Document:

exv10w11

 

Exhibit 10.11

SECURITIES PURCHASE AGREEMENT

     This SECURITIES PURCHASE AGREEMENT (this “Agreement”), is entered into as of September
28, 2006, by and among ACROSS AMERICA REAL ESTATE CORP., a Colorado corporation (the
“Company”), BOCO INVESTMENTS, LLC, a Colorado limited liability company (“BOCO”),
GDBA INVESTMENTS, LLLP, a Colorado limited liability limited partnership (“GDBA” and
together with BOCO, the “Institutional Buyers”) and JOSEPH C. ZIMLICH (“Zimlich”
and together with the Institutional Buyers, collectively, the “Buyers” and individually a
“Buyer”).

RECITALS

     A. BOCO, GDBA and Zimlich desire to purchase and the Company desires to issue and sell, upon
the terms and conditions set forth in this Agreement an aggregate of 517,000 shares of the
Company’s Series A Convertible Preferred Stock with the rights and preferences as shown in
Exhibit A (the “Preferred Stock”).

     B. The Institutional Buyers initially desire to purchase from the Company and the Company
initially desires to issue and sell senior subordinated notes, in the form attached hereto as
Exhibit B, in the original aggregate principal amount of Seven Million Dollars ($7,000,000)
(together with any note(s) issued in replacement thereof or as any of the same may be amended,
restated or modified, the “Term Notes”).

     C. Subject to the terms and conditions set forth in this Agreement, the Institutional Buyers
will make available to the Company until December 31, 2007, a Revolving Line of Credit in the
maximum aggregate amount up to $7,000,000.

     D. The Company and the Buyers are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the rules and regulations as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the Securities Act of
1933, as amended (the “1933 Act”);

     NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and for
other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Buyers hereby agree as follows:

     1. PURCHASE AND SALE OF PREFERRED STOCK AND TERM NOTES.

          a. Purchase of Preferred Stock. On the Closing Date, the Company shall issue and sell
to the Buyers and each Buyer agrees to purchase from the Company the number of shares of Preferred
Stock in exchange for the purchase price (the “Preferred Stock Purchase Price”) as set
forth below:

	 	 	 	 	 	 	 	 	 
	Name	 	Preferred Shares	 	Purchase Price
	BOCO
	 	 	250,000	 	 	$	3,000,000	 
	GDBA
	 	 	250,000	 	 	$	3,000,000	 
	Zimlich
	 	 	17,000	 	 	$	204,000	 

 

 

          b. Purchase of Term Notes . On the Closing Date, the Company shall issue and sell to
the Institutional Buyers and each Institutional Buyer agrees to purchase from the Company such
principal amount of the Term Notes in exchange for the purchase price (the “Term Notes Purchase
Price”) as set forth below:

	 	 	 	 	 	 	 	 	 
	Name	 	Principal Amount	 	Purchase Price
	BOCO
	 	$	3,500,000	 	 	$	3,500,000	 
	GDBA
	 	$	3,500,000	 	 	$	3,500,000	 

     2. REVOLVING LOANS

          a. Revolving Loan Commitment. Subject to the terms and conditions of this Agreement,
in reliance upon the representations and warranties of the Company set forth herein, the
Institutional Buyers, severally (and not jointly), agree to make such Revolving Loans at such times
as the Company may request until, but not including, the Revolving Loan Commitment Date;
provided, however, that the aggregate principal balance of all Revolving Loans
outstanding from time to time shall not exceed the Revolving Loan Commitment. Revolving Loans made
by the Institutional Buyers may be repaid and, subject to the terms and conditions hereof, borrowed
again up to, but not including the Revolving Loan Commitment Date unless the Revolving Loans are
otherwise accelerated, terminated or extended as provided in this Agreement.

          b. Revolving Loan Interest and Payments. The principal amount of the Revolving Loans
outstanding from time to time shall bear interest at the Revolving Interest Rate. Accrued and
unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to
time shall be due and payable quarterly, in arrears, on the last Business Day of each calendar
quarter, beginning December 29, 2006 (each, a “Revolving Payment Due Date”), through and
including the Revolving Payment Due Date immediately prior to the Revolving Loan Maturity Date.
Any amount of principal or interest on the Revolving Loans that is not paid when due, whether at
stated maturity, by acceleration or otherwise, shall bear interest payable on demand at the Default
Interest Rate.

          c. Revolving Loan Principal Payments.

               (i) Revolving Loan Mandatory Repayments. All Revolving Loans hereunder shall be
repaid by the Company on the Revolving Loan Maturity Date, unless payable sooner pursuant to the
provisions of this Agreement. In the event the aggregate outstanding principal balance of all
Revolving Loans hereunder exceeds the Revolving Loan Commitment, the Company shall, without notice
or demand of any kind, immediately make such repayments of the Revolving Loans or take such other
actions as are satisfactory to the Institutional Buyers as shall be necessary to eliminate such
excess.

               (ii) Optional Repayments. The Company may from time to time repay the Revolving Loans
in whole or in part, without any prepayment penalty whatsoever.

2

 

          d. Use of Proceeds. The Company shall use the Revolving Loans for the purposes
described in Section 6(d).

          e. Revolving Note. The Revolving Loans payable to each Institutional Buyer shall be
evidenced by a single Revolving Note in the form attached as Exhibit C, duly executed by
the Company and payable to the applicable Institutional Buyer. At the time of the initial
disbursement of a Revolving Loan and at each time any additional Revolving Loan shall be requested
hereunder or repayment made in whole or in part thereon, a notation thereof shall be made on the
books and records of the Company. The failure to record any such amounts or any error in recording
such amounts shall not, however, limit or otherwise affect the obligations of the Company under the
Revolving Note to repay the principal amount of the Revolving Loans, together with all interest
accruing thereon.

     3. CLOSING AND ADVANCES OF REVOLVING LOANS

          a. Closing.

               (i) Subject to the satisfaction (or written waiver) of the conditions thereto set forth in
Section 8, the sale and purchase of the Term Notes, the Revolving Notes and the Preferred Stock
(the “Closing”) shall take place at such date and time as is mutually agreed by the Company
and the Buyers (such date, the “Closing Date”). The Closing shall occur at the offices of
Davis Graham & Stubbs LLP, 1550 Seventeenth Street, Suite 500, Denver, Colorado 80202, or at such
other place as the Company and the Buyers may designate.

               (ii) On the Closing Date,

                    (a) against delivery by the Company of the Term Notes, the Revolving Notes and share
certificates representing the shares of Preferred Stock, each Buyer shall pay the Preferred Stock
Purchase Price and the Term Notes Purchase Price applicable to such Buyer (together, the
“Purchase Price”) by wire transfer of immediately available funds to the Company, in
accordance with the Company’s written wiring instructions; provided, however, that
the Purchase Price payable to the Company by GDBA may be setoff against amounts to be paid at the
Closing Date by the Company with respect to the repayment of the GDBA Agreement to Fund pursuant to
Section 8(b)(vi); and

                    (b) the Company shall pay directly or reimburse the Buyers for all Buyer Expenses as provided
in Section 6(e).

          b. Advances. Each Institutional Buyer agrees, on the terms and conditions set forth
herein, to make Advances to the Company of Revolving Loans from time to time on any Business Day
from and after the date of this Agreement.

               (i) Request for Advances. Each Advance shall be made after delivery by the Company to
the Institutional Buyers of a Request for Advance, duly executed by the Company, delivered not
later than 11:00 a.m. (Denver, Colorado time) on the second Business Day prior to the date of the
proposed Advance. The Request for Advance shall be in the form attached hereto as Exhibit
D. The requested Advance shall be in an amount at least equal to the lesser of (A) $200,000, or (B) the undrawn amount of such Institutional Buyer’s Revolving Loan
Commitment.

3

 

               (ii) Funding of Advances. Not later than 2:00 p.m. (Denver, Colorado time) on the
date of such Advance, subject to fulfillment of the applicable conditions set forth herein, the
Institutional Buyers will make such Advance available to the Company by wire transfer of
immediately available funds to an account specified in writing by the Company. All Advances shall
be funded one-half by BOCO and one-half by GDBA. The Institutional Buyers obligation to fund each
Advance shall be several and not joint. Nothing contained herein shall obligate either
Institutional Buyer to fund more than one-half of any Advance, notwithstanding any failure by the
other Institutional Buyer to fund its portion of the Advance.

     4. BUYER’S REPRESENTATIONS AND WARRANTIES. Each Buyer, with respect to itself and not with
respect to the other Buyer, represents and warrants to the Company that:

          a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Term Notes
and the Preferred Stock for its own account and not with a present view towards the public sale or
distribution thereof; provided, however, that by making the representations herein,
the Buyer does not agree to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.

          b. Accredited Investor Status. The Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.

          c. Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

          d. Information. The Buyer acknowledges that it has been afforded the opportunity to
ask questions and receive answers concerning the Company and to obtain additional information that
it has requested to verify the accuracy of the information contained herein. Neither the foregoing
nor any due diligence investigation conducted by Buyer or any of its advisors or representatives
shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties
contained in Section 5 below. The Buyer understands that its investment in the Securities involves
a significant degree of risk.

          e. Governmental Review. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made any recommendation or
endorsement of the Securities or the Revolving Loans.

4

 

          f. Transfer or Resale. The Buyer understands that, except as provided in the
Registration Rights Agreement, (i) the sale or resale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the
Securities may not be transferred unless (a) the Securities are sold pursuant to an effective
registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company an
opinion of counsel reasonably acceptable to the Company and its counsel that the Securities to be
sold or transferred may be sold or transferred pursuant to an exemption from such registration or
(c) such Buyer provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or any successor rule
thereto) (“Rule 144”); (ii) any sale of such Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any
resale of such Securities under circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to
register such Securities under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder. Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.

          g. Legends. The certificates evidencing the Securities will bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed against transfer of
the certificates for such Securities):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER SAID ACT.”

     The legend set forth above shall be removed and the Company shall issue a certificate without
such legend to the holder of any Security upon which it is stamped, if, unless otherwise required
by applicable state securities laws, (a) such Security is registered for resale under the 1933 Act,
(b) such holder provides the Company with an opinion of counsel, which opinion shall be reasonably
acceptable to the Company’s counsel, to the effect that the sale or transfer of such Security may
be made without registration under the 1933 Act, or (c) such holder provides the Company with
reasonable assurances that such Security has been or is being sold pursuant to Rule 144. The Buyer
agrees to sell all Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery requirements, if any.

5

 

          h. Authorization; Enforcement. The Agreements to which such Buyer is a party have
been duly and validly authorized, executed and delivered on behalf of the Buyer, and each Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms.

          i. Residency. The Buyer is a resident of the jurisdiction set forth immediately below
such Buyer’s name on the signature pages hereto.

     5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each
Buyer that:

          a. Organization and Qualification. The Company and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, with full power and authority to own, lease, use and operate its
properties and to carry on its business as and where now owned, leased, used, operated and
conducted. Schedule 5(a) sets forth a list of all of the Subsidiaries of the Company, the
jurisdiction in which each is incorporated or organized and the percentage of stock or ownership
interests held by the Company in such Subsidiary. The Company and each of its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in every jurisdiction in
which its ownership or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good standing has not had
and could not reasonably be expected to have a Material Adverse Effect.

          b. Authorization; Enforcement. (i) The Company has all requisite corporate power and
authority to enter into and perform the Agreements, to consummate the transactions contemplated
hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of the Agreements, the Notes and the Preferred Stock by the Company
and the consummation by it of the transactions contemplated hereby and thereby (including without
limitation, the issuance of the Notes and the Preferred Stock and the issuance and reservation for
issuance of the Conversion Shares) have been duly authorized by the Company’s Board of Directors
and no further consent or authorization of the Company, its Board of Directors, or its shareholders
is required, (iii) the Agreements have been duly executed and delivered by the Company by its
authorized representative, and such authorized representative is the true and official
representative with authority to sign the Agreements and the other documents executed in connection
herewith and bind the Company accordingly, and (iv) the Agreements constitute, and upon execution
and delivery by the Company of the Notes and the Preferred Stock, each of such instruments will
constitute, a legal, valid and binding obligation of the Company enforceable against the Company in
accordance with its terms.

          c. Capitalization. Before giving effect to the transactions to be effected at the
Closing, the authorized capital stock of the Company consists of (i) 50,000,000 shares of Common
Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for
issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s
covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred
stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the
Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such
outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable. No shares of capital stock

6

 

of the Company are subject to preemptive rights or any other similar rights of the
shareholders of the Company or any liens or encumbrances imposed through the actions or failure to
act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this
Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or
rights of any character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or
arrangements by which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933 Act and (iii) there are no
anti-dilution or price adjustment provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) that will be triggered by the issuance of the
Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true
and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof
(“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the
“Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock
of the Company and the material rights of the holders thereof in respect thereto.

          d. Issuance of Shares. The Conversion Shares are duly authorized and reserved for
issuance and, upon conversion of the Preferred Stock in accordance with its terms, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive rights or other similar rights
of shareholders of the Company and will not impose personal liability upon the holder thereof.

          e. Acknowledgment of Dilution. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon
conversion of the Preferred Stock. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of Preferred Stock in accordance with this Agreement is absolute
and unconditional regardless of the dilutive effect that such issuance may have on the ownership
interests of other shareholders of the Company.

          f. No Conflicts. The execution, delivery and performance of the Agreements, the
issuance of the Securities to be issued by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the issuance and
reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a
violation of any provision of the Articles of Incorporation or Bylaws or (ii) violate or conflict
with, or result in a breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any contract, commitment, agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound or affected, except
with respect to clause (ii) and (iii) only, for such

7

 

conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as
could not reasonably be expected, individually or in the aggregate, to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is in violation of its Articles of
Incorporation, Bylaws or other organizational documents and neither the Company nor any of its
Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both
could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any
of its Subsidiaries has taken any action or failed to take any action that would give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party or by which any property or
assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults
as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse
Effect. Except as set forth on Schedule 5(f), the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any court,
governmental agency, regulatory agency, self regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations under the Agreements,
to issue and sell the Notes and Preferred Stock or to issue the Conversion Shares upon conversion
of the Preferred Stock. Except as set forth in Schedule 5(f), all consents,
authorizations, orders, filings and registrations which the Company is required to obtain pursuant
to the preceding sentence have been obtained or effected on or prior to the date hereof.

          g. Trading. The Company’s Common Stock is traded on the Over-the-Counter Bulletin
Board under the symbol AARD.OB (the “OTCBB”). The Company is not in violation of the
quotation requirements of the OTCBB and does not reasonably anticipate that the Common Stock will
be removed by the OTCBB in the foreseeable future. To the Company’s Knowledge, there are no facts
or circumstances which might give rise to any of the foregoing.

          h. SEC Documents; Financial Statements. The Company’s Common Stock is registered
under Section 12(g) of the 1934 Act. Except as disclosed in Schedule 5(h), the Company has
timely filed all reports, schedules, forms, statements and other documents required to be filed by
it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed
prior to the date hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits to such documents) incorporated by reference therein,
being hereinafter referred to herein as the “SEC Documents”). None of the SEC Documents
contains any untrue statement of a material fact or omits any statement of material fact required
in order to make the statements contained therein not misleading. As of their respective dates,
the financial statements of the Company included in the SEC Documents (the “Financial
Statements”) complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto. The
Financial Statements have been prepared in accordance with United States generally accepted
accounting principles, consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes) and fairly present in
all material respects the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).

8

 

          i. No Undisclosed Liabilities. The Company does not have any Liabilities, except for
(a) Liabilities reflected on the face of the liabilities section of the Company’s balance sheet at
December 31, 2005 as filed with the Company’s Form 10-KSB for the year ended December 31, 2005, as
amended (b) Liabilities under agreements, contracts, commitments, licenses or leases which have
arisen since December 31, 2005 in the ordinary course of business, and (c) Liabilities set forth on
Schedule 5(i).

          j. Absence of Certain Changes. Except as set forth in Schedule 5(j), since
December 31, 2005, (i) each of the Company and its Subsidiaries has been operated in the ordinary
course, and (ii) there has occurred no fact, event or circumstance that, individually or in the
aggregate, has or could reasonably be expected to have a Material Adverse Effect.

          k. Absence of Litigation. Except as set forth on Schedule 5(k), there is no
action, suit, claim, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the Knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries,
or their officers or directors in their capacity as such. To the Knowledge of the Company and its
Subsidiaries there are no facts or circumstances which might give rise to any of the foregoing.

          l. Intellectual Property. The Company and each of its Subsidiaries owns or possesses
the requisite licenses or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service
names, trade names and copyrights (“Intellectual Property”) necessary to enable it to
conduct its business as now operated (and, except as set forth in Schedule 5(l) hereof as
presently contemplated to be operated in the future); there is no claim or action by any person
pertaining to, or proceeding pending, or to the Company’s Knowledge threatened, which challenges
the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to
enable it to conduct its business as now operated (and, except as set forth in Schedule
5(l) hereof as presently contemplated to be operated in the future); the Company’s or its
Subsidiaries’ current and intended products, services and processes do not infringe on any
Intellectual Property or other rights held by any person; and to the Company’s Knowledge, there are
no facts or circumstances which might give rise to any of the foregoing. The Company and each of
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of their Intellectual Property.

          m. No Materially Adverse Contracts, etc. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment,
decree, order, rule or regulation which has or could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or
agreement which has or could reasonably be expected to have a Material Adverse Effect.

          n. Tax Status. Except as set forth on Schedule 5(n), the Company and each of
its Subsidiaries has made or filed all Tax Returns that it was required to file. All such Tax
Returns are correct and complete in all material respects. Except as set forth on Schedule
5(n), all Taxes owned by the Company or any Subsidiary whether or not shown on any Tax Return
have been paid in a timely fashion. Except as set forth on Schedule 5(n), the Company
currently

9

 

is not the beneficiary of any extension of time within which to file any Tax Return. There
are no liens or encumbrances on any of the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax. The Company has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid to or owed to any employee,
independent contractor, creditor, stockholder, or other third party. There are no unpaid Taxes in
any material amount claimed to be due by the taxing authority of any jurisdiction, and to the
Company’s Knowledge, there is no basis for any such claim. The Company has not executed a waiver
with respect to the statute of limitations relating to the assessment or collection of any foreign,
federal, state or local tax. Except as set forth on Schedule 5(n), none of the Company’s
tax returns is presently being audited by any taxing authority.

          o. Certain Transactions. Except as set forth on Schedule 5(o), none of the
officers, directors, or employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the Company’s Knowledge, any
corporation, partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or partner.

          p. Disclosure. No event or circumstance has occurred or exists with respect to the
Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure
or announcement by the Company but which has not been so publicly announced or disclosed. The
Company has not disclosed to the Buyers any material nonpublic information and will not disclose
such information unless such information is disclosed to the public prior to or promptly following
such disclosure to the Buyers.

          q. Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges
and agrees that each Buyer is acting solely in the capacity of arm’s length purchasers with respect
to this Agreement and the transactions contemplated hereby. The Company further acknowledges that
no Buyer is acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any statement made by
any Buyer or any of their respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyer’s purchase of the Securities. The Company further represents to each Buyer that the
Company’s decision to enter into this Agreement has been based solely on the independent evaluation
of the Company and its representatives.

          r. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers or sales in any
security or solicited any offers to buy any security under circumstances that would require
registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of
the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.

10

 

          s. No Brokers. Except as set forth in Schedule 5(s), the Company has taken no
action which would give rise to any claim by any person for brokerage commissions, transaction fees
or similar payments relating to this Agreement or the transactions contemplated hereby.

          t. Permits; Compliance. The Company and each of its Subsidiaries is in possession of
all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders necessary to own, lease and operate its properties and
to carry on its business as it is now being conducted (collectively, the “Company
Permits”), and there is no action pending or, to the Knowledge of the Company, threatened
regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of
its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits,
except for any such conflicts, defaults or violations which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. Since January 1, 2004, neither
the Company nor any of its Subsidiaries has received any notification with respect to possible
conflicts, defaults or violations of applicable laws, except for notices relating to possible
conflicts, defaults or violations, which conflicts, defaults or violations could not reasonably be
expected to have a Material Adverse Effect.

          u. Environmental Matters.

               (i) Except as set forth in Schedule 5(u), there are, with respect to the Company or
any of its Subsidiaries or any predecessor of the Company, no past or present violations of
Environmental Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual obligations which may give
rise to any common law environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or
foreign laws and neither the Company nor any of its Subsidiaries has received any notice with
respect to any of the foregoing, nor is any action pending or, to the Company’s Knowledge,
threatened in connection with any of the foregoing.

               (ii) Other than those that are or were stored, used or disposed of in compliance with
applicable law, no Hazardous Materials are contained on or about any real property currently owned,
leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released
on or about any real property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, leased or used by the Company or any of its
Subsidiaries, except in the normal course of the Company’s or any of its Subsidiaries’ business.

               (iii) Except as set forth in Schedule 5(u), to the Company’s Knowledge there are no
underground storage tanks on or under any real property owned, leased or used by the Company or any
of its Subsidiaries that are not in compliance with applicable law.

11

 

          v. Title to Property. Schedule 5(v)(i) sets forth a list of all real property
owned by the Company or its Subsidiaries. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects except such as are described in
Schedule 5(v). Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases.

          w. Insurance. Attached hereto as Schedule 5(w) is a list and brief
description of all policies of fire, casualty, liability, property or other forms of insurance and
all fidelity bonds held by or applicable to the Company or its Subsidiaries. Neither the Company
nor any Subsidiary is in default in any material respect under any provision of any such policy and
neither the Company nor any Subsidiary has received notice of cancellation of any such insurance.
Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a cost that is not
materially in excess of current premiums.

          x. Internal Accounting Controls. The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.

          y. Compliance With Law. The Company has complied with all applicable laws, statutes,
rules, regulations or orders of any governmental authority and no proceeding or investigation is
pending, or to the Knowledge of the Company, threatened, alleging any failure to so comply.

          z. Solvency. The Company (after giving effect to the transactions contemplated by
this Agreement) is Solvent and currently the Company has no information that would lead it to
reasonably conclude that the Company would not, after giving effect to the transaction contemplated
by this Agreement, have the ability to, nor does it intend to take any action that would impair its
ability to, pay its debts from time to time incurred in connection therewith as such debts mature.

          aa. No Investment Company. The Company is not, and upon the issuance and sale of the
Securities as contemplated by this Agreement will not be an “investment company” required to be
registered under the Investment Company Act of 1940.

          bb. Certain Registration Matters. Assuming the accuracy of the Buyer’s
representations and warranties set forth in Section 2, no registration under the Securities Act or
action on the part of the shareholders of the Company is required for the offer and sale of the
Conversion Shares by the Company to the Buyer under the transaction documents. Except as

12

 

contemplated by the Registration Rights Agreement or as specified in Schedule 5(bb),
the Company has not granted or agreed to grant to any Person any rights (including “piggy-back”
registration rights) to have any securities of the Company registered with the Commission or any
other governmental authority that have not been satisfied.

     6. COVENANTS.

          a. Best Efforts. The Company and the Buyers shall each use their best efforts to
satisfy timely each of the conditions described in Section 8 and 9 of this Agreement and to do all
things necessary, proper and advisable in order to consummate and make effective the transactions
contemplated by this Agreement.

          b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company shall, on or before the Closing Date, take such action as the
Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyers at
the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states
of the United States (or to obtain an exemption from such qualification), and shall provide
evidence of any such action so taken to each Buyer on or prior to the Closing Date.

          c. Disclosure. The Company shall issue a press release describing the material terms
of the transaction contemplated hereby as soon as practicable following the Closing Date but in no
event more than two (2) business days after the Closing Date, which press release shall be subject
to prior review by the Buyers. The Company agrees that such press release shall not disclose the
name of the Buyer unless expressly consented to in writing by the Buyer or unless required by
applicable law or regulation, and then only to the extent of such requirement. The Company has not
disclosed to the Buyers any material nonpublic information and will not disclose such information
unless such information is disclosed to the public prior to or promptly following such disclosure
to the Buyers.

          d. Use of Proceeds. The Company shall use the net proceeds from the sale of the Term
Notes and the Preferred Stock in the manner set forth in Schedule 6(d) attached hereto and
made a part hereof and shall not, directly or indirectly, use such proceeds for (i) any loan to or
investment in any other corporation, partnership, enterprise or other person (except in connection
with its currently existing or future direct or indirect Subsidiaries); or (ii) the redemption of
any Common Stock.

          e. Expenses. At the Closing, the Company shall pay directly or reimburse the Buyers
for all expenses incurred by the Buyers in connection with the negotiation, preparation, execution,
delivery and performance of the Agreements, including, without limitation, attorneys’ and
consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees
relating to any amendments or modifications of the Agreements or any consents or waivers required
to be obtained by a Buyer in connection with this transaction (the “Buyer Expenses”). On
or before the Closing Date, each Buyer shall submit to the Company a schedule of Buyer Expenses
that have been incurred by such Buyer, which schedule shall specify the amounts to be paid by the
Company directly on behalf of the Buyers and amounts to be paid

13

 

by the Company to the Buyers in reimbursement of amounts expended by the Buyers.
Notwithstanding anything herein to the contrary, the Company’s obligation to pay or reimburse the
Buyers’ Expenses shall not exceed $25,000 for each Buyer.

          f. No Integration. The Company shall not make any offers or sales of any security
(other than the Securities) under circumstances that would require registration of the Securities
being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be
integrated with any other offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

          g. Affirmative Covenants of the Company. For so long as either of the Buyers holds
Notes, Preferred Stock or Conversion Shares, the Company shall:

               (i) Timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and
the Company shall not terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such termination;

               (ii) Send to the Buyer contemporaneously with the making available or giving to the
shareholders of the Company, copies of any notices or other information the Company makes available
or gives to such shareholders, provided that, the Company shall not be required
pursuant to this Section 6(g)(ii) to send reports to any Buyer if the only Securities then held by
such Buyer are Conversion Shares;

               (iii) Authorize and reserve for the purpose of issuance, a sufficient number of shares of
Common Stock (the “Reserved Amount”) to provide for the full conversion of the Preferred
Stock and issuance of the Conversion Shares in connection therewith (based on the conversion ratio
of the Preferred Stock in effect from time to time). If at any time the number of shares of Common
Stock authorized and reserved for issuance (“Authorized and Reserved Shares”) is below the
Reserved Amount, the Company will promptly take all corporate action necessary to authorize and
reserve a sufficient number of shares, including, without limitation, calling a special meeting of
shareholders to authorize additional shares to meet the Company’s obligations under this Section
6(g)(iii). In order to ensure that the Company has authorized a sufficient amount of shares to
meet the Reserved Amount at all times, the Company shall deliver to the Buyer at the end of every
fiscal quarter a list detailing (1) the current amount of shares authorized by the Company and
reserved for the Buyer; and (2) amount of shares issuable upon conversion of the Preferred Stock.

               (iv) Promptly secure the listing of the Conversion Shares upon each national securities
exchange or automated quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and, so long as any Buyer owns any of the Securities,
maintain, so long as any other shares of Common Stock shall be so listed, such listing of all
Conversion Shares. The Company will obtain and, so long as any Buyer owns any of the Securities,
maintain the listing and trading of its Common Stock on the OTCBB or any equivalent replacement
exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the
New York Stock Exchange, or the American Stock Exchange and will comply in all respects with the
Company’s reporting, filing and other

14

 

obligations under the bylaws or rules of the National Association of Securities Dealers and
such exchanges, as applicable. The Company shall promptly provide to each Buyer copies of any
notices it receives from the OTCBB and any other exchanges or quotation systems on which the Common
Stock is then listed regarding the continued eligibility of the Common Stock for listing on such
exchanges and quotation systems. As long as the Company Stock is not listed for trading on a
national securities or automated quotation system, the Company shall ensure that the Company’s
Common Stock is listed on the OTCBB (or equivalent replacement) and shall use its commercially
reasonable efforts to ensure that at least two market-makers are making a market in the Company’s
Common Stock.

               (v) Maintain its corporate existence in good standing.

          h. Negative Covenants of the Company. For so long as (i) any of the Buyers holds Term
Notes, Preferred Stock or Conversion Shares, or (ii) any Revolving Loans are outstanding, the
Company, without the written consent of the Buyer or Buyers that hold such Notes, Preferred Stock
or Conversion Shares, shall not:

               (i) authorize, issue or agree to authorize or issue any new class or series of Parity
Securities or Senior Securities or securities or rights of any kind convertible into or exercisable
or exchangeable for any such Parity Securities or Senior Securities, or offer, sell or issue any
Parity Securities or Senior Securities or securities or rights of any kind convertible into or
exercisable or exchangeable for any such Parity Securities or Senior Securities;

               (ii) authorize, issue or agree to authorize or issue Common Stock at a discount to the Market
Price of the Common Stock on the date of issuance (taking into account the value of any Preferred
Stock or options to acquire Common Stock issued in connection therewith), provided,
however, that this Section 6(h) shall not prohibit the Company from issuing up to 1,000,000
shares of Common Stock and/or Options therefore issued to the Company’s officers, directors,
employees, consultants or independent contractors pursuant to an equity incentive plan or another
similar plan or agreement approved by the Board of Directors;

               (iii) authorize, issue or agree to authorize or issue convertible securities that are
convertible into an indeterminate number of shares of Common Stock;

               (iv) purchase, repurchase or redeem shares of (i) Common Stock, (ii) securities or rights of
any kind convertible into or exercisable or exchangeable for Common Stock or (iii) other securities
of the Company, (except in the case of a termination of an employee, at which the Company may
repurchase or redeem such shares of Common Stock at cost and pursuant to any agreement under which
such shares of Common Stock were issued);

               (v) declare or pay dividends or any other distribution on shares of Common Stock or any other
capital stock of the Company except as contemplated with respect to the Preferred Stock;

               (vi) amend the Articles of Incorporation or Bylaws of the Company or alter or change the
rights, preferences or privileges of the Preferred Stock or any Parity Securities or Senior
Securities in each case so as to affect adversely the rights, preferences or privileges of the
Preferred Stock;

15

 

               (vii) merge or consolidate with any other entity, or sell, assign, license, lease or otherwise
dispose of or voluntarily part with the control of (whether in one transaction or in a series of
transactions all, or a significant portion, of its assets (whether now owned or later acquired)),
or effect any transaction or series of transactions in which the holders of the Company’s voting
interests prior to such transaction or series of transactions hold less than 50% of the voting
interests of the Company following such transaction or series of transactions;

               (viii) increase or decrease the number of directors constituting the Company’s Board of
Directors;

               (ix) incur Indebtedness for Borrowed Money in any single transaction in excess of $10,000,000
or which obligates the Company to make aggregate expenditures for all Indebtedness for Borrowed
Money in excess of $50,000,000;

               (x) enter into any non-ordinary course agreement, directly or indirectly, with officers,
employees, stockholders, directors or affiliates of the Company, other than employment agreements,
compensation arrangements, stock options or service-related transactions that are approved by a
majority of the disinterested members of the Company’s Board of Directors;

               (xi) initiate the voluntary dissolution or winding up or reorganization of the Company; or

               (xii) change its fiscal year.

     7. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable instructions to its
transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the
Conversion Shares in such amounts as specified from time to time by such Buyer to the Company upon
conversion of the Preferred Stock in accordance with the terms thereof (the “Irrevocable
Transfer Agent Instructions”). Prior to registration of the Conversion Shares under the 1933
Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any
restriction as to the number of Securities as of a particular date that can then be immediately
sold, all such certificates shall bear the restrictive legend specified in Section 4(g) of this
Agreement. The Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 7, and stop transfer instructions to give effect to
Section 4(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion
Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule
144 without any restriction as to the number of Securities as of a particular date that can then be
immediately sold), will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement. If a Buyer provides the Company with (i) an opinion of counsel
reasonably acceptable to the Company and its counsel in form, substance and scope customary for
opinions in comparable transactions, to the effect that a public sale or transfer of such
Securities may be made without registration under the 1933 Act and such sale or transfer is
effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant
to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares,
promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as
specified by such Buyer.

16

 

     8. CLOSING DATE CONDITIONS PRECEDENT

          a. Conditions to the Company’s Obligation to Sell. The obligation of the Company
hereunder to issue and sell the Term Notes and Preferred Stock to each Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the following conditions
thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:

               (i) The applicable Buyer shall have executed the Agreements and delivered the same to the
Company.

               (ii) The applicable Buyer shall have delivered its portion of the Purchase Price in accordance
with Section 3(a) above.

               (iii) The representations and warranties of the applicable Buyer shall be true and correct in
all material respects as of the date when made and as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a specific date), and the
applicable Buyer shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by the applicable Buyer at or prior to the Closing Date.

               (iv) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which is reasonably expected to restrain, prohibit or invalidate
transactions contemplated by this Agreement.

          b. Conditions to the Buyers’ Obligation to Purchase. The obligations of each Buyer
hereunder to purchase the Notes and Preferred Stock at the Closing is subject to the satisfaction,
at or before the Closing Date of each of the following conditions, provided that these conditions
are for such Buyer’s sole benefit and may be waived by such Buyer at any time in its sole
discretion:

               (i) The Company shall have executed the Agreements and delivered the same to the Buyer.

               (ii) The Company shall have delivered to such Buyer a duly executed Term Note in the principal
amount set forth in Section 3(a).

               (iii) The Company shall have delivered to such Institutional Buyer a duly executed Revolving
Note as required pursuant to
Section 2(e).

               (iv) The Company shall have delivered to such Buyer a certificate representing such number of
shares of Preferred Stock as set forth in Section 3(a).

17

 

               (v) The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the
Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.

               (vi) The Company shall have delivered a signed letter from GDBA confirming that the GDBA
Agreement to Fund will be terminated and all amounts payable to GDBA thereunder will be repaid on
the Closing Date.

               (vii) The representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though made at such time
(except for representations and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied with by the Company at
or prior to the Closing Date. The Buyer shall have received a certificate or certificates,
executed by the chief executive officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by such Buyer
including, but not limited to certificates with respect to the Company’s Articles of Incorporation,
Bylaws and Board of Directors’ resolutions relating to the transactions contemplated hereby.

               (viii) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which is reasonably expected to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.

               (ix) No event shall have occurred which has had or which could reasonably be expected to have
a Material Adverse Effect on the Company.

               (x) The Common Shares shall have been authorized for quotation on the OTCBB, trading in the
Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB, and at least two
market-makers shall be making a market in the Company’s Common Stock.

               (xi) The Buyers shall have received an opinion of David Wagner & Associates, P.C., counsel for
the Company, in the form of Exhibit E.

               (xii) The amendment to the Company’s Articles of Incorporation required to designate the
number, preferences and rights of the Series A Preferred Stock, as set forth in Exhibit A,
shall have been accepted for filing with the Colorado Secretary of State.

18

 

     9. CONDITIONS PRECEDENT TO ADVANCES. The obligations of each Institutional Buyer hereunder to
make Advances of Revolving Loans is subject to the satisfaction, at or before each Advance of each
of the following conditions, provided that these conditions are for such Buyer’s sole benefit and
may be waived by such Buyer at any time in its sole discretion:

          a. No Event of Default or any event which, with notice or lapse of time, or both, would
constitute an Event of Default, shall have occurred and be continuing.

          b. No event shall have occurred which has had or which could reasonably be expected to have a
Material Adverse Effect on the Company.

          c. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which is reasonably expected to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.

          d. The representations and warranties of the Company shall be true and correct in all material
respects as of the date of any Advance as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions required by this
Agreement or any of the other Agreements to be performed, satisfied or complied with by the Company
at or prior to the date of such Advance.

          e. The Institutional Buyers shall have received a Request for Advance duly executed by the
Company.

     10. SURVIVAL AND INDEMNIFICATION.

          a. Survival. The representations and warranties of the Company and the agreements and
covenants set forth in Sections 5, 6, 7 and 10 shall survive the Closing notwithstanding any due
diligence investigation conducted by or on behalf of the Buyers.

          b. Indemnification. The Company shall defend, protect, indemnify and hold harmless
each Buyer and all of such Buyer’s partners, members, officers, directors, employees and direct or
indirect investors and any of such Buyer’s agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out
of, or relating to (a) any misrepresentation or breach of any representation or warranty made by
the Company in the Agreements or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the
Agreements or any other certificate, instrument or document contemplated hereby or thereby or (c)
any cause of action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the Company) and arising out
of or resulting from (i) the execution, delivery, performance or enforcement of the Agreements or
any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Notes or Preferred Stock, or

19

 

(iii) the status of such Buyer as an investor in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 8(b) shall be the same as
those set forth in Section 2.5 of the Registration Rights Agreement.

     11. DEFINITIONS.

          “1934 Act” means the Securities and Exchange Act of 1934, as amended.

          “Advance” shall mean an advance of funds by the Institutional Buyers to the Company as
a Loan pursuant to a Request for Advance as provide in Section 3(b).

          “Agreements” means this Agreement, the Registration Rights Agreement, the Shareholders
Agreement, the Notes and any other agreements or instruments to be executed in connection with the
transactions contemplated by this Agreement.

          “Business Day” means any day other than a Saturday, Sunday or a day on which
commercial banks in the city of Denver, Colorado are authorized or required by law or executive
order to remain closed.

          “Closing” has the meaning set forth in Section 1(c).

          “Closing Date” has the meaning set forth in Section 1(c).

          “Conversion Shares” means the Common Stock issued upon conversion of the Preferred
Stock.

          “Default Interest Rate” means the higher of (i) the Revolving Interest Rate plus 800
basis points, or (ii) twenty-four percent (24%) per annum.

          “Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as
well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder.

          “Event of Default” has the meaning provided in the Term Note and the Revolving Note.

          “GDBA Agreement to Fund” means that certain Agreement to Fund dated November 26, 2004
by and between GDBA Investments, LLLP and the Company, as amended.

20

 

          “Indebtedness for Borrowed Money” means all obligations of the Company and its
Subsidiaries, on a consolidated basis, (a) to repay money borrowed, (b) to pay money evidenced by
term loans, bonds, debentures, notes or other similar instruments, (c) to pay the deferred purchase
price of property or services, (d) as lessee under capital leases, and (e) all obligations of
another individual or entity of the type listed in (a through (d), payment of which is guaranteed
by or secured by liens on the property of such individual or entity (with respect to liens, to the
extent of the value of property pledged pursuant to such liens if less than the amount of such
obligations), provided, that “Indebtedness for Borrowed Money” shall not include
trade accounts payable incurred in the ordinary course of business.

          “Knowledge” means a Person’s actual knowledge and such knowledge as would be obtained
by such Person upon a reasonable inquiry. For the purposes of this agreement, the “Company’s
Knowledge” or “Knowledge of the Company” means the knowledge of Ann L. Schmitt or James W. Creamer
III.

          “Liability” means any liability or obligation, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether
due or to become due, regardless of when asserted.

          “Market Price” means the average closing bid price for the Company’s Common Stock on
the OTCBB or any equivalent replacement exchange (or such other exchange on which the Company’s
Common Stock is primarily listed or eligible for trading) for the previous ten trading days.

          “Material Adverse Effect” means (i) a material and adverse effect on the business,
assets, liabilities, results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (ii) an adverse impairment to
the Company’s ability to perform under any of its obligations under the Agreements.

          “Notes” means the Term Notes and the Revolving Notes.

          “Parity Securities” means all equity securities of the Company to which the Preferred
Stock ranks on a parity with, whether with respect to dividends or upon liquidation, dissolution,
winding up or otherwise.

          “Person” means a natural person or any corporation, limited liability company or other
entity.

          “Registration Rights Agreement” means the Registration Rights Agreement of even date
herewith executed by and between the Company and the buyers.

          “Request for Advance” means a written request by the Company to the Institutional
Buyers for an Advance of funds as a Loan hereunder, which written request will be in the form of
Exhibit D.

21

 

          “Revolving Interest Rate” means a rate per annum equal to the greatest of:

               (i) the ninety day average for U.S. Treasury Notes with a 10-year maturity as determined on
the last Business Day of each calendar quarter, using the constant maturity calculation,
plus 650 basis points;

               (ii) eleven percent (11%); or

               (iii) the highest effective interest rate accruing on any outstanding Indebtedness for
Borrowed Money of the Company at any time during the applicable calendar quarter.

          “Revolving Loans” means all Advances of funds by the Institutional Buyers to the
Company pursuant to the Revolving Loan Commitment, which Loans will be evidenced by the Revolving
Notes.

          “Revolving Loan Commitment” means (a) with respect to BOCO, Three Million Five Hundred
Thousand Dollars ($3,500,000), and (b) with respect to GDBA, Three Million Five Hundred Thousand
Dollars ($3,500,000).

          “Revolving Loan Commitment Date” means December 31, 2007.

          “Revolving Loan Maturity Date” means September 28, 2009.

          “Revolving Note” shall mean the revolving note in the form attached as Exhibit
C.

          “Revolving Payment Due Date” has the meaning set forth in Section 2(b).

          “SEC Documents” has the meaning set forth in Section 5(h).

          “Securities” means the Term Notes, the Preferred Stock and the Conversion Shares.

          “Senior Securities” means all equity securities of the Company to which the Preferred
Stock ranks junior, whether with respect to dividends or upon liquidation, dissolution, winding up
or otherwise.

          “Shareholders Agreement” means the Shareholders Agreement of even date herewith
executed by and between the Buyers.

          “Solvent” means that the Company’s assets have a fair market value in excess of the
amount required to pay its probable liabilities on its existing debts as they become absolute and
matured.

          “Subsidiaries” means any corporation or other organization, whether incorporated or
unincorporated, in which the Company owns, directly or indirectly, any ownership interest.

          “Tax” or “Taxes” means any federal, state, local or foreign income,
alternative or add-on minimum, gross income, gross receipts, windfall profits, severance, property,
production,

22

 

sales, use, transfer, gains, license, excise, employment, payroll, withholding or minimum tax,
transfer, goods and services, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any governmental body.

          “Tax Return” means any return, report or similar statement required to be filed with
respect to any Taxes (including attached schedules), including, without limitation, any information
return, claim for refund, amended return and declaration of estimated Tax.

     12. GOVERNING LAW; MISCELLANEOUS.

          a. Governing Law. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Colorado applicable to agreements made and to be performed
entirely within such state, without regard to the principles of conflict of laws. The parties
hereto hereby submit to the exclusive jurisdiction of federal or state courts located in Denver,
Colorado with respect to any dispute arising under this Agreement, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby. Both parties irrevocably
waive the defense of an inconvenient forum to the maintenance of such suit or proceeding. Both
parties further agree that service of process upon a party mailed to the notice address set forth
in Section 11(f) (or such other address specified in writing) by registered first class mail shall
be deemed in every respect effective service of process upon the party in any such suit or
proceeding. Nothing herein shall affect either party’s right to serve process in any other manner
permitted by law. Both parties agree that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner. The party which does not prevail in any dispute arising under this
agreement shall be responsible for all fees and expenses, including reasonable attorneys’ fees,
incurred by the prevailing party in connection with such dispute.

          b. Counterparts; Signatures by Facsimile. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which shall constitute one
and the same agreement and shall become effective when counterparts have been signed by each party
and delivered to the other party. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature
of the party so delivering this Agreement.

          c. Headings. The headings of this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this Agreement.

          d. Severability. In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision hereof.

          e. Entire Agreement; Amendments. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters

23

 

covered herein and therein and, except as specifically set forth herein or therein, neither
the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.

          f. Notices. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by certified or registered mail (return receipt requested) or delivered
personally or by courier (including a recognized overnight delivery service) or by facsimile and
shall be effective five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The addresses for such
communications shall be:

     If to the Company:

Across America Real Estate Corp.

1660 Seventeenth Street, Suite 450

Denver, Colorado 80202

Attention: Chief Executive Officer

Telephone: (303) 893-1003

Facsimile: (303) 893-1005

With a copy to:

David Wagner & Associates, P.C.

8400 East Prentice Ave.

Penthouse Suite

Greenwood Village, Colorado 80111

Attention: David J. Wagner, Esq.

Telephone: (303) 793-0304

Facsimile: (303) 409-7650

     If to a Buyer:

BOCO Investments, LLC

103 West Mountain Ave.

Fort Collins, Colorado 80524

Facsimile: (970) 482-6139

Attention: Chief Executive Officer

24

 

With a copy to:

Davis Graham & Stubbs LLP

1550 17th Street, Suite 500

Denver, Colorado 80202

Attention: Ronald R. Levine II and Brian J. Boonstra

Telephone: (303) 892-9400

Facsimile: (303) 892-7400

GDBA Investments, LLLP

1440 Blake Street, Suite 310

Denver, CO 80202

Facsimile: (720) 932-9397

Attention: Chief Executive Officer

With a copy to

Davis & Ceriani P.C.

Suite 400, Market Center

1350 Seventeenth Street

Denver, CO 80202

Facsimile: (303) 534-4618

Attention: Patrick J. Kanouff

Joseph C. Zimlich

103 West Mountain Ave.

Fort Collins, Colorado 80524

Facsimile: (970) 482-6139

     Each party shall provide notice to the other party of any change in address.

          g. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. Neither the Company nor any Buyer shall
assign this Agreement or any rights or obligations hereunder without the prior written consent of
the other. Notwithstanding the foregoing, subject to Section 4(f), any Buyer may assign its rights
hereunder to any person that purchases Securities in a private transaction from a Buyer or to any
of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the
Company.

          h. Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.

          i. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may reasonably request

25

 

 in order to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

          j. No Strict Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

26

 

     IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be
duly executed as of the date first above written.

	 	 	 
	ACROSS AMERICA REAL ESTATE CORP.

	 	 
	 
	 	 
	/s/ Ann L. Schmitt
	 	 
	 	 	 
	Name:
Ann L. Schmitt

Title: Chief Executive Officer
	 	 
	 
	 	 
	BUYERS:
	 	 
	 
	 	 
	BOCO INVESTMENTS, LLC
	 	 
	 
	 	 
	/s/ Joseph C. Zimlich
	 	 
	 	 	 
	Name:
Joseph C. Zimlich 

Title: CEO

RESIDENCE: Colorado
	 	 
	 
	 	 
	GDBA INVESTMENTS, LLLP
	 	 
	 
	 	 
	/s/ G. Brent Backman
	 	 
	 	 	 
	Name:
G. Brent Backman 

Title: Manager 

RESIDENCE: Colorado
	 	 
	 
	 	 
	JOSEPH C. ZIMLICH
	 	 
	 
	 	 
	/s/ Joseph C. Zimlich

	 	 
	 	 	 
	RESIDENCE: Colorado
	 	 

 

 

EXHIBIT A

SERIES A CONVERTIBLE PREFERRED STOCK

 

 

EXHIBIT B

FORM OF TERM NOTE

 

 

EXHIBIT C

FORM OF REVOLVING NOTE

 

 

EXHIBIT D

FORM OF REQUEST FOR ADVANCE

 

 

EXHIBIT E

FORM OF LEGAL OPINIONexv10w12

 

Exhibit 10.12

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR
OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

SENIOR SUBORDINATED NOTE

	 	 	 	 	 
	Denver, Colorado
	 	 	 	 
	September 28, 2006
	 	$	3,500,000	 

     FOR VALUE RECEIVED, ACROSS AMERICA REAL ESTATE CORP., a Colorado corporation (the
“Company”), hereby promises to pay to the order of GDBA INVESTMENTS, LLLP, a Colorado
limited liability limited partnership or registered assigns (the “Holder”) the sum of
Three Million Five Hundred Thousand Dollars ($3,500,000) (the “Principal”), on September
28, 2009 (the “Maturity Date”), on the terms and conditions set forth herein and in the
Securities Purchase Agreement dated September 28, 2006 (the “Purchase Agreement”).

     Each capitalized term used herein, and not otherwise defined, shall have the meaning
ascribed thereto in the Purchase Agreement.

     All payments due under this Senior Subordinated Note (the “Note”) shall be made in
lawful money of the United States of America.

     1. Interest; Payments

          (a) Interest Rate. Subject to Section 1(b) and 1(c), this Note shall bear interest on
the unpaid Principal balance hereof at the rate (the “Interest Rate”) per annum equal to
the greatest of:

          (i) the ninety day average for U.S. Treasury Notes with a 10-year maturity as
determined on the last Business Day of each calendar quarter, using the constant maturity
calculation, plus 650 basis points;

          (ii) eleven percent (11%); or

          (iii) the highest effective interest rate accruing on any outstanding Indebtedness for
Borrowed Money of the Company at any time during the applicable calendar quarter.

 

 

          (b) Default Interest. If an Event of Default has occurred and is continuing, interest
shall accrue on the unpaid Principal balance of this Note at a rate (the “Default Interest
Rate”) equal to the higher of (i) the Interest Rate plus 800 basis points, or (ii) twenty-four
percent (24%) per annum.

          (c) Applicable Law. Notwithstanding any provision of this Note, the Purchase
Agreement or any other agreement to the contrary, the Company shall not be required to pay, and the
Holder shall not be permitted to receive, any compensation that constitutes interest under
Applicable Law in excess of the maximum amount of interest permitted by Applicable Law.

          (d) Interest. Interest shall commence accruing on the date hereof, shall be
computed on the basis of a 365-day year and the actual number of days elapsed and shall be
payable quarterly on the last Business Day of each calendar quarter, beginning December 29, 2006.
The applicable Interest Rate for each calendar quarter shall be determined as provided in Section
1(a) on the last Business Day of each calendar quarter.

          (e) Payments. All payments shall be made at such address as the Holder shall
hereafter give to the Company by written notice made in accordance with the provisions of this
Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is
not a Business Day, the same shall instead be due on the next succeeding day which is a Business
Day and, in the case of any interest payment date which is not the date on which this Note is paid
in full, the extension of the due date thereof shall not be taken into account for purposes of
determining the amount of interest due on such date. The Principal amount of this Note, together
with any unpaid interest thereon, shall be due and payable on the Maturity Date.

          (f) Prepayment. The unpaid Principal balance of this Note, together with all accrued
and unpaid interest, may at the Company’s option be prepaid in whole or in part, at any time or
from time to time upon ten (10) days’ prior written notice to the Holder stating the Principal
amount to be prepaid and the date on which such prepayment shall be made. Any prepayments
hereunder shall be applied first, to all interest accrued but unpaid at such prepayment date and
second, to outstanding Principal amounts.

     2. Subordination. The payment of principal and interest on this Note is hereby subordinated
to the Senior Debt and Holder will not ask, demand, sue for, take or receive from the Company, by
setoff or in any other manner, the whole or any part any amount payable with respect to this Note
(whether such amounts represent principal or interest, or obligations which are due or not due,
direct or indirect, absolute or contingent), including, without limitation, the taking of any
negotiable instruments evidencing such debt, nor any security for any of the Note, unless and until
all Senior Debt, whether now existing or hereafter arising, shall have been fully and indefeasibly
paid in full in cash and satisfied and all financing arrangements between the Company and all
holders of the Senior Debt have been terminated; provided, however, that Holder may
receive from the Company scheduled payments of principal and interest with respect to this Note on
an unaccelerated basis so long as no Senior Default has occurred and is continuing or would result
therefrom. If a Senior Default has occurred and is continuing or would result from any scheduled
payment of principal or interest by the Company with respect to this Note, then, until the Senior

- 2 -

 

Default which has occurred or which would result from such payment has been cured, no payment of
principal or interest shall be deemed due or otherwise payable under this Note.

     3. Events of Default. Each of the following events shall be deemed an “Event of
Default”:

          (a) The Company fails to pay the Principal hereof or interest thereon when due on this Note,
whether at maturity, upon acceleration or otherwise;

          (b) Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings
for relief under any bankruptcy law or any law or the relief of debtors shall be instituted by or
against the Company or any subsidiary of the Company, unless such proceeding shall be stayed within
thirty (30) days;

          (c) The Company or any subsidiary of the Company shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business, or such a receiver or
trustee shall otherwise be appointed;

          (d) Any representation or warranty of the Company made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith (including, without
limitation, the Purchase Agreement and the Registration Rights Agreement), shall be false or
misleading in any material respect when made and the breach of which has (or with the passage of
time will have) a material adverse effect on the rights of the Holder with respect to this Note,
or the Purchase Agreement;

          (e) Any material failure by the Company to perform or observe any of its covenants contained
in the Purchase Agreement where such failure continues for a period in excess of five (5) days
after written notice from the Holder or actual knowledge of the Company of such failure;

          (f) If a final judgment, writ or similar process is entered or filed against the Company or
any subsidiary of the Company or any of its property or other assets in an amount in excess of
$50,000, which is not, within twenty (20) days after the entry thereof, discharged or the execution
thereof stayed pending appeal, or within twenty (20) days after the expiration of such stay, such
judgment is not discharged;

          (g) Any default with respect to any other Indebtedness for Borrowed Money or liabilities of
the Company or any of its subsidiaries in any amount in excess of (i) $50,000 individually or in
the aggregate with respect to Indebtedness for Borrowed Money, (ii) $50,000 individually with
respect to liabilities and (iii) $100,000 in the aggregate with respect to liabilities and
Indebtedness for Borrowed Money, provided, that such event shall only constitute an “Event
of Default” where the effect of such default is to permit the holder thereof to accelerate the
maturity of such Indebtedness for Borrowed Money or liabilities, as the case may be, but only if
(x) the holder elects to exercise such a right to accelerate the maturity of such Indebtedness for
Borrowed Money

- 3 -

 

or liabilities, as the case may be, and (y) where such default continues for a period of fifteen
(15) days after written notice from the Holder or actual knowledge of the Company of such a
default, and provided, further, that a default with respect to liabilities shall
not constitute an “Event of Default” where the Company in good faith objects to the amount or
obligation to pay the applicable liability and makes appropriate reserves for such liability, if
necessary, in accordance with GAAP.

          (h) Any liquidation, dissolution or winding up of the Company and its subsidiaries or its
business;

          (i) If the Company reports a net loss, as determined in accordance with U.S. generally
accepted accounting principles, in excess of (i) $1,000,000 for any calendar quarter after the date
hereof, or (ii) $2,500,000 for any three consecutive calendar quarters after the date hereof;

          (k) Any event, circumstance or conditions exists which could reasonably be expected to result
in a Material Adverse Effect on the Company and its Subsidiaries, provided that the
Holder shall provide thirty (30) days written notice to the Company if it intends to declare an
Event of Default under this paragraph 3(k) and provide the Company with an opportunity to present
evidence satisfactory to the Holder in its sole discretion that such event, circumstance or
condition has been remedied; or

          (l) The Company shall fail to maintain the listing of the Common Stock on at least one
of the OTCBB or any equivalent replacement exchange, the Nasdaq Global Select Market, the Nasdaq
Global Market, the Nasdaq Capital Market, the New York Stock Exchange or the American Stock
Exchange

     4. Consequences of Event of Default

          (a) If there shall occur, after the fulfillment of any applicable notice and cure provisions
(if any), any Event of Default specified in sections (a), (b) or (c) of Section 3 hereof, the
unpaid Principal balance of this Note and all accrued interest thereon shall be immediately due and
payable, without presentment, demand, protest or notice of any kind, all of which are expressly
waived.

          (b) If there shall occur, after the fulfillment of any applicable notice and cure provisions
(if any), any Event of Default other than those listed in Section 4(a) above, the Holder may, at
its option, by written notice to the Company, declare the entire Principal balance of his Note and
all accrued interest thereon due and payable, and the same shall thereupon become immediately due
and payable without presentment, demand, protest or (except as required hereby) notice of any kind,
all of which are expressly waived.

          (c) If an Event of Default shall occur, the Company shall pay the Holder hereof all costs of
collection, including reasonable attorneys’ fees.

- 4 -

 

     5. Definitions

          “Applicable Law” means that law in effect from time to time and applicable to this
Note which lawfully permits the contracting, charging, taking, reserving and/or collection of the
highest permissible lawful, non-usurious rate of interest or amount of interest on or in connection
with this Note.

          “Business Day” means any day other than a Saturday, Sunday or a day on which
commercial banks in the city of Denver, Colorado are authorized or required by law or executive
order to remain closed.

          “Senior Debt” means all indebtedness, obligations and other liabilities of the Company
to Vectra Bank Colorado, national association, pursuant to that certain First Amendment to Credit
Agreement dated August 3, 2006, as amended.

          “Senior Default” means any “Default,” “Event of Default” or any condition or event
that (with or without notice, lapse of time, or both) would permit Holders of Senior Debt to
accelerate the maturity of such Senior Debt if that condition or event were not cured or removed
within any applicable grace or cure period set forth therein.

     6. Miscellaneous

          (a) No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

          (b) Any notice herein required or permitted to be given shall be in writing and may be
personally served or delivered by courier or sent by United States mail and shall be deemed
to have been given upon receipt if personally served (which shall include telephone line
facsimile transmission) or sent by courier or three (3) days after being deposited in the United
States mail, certified, with postage pre-paid and properly addressed, if sent by mail. For the
purposes hereof, the addresses of the parties for receipt of notice hereunder are:

          If to the Company:

Across America Real Estate Corp.

1660 Seventeenth Street, Suite 450

Denver, Colorado 80202

Attention: Chief Executive Officer

Telephone: (303) 893-1003

Facsimile: (303) 893-1005

- 5 -

 

With a copy to:

David Wagner & Associates, P.C.

8400 East Prentice Ave.

Penthouse Suite

Greenwood Village, Colorado 80111

Attention: David J. Wagner, Esq.

Telephone: (303) 793-0304

Facsimile: (303) 409-7650

          If to the Holder:

GDBA Investments, LLLP

1440 Blake Street, Suite 310

Denver, CO 80202

Facsimile: (720) 932-9397

Attention: Chief Executive Officer

With a copy to

Davis & Ceriani P.C.

Suite 400, Market Center

1350 Seventeenth Street

Denver, CO 80202

Facsimile: (303) 534-4618

Attention: Patrick J. Kanouff

          (c) This Note and any provision hereof may only be amended by an instrument in writing signed
by the Company and the Holder. The term “Note” and all reference thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later amended or supplemented,
then as so amended or supplemented.

          (d) This Note shall be binding upon the Company and its successors and assigns, and shall
inure to be the benefit of the Holder and its successors and assigns. Notwithstanding anything in
this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement.

          (e) This Note shall be enforced, governed by and construed in accordance with the laws of the
State of Colorado applicable to agreements made and to be performed entirely within such state,
without regard to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of federal or state courts located in Denver, Colorado with respect to any
dispute arising under this Note. Both parties irrevocably waive the defense of an inconvenient
forum to the maintenance of such suit or proceeding. Both parties further agree that service of
process upon a party mailed to the notice address set forth in this Note by registered first class
mail shall be deemed in every respect effective service of process upon the party in any such

- 6 -

 

suit or proceeding. Nothing herein shall affect either party’s right to serve process in any other
manner permitted by law. Both parties agree that a final non-appealable judgment in any such suit
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.

- 7 -

 

     IN WITNESS WHEREOF, Company has caused this Note to be signed in its name by its duly
authorized officer this 28th day of September, 2006.

	 	 	 	 	 	 	 
	 	 	ACROSS AMERICA REAL ESTATE CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	 	/s/ Ann L. Schmitt	 	 
	 

	 	 	 	 

Name: Ann L. Schmitt
	 	 
	 

	 	 	 	Title: Chief Executive Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]