[tex10-1_logo.jpg]

 

LOAN AGREEMENT

 

Borrower: Internet America, Inc. Lender: Frost Bank Address:

6210 Rothway Street, Suite 100

Houston, Texas 77040

Address:

P.O. Box 1600

San Antonio, Texas 78296

  

This Loan Agreement (this "Loan Agreement") is dated as of October 28, 2013 by
and between Borrower and Lender.

 

ARTICLE I

  

Definitions and Use of Terms

 

Section 1.01.         Certain Definitions. As used herein, the following terms
have the meanings indicated, unless the context otherwise requires:

 

"Advance" means a disbursement by Lender of any of the proceeds of a Loan.

 

"Affiliate" means any individual or entity directly or indirectly controlling,
controlled by, or under common control with, another individual or entity.

 

"Applicable Bankruptcy Law" means the United States Bankruptcy Code or any other
present or future insolvency, bankruptcy, liquidation, conservatorship,
reorganization or moratorium Governmental Requirement or other similar
Governmental Requirements.

 

"Acquisition Cost" means the Borrower’s cost of acquiring assets or equity
interests associated with internet company user subscriptions, related hardware
costs of integrating such users into Borrower’s business (which shall not
include employee related costs) and other related assets thereto.

 

"Business Day" means a day other than a Saturday, Sunday or a day on which
commercial banks in the State of Texas are authorized to be closed, or are in
fact closed.

 

"Closing Date" means the date of this Loan Agreement.

 

"Code" means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated and rulings issued thereunder.

 

"Collateral" means any and all Property and rights and interests in or to
Property of Borrower and each of the Obligated Parties, whether tangible or
intangible, in which a Lien is granted or purported to be granted pursuant to
the Loan Documents.

 

"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

  

 

 

  

"Default" means any event or circumstance that constitutes an Event of Default
or, that with, the lapse of time, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.

 

"Distributions" means all dividends and other distributions made by a Person to
its equityholders.

 

"Eligible Contract Participant" as defined in the Commodity Exchange Act and the
regulations thereunder.

 

"Environmental Laws" means any and all Federal, state, local, and foreign
Governmental Requirements, judgments, permits, concessions, grants, franchises,
licenses, agreements or governmental restrictions relating to pollution and the
protection of health and the environment or the release of any materials into
the environment, including those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

 

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

 

"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with Borrower within the meaning of Section 414(b) or (c)
of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

 

"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a Plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.

 

"Event of Default" has the meaning set forth in Article IX.

  

2

 

  

"Excluded Swap Obligation" means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Guaranty of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Swap Obligation (or any guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) (a) by virtue of such Guarantor's failure for any reason to constitute
an Eligible Contract Participant at the time the Guaranty of such Guarantor or
the grant of such security interest becomes or would become effective with
respect to such Swap Obligation or (b) in the case of a Swap Obligation subject
to a clearing requirement pursuant to Section 2(h) of the Commodity Exchange Act
(or any successor provision thereto), because such Guarantor is a "financial
entity," as defined in Section 2(h)(7)(C)(i) the Commodity Exchange Act (or any
successor provision thereto), at the time the Guaranty of such Guarantor becomes
or would become effective with respect to such related Swap Obligation. If a
Swap Obligation arises under a master agreement governing more than one swap,
such exclusion shall apply only to the portion of such Swap Obligation that is
attributable to swaps for which such Guaranty or security interest is or becomes
illegal.

 

"Financial Statements" means financial information of Borrower, any Subsidiary
and any Obligated Party, as required and set forth in Section 6.01 as, at the
time in question, have been most recently furnished to Lender.

 

"GAAP" means generally accepted accounting principles in the United States set
forth in the statements and pronouncements of the Financial Accounting Standards
Board or such other principles as may be approved by a significant segment of
the accounting profession in the United States, that are applicable to the
circumstances as of the date of determination, consistently applied.

 

"Governmental Authority" means the United States, the state, the county, the
city or any other political subdivision in which the Property is located, and
any court or political subdivision, agency, or instrumentality having
jurisdiction over Borrower, its Subsidiaries, any Obligated Party or the
Property, domestic or foreign.

 

"Governmental Requirements" means all constitutions, statutes, laws, ordinances,
rules, regulations, orders, writs, injunctions or decrees of any Governmental
Authority applicable to Borrower, its Subsidiaries, any Obligated Party or the
Property.

 

"Guarantee" means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease Property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee will be deemed
to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof. The term "Guarantee" as a verb has a corresponding
meaning.

  

3

 

  

"Guarantor" means any Person who executes a Guaranty or a supplement thereto in
favor of Lender.

 

"Guaranty" means a continuing guaranty of the Obligations executed by a
Guarantor, in form and substance satisfactory to Lender, as the same may be
amended, modified, restated, ratified, supplemented, or replaced from time to
time. Notwithstanding the foregoing, amounts received from any Guarantor that is
not an Eligible Contract Participant shall not be applied to any Obligations
that are Excluded Swap Obligations.

 

"Hazardous Materials" means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

"Improvements" means any and all buildings, covered garages, air conditioning
towers, open parking areas, structures and other improvements of any kind or
nature, and any and all additions, alterations, betterments or appurtenances
thereto, now or at any time hereafter situated, placed or constructed upon the
Land or any part thereof.

 

"Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP: (a) all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments; (b) all direct
or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers' acceptances, bank guaranties,
surety bonds and similar instruments; (c) net obligations of such Person under
any Interest Rate Protection Agreement; (d) all obligations of such Person to
pay the deferred purchase price of Property or services (other than trade
accounts payable in the ordinary course of business that are not past due);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
Property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness will have been assumed by such Person or is limited in
recourse; (f) capital leases and Synthetic Lease Obligations; and (g) all
Guarantees of such Person in respect of any of the foregoing. For all purposes
hereof, the Indebtedness of any Person will include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person.

  

4

 

  

"Information" means all information received from Borrower, any Subsidiary or
any Obligated Party relating to Borrower, any Subsidiary or any Obligated Party
or any of their respective businesses, other than any such information that is
available to Lender on a nonconfidential basis prior to disclosure by Borrower,
any Subsidiary or any Obligated Party, provided that, in the case of information
received from Borrower, any Subsidiary or any Obligated Party after the Closing
Date, such information is clearly identified at the time of delivery as
confidential.

 

"Interest Rate Protection Agreement" means any interest rate swap agreement,
interest rate exchange agreement, currency exchange agreement, foreign exchange
agreement, interest rate and currency exchange agreement, forward rate
agreement, rate floor agreement, interest rate protection agreement, interest
rate cap agreement, rate collar agreement, any option agreement respecting the
foregoing, International Swaps and Derivatives Association, Inc. (ISDA) Master
Agreement, or any similar agreement or arrangement and any schedule,
confirmation, exhibit, document or instrument evidencing any interest in a
transaction covered by any such agreement now existing or hereafter entered into
by a Person to hedge the risk of variable interest rate volatility or
fluctuations of interest rates, as the same may be modified, supplemented,
amended or revised and in effect from time to time.

 

"IRS" means the United States Internal Revenue Service.

 

"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing).

 

"Loans" are defined in Section 2.01, each individually a "Loan".

 

"Loan Documents" means this Loan Agreement, the Notes, all Guaranties, all Deeds
of Trust, all Security Agreements, all Interest Rate Protection Agreements, and
such other documents, instruments and agreements, evidencing, securing or
pertaining to the Obligations as will from time to time be executed and
delivered to Lender by Borrower, any Subsidiary, any Obligated Party, or any
other party pursuant to this Loan Agreement, and any future amendments,
restatements, modifications, ratifications, confirmations, extensions or
supplements hereto or thereto.

 

"Managerial Official" means, with respect to any Person, an officer or a
governing Person of such Person.

 

"Margin Stock" has the meaning given thereto in Section 221.3(v) of
Regulation U, promulgated by the Board of Governors of the Federal Reserve
System, F.R.S. Reg. U, 12 C.F.R. part 221 (January 1, 1983 revision), as amended
from time to time.

  

5

 

  

"Material Adverse Change" means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, prospects, properties, assets,
liabilities (actual or contingent), condition (financial or otherwise) of
Borrower or Borrower and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Obligated Party to perform its obligations
under any Loan Document to which it is a party; (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against Borrower
or any Obligated Party of any Loan Document to which it is a party or the rights
of Lender under any Loan Document; or (d) a material restatement or revision of
a previously submitted financial statement pursuant to an audit. Notwithstanding
anything contained in the preceding sentence, a Material Adverse Change shall to
be deemed to have occurred as a result of any change, effect, event or
occurrence relating to (i) interest rates, the U.S. or global economy in
general, U.S. or global securities markets in general, the industry in which
Borrower operates in general, or acts of war (whether or not declared),
terrorism or any other calamity or crisis or geopolitical event, or effects of
weather, natural disasters or meteorological events, except to the extent any of
the foregoing has a disproportionate negative impact on Borrower, as compared to
other similarly situated companies, (ii) changes in any laws, except to the
extent such changes have a disproportionate negative impact on Borrower, as
compared to other similarly situated companies, (iii) any change in GAAP or in
its interpretation, (iv) actions taken or omitted to be taken pursuant to the
terms of any Loan Documents, (v) actions taken by Borrower with the consent of
Lender, (vi) actions taken by Lender, or (vii) any matter set forth in the
Borrower’s Schedules hereto.

 

"Multiemployer Plan" means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which Borrower, any Subsidiary, or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.

 

"Notes" means, collectively, each Specific Advance Note and any renewals,
extensions, modifications, refinancings, consolidations and substitutions
thereof.

 

"Obligated Party" means any party other than Borrower who secures, guarantees
and/or is otherwise obligated to pay all or any portion of the Obligations.

 

"Obligations" mean all present and future Indebtedness, obligations and
liabilities of Borrower to Lender arising pursuant to the Loans, this Loan
Agreement or any of the other Loan Documents or otherwise, and any renewals,
extensions, increases, or amendments thereof, or any part thereof, regardless of
whether such Indebtedness, obligations and liabilities are direct, indirect,
fixed, contingent, liquidated, unliquidated, joint, several or joint and several
and including interest and fees that accrue after the commencement by or against
Borrower of any proceeding under any Applicable Bankruptcy Law naming Borrower
as the debtor in such proceeding, regardless of whether such interest and fees
are allowed claims in such proceeding. Notwithstanding the foregoing, the
definition of "Obligations" shall not create any guarantee by any Guarantor of
(or grant of security interest by any Guarantor to support, as applicable) any
Excluded Swap Obligations of such Guarantor for purposes of determining any
obligations of any Guarantor.

 

"Patriot Act" is defined in Section 5.16.

  

6

 

  

"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Borrower, any
Subsidiary, or any ERISA Affiliate or to which Borrower, any Subsidiary, or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case
of a multiple employer or other plan described in Section 4064(a) of ERISA, has
made contributions at any time during the immediately preceding five plan years.

 

"Person" means any individual, firm, corporation, association, partnership,
joint venture, trust, entity, unincorporated organization or Governmental
Authority.

 

"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by Borrower, any Subsidiary, or, with respect
to any such plan that is subject to Section 412 of the Code or Title IV of
ERISA, any ERISA Affiliate.

 

"Property" means all property, whether real or personal, tangible or intangible.

 

"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

 

"Security Agreements" means, collectively, (a) the Security Agreement executed
by Borrower, in form and substance satisfactory to Lender, creating a Lien in
favor of Lender, (b) those Security Agreements executed by the Obligated
Parties, all in form and substance satisfactory to Lender, creating a Lien in
favor of Lender, and (c) any security agreement executed by any Person in
connection with this Loan Agreement, as each may be amended, modified, ratified,
supplemented, restated or replaced from time to time.

 

"Special Account" is defined in Section 2.05(a).

 

"Specific Advance Commitment" means a disbursement by Lender of any of the
proceeds of a Specific Advance Loan.

 

"Specific Advance Loans" is defined in Section 2.01(b).

 

"Specific Advance Note" means each promissory note executed by Borrower and
payable to the order of Lender, evidencing a Specific Advance Loan made by
Lender, as the same may be amended, restated, supplemented, modified, extended
or increased from time to time.

 

"Subordinated Debt" means any 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 reasonably
satisfactory to Lender.

 

"Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" will refer to a Subsidiary or Subsidiaries of
Borrower.

  

7

 

  

"Swap Obligation" means, with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a "swap"
within the meaning of section 1a(47) of the Commodity Exchange Act.

 

"Synthetic Lease Obligation" means the monetary obligation of a Person under
(a) a synthetic, off-balance sheet or tax retention lease, or (b) an agreement
for the use or possession of Property creating obligations that do not appear on
the balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the Indebtedness of such Person (without
regard to accounting treatment).

 

"Termination Date" means April 25, 2015.

 

"UCC" means the Uniform Commercial Code of the State of Texas or of any other
state having jurisdiction with respect to any of the rights and remedies of
Lender under the Loan Documents, as amended.

 

"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

Section 1.02.         Headings. The headings, captions, and arrangements used in
any of the Loan Documents are, unless specified otherwise, for convenience only
and will not be deemed to limit, amplify, or modify the terms of the Loan
Documents nor to affect the meaning thereof.

 

Section 1.03.         Number and Gender of Words. Whenever herein the singular
number is used, the same will include the plural where appropriate, and words of
any gender will include each other gender where appropriate.

 

Section 1.04.         Money. Unless stipulated otherwise, all references herein
or in any of the Loan Documents to "Dollars," "money," "payments," or other
similar financial or monetary terms are references to currency of the United
States of America.

 

Section 1.05.         Articles, Sections and Exhibits. All references herein to
Articles and Sections are, unless specified otherwise, references to articles
and sections of this Loan Agreement. All references herein to an "Exhibit,"
"Annex" or "Schedule" are references to exhibits, annexes or schedules attached
hereto, all of which are made a part hereof for all purposes, the same as if set
forth herein verbatim, it being understood that if any exhibit, annex or
schedule attached hereto, which is to be executed and delivered, contains
blanks, the same will be completed correctly and in accordance with the terms
and provisions contained and as contemplated herein prior to or at the time of
the execution and delivery thereof. The words "herein," "hereof," "hereunder"
and other similar compounds of the word "here" when used in this Loan Agreement
will refer to the entire Loan Agreement and not to any particular provision or
section.

 

8

 

  

Section 1.06.         Accounting Terms. Unless otherwise specified, all
accounting and financial terms and covenants set forth above and in Article VIII
are to be determined according to GAAP. If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either Borrower or Lender will so request, Lender and
Borrower will negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to
the approval of Lender, provided that, until so amended, (a) such ratio or
requirement will continue to be computed in accordance with GAAP prior to such
change therein and (b) Borrower will provide to Lender financial statements and
other documents required under this Loan Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

ARTICLE II

 

Loans

 

Section 2.01.        Loans. Subject to the terms and conditions set forth in
this Loan Agreement and the other Loan Documents, Lender hereby agrees to
provide to Borrower the following credit facilities:

 

(a)          Specific Advance Loans. Lender agrees to lend to Borrower, on a
non-revolving basis from time to time during the period commencing on the
Closing Date and continuing through the Termination Date, an aggregate amount
not to exceed $2,000,000.00 (the "Specific Advance Commitment") in a single
advance or in multiple advances (collectively, the "Specific Advance Loans"), as
may be requested by Borrower from time to time. Borrower will not be allowed to
reborrow under the Specific Advance Commitment after a repayment. Except for the
initial Specific Advance Loan described below, or unless Lender otherwise
specifically waives such additional conditions in writing, Lender's obligation
to make Specific Advance Loans will also be subject to the following additional
conditions precedent:

 

(i)          Each such Specific Advance Loan shall not exceed the least of (x)
fifty-five percent (55%) of the proposed Acquisition Cost of internet companies
being acquired by Borrower if the remaining acquisition cost is paid via fully
subordinated seller financing acceptable to Lender with a term less than three
(3) years (or a combination of such seller financing and Borrower equity); (y)
sixty-five percent (65%) of the proposed acquisition cost if the remaining
Acquisition Cost is paid via fully subordinated seller financing acceptable to
Lender within a term of three (3) years or more (or a combination of such seller
financing and Borrower equity); or (z) the remaining amount of the Specific
Advance Commitment;

  

9

 

  

(ii)         Each Specific Advance Loan shall have a term to be determined by
Borrower not to exceed three (3) years and all shall be evidenced by a separate
Specific Advance Note providing for equal monthly principal reduction payments
and accrued interest in an amount sufficient to fully amortize such Specific
Advance Loan over a three (3) year period.

 

(iii)        Borrower shall pay to Lender a loan processing fee at the time of
each Specific Advance Loan in an amount equal to the greater of (y) $250.00 or
(z) one tenth of one percent (0.10%) of such Specific Advance Loan. Such fee
shall be fully earned when paid; and

 

(iv)         Each Specific Advance Note shall bear interest at a fixed rate
equal to the sum of (y) the FHLB SecureConnect Bullet Rate for a one and
one-half (1 ½) year to two (2) year maturity established by the Federal Home
Loan Bank of Dallas (the “FHLB”) in its listing of advance pricing rates (the
“Index Rate”) plus (z) four percent (4.0%). The Index Rate shall be determined
by Lender two (2) Business Days prior to the date of each Specific Advance Note.
If the Index Rate ceased to be made available by the FHLB, Lender shall
substitute a comparable index.

 

All Specific Advance Loans will be collectively called the "Loans". Lender
reserves the right to require Borrower to give Lender not less than one Business
Day prior notice of each requested Advance, specifying (1) the aggregate amount
of such requested Advance, (2) the requested date of such Advance, and (3) the
purpose for such Advance, with such Advances to be reasonably requested in a
form satisfactory to Lender.

 

Section 2.02.         Promissory Notes. The Loans will be evidenced by one or
more Notes. Interest on the Notes will accrue at the rate set forth therein. The
principal of and interest on the Notes will be due and payable in accordance
with the terms and conditions set forth in the Notes and in this Loan Agreement.

 

Section 2.03.         Capital Adequacy. If after the Closing Date, Lender will
have determined that the adoption or implementation of any applicable
Governmental Requirement regarding capital adequacy or any change therein, or
any change in the interpretation or administration thereof by any central bank
or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by Lender (or its parent) with any
guideline, request, or directive regarding capital adequacy (whether or not
having the force of law) of any such central bank or other Governmental
Authority, has or would have the effect of reducing the rate of return on
Lender's (or its parent's) capital as a consequence of its obligations hereunder
or the transactions contemplated hereby to a level below that which Lender (or
its parent) could have achieved but for such adoption, implementation, change,
or compliance (taking into consideration Lender's policies with respect to
capital adequacy) by an amount deemed by Lender to be material, then from time
to time, within ten (10) Business Days after demand by Lender, Borrower will pay
to Lender (or its parent) such additional amount or amounts as will compensate
Lender for such reduction. A certificate of Lender claiming compensation under
this Section and setting forth the additional amount or amounts to be paid to it
hereunder will be conclusive, provided that the determination thereof is made on
a reasonable basis. In determining such amount or amounts, Lender may use any
reasonable averaging and attribution methods.

 

10

 

  

ARTICLE III

 

[[RESERVED]]

 

ARTICLE IV

 

Conditions Precedent

 

Section 4.01.        Initial Extension of Credit. The obligation of Lender to
make the initial Advances is subject to the condition precedent that Lender will
have received on or before the day of such Advances all of the following, each
dated (unless otherwise indicated) the Closing Date, in form and substance
reasonably satisfactory to Lender:

 

(a)          Resolutions. Resolutions of the board of directors, members,
partners or other appropriate governing body of Borrower and each Obligated
Party certified by a Managerial Official of such Person, which resolutions
authorize the execution, delivery, and performance by such Person of this Loan
Agreement and the other Loan Documents to which it is a party;

 

(b)          Certificates of Borrower and Obligated Parties. Certificates of
each of Borrower and Obligated Parties executed by a Managerial Official of such
Person certifying as to (i) the names of the officers of such Person authorized
to sign this Loan Agreement and each of the other Loan Documents to which it is
a party (including the certificates contemplated herein) together with specimen
signatures of such officers; (ii) original certified or file–stamped copies of
the certificate or articles of incorporation, articles of organization,
certificate of limited partnership, trust agreement or other similar
organizational document of such Person, certified as true, correct and complete
by the appropriate authority in their respective jurisdictions of organization
as of a date within ten (10) days prior to the Closing Date; (iii) bylaws,
limited partnership agreement, trust agreement, operating agreement or other
similar organizational document of such Person certified as true, correct, and
complete by such Managerial Official; and (iv) certificates of the appropriate
government officials as to the existence and active standing (if applicable) of
such Person in (A) their respective jurisdictions of organization and (B) each
other jurisdiction in which such Person is required to qualify to do business,
each dated within ten (10) days prior to the Closing Date;

 

(c)          Notes. The Notes executed by Borrower;

 

(d)          Security Agreement. The Security Agreement executed by Borrower;

  

11

 

  

(e)          Insurance Policies. Copies of all insurance policies required by
Section 6.06, together with additional insured endorsements, as applicable in
favor of Lender with respect to all insurance policies covering Collateral and
Borrower;

 

(f)          UCC, Lien Search, etc. The results of a Uniform Commercial Code,
tax Lien and judgment searches showing all financing statements and other
documents or instruments on file against Borrower and each Obligated Party with
the applicable authority in the jurisdiction of such Person's principal
residence, place of business or chief executive office (as applicable) and such
other jurisdictions reasonably requested by Lender, such search to be as of a
date no more than ten (10) days prior to the Closing Date;

 

(g)          Termination of Existing Indebtedness. Evidence that (i) all
existing Indebtedness not otherwise permitted by Section 7.07 have been or
concurrently with the Closing Date are being terminated, and all outstanding
amounts thereunder have been paid in full and (ii) all Liens securing such
Indebtedness have been or concurrently with the Closing Date are being released;

 

(h)          Compliance Certificate. A duly completed compliance certificate as
of the end of the fiscal quarter of Borrower most recently ended prior to the
Closing Date, signed by a Managerial Official of Borrower, and certifying as to
such matters described in Section 6.01(d);

 

(i)          Attorneys' Fees and Expenses. Evidence that the costs and expenses
(including reasonable attorneys' fees) referred to in Section 10.13, to the
extent incurred, will have been paid in full by Borrower; and

 

(j)          Additional Documentation. Lender will have received such additional
approvals, opinions, instruments or documents as Lender or its legal counsel may
reasonably request.

 

Section 4.02.        Conditions to all Subsequent Advances. The obligation of
Lender to make any Advance is subject to the following conditions precedent:

 

(a)          The representations and warranties of Borrower contained in
Article V or any other Loan Document, or which are contained in any document
furnished at any time under or in connection herewith or therewith, will be true
and correct on and as of the date of such Advance, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they will be true and correct as of such earlier date, and except
that for purposes of this Section 4.02, the representations and warranties
contained in Section 5.06 will be deemed to refer to the most recent statements
furnished pursuant to Section 6.01.

 

(b)          No Default will exist, or would result from such proposed Advance.

  

12

 

  

(c)          Lender will have received a request for such Advance in accordance
with the requirements hereof.

 

Each request for an Advance hereunder submitted by Borrower will be deemed to be
a representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Advance.

 

ARTICLE V

 

Representations and Warranties

 

Borrower hereby represents and warrants, and upon each request for an Advance
further represents and warrants, to Lender as follows:

 

Section 5.01.         Existence, Power, Compliance with Governmental
Requirements. Borrower and each of its Subsidiaries (a) is a corporation duly
organized, validly existing and in active standing, if applicable, under the
Governmental Requirements of the jurisdiction of its organization and all other
states where it is doing business, (b) has all requisite power and authority to
execute, deliver and perform the Loan Documents to which it is a party, to own
its Property and to conduct its business and (c) is in compliance with all
Governmental Requirements, except for such instances as could not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Change. Each Obligated Party (a) is a corporation duly organized, validly
existing and in active standing, if applicable, under the Governmental
Requirements of the jurisdiction of its organization and all other states where
it is doing business, (b) has all requisite power and authority to execute,
deliver and perform the Loan Documents to which it is a party, to own its
Property and to conduct its business, and (c) is in compliance with all
Governmental Requirements, except for such instances as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Change.
If Borrower, any of its Subsidiaries or any Obligated Party is engaged in the
business of operating a convenience store, such Person is not engaged in check
cashing or money services.

 

Section 5.02.         Binding Obligations. The execution, delivery, and
performance of this Loan Agreement and all of the other Loan Documents by
Borrower, each of its Subsidiaries and each Obligated Party have been duly
authorized by all necessary action by Borrower, its Subsidiaries, and the
Obligated Parties and constitute legal, valid and binding obligations of
Borrower, its Subsidiaries, and the Obligated Parties, enforceable in accordance
with their respective terms, except as enforcement of remedies may be limited by
Applicable Bankruptcy Law.

 

Section 5.03.         No Consent. The execution, delivery and performance of
this Loan Agreement and the other Loan Documents, and the consummation of the
transactions contemplated hereby and thereby, do not (a) conflict with, result
in a violation of, or constitute a default under (i) any provision of its
charter or organizational documents, or other instrument binding upon Borrower,
any of its Subsidiaries, or any Obligated Party, (ii) any Governmental
Requirements or (iii) any contract, agreement, document or instrument to which
Borrower, any of its Subsidiaries or any Obligated Party is a party or affecting
such Person or the Property of such Person, (b) require the consent, approval or
authorization of or notice to or filing with any third party, not otherwise
obtained and delivered to Lender or (c) result in creation or perfection of a
Lien.

  

13

 

  

Section 5.04.         Taxes; Governmental Charges. Borrower, each Subsidiary and
each Obligated Party have timely filed all federal, state and local tax reports
and returns required by any Governmental Requirement to be filed, including,
without limitation, all income, franchise, employment, property and sales tax
returns, and have duly paid all their respective liabilities for taxes,
assessments, governmental charges and levies that are due and payable. The
reserves reflected on the balance sheet of Borrower, each Subsidiary and each
Obligated Party are adequate in amount for the payment of all tax liabilities
for Borrower, each Subsidiary, and each Obligated Party, as applicable, accrued
through the date of such balance sheet. To the best of Borrower's knowledge,
there is no pending investigation or audit of Borrower, any Subsidiary or any
Obligated Party by any taxing authority. Furthermore, to the best of Borrower's
knowledge, there is no pending but unassessed tax liability of Borrower, any
Subsidiary or any Obligated Party or any unresolved questions or claims
concerning any tax liability of Borrower, any Subsidiary or any Obligated Party.

 

Section 5.05.         No Default. Neither Borrower, any Subsidiary nor any
Obligated Party is in default under or with respect to any contractual
obligation that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Change. No Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Loan Agreement or any other Loan Document.

 

Section 5.06.         Financial Statements. The Financial Statements are
(a) true, correct and complete in all material respects as of the dates
specified therein, (b) fully and accurately present the financial condition and
results of operations for the period covered thereby of Borrower, its
Subsidiaries and Obligated Parties, as applicable, as of the dates specified and
(c) except as set forth in Schedule 5.06, prepared in accordance with GAAP.
Since the date of the Financial Statements, no Material Adverse Change has
occurred, except as heretofore disclosed in writing to Lender, nor has Borrower,
any Subsidiary or any Obligated Party incurred any material liability, direct or
indirect, fixed or contingent. Each of Borrower and Obligated Parties is
solvent.

 

Section 5.07.         Suits, Actions, Etc. There are no investigations, actions,
suits or proceedings pending or to the knowledge of Borrower threatened before
or by any Governmental Authority or arbitration authority against or affecting
Borrower, any Subsidiary, any Obligated Party or the Collateral, or involving
the validity, enforceability or priority of any of the Loan Documents. Neither
Borrower, any Subsidiary, nor any Obligated Party is, and the consummation of
the transactions contemplated hereby and the performance or satisfaction of any
of the terms or conditions hereof and of the other Loan Documents will not cause
Borrower, any Subsidiary, or any Obligated Party to be, in violation of or in
default with respect to any Governmental Requirement or in default (or provide
cause for acceleration of Indebtedness) under any mortgage, deed of trust,
lease, promissory note, loan agreement, credit agreement, partnership agreement
or other agreement or restriction to which Borrower, any Subsidiary, or any
Obligated Party is a party or by which Borrower, any Subsidiary, or any
Obligated Party or the Collateral may be bound or affected.

  

14

 

  

Section 5.08.         Insurance. Borrower, its Subsidiaries and Obligated
Parties and the Properties of Borrower, its Subsidiaries and Obligated Parties
are insured with financially sound and reputable insurance companies not
Affiliates of Borrower or any Obligated Party, in such amounts, with such
deductibles and covering such risks required by Lender and in the absence of
such requirements, as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where Borrower, the
applicable Subsidiary or the applicable Obligated Party operates.

 

Section 5.09.         Subsidiaries. Borrower (a) has no Subsidiaries other than
those specifically disclosed on Schedule 5.09(a), (b) has no equity investments
or other interests convertible into equity in any other corporation or entity
other than those specifically disclosed in Schedule 5.09(b) and (c) has no, and
does not transact business under any, assumed names or trade names other than
those specifically disclosed in Schedule 5.09(c).

 

Section 5.10.         Ownership of Property; Liens. Except as otherwise
permitted in Section 7.06, Borrower, each Subsidiary and each Obligated Party
have good record and marketable title in fee simple to, or valid leasehold
interests in, all personal and real Property, including the Collateral,
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Change. Except to the extent permitted in
Section 7.06, the Collateral is not subject to any Lien other than Liens in
favor of Lender. All Property of Borrower is titled in Borrower's legal name,
and Borrower has not used any other name during the last five years other than
the assumed names or trade names listed on Schedule 5.09(c).

 

Section 5.11.         Environmental Compliance. Borrower and its Subsidiaries
conduct in the ordinary course of business a review of the effect of existing
Environmental Laws and claims alleging potential liability or responsibility for
violation of any Environmental Law on their respective businesses, operations
and properties, and as a result thereof Borrower has reasonably concluded that
such Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Change.

 

Section 5.12.         ERISA Compliance.

 

(a)           Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Governmental Requirements.
Each Plan that is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS or an application for
such a letter is currently being processed by the IRS with respect thereto and,
to the best knowledge of Borrower, nothing has occurred which would prevent, or
cause the loss of, such qualification. Borrower and each ERISA Affiliate have
made all required contributions to each Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.

  

15

 

  

(b)          There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Change. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Change.

 

(c)          (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.

 

Section 5.13.        Margin Regulations; Investment Company Act; Public Utility
Holding Company Act.

 

(a)          Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.

 

(b)          None of Borrower, any Person controlling Borrower, or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.

 

Section 5.14.        Disclosure. Borrower has disclosed to Lender all
agreements, documents, instruments and organizational documents or other
restrictions to which it, any of its Subsidiaries, or any Obligated Party is
subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Change.
No report, financial statement, certificate or other information furnished
(whether in writing or orally) by or on behalf of Borrower, any Subsidiary, or
any Obligated Party to Lender in connection with the transactions contemplated
hereby and the negotiation of this Loan Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.

  

16

 

  

Section 5.15.         Intellectual Property. Borrower, its Subsidiaries and
Obligated Parties own, or possess the right to use, all of the trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises,
licenses, slogans, other advertising products and processes, and other
intellectual property rights that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other
Person. To the best knowledge of Borrower, no slogan or other advertising
product, process or other material now used by Borrower, any Subsidiary or any
Obligated Party infringes upon any rights held by any other Person.

 

Section 5.16.         Patriot Act. All capitalized words and phrases and all
defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October
26, 2001) (the "Patriot Act") and in other statutes and all orders, rules and
regulations of the United States government and its various executive
department, agencies and offices related to the subject matter of the Patriot
Act, including, but not limited to, Executive Order 13224 effective September
24, 2001, are hereinafter collectively referred to as the "Patriot Rules" and
are incorporated into this section of the Loan Agreement. Borrower represents
and warrants to Lender that neither it nor any of its principals, shareholders,
members, partners, or Affiliates, as applicable, is a Person named as a
Specially Designated National and Blocked Person (as defined in Presidential
Executive Order 13224) and that it is not acting, directly or indirectly, for or
on behalf of any such Person. Borrower further represents and warrants to Lender
that Borrower and its principals, shareholders, members, partners, or
Affiliates, as applicable, are not, directly or indirectly, engaged in, nor
facilitating, the transactions contemplated by this Loan Agreement on behalf of
any Person named as a Specially Designated National and Blocked Person. Borrower
hereby agrees to defend, indemnify and hold harmless Lender from and against any
and all claims, damages, losses, risks, liabilities, and expenses (including
reasonable attorneys' fees and costs) arising from or related to any breach of
the foregoing representations and warranties.

 

ARTICLE VI

 

Affirmative Covenants

 

Until (i) all Obligations are fully paid and satisfied, and (ii) the Specific
Advance Commitment has been terminated, Borrower agrees and covenants that it
will, and cause each Subsidiary to:

  

17

 

  

Section 6.01.        Furnish to Lender:

 

(a)          Annual Financial Statements. As soon as available and in any event
within one hundred twenty (120) days after the end of each fiscal year of
Borrower, a consolidated and consolidating balance sheet and related statements
with detailed footnotes of income or operations, shareholders' equity and cash
flows of Borrower and its Subsidiaries as of the end of such fiscal year, in
each case audited by Borrower’s existing accounting firm, accompanied by a
report and opinion of such firm, which report and opinion shall be prepared in
accordance with GAAP and shall not be subject to any "going concern," "emphasis
on going concern," or like qualification or exception, or any qualification or
exception as to the scope of such audit. Borrower grants Lender permission to
discuss with such Firm the results of any audit, the field work undertaken, the
Loans and any other matters related to Borrower, any Subsidiary and any
Obligated Party.

  

(b)          Interim Financial Statements. As soon as available, and in any
event within sixty (60) days after the end of each fiscal quarter of each fiscal
year of Borrower, a consolidated and consolidating balance sheet and income
statement, and statement of contingent liabilities of Borrower and its
Subsidiaries as of the end of such fiscal quarter, all in form and substance and
in detail reasonably satisfactory to Lender and duly certified (subject to
year-end review adjustments) by a Managerial Official of Borrower (i) as being
true and correct in all material aspects to the best of his or her knowledge and
(ii) except as set forth in Schedule 5.06, as having been prepared in accordance
with GAAP.

 

(c)          Compliance Certificate. A certificate in form acceptable to Lender
signed by a Managerial Official of Borrower, within sixty (60) 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 Article VIII.

 

Section 6.02.        Notices. Promptly notify Lender:

 

(a)          of the occurrence of any Default;

 

(b)          of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Change, including (i) breach or non-performance of,
or any default under, a contractual obligation of Borrower, any Subsidiary or
any Obligated Party; (ii) any dispute, litigation, investigation, proceeding or
suspension between Borrower, any Subsidiary or any Obligated Party and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting Borrower, any Subsidiary
or any Obligated Party;

 

(c)          of the occurrence of any ERISA Event;

 

(d)          of a change in name of Borrower or any Obligated Party or a change
in the location of Borrower, any Obligated Party, or any Collateral, in each
case, within 30 days prior to such change; and

 

(e)          of any material change in accounting policies or financial
reporting practices by Borrower or any Subsidiary; provided however, this shall
exclude any changes necessitated by changes in GAAP.

  

18

 

  

Each notice pursuant to this Section will be accompanied by a statement of a
Managerial Official of Borrower setting forth details of the occurrence referred
to therein and stating what action Borrower has taken and proposes to take with
respect thereto. Each notice pursuant to this Section will describe with
particularity any and all provisions of this Loan Agreement and any other Loan
Document that have been breached or affected thereby.

 

Section 6.03.         Accounts and Records. Maintain its books and records in
accordance with GAAP.

 

Section 6.04.         Preservation of Existence, Etc. (a) Preserve, renew and
maintain in full force and effect its legal existence and good standing under
the Governmental Requirements of the jurisdiction of its organization and each
state in which it is qualified to do business; and (b) take all reasonable
action to maintain all rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business, except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Change.

 

Section 6.05.         Maintenance of Properties. (a) Maintain, preserve and
protect all of its material properties and equipment necessary in the operation
of its business in good working order and condition, ordinary wear and tear
excepted; (b) make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so could not reasonably be expected to
have a Material Adverse Change; (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities; and (d) preserve or
renew all of its registered patents, trademarks, trade names and service marks
(including licenses thereof), except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Change.

 

Section 6.06.         Maintenance of Insurance. Maintain with financially sound
and reputable insurance companies not Affiliates of Borrower, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
including but not limited to, commercial property insurance, all risks property
damage, commercial general liability, worker's compensation, business
interruption and other insurance, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons and
providing for not less than 30 days' prior notice to Lender of termination,
lapse or cancellation of such insurance. Each insurance policy will name Lender
as "additional insured" and "mortgagee", as applicable. Borrower will, and will
cause each Obligated Party to, deliver to Lender upon Lender's request,
originals or certified copies of insurance policies or certificates of
insurance, each in form and substance satisfactory to Lender.

 

Section 6.07.         Right of Inspection. Permit Lender to (a) visit its
properties and installations, (b) examine, audit and make and take away copies
or reproductions of its books and records, and (c) discuss with its respective
directors, partners, principal officers and independent auditors its respective
businesses, assets, liabilities, financial positions, results of operations, and
business prospects, at all reasonable times. Borrower shall be responsible for
the reasonable costs and expenses associated with such inspection. To the extent
Borrower maintains any records, including computer generated records and
software programs for the generation of such records in the possession of a
third party, Borrower will, to the extent such records constitute Collateral,
(i) notify such third party of Lender's Lien in such records, (ii) cause such
party to grant access to Lender to such records and (iii) provide Lender with
copies of any records Lender may request, all at Borrower's sole cost and
expense. In addition, permit Lender and its designees from time to time to make
such inspections and audits, and to obtain such confirmations or other
information, with respect to any of the Unencumbered Liquid Assets as Lender
deems reasonably necessary or desirable and shall reimburse Lender on demand for
all costs and expenses incurred by Lender in connection with such inspections
and audits.

  

19

 

  

Section 6.08.         Right to Additional Information. Furnish Lender with such
additional information and statements, lists of assets and liabilities,
statements of contingent liabilities, tax returns, and other reports and
certificates with respect to Borrower's, any Subsidiary's, or any Obligated
Party's financial condition, business operations and compliance with the terms
of the Loan Documents as Lender may reasonably request from time to time.

 

Section 6.09.         Compliance with Governmental Requirements. Conduct its
business in an orderly and efficient manner consistent with good business
practices, and perform and comply with all Governmental Requirements applicable
to Borrower, its Subsidiaries, and their businesses, operations and Property
(including without limitation, all applicable Environmental Laws).

 

Section 6.10.         Taxes. Timely pay and discharge when due all of its
Indebtedness and obligations, including without limitation, all assessments,
taxes, governmental charges, levies, Liens and claims, of every kind and nature,
imposed upon Borrower, its Subsidiaries or any of their properties, income, or
profits, prior to the earlier of the date on which such obligation would become
delinquent or the date penalties would attach, and all lawful claims that, if
unpaid, might reasonably be expected to become a Lien or charge upon any of
Borrower's or its Subsidiary's properties, income, or profits; provided,
however, Borrower and its Subsidiaries will not be required to pay and discharge
any such assessment, tax, government charge, levy, Lien or claim so long as
(a) the legality of the same will be contested in good faith by appropriate
judicial, administrative or other legal proceedings instituted with reasonable
promptness and diligently conducted, and (b) Borrower and its Subsidiaries will
have established on their books adequate reserves with respect to such contested
assessment, tax, government charge, levy, Lien or claim in accordance with GAAP.

 

Section 6.11.         Notice of Indebtedness. Promptly inform Lender of the
creation, incurrence or assumption by Borrower or any Subsidiary of any actual
or contingent liabilities not permitted under this Loan Agreement or any other
Loan Document.

 

Section 6.12.         Additional Documents. Execute and deliver, or cause to be
executed and delivered, to Lender, from time to time as required by Lender, any
and all other agreements, instruments and documents which Lender may reasonably
request in order to provide the rights and remedies to Lender granted or
provided for by the Loan Documents or give effect to the transactions
contemplated under this Loan Agreement and the other Loan Documents.

 

20

 

 

Section 6.13.         Lender as Principal Depository. Maintain with Lender
primary deposit accounts, including business, cash management, operations and
administrative deposit accounts; provided however, that Borrower may maintain
its credit card and automated clearing house (ACH) processing with a third
Person.

 

ARTICLE VII

 

Negative Covenants

 

Until (i) all Obligations are fully paid and satisfied, and (ii) the Specific
Advance Commitment has been terminated in full, Borrower will not, nor will it
permit any Subsidiary or any Obligated Party to, directly or indirectly:

 

Section 7.01.         Nature of Business. Make any material change in the nature
of its business as carried on as of the Closing Date.

 

Section 7.02.         Liquidations, Mergers, Consolidations. Except as
contemplated by the purpose of the Specific Advance Loans referenced herein
approved by Lender, become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the assets of any Person or any
shares or other evidence of beneficial ownership of any Person, or dissolve,
liquidate or cease operations. Upon reasonable prior written notice to Lender,
notwithstanding the foregoing, Borrower shall be permitted to: (i) be a party to
a merger or consolidation so long as it is the surviving entity, or (ii)
purchase or otherwise acquire all or a substantial part of the assets of any
Person or any shares or other evidence of beneficial ownership of any Person in
an aggregate amount not to exceed $100,000.00, so long as any such transaction
involves an internet service provider or related business and Borrower does not
borrow funds to finance the merger, consolidation, purchase or acquisition other
than from the selling Person.

 

Section 7.03.         Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its assets or Properties, other than in the ordinary course of
business.

 

Section 7.04.         Sale and Leaseback. Enter into any arrangement with any
Person pursuant to which it leases from such Person real or personal Property
that has been or is to be sold or transferred, directly or indirectly, by it to
such Person.

 

Section 7.05.         Prepayment of Indebtedness. Prepay any Indebtedness,
except the Obligations in accordance with the terms of this Loan Agreement.

 

Section 7.06.         Liens. Create, incur or permit to exist any Lien or
encumbrance on any of its assets, other than (a) purchase money security
interests in equipment securing Indebtedness in an aggregate amount not to
exceed $500,000.00 in equipment incurred in any fiscal year of Borrower,
(b) Liens and security interests securing Indebtedness owing to Lender,
(c) Liens for taxes, assessments or similar charges that are (i) not yet due or
(ii) being contested in good faith by appropriate proceedings and for which
Borrower has established adequate reserves, and (d) Liens and security interests
existing as of the Closing Date which have been disclosed to and approved by
Lender in writing. 

 

21

 

  

Section 7.07.        Indebtedness. Create, incur, permit or assume any
Indebtedness, other than (a) Indebtedness to Lender, (b) Indebtedness
outstanding on the Closing Date which has been disclosed to and approved by
Lender in writing and (c) other Indebtedness in an aggregate amount not to
exceed $500,000.00.

 

Section 7.08.        Change in Management. Permit a change in the senior
management of Borrower or any Subsidiary.

 

Section 7.09.         Loans and Investments. Make any advance, loan, extension
of credit, or capital contribution to or investment in, or purchase any stock,
bonds, notes, debentures, or other securities of, any Person.

 

Section 7.10.       Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of Property or the
rendering of any service, with any Affiliate of Borrower or any Subsidiary,
except in the ordinary course of and pursuant to the reasonable requirements of
Borrower's and its Subsidiaries' business and upon fair and reasonable terms no
less favorable to Borrower or any Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of Borrower
or any Subsidiary.

 

Section 7.11.        Dividends. Declare or pay any dividends on any shares of
its capital stock unless such dividends do not result in an Event of Default (as
defined in Article IX), make any other Distributions with respect to any payment
on account of the purchase, redemption, or other acquisition or retirement of
any shares of its capital stock, unless any such amounts are directly utilized
for the payment of principal or interest on Obligations and other Indebtedness
or obligations owing from time to time by Borrower or any Subsidiary to Lender.

 

Section 7.12.         Use of Proceeds. Use the proceeds for any purpose other
than as follows: the Specific Advance Loans for acquisition of internet
businesses, in each case, not in contravention of any Governmental Requirement
or of any Loan Document.

 

Section 7.13.        Additional Subsidiaries. Form or acquire any Subsidiary
unless Borrower shall have notified Lender at the time that any Person becomes a
Subsidiary, and promptly thereafter (and in any event within 30 days), cause
such Person to (a) become a Guarantor by executing and delivering to Lender a
counterpart of the Guaranty or such other document as Lender will deem
reasonably appropriate for such purpose, and (b) deliver to Lender an executed
counterpart of the Security Agreement or such other document as Lender will deem
reasonably appropriate, and (c) such other documents, instruments and agreements
Lender will reasonably request.

 

ARTICLE VIII

 

Financial Covenants

 

As long as this Loan Agreement remains in effect, Borrower will, and will cause
any Subsidiary or any Obligated Party to, directly or indirectly:

 

 

22

 

 

Section 8.01         Debt to Tangible Net Worth. Maintain at all times a ratio
of Debt to Tangible Net Worth of not more than 2.50 to 1.00, to be tested as of
the end of each fiscal quarter. “Debt” shall be defined as the sum of: (a)
Borrower’s Total Liabilities; less (b) Subordinated Debt. “Tangible Net Worth”
shall be defined as the sum of: (a) Borrower’s Total Assets; less (b) all
intangible assets; less (c) Total Liabilities; plus (d) Subordinated Debt.

 

Section 8.02         Cash Flow Coverage. Maintain a ratio of Cash Flow to Debt
Service of not less than 2.0 to 1.0, to be tested as of the end of each fiscal
quarter. “Cash Flow” shall be defined as Borrower's (a) net income plus (b)
depreciation and amortization, plus (c) interest expense on a rolling four (4)
quarter basis. “Debt Service” shall be defined as Borrower's scheduled principal
payments corresponding to the cash flow measurement period.

 

ARTICLE IX

 

Events of Default

 

Section 9.01.        Events of Default. Each of the following will constitute an
"Event of Default" under this Loan Agreement:

 

(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 Obligations by
Borrower from time to time.

 

(b)          The failure of Borrower, any Subsidiary, or any Obligated Party to
timely and properly observe, keep or perform any covenant, agreement or
condition required in Sections 6.01 and 6.02 and Articles VII and VIII.

 

(c)          Upon fifteen (15) days notice and an opportunity to cure, the
failure of Borrower, any Subsidiary, or any Obligated Party to timely and
properly observe, keep or perform any covenant, agreement or condition required
herein (other than as specified in clauses (a) and (b) above) or in any of the
other Loan Documents.

 

(d)          Any representation or warranty contained herein, in any of the
other Loan Documents or in any other document ever delivered or furnished by
Borrower, any Subsidiary or any Obligated Party to Lender in connection with the
Obligations is or proves to have been false, misleading, erroneous or breached
in any material respect.

 

(e)          If Borrower, any Subsidiary 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 or is unable 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 Applicable Bankruptcy Laws or an involuntary
petition for relief is filed against such party under any Applicable Bankruptcy
Law, 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 material Property of
such party; or (vi) fails to pay within 30 days any final material money
judgment against such party. 

 

23

 

  

(f)           A levy against the Property or any part thereof, or against any
material portion of Borrower's other property, or any execution, garnishment,
attachment, sequestration or other writ or similar proceeding which is not
permanently dismissed or discharged within 30 days after such levy.

 

(g)          Abandonment of any portion of the Property or of any material
portion of any of the other property of Borrower or any Obligated Party.

 

(h)          The dissolution, liquidation, termination or forfeiture of right to
do business of Borrower, any Subsidiary or any Obligated Party, or if Borrower
or any Obligated Party is an individual, the death or disability of Borrower,
any Subsidiary or any Obligated Party.

 

(i)           An inability of Borrower to satisfy any condition specified herein
as precedent to the obligation of Lender to make an Advance after an application
for Advance has been submitted by Borrower to Lender.

 

(j)           Borrower, any Subsidiary or any Obligated Party will have
(i) concealed, removed, or permitted to be concealed or removed any part of its
Property with the intent to hinder, delay or defraud any of its creditors; or
(ii) made or suffered a transfer of any of its Property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar Governmental Requirement;
or (iii) suffered or permitted while insolvent (under any applicable definition
of the term) any creditor to obtain a Lien upon any of its material Property
through legal proceedings or distraint which Lien is not permanently vacated
within 30 days from the Closing Date.

 

(k)          The occurrence of any event or condition which results in, or with
notice or lapse of time or both could reasonably be expected to result in, a
default in the payment of any Indebtedness or performance of any obligation of
Borrower, any Subsidiary or any Obligated Party to any Person other than Lender,
excluding any Indebtedness or obligation not exceeding, individually or in the
aggregate, $50,000.00.

 

(l)           The occurrence of a Material Adverse Change.

 

(m)         The occurrence of any default under any lease covering any portion
of any material Property or the repudiation, termination or attempted
repudiation or termination of any such lease.

   

24

 

  

(n)          The issuance or entry of any attachment or other Lien (other than
Lender's Lien on the Collateral) against any of the Property of Borrower for an
amount in excess of $50,000.00, if undischarged, unbonded or undismissed within
30 days after such entry.

 

(o)          The occurrence of an ERISA Event.

 

(p)          Any Loan Document or any provision thereof ceases to be in full
force and effect; or Borrower or any Obligated Party or any other Person
contests the validity or enforceability of any Loan Document or any provision
thereof; or Borrower or any Obligated Party denies that it has any or further
liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document or any provision thereof.

 

Nothing contained in this Loan Agreement will be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default will be cumulative.

 

Section 9.02.        Remedies. Upon the occurrence and during the continuance of
any Event of Default, (a) the entire unpaid principal balance of the Notes,
together with all accrued but unpaid interest thereon, and all other
Indebtedness owing to Lender by Borrower at such time will, 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, (b) Lender may, at its option, cease further
Advances under any of the Notes, (c) reduce any claim to judgment, and
(d) exercise any and all rights and remedies afforded by any of the Loan
Documents, or by law or equity or otherwise, as Lender will deem appropriate.
All rights and remedies of Lender set forth in this Loan Agreement and in any of
the other Loan Documents may be exercised by Lender at its option and in its
sole discretion, upon the occurrence and during the continuance of any Event of
Default.

 

Section 9.03.        Right of Setoff. If an Event of Default shall have occurred
and be continuing, Lender and its Affiliates are hereby authorized at any time
and from time to time, to the fullest extent not prohibited by applicable
Governmental Requirements, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, in whatever currency) at any time
held and other obligations (in whatever currency) at any time owing by Lender or
any such Affiliate to or for the credit or the account of Borrower or any
Obligated Party against any and all of the Obligations or the obligations of any
Obligated Party now or hereafter existing under this Loan Agreement or any other
Loan Document, irrespective of whether or not Lender shall have made any demand
under this Loan Agreement or any other Loan Document and although the
Obligations or such obligations of such Obligated Party may be contingent or
unmatured or are owed to a branch or office of Lender different from the branch
or office holding such deposit or obligated on such Indebtedness. The rights of
Lender and its Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that Lender or its Affiliates may
have.

  

25

 

  

Section 9.04.        Performance by Lender. Should any covenant, duty, or
agreement of any Obligated Party fail to be performed in accordance with the
terms of the Loan Documents, Lender may, at its option, perform, or attempt to
perform, such covenant, duty or agreement on behalf of any Obligated Party. In
such event, Borrower will pay to Lender on demand any amount expended by Lender
in such performance or attempted performance, together with interest thereon at
the rate provided in the Notes for past-due payments from the date of such
expenditure by Lender until paid. Notwithstanding the foregoing, it is expressly
understood that Lender does not assume and will never have any liability or
responsibility for the performance of any duties of Borrower hereunder. Without
limiting the generality of the foregoing, upon the occurrence and during the
continuance of any Event of Default, Lender will have the right, in addition to
any other right of Lender, but not the obligation, in its own name or in the
name of Borrower, to enter into possession of the Property.

 

Section 9.05.        Rights Cumulative; Election of Remedies. All rights and
remedies of Lender under the terms of this Loan Agreement will be cumulative of,
and in addition to, the rights and remedies 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 and
remedies now or hereafter held by Lender under the terms of any other agreement.
Such rights and remedies may be pursued separately, successively or concurrently
against Borrower, or any Obligated Party or any Property covered under the Loan
Documents at the sole discretion of Lender. The exercise or failure to exercise
any of the same will not constitute a waiver or release thereof or of any other
Right, and the same will be nonexclusive.

 

Section 9.06.        Waiver of Deficiency Statute. In the event an interest in
any of the Collateral is foreclosed upon pursuant to a judicial or nonjudicial
foreclosure sale, Borrower agrees, notwithstanding the provisions of
Sections 51.003, 51.004 and 51.005 of the Texas Property Code (as the same may
be amended from time to time), and to the extent not prohibited by Governmental
Requirements, that Lender shall be entitled to seek a deficiency judgment from
Borrower and any Obligated Party equal to the difference between the Obligations
and the amount for which the Collateral was sold pursuant to judicial or
nonjudicial foreclosure sale. Borrower acknowledges and agrees that this waiver
creates an irrebuttable presumption that the foreclosure sale price is equal to
the fair market value of the Collateral for purposes of calculating deficiencies
owed by Borrower, Obligated Parties and others against whom recovery of a
deficiency is sought.

 

ARTICLE X

 

Miscellaneous

 

Section 10.01.      Waiver and Agreement. Neither the failure nor any delay on
the part of Lender to exercise any right, remedy, power or privilege herein or
under any of the other Loan Documents will operate as a waiver thereof, nor will
any single or partial exercise of such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. No waiver of any provision in this Loan
Agreement or in any of the other Loan Documents and no departure by any
Obligated Party therefrom will be effective unless the same will be in writing
and signed by Lender, and then will 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 will be valid or effective unless the same is signed by the party
against whom it is sought to be enforced.

 

26

 

  

Section 10.02.      Benefits. This Loan Agreement will be binding upon and inure
to 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 or encumber any interests, rights, remedies, powers,
duties or obligations under this Loan Agreement or any of the other Loan
Documents.

 

Section 10.03.      Notices.

 

(a)          All notices, requests, demands or other communications required or
permitted to be given pursuant to this Loan 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 will 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 will 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.

 

(b)          Borrower and Lender agree that no notices or other communications
by electronic means between such parties or their representatives in connection
with this Loan Agreement or any instrument executed in connection herewith shall
constitute a transaction, agreement, contract or electronic signature under the
Electronic Signatures in Global and National Commerce Act, any version of the
Uniform Electronic Transactions Act or any other statute governing electronic
transactions, unless otherwise specifically agreed to in writing.

 

Section 10.04.      Continuation and Survival. All covenants, agreements,
representations and warranties made in or pursuant to this Loan Agreement and
the other Loan Documents will be deemed continuing and made at and as of the
date of this Loan Agreement and at and as of all times thereafter. All
statements contained in any certificate, financial statement, legal opinion or
other instrument delivered by or on behalf of Borrower, its Subsidiaries, or
Obligated Parties pursuant to or in connection with any of the Loan Documents
will constitute additional representations and warranties made under this Loan
Agreement. All covenants, agreements, representations and warranties made in or
pursuant to this Loan Agreement and the other Loan Documents will survive until
payment in full of all sums owing and performance of all other obligations
hereunder by Borrower to Lender and will not be waived by the execution and
delivery of this Loan Agreement, any Advance hereunder, completion of
construction of the Improvements, any investigation by Lender or any other event
except a specific written waiver by Lender. 

 

27

 

  

Section 10.05.      Controlling Agreement. The parties hereto intend to conform
strictly to the applicable usury Governmental Requirements. In no event, whether
by reason of demand for payment or acceleration of the maturity of the
Obligations or otherwise, will the interest contracted for, charged or received
by Lender hereunder or otherwise exceed the maximum amount permissible under
applicable Governmental Requirements. If, from any circumstance whatsoever,
interest would otherwise be payable to Lender in excess of the maximum lawful
amount, the interest payable to Lender will be reduced automatically to the
maximum amount permitted under applicable Governmental Requirements. If Lender
will ever receive anything of value deemed interest under applicable
Governmental Requirements which would apart from this provision be in excess of
the maximum lawful amount, an amount equal to any amount which would have been
excessive interest will be applied to the reduction of the principal amount
owing on the Obligations in the inverse order of its maturity and not to the
payment of interest, or if such amount which would have been excessive interest
exceeds the unpaid principal balance of the Obligations, such excess will be
refunded to Borrower. The interest and any other amounts that would have been
payable in respect of any portion of the Obligations or during any period but
were not payable as a result of the operation of this Section shall be cumulated
and the interest and other amounts on any other portion of the Obligations or
periods shall be increased (but not above the maximum amount permitted under
applicable Governmental Requirement) until such cumulated amount shall have been
received by Lender. All interest paid or agreed to be paid to Lender will, to
the extent permitted by applicable Governmental Requirements, be amortized,
prorated, allocated and spread throughout the full stated term (including any
renewal or extension) of such Indebtedness so that the amount of interest on
account of such Indebtedness does not exceed the maximum permitted by applicable
Governmental Requirements. The provisions of this Section will control all
existing and future agreements between Borrower and Lender.

 

Section 10.06.      No Third Party Beneficiary. This Loan Agreement is for the
sole benefit of Lender and Borrower and is not for the benefit of any third
party.

 

Section 10.07.      Lender's Consent or Approval. Except where otherwise
expressly provided in the Loan Documents, in any instance where the approval,
consent or the exercise of judgment of Lender is required, the granting or
denial of such approval or consent and the exercise of such judgment will be (a)
within the sole good faith discretion of Lender; and (b) deemed to have been
given only by a specific writing intended for the purpose and executed by
Lender. Each provision for consent, approval, inspection, review, or
verification by Lender is for Lender's own purposes and benefit only.

 

 

 

28

 

 

 

Section 10.08.      Applicable Governmental Requirements. This Loan Agreement
and the other Loan Documents have been executed and delivered in the State of
Texas, are performable in Bexar County, Texas, and will be governed by and
construed in accordance with the Governmental Requirements of the State of Texas
and the Governmental Requirements of the United States applicable to
transactions within the State of Texas. Except to the extent that the
Governmental Requirements of the United States may apply to the terms hereof,
the substantive Governmental Requirements of the State of Texas shall govern the
validity, construction, enforcement and interpretation of this Loan Agreement
and the other Loan Documents. In the event of a dispute involving this Loan
Agreement, any other Loan Document or any other instrument executed in
connection herewith, Borrower irrevocably agrees that venue for such dispute
shall lie in any court of competent jurisdiction in Bexar County, Texas. To the
extent that Chapter 303 of the Texas Finance Code is applicable to any Loan, any
Advance or any Loan Document, the "weekly ceiling" specified in such article is
the applicable ceiling; provided that, if any applicable Governmental
Requirement permits greater interest, the Governmental Requirement permitting
the greatest interest will apply.

 

Section 10.09.      Loan Agreement Governs. This Loan Agreement, together with
the other Loan Documents, comprise the complete and integrated agreement of the
parties on the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, on such subject matter. In the event of any
conflict between the terms of this Loan Agreement and any terms of any other
Loan Document, the terms of this Loan Agreement will govern; provided, that the
inclusion of supplemental rights or remedies in favor of Lender in any other
Loan Document will not be deemed a conflict with this Loan Agreement. Each Loan
Document was drafted with the joint participation of the respective parties
thereto and will be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.

 

Section 10.10.      Time of Essence. Time will be of the essence in this Loan
Agreement.

 

Section 10.11.      Patriot Act Notice. Lender hereby notifies Borrower that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow
Lender to identify Borrower in accordance with the Act.

 

Section 10.12.      Invalid Provisions. If any provision of this Loan Agreement
or any of the other Loan Documents is held to be illegal, invalid or
unenforceable under present or future Governmental Requirements, such provision
will be fully severable and the remaining provisions of this Loan Agreement or
any of the other Loan Documents will remain in full force and effect and will
not be affected by the illegal, invalid or unenforceable provision or by its
severance.

 

Section 10.13.      Expenses of Lender. Borrower shall pay to Lender on demand:
(a) all reasonable costs and expenses incurred by Lender in connection with the
preparation, negotiation, execution and administration of this Loan Agreement
and the other Loan Documents and any and all amendments, modifications,
renewals, extensions, increases, and supplements thereof and thereto, including,
without limitation, the reasonable fees and expenses of Lender's legal counsel
and professionals, (b) all costs and expenses incurred by Lender in connection
with the enforcement, workout or restructure of this Loan Agreement or any other
Loan Document, including, without limitation, the fees and expenses of Lender's
legal counsel and professionals, and (c) all other reasonable costs and expenses
incurred by Lender in connection with this Loan Agreement or any other Loan
Document, including, without limitation, all reasonable costs, expenses, taxes,
assessments, filing fees, and other charges levied by a Governmental Authority
or otherwise payable in respect of this Loan Agreement or any other Loan
Document. 

 

29

 

 

 

Section 10.14.       INDEMNIFICATION OF LENDER. BORROWER SHALL INDEMNIFY AND
HOLD LENDER, ITS AFFILIATES AND LENDER'S SUCCESSORS AND ASSIGNS (EACH SUCH
PERSON HEREIN REFERRED TO AS AN "INDEMNITEE") ABSOLUTELY HARMLESS FROM AND
AGAINST ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS OR RELATED
EXPENSES INCURRED BY OR IMPOSED UPON OR ALLEGED TO BE DUE OF INDEMNITEE IN
CONNECTION WITH (a) THE EXECUTION OR DELIVERY OF THIS LOAN AGREEMENT, ANY OTHER
LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THEREUNDER, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, OR, IN THE CASE OF LENDER, THE ADMINISTRATION OF THIS LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS, (b) ANY LOAN, (c) ANY ACTUAL OR ALLEGED
PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR
OPERATED BY BORROWER, ANY SUBSIDIARY OR ANY OBLIGATED PARTY, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO BORROWER, ANY SUBSIDIARY OR ANY
OBLIGATED PARTY, OR (d) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY
BORROWER OR ANY OBLIGATED PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A
PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN
PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE;
PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO
THE EXTENT THAT SUCH CLAIMS, LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS OR
RELATED EXPENSES (i) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY
FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED BY GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNITEE OR (ii) RESULT FROM A CLAIM BROUGHT BY BORROWER OR
ANY OBLIGATED PARTY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH
INDEMNITEE'S OBLIGATIONS HEREUNDER OR ANY OTHER LOAN DOCUMENT, IF BORROWER OR
SUCH OBLIGATED PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS
FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION. IN THE
EVENT OF COURT ACTION IN CONNECTION WITH ANY SUCH CLAIM OR DEMAND, BORROWER WILL
ASSUME, TO THE EXTENT REQUESTED BY LENDER, THE RESPONSIBILITY FOR THE DEFENSE OF
ANY SUCH ACTION AND WILL IMMEDIATELY SATISFY AND DISCHARGE ANY FINAL DECREE OR
JUDGMENT RENDERED THEREIN. LENDER MAY, IN ITS SOLE DISCRETION, MAKE ANY PAYMENTS
SUSTAINED OR INCURRED BY REASON OF ANY OF THE FOREGOING, AND BORROWER WILL
IMMEDIATELY REPAY TO LENDER IN CASH THE AMOUNT OF SUCH PAYMENT, WITH INTEREST
THEREON AT THE RATE SPECIFIED IN THE NOTES TO BE APPLICABLE TO PAST-DUE
PRINCIPAL. LENDER WILL HAVE THE RIGHT TO JOIN BORROWER AND ITS SUBSIDIARIES AS
PARTIES DEFENDANT IN ANY LEGAL ACTION BROUGHT AGAINST LENDER, AND BORROWER
HEREBY CONSENTS TO THE ENTRY OF AN ORDER MAKING BORROWER AND ITS SUBSIDIARIES AS
PARTIES DEFENDANT TO ANY SUCH ACTION.

  

30

 

 

 

Section 10.15.      Participation of the Loans. Borrower agrees that Lender may,
at its option, sell interests in the Loans and its rights and remedies under
this Loan Agreement to one or more financial institutions or other Person
acceptable to Lender and, in connection with each such sale, Lender may disclose
any financial and other information available to Lender concerning Borrower or
any Obligated Party to each prospective purchaser.

 

Section 10.16.      Counterparts; Facsimile Documents and Signatures. This Loan
Agreement may be separately executed in any number of counterparts, each of
which will be an original, but all of which, taken together, will be deemed to
constitute one and the same instrument. For purposes of negotiating and
finalizing this Loan Agreement, if this document or any document executed in
connection with it is transmitted by facsimile machine, electronic mail or other
electronic transmission, it will be treated for all purposes as an original
document. Additionally, the signature of any party on this document transmitted
by way of a facsimile machine or electronic mail will be considered for all
purposes as an original signature. Any such transmitted document will be
considered to have the same binding legal effect as an original document. At the
request of any party, any faxed or electronically transmitted document will be
re-executed by each signatory party in an original form.

 

Section 10.17.      Imaging of Documents. Borrower understands and agrees that
(a) Lender's document retention policy may involve the electronic imaging of
executed Loan Documents and the destruction of the paper originals, and
(b) Borrower waives any right that it may have to claim that the imaged copies
of the Loan Documents are not originals.

 

Section 10.18.      No Oral Agreements. The term "WRITTEN AGREEMENT" will
include this Loan Agreement, together with each and every other document
relating to and/or securing the Obligations, 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.

 

Section 10.19.      Waiver of Right to Trial by Jury. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE
GOVERNMENTAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LOAN
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

[Remainder of Page Intentionally Left Blank]

 

31

 

 

Executed as of the date first written above.

 

  BORROWER:       INTERNET AMERICA, INC.         By: /s/ William E. Ladin Jr.  
  William E. Ladin, Jr.     its CEO       LENDER:       FROST BANK,   a Texas
state bank         By: /s/ Mike Adams     Michael Adams     Market President