateral and security for the indebtedness
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evidenced by the Notes and any and all other indebtedness or obligations from
time to time owing by Borrower to Lender, Borrower shall grant, and hereby
grants, to Lender, its successors and assigns, a first and prior lien and
security interest in and to the property described herein below, together with
any and all PRODUCTS AND PROCEEDS thereof (the "Collateral"):
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(a) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right to
payment for goods sold or services rendered arising out of the sale or delivery
of personal property or work done or labor performed by Borrower), now or
hereafter owned, held, or acquired by Borrower, together with any and all books
of account, customer lists and other records relating in any way to the
foregoing.
(b) All present and hereafter acquired inventory (including without
limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of service, in whole or in part, by Borrower wherever
located.
(c) All equipment and fixtures of whatsoever kind and character now or
hereafter possessed, held, acquired, leased or owned by Borrower and used or
usable in Borrower's business, together with all replacements, accessories,
additions, substitutions and accessions to all of the foregoing.
(d) All other assets of Borrower.
(e) All assets and common stock of the defined subsidiaries of
iExalt, Inc. including without limitation the following:
(1) ChristianSpeakers.com, Inc. (Christian Speakers and Artists
Agency)
(2) Keener Communications, Inc. (Christian Times Newspaper)
(3) Wordcross, Inc. (Christian Happenings, Inc.)
(4) Church.com url, and all associated urls of i Exalt, Inc.
(Nevada) or i Exalt, Inc. (Texas) - see attached listing.
The term "Collateral" shall also include all records and data relating to any of
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the foregoing (including, without limitation, any computer software on which
such records and data may be located). Borrower agrees to execute such security
agreements, assignments, deeds of trust and other agreements and documents as
Lender shall deem appropriate and otherwise require from time to time to more
fully create and perfect Lender's lien and security interests in the Collateral.
4. Representations and Warranties. Borrower hereby represents and
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warrants, and upon each request for an advance under the Credit Facilities
further represents and warrants, to Lender as follows:
(a) Existence. Borrower is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Nevada and all
other states where it is doing business, and has all requisite power and
authority to execute and deliver the Loan Documents.
(b) Binding Obligations. The execution, delivery, and performance of
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this Loan Agreement and all of the other Loan Documents by Borrower have
been duly authorized by all necessary action by Borrower, and constitute
legal, valid and binding obligations of Borrower, enforceable 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.
(c) No Consent. The execution, delivery and performance of this Loan
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Agreement and the other Loan Documents, and the consummation of the
transactions contemplated hereby and thereby, do not (i) conflict with,
result in a violation of, or constitute a default under (A) any provision
of its articles or certificate of incorporation or bylaws, if Borrower is a
corporation, or its partnership agreement, if Borrower is a partnership, or
any agreement or other instrument binding upon Borrower, or (B) any law,
governmental regulation, court decree or order applicable to Borrower, or
(ii) require the consent, approval or authorization of any third party.
(d) Financial Condition. Each financial statement of Borrower
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supplied to the Lender truly discloses and fairly presents Borrower's
financial condition as of the date of each such statement. There has been
no material adverse change in such financial condition or results of
operations of Borrower subsequent to the date of the most recent financial
statement supplied to Lender. The Chief Financial Officer of the Borrower
shall present a signed representation to the true and correct disclosure of
such Financial statements which is to be supplied with each delivery of
said Financial Statements.
(e) Litigation. Other than those legal issues disclosed within the
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Momentum Equity Group Spec., there are no actions, suits or proceedings,
pending or, to the knowledge of Borrower, threatened against or affecting
Borrower or the properties of Borrower, before any court or governmental
department, commission or board, which, if determined adversely to
Borrower, would have a material adverse effect on the financial condition,
properties, or operations of Borrower.
(f) Taxes; Governmental Charges. Borrower has filed all federal,
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state and local tax reports and returns required by any law or regulation
to be filed by it and has either duly paid all taxes, duties and charges
indicated due on the basis of such returns and reports, or made adequate
provision for the payment thereof, and the assessment of any material
amount of additional taxes in excess of those paid and reported is not
reasonably expected.
5. Conditions Precedent to Advances. Lender's obligation to make any
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advance under this Loan Agreement and the other Loan Documents shall be subject
to the conditions precedent that, as of the date of such advance and after
giving effect thereto (i) all representations and warranties made to Lender in
this Loan Agreement and the other Loan Documents shall be true and correct, as
of and as if made on such date, (ii) no material adverse change in the financial
condition of Borrower since the effective date of the most recent financial
statements furnished to Lender by Borrower shall have occurred and be
continuing, (iii) no event has occurred and is continuing, or would result from
the requested advance, which with notice or lapse of time, or both, would
constitute an Event of Default (as
hereinafter defined), (iv) Lender's receipt of all Loan Documents appropriately
executed by Borrower and all other proper parties and (v) the aforementioned
Management Committee has authorized such Advance to be deemed necessary, such
approval shall not be unreasonably withheld.
6. Affirmative Covenants. Until (i) the Notes and all other obligations
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and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower agrees and covenants that it will, unless
Lender shall otherwise consent in writing:
(a) Accounts and Records. Maintain its books and records in
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accordance with generally accepted accounting principles.
(b) Right of Inspection. Permit Lender to visit its properties and
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installations and to examine, audit and make and take away copies or
reproductions of Borrower's books and records, at all reasonable times.
(c) Right to Additional Information. Furnish Lender with such
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additional information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Borrower's financial condition
and business operations as Lender may request from time to time.
(d) Compliance with Laws. Conduct its business in an orderly and
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efficient manner consistent with good business practices, and perform and
comply with all statutes, rules, regulations and/or ordinances imposed by
any governmental unit upon Borrower and its businesses, operations and
properties (including without limitation, all applicable environmental
statutes, rules, regulations and ordinances).
(e) Taxes. Pay and discharge when due all of its indebtedness and
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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, lien or claim so long as
(i) the legality of the same shall be contested in good faith by
appropriate judicial, administrative or other legal proceedings, and (ii)
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, consistently
applied.
(f) Insurance. Maintain insurance, including but not limited to,
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directors and officers insurance, fire insurance, comprehensive property
damage, public liability, worker's compensation, business interruption and
other insurance deemed necessary or otherwise required by Lender.
(g) Notice of Indebtedness. Promptly inform Lender of the creation,
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incurrence or assumption by Borrower of any actual or contingent
liabilities not permitted or not disclosed with the Momentum Spec. under
this Loan Agreement.
(h) Notice of Litigation. Promptly after the commencement thereof,
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notify Lender of all actions, suits and proceedings before any court or any
governmental department, commission or board affecting Borrower or any of
its properties.
(i) Notice of Material Adverse Change. Promptly inform Lender of (i)
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any and all material adverse changes in Borrower's financial condition, and
(ii) all claims made against Borrower which could materially affect the
financial condition of Borrower.
(j) Additional Documentation. Execute and deliver, or cause to be
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executed and delivered, any and all other agreements, instruments or
documents which Lender may reasonably request in order to give effect to
the transactions contemplated under this Loan Agreement and the other Loan
Documents.
7. Negative Covenants. Until (i) the Notes and all other obligations
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and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower will not, without the prior written
consent of Lender:
(a) Nature of Business. Make any material change in the nature of its
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business as carried on as of the date hereof unless agreed to by the
Management Committee established within this document.
(b) Liquidations, Mergers, Consolidations. Liquidate, merge or
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consolidate with or into any other entity, unless agreed to by the
Management Committee established within this document.
(c) Sale of Assets. Sell, transfer or otherwise dispose of any of its
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material assets or properties, other than in the ordinary course of
business, unless agreed to by the Management Committee established within
this document.
(d) Liens. Create or incur any lien or encumbrance on any of its
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assets, other than (i) liens and security interests securing indebtedness
owing to Lender, (ii) liens for taxes, assessments or similar charges that
are (1) not yet due or (2) being contested in good faith by appropriate
proceedings and for which Borrower has established adequate reserves, and
(iii) liens and security interests existing as of the date hereof which
have been disclosed to and approved by Lender in writing, unless agreed to
by the Management Committee established within this document.
(e) Indebtedness. Create, incur or assume any indebtedness for
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borrowed money or issue or assume any other note, debenture, bond or other
evidences of indebtedness, or guarantee any such indebtedness or such
evidences of indebtedness of others, other than (i) borrowings from Lender,
and (ii) borrowings outstanding on the date hereof and disclosed in writing
to Lender, and (iii) those occurring in the normal course of business,
unless agreed to by the Management Committee established within this
document.
(f) Transfer of Ownership. Permit the sale, pledge or other transfer
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of any of the ownership interests in Borrower, unless agreed to by the
Management Committee established within this document.
(g) Change in Management. Permit a change in the senior management of
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Borrower, unless agreed to by the Management Committee established within
this document.
(h) Loans. Make any loans to any person or entity, unless agreed to
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by the Management Committee established within this document.
(i) Transactions with Affiliates. Enter into any transaction,
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including, without limitation, the purchase, sale or exchange of property
or the rendering of any service, with any Affiliate (as hereinafter
defined) of Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and reasonable
terms no less favorable to Borrower than would be obtained in a comparable
arm's-length transaction with a person or entity not an Affiliate of
Borrower. As used herein, the term "Affiliate" means any individual or
entity directly or indirectly controlling, controlled by, or under common
control with, another individual or entity, unless agreed to by the
Management Committee established within this document.
(j) Dividends. Borrower agrees not to declare or pay any dividends on
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any shares of Borrower's capital stock, make any other distributions with
respect to any payment on account of the purchase, redemption, or other
acquisition or retirement of any shares of Borrower's capital stock, or
make any other distribution, sale, transfer or lease of any of Borrower's
assets other than in the ordinary course of business, unless any such
amounts are directly utilized for the payment of principal or interest on
indebtedness and obligations owing from time to time by Borrower to Lender,
unless agreed to by the Management Committee established within this
document.
(k) Salaries. Borrower agrees not to pay or contract to pay to any
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executive officer, director or senior management, or any member of his/her
immediate family, in any one calendar year, salaries, commissions, bonuses
or other compensation, in whatever form, which are in the aggregate in
excess of 110% of the amount of salaries, commissions, bonuses or other
compensation, in whatever form, payable to such persons during 2001, unless
agreed to by the Management Committee established within this document.
8. Management Committee. Lender shall appoint a Management Committee
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for the purpose of ensuring and safeguarding the Operating Capital of the
Lender. This Management Committee shall be comprised of not more than three (3)
and not less than one (1) individual reasonably acceptable to the Borrower. The
Management Committee shall work in conjunction with the Executive Management of
the Borrower to approve, which approval shall not be unreasonably withheld, any
and all
funding requests, as defined in Section (2) above. The Management Committee
shall have requisite authority to negotiate with any and all lenders, employees,
potential acquisitions, and subsidiaries of Borrower, for the purpose of
execution of a tactical plan to allow the Borrower to become cash flow positive.
The Management Committee shall be paid a fixed fee of $10,000 per month for
services rendered such services may be paid in cash or the companies restricted
common stock for the term of this agreement. Should stock be issued, the value
of such stock shall be $.225/share, and shall be issued to an accredited
investor for services rendered to the Company, on behalf of the Management
Committee.
9. Financial Covenants. Until (i) the Notes and all other obligations
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and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower will maintain reasonable financial
covenants as agreed to by and between the Lender and the Management Committee as
defined herein.
10. Reporting Requirements. Until (i) the Notes and all other
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obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower will, unless Lender shall otherwise
consent in writing, furnish to Lender:
(a) Interim Financial Statements. As soon as available, and in any
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event within 45 days after the end of each fiscal quarter, a balance sheet
and income statement of Borrower as of the end of such fiscal quarter, all
in form and substance and in reasonable detail satisfactory to Lender and
duly certified (subject to year-end review adjustments) by the President
and/or Chief Financial Officer of Borrower (i) as being true and correct in
all material aspects to the best of his or her knowledge and (ii) as having
been prepared in accordance with generally accepted accounting principles,
consistently applied.
(b) Annual Financial Statements. As soon as available and in any
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event within 90 days after the end of each fiscal year, a balance sheet and
income statement of Borrower as of the end of such fiscal year, in each
case audited by independent public accountants of recognized standing
acceptable to Lender.
(c) Compliance Certificate. A certificate signed by Borrower's
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president, within 45 days after the end of each fiscal quarter, stating
that Borrower is in full compliance with all of its obligations under this
Loan Agreement and all other Loan Documents and is not in default of any
term or provisions hereof or thereof, and demonstrating compliance with all
financial ratios and covenants set forth in this Loan Agreement.
(d) Borrowing Base Report. A borrowing base report signed by
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Borrower's president, within 45 days after the end of each fiscal quarter,
in form and detail satisfactory to Lender.
(e) Accounts Aging. An accounts receivable aging report within 45
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days after the end of each fiscal quarter, in form and detail satisfactory
to Lender.
(f) Payables Aging. An accounts payable aging report within 45 days
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after the end of each fiscal quarter, in form and detail satisfactory to
Lender.
(g) Inventory Listing. A list of Borrower's inventory by location and
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type (to include the following: raw materials, work in process and finished
goods) within 45 days after the end of each fiscal quarter, in form and
detail satisfactory to Lender.
(h) Tax Returns. Copies of Borrower's and Guarantor's income tax
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returns (federal and state, if any) within 30 days after filing.
11. Events of Default. Each of the following shall constitute an
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"Event of Default" under this Loan Agreement:
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(a) The failure, refusal or neglect of Borrower to pay when due any
part of the principal of, or interest on, the Notes or any other indebtedness or
obligations owing to Lender by Borrower from time to time.
(b) The failure of Borrower or any Obligated Party (as defined below)
to timely and properly observe, keep or perform any covenant, agreement,
warranty or condition required herein or in any of the other Loan Documents.
(c) The occurrence of an event of default under any of the other Loan
Documents or under any other agreement now existing or hereafter arising between
Lender and Borrower.
(d) Any representation contained herein or in any of the other Loan
Documents made by Borrower or any Obligated Party is false or misleading in
any material respect.
(e) The occurrence of any event which permits the acceleration of the
maturity of any indebtedness owing by Borrower to any third party under any
agreement or understanding.
(f) If Borrower or any Obligated Party: (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,
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 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
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is filed against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within 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 30 days any attachment, sequestration or similar writ
levied upon any property of such party; or (vi) fails to pay within 30 days
any final money judgment against such party.
(g) If Borrower or any Obligated Party is an entity, the liquidation,
dissolution, merger or consolidation of any such entity or, if Borrower or
any Obligated Party is an individual, the death or legal incapacity of any
such individual.
(h) The entry of any judgment, arising from any litigation occurring
after the creation of this Loan Agreement, against Borrower or the issuance or
entry of any attachment or other lien against any of the property of Borrower
for an amount in excess of $50,000, if undischarged, unbonded or undismissed
within 30 days after such entry.
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative. The term "Obligated Party", as used herein, shall
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mean any party other than Borrower who secures, guarantees and/or is otherwise
obligated to pay all or any portion of the indebtedness evidenced by the Notes.
12. Remedies. Upon the occurrence of any one or more of the foregoing
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Events of Default, (a) the entire unpaid balance of principal of the Notes,
together with all accrued but unpaid interest thereon, and all other
indebtedness owing to Lender by Borrower at such time shall, at the option of
Lender, become immediately due and payable without further notice, demand,
presentation, notice of dishonor, notice of intent to accelerate, notice of
acceleration, protest or notice of protest of any kind, all of which are
expressly waived by Borrower, and (b) Lender may, at its option, cease further
advances under any of the Notes. All rights and remedies of Lender set forth in
this Loan Agreement and in any of the other Loan Documents may also be exercised
by Lender, at its option to be exercised in its sole discretion, upon the
occurrence of an Event of Default.
13. Rights Cumulative. All rights of Lender under the terms of this
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Loan Agreement shall be cumulative of, and in addition to, the rights of Lender
under any and all other agreements between Borrower and Lender (including, but
not limited to, the other Loan Documents), and not in substitution or diminution
of any rights now or hereafter held by Lender under the terms of any other
agreement.
14. Waiver and Agreement. Neither the failure nor any delay on the
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part of Lender to exercise any right, power or privilege herein or under any of
the other Loan Documents shall operate as a waiver thereof, nor shall any single
or partial exercise of such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
No waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower therefrom shall be effective unless the
same shall be in writing and signed by Lender, and then shall be effective only
in the specific instance and for the purpose for which given and to the extent
specified in such writing. No modification or amendment to this Loan Agreement
or to any of the other Loan Documents shall be valid or effective unless the
same is signed by the party against whom it is sought to be enforced.
15. Benefits. This Loan Agreement shall be binding upon and inure to
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the benefit of Lender and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written consent of
Lender, assign any rights, powers, duties or obligations under this Loan
Agreement or any of the other Loan Documents.
16. Notices. All notices, requests, demands or other communications
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required or permitted to be given pursuant to this Agreement shall be in writing
and given by (i) personal delivery, (ii) expedited delivery service with proof
of delivery, or (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the first page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time
of personal delivery, in the case of expedited delivery service, as of the date
of first attempted delivery at the address and in the manner provided herein, or
in the case of mail, upon deposit in a depository receptacle under the care and
custody of the United States Postal Service. Either party shall have the right
to change its address for notice hereunder to any other location within the
continental United States by notice to the other party of such new address at
least 30 days prior to the effective date of such new address.
17. Construction. This Loan Agreement and the other Loan Documents
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have been executed and delivered in the State of Texas, shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
performable by the parties hereto in the county in Texas where the Lender's
address set forth on the first page hereof is located.
18. Invalid Provisions. If any provision of this Loan Agreement or any
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of the other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
19. Expenses. Borrower shall pay all costs and expenses (including,
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without limitation, reasonable attorneys' fees) in connection with (i) any
action required in the course of administration of the indebtedness and
obligations evidenced by the Loan Documents, and (ii) any action in the
enforcement of Lender's rights upon the occurrence of Event of Default.
20. Participation of the Loans. Borrower agrees that Lender may, at
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its option, sell interests in the Loans and its rights under this Loan Agreement
to a financial institution or institutions and, in connection with each such
sale, Lender may disclose any financial and other information available to
Lender concerning Borrower to each prospective purchaser.
21. Conflicts. In the event any term or provision hereof is inconsistent
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with or conflicts with any provision of the other Loan Documents, the terms and
provisions contained in this Loan Agreement shall be controlling.
22. Counterparts. This Loan Agreement may be separately executed in
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any number of counterparts, each of which shall be an original, but all of
which, taken together, shall be deemed to constitute one and the same
instrument.
23. Facsimile Documents and Signatures. For purposes of negotiating
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and finalizing this Loan Agreement, if this document or any document executed in
connection with it is transmitted by facsimile machine ("fax"), it shall be
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treated for all purposes as an original document. Additionally, the signature
of any party on this document transmitted by way of a facsimile machine shall be
considered for all purposes as an original signature. Any such faxed document
shall be considered to have the same binding legal effect as an original
document. At the request of any party, any faxed document shall be re-executed
by each signatory party in an original form.
NOTICE TO COMPLY WITH STATE LAW
For the purpose of this Notice, the term "WRITTEN AGREEMENT" shall include
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the document set forth above, together with each and every other document
relating to and/or securing the same loan transaction, regardless of the date of
execution.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
24. Conversion Rights. At Lender's option, Lender shall have the right
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to convert all or any unpaid principal amount of the Loans in to fully paid and
non-assessable shares of restricted common stock of Borrower at a price per
share equal to $.225, but not to exceed 7,500,000 shares, Borrower shall have
the right to convert, upon the Management Committee's recognition and
authorization on the achievement of the Borrower's acceptable positive cash
flow, if such occurrence is before the maturity of this Loan, and provided all
interest has been paid or converted and is current with Lender.
25. Warrants. The Lender will receive warrants to purchase 1,600,000
shares of the Borrower's common stock. The purchase price per share of the
Warrants would be equal to $0.50 per share. The Warrants are to be i) in a form
acceptable to the Lender, ii) fully vested and exercisable upon purchase, iii)
exercisable in whole or in part from time to time, iv) contain a cashless
exercise provision., and shall have an exercise term not to exceed three (3)
years.
26. Reservation of Shares. (i) The Borrower shall reserve, free from
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preemptive rights, out of its treasury stock or its authorized but un-issued
shares of Borrower's common stock, or both, solely for the purpose of effecting
the conversion of the Loans, sufficient shares to provide for the conversion of
the Loans; and (ii) the Borrower covenants that all shares of Borrower's common
stock which may be issued upon conversion of the Loans will, upon issue, be
validly issued, fully paid and non-assessable by the Borrower and free from all
taxes, liens and charges with respect to the issuance thereof.
27. Registration Rights. All of the Borrower's common stock underlying
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the warrants and conversion rights acquired by the Lender have one demand and
unlimited piggyback registration rights with the specific form of rights
acceptable to the Lender, whereby the Lender agrees to register in the
appropriate filing with the SEC, the underlying shares indicated above in
Section 24. Such filing of a registration statement shall be paid by the Lender,
such costs not to exceed $25,000, and shall be made within ninety (90) days of
such written request of the Borrower. In addition, Borrower shall use its best
efforts to obtain approval of such registration, and should the registration of
the underlying shares not be approved within ninety (90) days of filing,
Borrower shall incur a penalty of 1% per week payable in common stock, for any
delay, not to exceed 500,000 shares in total penalty payment to Lender.
28. Lock out/ Restricted Sales of Stock. Lender agrees that the Loan
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contemplated herein, and the subsequent funding, could cause irreparable harm to
the Borrowers existing shareholders, and as such, agrees, during the term of
this loan, not sell more than ten percent
(10%) of Lenders stock, if converted, in any given month, nor more than ten
percent (10%) in any given day of the total volume of stock traded in the
previous day. This agreement is intended by the parties to ensure the protection
of the bid/ask price of the Borrower's common stock publicly traded.
29. Default. Upon any material default by Borrower, and notice provided
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by Lender of such default, wherein the default has not been cured within ten
(10) days, Lender may exercise its rights of foreclosure on the collateral as
defined herein. Upon material default by Lender, and notice provided by Borrower
of such default, wherein the default has not been cured within ten (10) days,
Borrower may exercise its rights of conversion as defined herein.
EFFECTIVE as of the 31st day of May, 2002.
EXECUTION date on this the 1st day of July, 2002.
BORROWER:
IEXALT, INC.
By: /s/ Donald W. Sapaugh
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Name: Donald W. Sapaugh
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Title: Chairman and CEO
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LENDER:
J.A.K. IV LP
By: /s/ Jay Gubert
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Name: Jay Gubert
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Title: President
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Exhibit A
Previous Loan Agreements, Promissory Notes
Consolidated into this Loan Agreement
J. Gubert 1/16/2002 $105,178
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Signature Date
Seafood Anywhere 2/20/2002 $102,192
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Signature Date
Seafood Anywhere 2/20/2002 $101,600
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Signature Date
Seafood Anywhere 2/20/2002 $ 66,820
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Signature Date
Seafood Anywhere 2/20/2002 $ 88,437
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Signature Date
Exhibit B
Advance Request
Use of Cash
Date
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Vendor Amount Due
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Total Due: $
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