CHANGE IN TERMS AGREEMENT

 

Principal

Loan Date

Maturity

Loan No.

Call/Coll

Account

Officer

Initials

$1,090,807.13

02-13-2007

09-20-2010

910012673

4200

 

1218

 

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.

Any item above containing ***** has been omitted due to text length limitations.

 

Borrower:     KELLEY COMMUNICATION COMPANY, INC.
                     5625 S. Arville St., Ste. E

Las Vegas, NV 89118

 

Lender:         Bank of Nevada

Rainbow Regional Office

777 North Rainbow Boulevard

Las Vegas, NV 89107

(702) 310-4000

 

 

 

DESCRIPTION OF EXISTING INDEBTEDNESS. A LOAN EVIDENCED BY A PROMISSORY NOTE
DATED APRIL 6, 2004 IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,5430,000.00 AND
REFERENCING LOAN NO. 910012673, MODIFIED BY THAT CERTAIN CHANGE IN TERMS
AGREEMENTS DATED AS OF JUNE 27, 2005, AND SEPTEMBER 20, 2005 (“NOTE”).

DESCRIPTION OF COLLATERAL. TWO CERTIFICATES OF DEPOSIT.

DESCRIPTION OF CHANGE IN TERMS. THE NOTE IS HEREBY MODIFIED AS FOLLOWS:

THE DATE ON WHICH ALL OUTSTANDING PRINCIPAL IS DUE AND PAYABLE (TOGETHER WITH
ANY ACCRUED BUT UNPAID INTEREST THEREON) (“MATURITY DATE”) IS HEREBY EXTENDED
FROM SEPTEMBER 20, 2008 TO SEPTEMBER 20, 2010.

BORROWER ACKNOWLEDGES RECEIPT OF ADVANCE FROM LENDER IN ADDITION TO THE AMOUNT
OF THE LOAN EVIDENCED BY THE NOTE IN THE AMOUNT OF $450,000.00. ACCORDINGLY, THE
PRINCIPAL AMOUNT OF THE NOTE IS HEREBY INCREASED FROM $640,807.13 TO
$1,090,807.13.

CERTIFICATE OF DEPOSIT #3400049751 IS HEREBY ADDED AS COLLATERAL ON THE NOTE.

THE PAYMENT SCHEDULE IS HEREBY MODIFIED (SEE PAYMENT BELOW). ALL OTHER TERMS AND
CONDITIONS OF THE NOTE AND EVERY LOAN DOCUMENT, CERTIFICATE AND INSTRUMENT
SECURING OR OTHERWISE RELATING TO THE INDEBTEDNESS EVIDENCED BY THE NOTE REMAIN
THE SAME AND IN FULL FORCE AND EFFECT.

PROMISE TO PAY. KELLEY COMMUNICATION COMPANY, INC. (“Borrower”) promises to pay
to Bank of Nevada (“Lender”), or order, in lawful money of the United States of
America, the principal amount of One Million Ninety Thousand Eight Hundred Seven
& 13/100 Dollars ($1,090,807.13), together with interest at the rate of 7.500%
per annum on the unpaid principal balance from February 13, 2007. until paid in
full. The interest rate may change under the terms and conditions of the
“INTEREST AFTER DEFAULT” section.

PAYMENT. Borrower will pay this loan in 43 payments of $29,097.84 each payment.
Borrower's first payment is due March 20, 2007, and all subsequent payments are
due on the same day of each month after that. Borrower's final payment will be
due on September 20, 2010, and will be for all principal and all accrued
interest not yet paid. Payments include principal and interest. Unless otherwise
agreed or required by applicable law, payments will be applied to Finance
Charges first; then to unpaid principal; then to late charges and other charges.
Interest on this loan is computed on a 365/360 simple interest 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
Lender's address shown above or at such other place as Lender may designate in
writing.

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
under the payment schedule. Rather, early payments will reduce the principal
balance due and may result in Borrower's making fewer payments. Borrower agrees
not to send Lender payments marked “paid in full”, “without recourse”, or
similar language. If Borrower sends such a payment, Lender may accept it without
losing any of Lender's rights under this Agreement, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes “payment in full” of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: Bank of Nevada, West Sahara
Regional Office, 2700 W. Sahara Avenue, Las Vegas, NV 89102.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $10.00,
whichever is greater.

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, the interest rate on this loan shall be increased by 5.000 percentage
points. However, in no event will the interest rate exceed the maximum interest
rate limitations under applicable law.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

 

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Payment Default. Borrower fails to make any payment when due under the
indebtedness.

Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.

False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf under this Agreement or the Related
Documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time thereafter.

Insolvency. The dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

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 or by any governmental agency against
any collateral securing the Indebtedness. This includes a garnishment of any of
Borrower's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any Guaranty of the Indebtedness evidenced by this Note. In the event of a
death, Lender, at its option, may, but shall not be required to, permit the
guarantor's estate to assume unconditionally the obligations arising under the
guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.

Change of Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.

 

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Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

Cure Provisions. If any default, other than a default in payment is curable and
if Borrower has not been given a notice of a breach of the same provision of
this Agreement within the preceding twelve (12) months, it may be cured if
Borrower, after receiving written notice from Lender demanding cure of such
default: (1) cures the default within fifteen (15) days; or (2) if the cure
requires more than fifteen (15) days, immediately initiates steps which Lender
deems in Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Agreement and all accrued unpaid interest immediately due,
and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Agreement if Borrower does not pay. Borrower will pay Lender that amount.
This includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit, including
attorneys' fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law.

GOVERNING LAW. This Agreement will be governed by federal law applicable to
Lender and, to the extent not preempted by federal law, the laws of the State of
Nevada without regard to its conflicts of law provisions. This Agreement has
bean accepted by Lender in the State of Nevada.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Clark County, State of Nevada.
(Initial Here)

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, any trust accounts for
which setoff would be prohibited by law, or monies in any accounts that were
received pursuant to the federal Social Security Act, including, without
limitation. retirement and survivors' benefits, supplemental security income
benefits and disability insurance benefits. 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.

 

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ARBITRATION. Borrower and Lender agree that all disputes, claims and
controversies between them whether individual, joint, or class in nature,
arising from this Agreement or otherwise, including without limitation contract
and tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association in effect at the time the claim is filed, upon request
of either party. 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 includes, 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 receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of any
right, concerning any Collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by any arbitrator may be entered in any court having jurisdiction.
Nothing in this Agreement shall preclude any party from seeking equitable relief
from a court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable in 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 an action for these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration provision.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation at obligations, including all agreements evidenced or
securing the obligation's), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.

DISHONORED ITEM FEE. I may be charged a fee if i make a payment on my loan and
the check or preauthorized charge with which I pay is later dishonored.

 

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SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Agreement on
transfer of Borrower's interest, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns. If ownership of the
Collateral becomes vested in a person other than Borrower, Lender, without
notice to Borrower, may deal with Borrower's successors with reference to this
Agreement and the Indebtedness by way of forbearance or extension without
releasing Borrower from the obligations of this Agreement or liability under the
Indebtedness.

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address: Bank of Nevada
West Sahara Regional Office 2700 W. Sahara Avenue Las Vegas, NV 89102.

MISCELLANEOUS PROVISIONS. If any part of this Agreement cannot be enforced, this
fact will not affect the rest of the Agreement. Lender may delay or forgo
enforcing any of its rights or remedies under this Agreement without losing
them. Borrower and any other person who signs, guarantees or endorses this
Agreement, to the extent allowed by law, waive presentment, demand for payment,
and notice of dishonor. Upon any change in the terms of this Agreement, and
unless otherwise expressly stated in writing, no party who signs this Agreement,
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 loan 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 loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Agreement are joint and several.

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

BORROWER:

KELLEY COMMUNICATION COMPANY, INC.

By:  

/s/ James Michael Kelley

JAMES MICHAEL KELLEY, President/Sec/Treas of

KELLEY COMMUNICATION COMPANY, INC.

 

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