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LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT dated as of October 31, 2001 (this
"Agreement"), is executed by and between Q COMM INTERNATIONAL, INC., a Utah
corporation, and Q COMM, INC., a Utah corporation (collectively "Q Comm"), both
of whose address is 0000 Xxxxx 0000 Xxxx, Xxxx, Xxxx 00000, and AMERICAN PAYMENT
SYSTEMS, INC., a Connecticut corporation ("APS"), whose address is One Hamden
Center, 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxx 00000.
In consideration of the mutual agreements hereinafter set forth, Q Comm and APS
hereby agree as follows:
1. DEFINITIONS.
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1.1 DEFINED TERMS.
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For the purposes of this Agreement, the following capitalized words
and phrases shall have the meanings set forth below.
"Adjusted Prime Rate" shall mean the Prime Rate plus 3% per annum.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as now existing
or hereafter amended.
"Collateral" shall have the meaning set forth in Section 5.1 hereof.
"Default Rate" shall mean a per annum rate of interest equal to the Adjusted
Prime Rate plus 3% per annum.
"Employee Plan" includes any pension, stock bonus, employee stock ownership
plan, retirement, disability, medical, dental or other health plan, life
insurance or other death benefit plan, profit sharing, deferred compensation,
stock option, bonus or other incentive plan, vacation benefit plan, severance
plan or other employee benefit plan or arrangement, including, without
limitation, those pension, profit-sharing and retirement plans of Q Comm
described from time to time in the financial statements of Q Comm and any
pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA)
or any multi-employer plan, maintained or administered by Q Comm or to which Q
Comm is a party or may have any liability or by which Q Comm is bound.
"Environmental Claim" shall mean any investigation, proceeding, complaint,
order, directive, claim, citation or notice by any governmental authority or any
other Person with respect to (i) any non-compliance with, or violation of, the
requirements of any Environmental Law, (ii) the release, spill or discharge,
threatened or actual, of any Hazardous Material, (iii) the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Material, or (iv) any other environmental, health or
safety matter, which affects Q Comm or its business, operations or assets or any
properties at which Q Comm has transported, stored or disposed of any Hazardous
Materials.
"Environmental Laws" shall mean all federal, state, district, local and foreign
laws, rules, regulations, ordinances, and consent decrees relating to health,
safety, hazardous substances, pollution and environmental matters, as now or at
LOAN AND SECURITY AGREEMENT BY AND BETWEEN
Q COMM INTERNATIONAL INC. AND AMERICAN PAYMENT SYSTEMS, INC.
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any time hereafter in effect, applicable to Q Comm's business or facilities
owned or operated by Q Comm, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contamination, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes in the environment
(including, without limitation, ambient air, surface water, land surface or
subsurface strata) or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall mean any of the events or conditions set forth in
Section 11 hereof.
"First Loan" shall have the meaning set forth in Section 2.1 hereof.
"Forbearance Period" shall have the meaning set forth in Section 10 hereof.
"GAAP" shall mean generally accepted accounting principles as in effect in the
United States, using the accrual basis of accounting and consistently applied
with prior periods, provided, however, that GAAP with respect to any interim
financial statements or reports shall be deemed subject to fiscal yearend
adjustments and footnotes made in accordance with GAAP.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous substance,
materials and wastes, including, without limitation, hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including, without
limitation, materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances, materials or
wastes that are or become regulated under any Environmental Law (including
without limitation, any that are or become classified as hazardous or toxic
under any Environmental Law)
"Holdback" shall have the meaning set forth in Section 2.2 hereof.
"Indemnified Party" and "Indemnified Parties" shall mean, respectively, each of
APS and any parent corporations, affiliated corporations or subsidiaries of APS,
and each of their respective officers, directors, employees, attorneys and
agents, and all of such parties and entities.
"Intellectual Property" shall mean all of Q Comm's intellectual property rights
of any type or nature, whether or not registered, including but not limited to:
(i) all common law, unregistered and registered (as applicable) and now existing
or subsequently arising trademarks, copyrights, trade names and Patents; (ii)
all applications for registration and registrations for such trademarks,
tradenames, names, copyrights and Patents; (iii) all goodwill of the business
symbolized by such trademarks, tradenames, names, copyrights and Patents; (iv)
all rights to xxx, recover and retain damages for past infringements of said
trademarks, tradenames, names, Patents or copyrights; (v) all registrations of
such trademarks, Patents, tradenames, names and copyrights; (vi) all
applications for reissues of such Patents; (vii) all requests for re-examination
of such Patents; (viii) all foreign counterpart Patents and applications related
to foreign counterparts of such Patents, (ix) all derivative works predicated on
any such Patents and copyrights; (x) all Software, computer programs and other
computer software; (xi) all inventions, know-how, designs, trade secrets, good
will, proprietary rights and technology; and (xii) tool kits, modules,
modifications and derivative works. The term "Intellectual Property" is intended
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to include intellectual property of any type or nature which Q Comm uses, owns,
has applied for, is developing, is licensed to use, is franchised to use,
services or which otherwise constitutes a part of the business of Q Comm.
"Key Bank Lien" shall mean the Lien of Key Bank National Association against Q
Comm's Accounts, as evidenced by a financing statement filed June 20, 1997,
against Teleconnect, a predecessor to Q Comm, as debtor.
"Lien" shall mean any mortgage, pledge, hypothecation, judgment lien or similar
legal process, title retention lien, or other lien or security interest,
including, without limitation, the interest of a vendor under any conditional
sale or other title retention agreement and the interest of a lessor under a
lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, by such Person as lessee that is, or should
be, a Capital Lease on the balance sheet of Q Comm prepared in accordance with
GAAP.
"Loans" shall mean, collectively, all Loans made by APS to Q Comm, under and
pursuant to this Agreement, as set forth in Section 2.1 of this Agreement.
"Loan Documents" shall have the meaning set forth in Section 3.1.
"Material Adverse Effect" shall mean a material adverse effect on the business
or financial condition of Q Comm.
"Maturity Date" shall mean the first to occur of (i) the Transaction Closing, or
(ii) June 1, 2002, unless extended by APS pursuant to any modification,
extension or renewal promissory note executed by Q Comm and accepted by APS in
its sole and absolute discretion in substitution for the Note.
"Note" shall mean the Note evidencing the Loans as set forth in Section 2.3.
"Obligations" shall mean the Loans, as evidenced by the Note, all interest
accrued thereon, any expenses incurred by APS hereunder which are reimbursable
to APS pursuant to this Agreement.
"Patent" shall mean each of the following in which Q Comm now holds or
subsequently acquires any interest: (i) all letters patent issued by the United
States Patent Office or any other governmental authority, including all
registrations and recordings thereof; (ii) all applications for letters patent
of the United States or any other governmental authority; (iii) all reissues,
continuations, continuations in part, extensions or foreign counterparts
thereof; and (iv) all applications for any such reissues, continuations,
continuations in part, extensions or foreign counterparts.
"Patent Security Agreement" shall mean the Patent Security Agreement, a form of
which is attached hereto as Exhibit "B".
"Permits" shall have the meaning set forth in Section 6.12.
"Person" shall mean any individual, partnership, limited liability company,
corporation, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Prime Rate" shall mean the floating per annum rate of interest which at any
time, and from time to time, shall be most recently announced by The Wall Street
Journal as the Prime Rate. The effective date of any change in the Prime Rate
shall for purposes hereof be the date the Prime Rate is first reported as
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LOAN AND SECURITY AGREEMENT BY AND BETWEEN
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changed by The Wall Street Journal. APS shall not be obligated to give notice of
any change in the Prime Rate.
"Second Loan" shall have the meaning set forth in Section 2.1 hereof.
"Third Loan" shall have the meaning set forth in Section 2.1 hereof.
"Transaction Agreement" means the Agreement dated October 18, 2001 between Q
Comm and APS.
"Transaction Closing" shall mean the date on which the transaction pursuant to
which APS is acquiring 11,400,000 shares of common stock of Q Comm
International, Inc. is closed.
"UCC" shall mean the Uniform Commercial Code in effect in Connecticut from time
to time.
"UEI Agreement" shall have the meaning set forth in Section 6.6.
1.2 OTHER TERMS DEFINED IN UCC.
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All other capitalized words and phrases used herein and not
otherwise specifically defined shall have the respective meanings
assigned to such terms in the UCC, as amended from time to time, to
the extent the same are used or defined therein.
1.3 OTHER DEFINITIONAL PROVISIONS; CONSTRUCTION.
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Whenever the context so requires, the neuter gender includes the
masculine and feminine, the single number includes the plural, and
vice versa, and in particular the word "Q Comm" shall be so construed.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
references to Article, Section, Subsection, Annex, Schedule, Exhibit
and like references are references to this Agreement unless otherwise
specified. An Event of Default shall "continue" or be "continuing"
until such Event of Default has been waived or cured in accordance
with this Agreement. References in this Agreement to any party shall
include such party's successors and permitted assigns. References to
any "Section" shall be a reference to such Section of this Agreement
unless otherwise stated. To the extent any of the provisions of the
other Loan Documents are inconsistent with the terms of this
Agreement, the provisions of this Agreement shall govern. If there is
any conflict between the provisions of this Agreement and those of
Section 10 of the Transaction Agreement, the provisions of this
Agreement shall control.
2. COMMITMENT OF APS.
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2.1 LOANS.
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(a) Funding of Loans.
Subject to the terms and conditions of this Agreement, and in
reliance upon the representations and warranties of Q Comm set forth
herein and in the other Loan Documents, APS agrees to make advances to
Q Comm as follows (each such advance constituting a "Loan"):
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(i) $200,000 less the Holdback (described in Section 2.2), on
October 31, 2001 (the "First Loan");
(ii) $200,000 on December 1, 2001 (the "Second Loan"); and
(iii) $200,000 on January 11, 2002 (the "Third Loan").
The Loans shall be used by Q Comm for the purpose of working
capital.
(b) Loan Interest and Payments.
The principal amount of the Loans outstanding from time to time
shall bear interest at the Adjusted Prime Rate. Accrued and unpaid
interest on the unpaid principal balance of all Loans outstanding from
time to time shall be due and payable on the Maturity Date.
(c) Loan Principal Repayments.
(i) Mandatory Principal Prepayments.
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All Loans hereunder shall be repaid by Q Comm on the
Maturity Date, unless payable sooner pursuant to the provisions
of this Agreement.
(ii) Optional Prepayments.
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Q Comm may from time to time prepay the Loans, in whole or
in part, without any prepayment penalty whatsoever provided that
any prepayment of the entire principal balance of the Loans shall
include accrued interest on such Loans to the date of such
prepayment and payment in full of all other Obligations then due
and payable.
2.2 HOLDBACK.
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APS shall withhold the sum of $10,000 (the "Holdback") from the First
Loan. APS shall pay from the Holdback reasonable expenses incurred by Q
Comm and APS and their representatives in connection with the patent
prosecution pursuant to Section 8.12. APS shall make such payments upon
submission of proper documentation. APS shall not be required to make any
such payments more often than weekly. In the event that any portion of the
Holdback remains as of the disbursement date of the Second Loan, the
remaining Holdback amount shall be disbursed to Q Comm as of such date. All
work done by Q Comm, APS and their representatives in connection with such
patent prosecution shall be the property of Q Comm, subject to the security
interest of APS.
2.3 INTEREST COMPUTATION.
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Except as otherwise set forth herein all interest and fees shall be
calculated on the basis of a year consisting of 360 days and shall be paid
for the actual number of days elapsed. Principal payments submitted in
funds not immediately available shall continue to bear interest until
collected.
2.4 NOTE EVIDENCING LOANS.
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The Loans shall be evidenced by a single promissory note (together
with any and all renewal, extension, modification or replacement notes
executed by Q Comm and delivered to APS and given in substitution therefor,
the "Note") in the form of Exhibit "A" attached hereto, duly executed by Q
Comm and payable to the order of APS.
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LOAN AND SECURITY AGREEMENT BY AND BETWEEN
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3. CONDITIONS OF FIRST LOAN.
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Notwithstanding any other provision of this Agreement, APS shall not be
required to disburse or make all or any portion of the First Loan if any of the
following conditions shall have occurred.
3.1 LOAN DOCUMENTS.
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Q Comm shall have failed to execute and deliver to APS any of the
following Loan Documents (collectively, the "Loan Documents"), all of which
must be satisfactory to APS and APS's counsel in form, substance and
execution:
(a) Loan Agreement.
This Agreement duly executed by Q Comm.
(b) Note.
A Note duly executed by Q Comm, in the form attached hereto as
Exhibit "A".
(c) Patent Security Agreement.
A Patent Security Agreement required by APS to be executed by Q
Comm, in the form attached hereto as Exhibit "B".
(d) Pledge Agreement.
A Pledge Agreement executed by Xxxx Xxxxxx ("Xxxxxx") pursuant to
which Xxxxxx will pledge 500,000 shares of stock in Q Comm
International, Inc. to secure the Loan, in the form attached hereto as
Exhibit "D".
(e) Resolutions.
Resolutions of the boards of directors of Q Comm authorizing the
execution of this Agreement and the Loan Documents.
(f) Additional Documents.
Such other certificates, financial statements, schedules, and
other documents which are provided for hereunder or which APS shall
reasonably require.
3.2 PATENT FILING.
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Q Comm shall have failed to file a patent application with respect to
the Q Xpress II point of sale activation system ("Q Xpress System").
3.3 REPRESENTATIONS AND WARRANTIES.
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Any representation or warranty of Q Comm contained herein or in any
Loan Document shall be untrue or incorrect as of the date of the First Loan
as though made on such date, except to the extent such representation or
warranty expressly relates to an earlier date.
3.4 AGREEMENT WITH CELLCARDS OF ILLINOIS, LLC.
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Q Comm, Inc. is in material compliance with its contractual
obligations to CellCards of Illinois, LLC ("CellCards") pursuant to the Q
Comm Services Agreement ("Services Agreement") dated June 29, 2000 by and
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between Q Comm, Inc. and CellCards, other than as a result of the breach of
LDC Direct Limited Company of its agreements with Q Comm, provided Q Comm
has used all commercially reasonable efforts to fulfil its obligations to
CellCards. Neither APS nor Q Comm has knowledge of any material default
under the Services Agreement as of the date hereof.
4. CONDITIONS OF SECOND LOAN AND THIRD LOAN.
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Notwithstanding any other provision of this Agreement, APS shall not be
required to make all or any portion of the Second Loan or the Third Loan if any
of the following conditions shall have occurred.
4.1 EVENT OF DEFAULT.
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Any 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; provided, however, if an event occurs which would constitute
an Event of Default and Q Comm cures such default within any applicable
time period or APS waives such default, APS shall make the Loan upon Q
Comm's curing of such default or APS' waiver.
4.2 LITIGATION.
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Any litigation or governmental proceeding shall have been instituted
against Q Comm, which in the discretion of APS, reasonably exercised, has a
Material Adverse Effect.
4.3 REPRESENTATIONS AND WARRANTIES.
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Any representation or warranty of Q Comm contained herein or in any
Loan Document shall be untrue or incorrect as of the date of any Loan as
though made on such date, except to the extent such representation or
warranty expressly relates to an earlier date.
4.4 AGREEMENT WITH CELLCARDS OF ILLINOIS, LLC.
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Q Comm, Inc. is in material compliance with its contractual
obligations to CellCards pursuant to the Services Agreement, other than as
a result of the breach of LDC Direct Limited Company of its agreements with
Q Comm, provided Q Comm has used all commercially reasonable efforts to
fulfil its obligations to CellCards.
4.5 DUE DILIGENCE.
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With respect to the Second Loan, APS is not satisfied in its
reasonable discretion with its due diligence investigation of Q Comm as
provided in the Transaction Agreement.
4.6 BETA TESTING.
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With respect to the Third Loan, the Beta Testing of the Q Xpress
System, pursuant to Q Comm's Beta plan, is not successfully completed in
the reasonable determination of APS.
4.7 TERMINATION OF TRANSACTION AGREEMENT.
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The Transaction Agreement is terminated.
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4.8 CHANGES IN KEY MANAGEMENT.
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Xxxxxxx X. Xxxxxxxx shall no longer be President of Q Comm.
5. SECURITY FOR THE OBLIGATIONS.
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5.1 SECURITY FOR OBLIGATIONS.
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As security for the payment of the Obligations, Q Comm does hereby
grant to APS a security interest in and to the following:
(i) All of Q Comm's Accounts; and
(ii) All Intellectual Property;
(all of which property, along with the products and proceeds
therefrom, are individually and collectively referred to as the
"Collateral").
5.2 FINANCING STATEMENTS.
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Q Comm shall, at APS's reasonable request, at any time and from time
to time, execute and deliver to APS such financing statements, amendments
and other documents and do such acts as APS deems necessary in order to
perfect and maintain first security interests in the Collateral in favor of
APS, free and clear of all Liens and claims and rights of third parties
whatsoever (except the Keybank Lien and as otherwise specifically set forth
in this Agreement). Q Comm hereby irrevocably authorizes APS at any time,
and from time to time, to file in any jurisdiction any initial financing
statements and amendments thereto and such filings acquired by the U.S.
Patent and Trademark Office to perfect APS' security interest in the
Collateral. Upon payment in full of the Obligations, APS shall promptly
execute and deliver to Q Comm, at Q Comm's expense, all termination
statements and other instruments as may be necessary or proper to terminate
APS' security interests in the Collateral, and to record the termination of
any such security interests of any governmental body.
5.3 OTHER ACTIONS AS TO ANY AND ALL COLLATERAL.
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Q Comm further agrees to use commercially reasonable efforts to take
any other action reasonably requested by APS to insure the attachment,
perfection and first priority of, and the ability of APS to enforce, APS's
security interest in any and all of the Collateral, subject to the Keybank
Lien, including, without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that Q Comm's
signature thereon is required therefor, (b) causing APS's name to be noted
as secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or
ability of APS to enforce, APS's security interest in such Collateral, (c)
complying with any provision of any statute, regulation or treaty of the
United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of APS to
enforce, APS's security interest in such Collateral, (d) obtaining
governmental and other third party consents and approvals, including
without limitation any consent of any licensor, lessor or other Person
obligated on Collateral, (e) use commercially reasonable efforts to obtain
waivers from mortgagees and landlords in form and substance reasonably
satisfactory to APS, and (f) taking all actions required by the UCC in
effect from time to time or by other law, as applicable in any relevant UCC
jurisdiction, or by other law as applicable in any foreign jurisdiction.
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6. REPRESENTATIONS AND WARRANTIES.
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To induce APS to make the Loans, Q Comm makes the following representations
and warranties to APS, each of which shall be true and correct as of the date of
the execution and delivery of this Agreement, except to the extent any such
representation or warranty expressly relates to an earlier date, and which shall
survive the execution and delivery of this Agreement:
6.1 ORGANIZATION AND NAME.
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Q Comm is a corporation duly organized, existing and in good standing
under the laws of the State of Utah, with full and adequate corporate power
to carry on and conduct its business as presently conducted. Q Comm is duly
licensed or qualified in all foreign jurisdictions wherein the nature of
its activities require such qualification or licensing, except where
failure to be so licensed or qualified would not have a Material Adverse
Effect. The exact legal name of Q Comm is as set forth in the first
paragraph of this Agreement, and Q Comm currently does not conduct, nor has
it during the last five (5) years conducted business under any other name
or trade name, except that Q Comm, Inc. has conducted business, during the
last five (5) years, under the following names or trademarks: Teleshare
900, Inc., Teleconnect, Inc., Four Rivers Development, Inc., QC Merco, Inc.
and Azore Acquisition Corporation.
6.2 AUTHORIZATION; VALIDITY.
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Q Comm has full right, power and authority to enter into this
Agreement, to make the borrowings and execute and deliver the Loan
Documents as provided herein and to perform all of its duties and
obligations under this Agreement and the Loan Documents. The execution and
delivery of this Agreement and the Loan Documents will not, nor will the
observance or performance of any of the obligations herein or therein set
forth, violate or contravene any provision of law or of the articles of
incorporation or bylaws of Q Comm. All necessary and appropriate corporate
action has been taken on the part of Q Comm to authorize the execution and
delivery of this Agreement and the Loan Documents. This Agreement and the
Loan Documents are valid and binding agreements and contracts of Q Comm in
accordance with their respective terms.
6.3 COMPLIANCE WITH LAWS.
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The nature and transaction of Q Comm's business and operations and the
use of its properties and assets, including, but not limited to, the
Collateral or any real estate owned or occupied by Q Comm, do not violate
or conflict with any applicable law, statute, ordinance, rule, regulation
or order of any kind or nature, except where such violation or conflict
would not have a Material Adverse Effect.
6.4 ENVIRONMENTAL LAWS AND HAZARDOUS SUBSTANCES.
--------------------------------------------
Q Comm represents, warrants and agrees with APS that (i) Q Comm has
not generated, used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off any of the
premises of Q Comm (whether or not owned by it) in any manner which
violated any Environmental Law or any license, permit, certificate,
approval or similar authorization thereunder, (ii) the operations of Q Comm
comply in all material respects with all Environmental Laws and all
licenses, permits certificates, approvals and similar authorizations
thereunder, (iii) there has been no investigation, proceeding, complaint,
order, directive, claim, citation or notice by any governmental authority
or any other Person, nor is any pending or, to the best of Q Comm's
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knowledge, threatened, with respect to any non-compliance with, or
violation of, the requirements of any Environmental Law by Q Comm or the
release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material or
any other environmental, health or safety matter, which affects Q Comm or
its business, operations or assets or any properties at which Q Comm has
transported, stored or disposed of any Hazardous Materials, (iv) Q Comm has
no material liability, contingent or otherwise, in connection with a
release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material.
6.5 ABSENCE OF BREACH.
------------------
The execution, delivery and performance of this Agreement, the Loan
Documents and any other documents or instruments to be executed and
delivered by Q Comm in connection with the Loans: (i) do not violate any
provisions of law or any applicable regulation, order, writ, injunction or
decree of any court or governmental authority, except where such violations
would not have a Material Adverse Effect; or (ii) do not conflict with, are
not inconsistent with, or do not result in any breach or default of any of
the terms, covenants, conditions, or provisions of any indenture, mortgage,
deed of trust, instrument, document, agreement or contract of any kind to
which Q Comm is a party or by which Q Comm or any of its property or assets
are bound, except where such conflict, inconsistency, breach or default
would not have a Material Adverse Effect.
6.6 TITLE.
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Q Comm is the sole owner of and has good, indefeasible and
merchantable title to the Collateral, free from any Lien of any kind, other
than the Lien of APS, the Keybank Lien, the rights of Universal Electronics
pursuant to a letter agreement dated May 4, 2001 ("UEI Agreement"), and
minor defects in title which would not, individually or collectively, have
a Material Adverse Effect.
6.7 INTELLECTUAL PROPERTY.
----------------------
To Q Comm's best knowledge, all Intellectual Property is subsisting,
in good standing and uncontested. Q Comm either owns exclusive, full and
clear title to the Intellectual Property or has the legal, unencumbered
right to use the Intellectual Property it licenses, subject to the rights
of Universal Electronics pursuant to the UEI Agreement. No employees or
former employees of Q Comm or independent contractors retained by Q Comm
has any claim to or title in any Intellectual Property. Q Comm has executed
agreements with all such employees and/or independent contractors which
specify that Q Comm has sole title to all the Intellectual Property,
whether or not developed solely or jointly by or with such employees or
independent contractors. None of the Intellectual Property which is or to Q
Comm's best knowledge could be a subject of any Patent, copyright,
trademark or other registration (whether in the United States or any other
governmental authority) has been claimed or judged to be invalid or
unenforceable in whole or in part. Q Comm has taken commercially reasonable
actions and effectuated all registrations necessary to maintain the
existence of and protect its exclusive title to the Intellectual Property
in the United States, to the extent that failure to take such actions could
have a Material Adverse Effect. Prior to utilizing any Intellectual
Property in the jurisdiction of any governmental authority, Q Comm has
taken all commercially reasonable actions necessary to protect and/or
register such Intellectual Property so that the use of such Intellectual
Property in such jurisdiction will not jeopardize any of Q Comm's ownership
or other rights or registrations in such Intellectual Property. Q Comm owns
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all or possesses adequate registrations of the Intellectual Property with
governmental authorities necessary for Q Comm to continue to operate its
business as currently conducted. To Q Comm's best knowledge, Q Comm does
not have to license any Patents owned by any Person in order to operate
their businesses, and there exist no "blocking patents" which could require
Q Comm to execute any such license in the future. Q Comm has not obtained
any Intellectual Property in any illegal fashion, and has not copied any
Patent applications, copyrights, trademarks or other intellectual property
of any other party. Q Comm has implemented commercially reasonable
procedures to maintain the confidentiality and/or trade secret status of
any Intellectual Property which is confidential and/or a trade secret in
nature. To Q Comm's best knowledge, the Intellectual Property does not
infringe upon any patents, copyrights, trademarks, licenses, trade secrets
or franchises which any other Person may own or claim. There is no claim or
action pending or to Q Comm's best knowledge threatened concerning any
Intellectual Property.
6.8 ACCOUNT WARRANTIES AND REPRESENTATIONS.
---------------------------------------
(a) All of Q Comm's Accounts are genuine;
(b) All of Q Comm's Accounts represent undisputed, bona fide
transactions arising in the ordinary course of business in accordance
with the terms and provisions contained in any documents related
thereto;
(c) To Q Comm's best knowledge, there are no setoffs, counterclaims or
disputes existing or asserted with respect to any of Q Comm's
Accounts, and Q Comm has not made any agreement with any Account
Debtor for any deduction from any such Account, except for discounts
or allowances allowed by Q Comm in the ordinary course of its
business;
(d) To Q Comm's best knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforcement of any
of Q Comm's Accounts; and
(e) Other than the Liens of APS and the Keybank Lien, Q Comm's
Accounts have not been pledged or sold to any other Person or
otherwise encumbered and Q Comm is the owner of such Accounts free of
all other liens and encumbrances.
6.9 LITIGATION AND TAXES.
---------------------
Except as set forth on Schedule 6.9 hereto, there is no litigation,
demand, charge, claim, petition or governmental investigation or proceeding
pending, or to the best knowledge of Q Comm, threatened, against Q Comm,
which, if adversely determined, would have a Material Adverse Effect.
Except for those taxes for which Q Comm has not filed tax returns or paid
tax since December 31, 1997, Q Comm has duly filed all applicable income or
other tax returns and has paid all income or other taxes when due. No
income taxes were due since 1997 for Q Comm. There is no controversy or
objection pending, or to the best knowledge of Q Comm, threatened in
respect of any tax returns of Q Comm.
6.10 ERISA OBLIGATIONS.
------------------
All Employee Plans of Q Comm meet the minimum funding standards of
Section 302 of ERISA where applicable and each such Employee Plan that is
intended to be qualified within the meaning of Section 401 of the Internal
Revenue Code of 1986 is qualified. No withdrawal liability has been
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incurred under any such Employee Plans and no "Reportable Event" or
"Prohibited Transaction" (as such terms are defined in ERISA), has occurred
with respect to any such Employee Plans, unless approved by the appropriate
governmental agencies. Q Comm has promptly paid and discharged all
obligations and liabilities arising under ERISA of a character which if
unpaid or unperformed might result in the imposition of a Lien against any
of its properties or assets.
6.11 ADVERSE CIRCUMSTANCES.
----------------------
No condition, circumstance, event, agreement, document, instrument,
restriction, litigation or proceeding (or to Q Comm's best knowledge
threatened litigation or proceeding or basis therefor) exists which (a)
could adversely affect the validity or priority of the Liens granted to APS
under the Loan Documents, (b) could materially adversely affect the ability
of Q Comm to perform its obligations under the Loan Documents, (c) would
constitute an Event of Default, or (d) would constitute such an Event of
Default with the giving of notice or lapse of time or both.
6.12 LICENSES AND PERMITS.
---------------------
Q Comm has obtained and holds in full force and effect, all
franchises, licenses, permits, certificates, registrations, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals (collectively "Permits") which are necessary for the
operation of its businesses as presently conducted, except where any such
failure or all failures collectively would not have a Material Adverse
Effect. Q Comm has materially fulfilled and performed all of its
obligations under each Permit. To Q Comm's best knowledge, no event has
occurred or condition or state of facts exists which constitutes, or after
notice or lapse of time or both, would constitute, a breach or default
under any Permit, or would cause the revocation or termination of any
Permit except where such breach or default would not have a Material
Adverse Effect. Q Comm has not received notice of cancellation, of default
or of any material dispute concerning any Permit. Each Permit is valid,
subsisting and in full force and effect except where such breach or default
would not have a Material Adverse Effect.
6.13 NO THREATENED PROCEEDING.
-------------------------
To Q Comm's best knowledge, no Person is contemplating filing or has
filed any petition under the Bankruptcy Code, or any other or similar law
of any governmental authority involving insolvency, or liquidation of all
or a major portion of Q Comm's properties.
6.14 VALIDITY, PERFECTION AND PRIORITY.
----------------------------------
Q Comm has authorized the filing of financing statements sufficient
when filed to perfect APS' security interest in the Collateral granted
hereunder and the other security interests created by the Loan Documents.
When such financing statements are filed in the offices noted therein, APS
will have a valid and perfected security interest in all Collateral which
is capable of being perfected by filing financing statements. Except for
those of APS and the KeyBank Lien, no financing statement concerning any of
the Collateral or any Proceeds of the Collateral is on file in any public
office.
6.15 EXCLUSIVITY.
------------
Except as set forth on Schedule 6.15, Q Comm has not granted any
exclusive arrangements to any Person with respect to products sold on or
through the Q Xpress System.
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6.16 COMPLETE INFORMATION.
---------------------
This Agreement and all financial statements, schedules, certificates,
confirmations, agreements, contracts, and other materials submitted to APS
in connection with or in furtherance of this Agreement by or on behalf of Q
Comm fully and fairly state the matters with which they purport to deal,
and neither misstate any material fact nor, separately or in the aggregate,
fail to state any material fact necessary to make the statements made not
misleading.
7. NEGATIVE COVENANTS.
-------------------
7.1 LIENS.
------
Q Comm shall not, either directly or indirectly, create, assume, incur
or suffer or permit to exist any Lien or charge of any kind or character
upon any of the Collateral, whether owned at the date hereof or hereafter
acquired except Liens granted to APS and the Keybank Lien. Notwithstanding
the foregoing or any other provision of this Agreement, if APS does not
make the Second Loan or the Third Loan, Q Comm may arrange additional
financing up to the aggregate amount of the Loans not made by APS, and APS
will permit the new lender to take a security interest in Q Comm's Accounts
and any other assets of Q Comm not comprising any of the Collateral.
7.2 TRANSFER; MERGER.
-----------------
Q Comm shall not, either directly or indirectly, merge, consolidate,
sell, transfer, license, lease, encumber or otherwise dispose of all or any
part of the Collateral or all or substantially all of its assets, or sell
or discount (with or without recourse) any of its Accounts. Notwithstanding
the foregoing, with the approval of APS, which approval shall not be
unreasonably withheld, Q Comm shall have the right to license its
Intellectual Property in territories outside the United States, provided
such license is at fair market value on commercially reasonable terms. In
addition, Q Comm shall have the right, in the ordinary course of business,
to provide limited licenses of its Intellectual Property to its customers
who distribute, purchase or lease its point of sale terminals.
7.3 ISSUANCE OF STOCK.
------------------
Q Comm shall not, either directly or indirectly, issue or distribute
any additional capital stock or other securities of Q Comm, other than
capital stock or securities to be issued (i) to APS, (ii) pursuant to
currently outstanding options granted under a stock incentive plan adopted
by the Board of Directors and shareholders (if necessary) of Q Comm, or
(iii) pursuant to currently outstanding warrants or convertible securities.
7.4 DISTRIBUTIONS.
--------------
Q Comm shall not, either directly or indirectly, purchase or redeem
any shares of its stock, or declare or pay any dividends (other than stock
dividends), whether in cash or otherwise, or set aside any funds for any
such purpose or make any distribution to its shareholders.
7.5 CHANGE OF LEGAL STATUS.
-----------------------
Q Comm shall not change its name, its type of organization, its
jurisdiction of organization or other legal structure.
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7.6 EXCLUSIVE ARRANGEMENTS.
-----------------------
Except as set forth in Schedule 6.15, Q Comm shall not grant any
exclusive arrangements to any person with respect to products sold on or
through the Q Xpress System without the prior written consent of APS.
8. AFFIRMATIVE COVENANTS.
----------------------
8.1 CORPORATE EXISTENCE.
--------------------
Q Comm shall at all times preserve and maintain its corporate
existence, name, rights, franchises and privileges desirable in the normal
conduct of its business, and shall at all times continue as a going concern
in the business which Q Comm is presently conducting. Q Comm promptly shall
notify APS in writing of any change of name or address of Q Comm from that
shown in this Agreement.
8.2 MAINTAIN PROPERTY.
------------------
Q Comm shall at all times maintain, preserve and keep its plant,
properties and Equipment, including, but not limited to, any Collateral, in
good repair, working order and condition, normal wear and tear excepted,
and shall from time to time make all reasonable repairs, renewals and
replacements so that at all times the efficiency thereof shall be
reasonably preserved and maintained.
8.3 MAINTAIN INSURANCE.
-------------------
Q Comm shall at all times insure and keep insured in insurance
companies reasonably acceptable to APS, all insurable property owned by it
which is of a character usually insured by companies similarly situated and
operating like properties, against loss or damage from fire and such other
hazards or risks as are customarily insured against by companies similarly
situated and operating like properties; and shall similarly insure
employers' and public liability risks.
8.4 TAX LIABILITIES.
----------------
Q Comm shall at all times pay and discharge all property and other
taxes, assessments and governmental charges upon, and all claims (including
claims for labor, materials and supplies) against Q Comm or any of its
properties, Equipment or Inventory, before the same shall become delinquent
and before penalties accrue thereon, unless and to the extent that the same
are being contested in good faith by appropriate proceedings and are
insured against or bonded over to the reasonable satisfaction of APS.
8.5 ERISA LIABILITIES; EMPLOYEE PLANS.
----------------------------------
Q Comm shall (i) keep in full force and effect any and all Employee
Plans which are presently in existence or may, from time to time, come into
existence under ERISA, and not withdraw from any such Employee Plans,
unless such withdrawal can be effected or such Employee Plans can be
terminated without material liability to Q Comm; (ii) make contributions to
all of such Employee Plans in a timely manner and in a sufficient amount to
comply with the standards of ERISA; including the minimum funding standards
of ERISA; (iii) comply with all material requirements of ERISA which relate
to such Employee Plans; (iv) notify APS promptly upon receipt by Q Comm of
any notice concerning the imposition of any withdrawal liability or of the
institution of any proceeding or other action which may result in the
termination of any such Employee Plans or the appointment of a trustee to
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administer such Employee Plans; (v) promptly advise APS of the occurrence
of any "Reportable Event" or "Prohibited Transaction" (as such terms are
defined in ERISA), with respect to any such Employee Plans; and (vi) amend
any Employee Plan that is intended to be qualified within the meaning of
Section 401 of the Internal Revenue Code of 1986 to the extent necessary to
keep the Employee Plan qualified, and to cause the Employee Plan to be
administered and operated in a manner that does not cause the Employee Plan
to lose its qualified status.
8.6 COLLATERAL RECORDS.
-------------------
Q Comm shall keep full and accurate books and records relating to the
Collateral and shall xxxx such books and records to indicate APS's Lien in
the Collateral.
8.7 NOTICE OF PROCEEDINGS.
----------------------
Q Comm shall, promptly after knowledge thereof shall have come to the
attention of any officer of Q Comm, give written notice to APS of all
threatened or pending actions, suits, and proceedings against Q Comm before
any court or governmental department, commission, board or other
administrative agency which may have a material effect on the business,
property or operations of Q Comm.
8.8 NOTICE OF DEFAULT.
------------------
Q Comm shall, promptly after the commencement thereof, give notice to
APS in writing of the occurrence of an Event of Default or of any event
which, with the lapse of time, the giving of notice or both, would
constitute an Event of Default hereunder.
8.9 ENVIRONMENTAL ISSUES.
---------------------
Q Comm shall promptly notify APS upon becoming aware of any
Environmental Claim, and shall take prompt and appropriate actions to
respond thereto. Q Comm shall, following determination by APS that there is
non-compliance, or any condition which requires any action by or on behalf
of Q Comm in order to avoid any non-compliance. with any Environmental Law,
at Q Comm's sole expense, cause an independent environmental engineer
acceptable to APS to conduct such tests of the relevant site as are
appropriate. and prepare and deliver a report setting forth the result of
such tests, a proposed plan for remediation and an estimate of the costs
thereof.
8.10 AGREEMENTS WITH APS AND AFFILIATES.
-----------------------------------
Q Comm will comply in all material respects with all agreements
between Q Comm and APS, CellCards and other affiliates of APS.
8.11 INTELLECTUAL PROPERTY.
----------------------
Upon demand from APS, Q Comm shall deliver to APS copies of all
documents which establish or evidence the Intellectual Property in any way,
and/or complete an accurate description of all such Intellectual Property.
8.12 PATENT INVESTIGATION.
---------------------
Q Comm has filed a provisional patent application with the U.S. Patent
and Trademark Office with respect to the Q Xpress System. Promptly upon
execution of this Agreement, Q Comm shall take all actions as reasonably
requested by APS to determine the efficacy of and to prosecute such patent,
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including: (i) conducting a novelty search; (ii) examining prior art; (iii)
determining the time that the technology was first used in commerce; and
(iv) accumulating information to support the patent claims. APS and its
attorneys will cooperate with and assist Q Comm in such regard. All
reasonable expenses of APS and its attorneys and representatives incurred
in connection with such investigation and prosecution shall be paid by Q
Comm and Q Comm shall own all work product of such attorneys and
representatives related to such investigation and prosecution, subject to
the security interest of APS.
9. EVENTS OF DEFAULT.
------------------
Q Comm, without notice or demand of any kind, shall be in default under
this Agreement upon the occurrence of any of the following events (each an
"Event of Default"), subject to Q Comm's rights to cure such defaults during the
Forbearance Period, if applicable.
9.1 NON-PAYMENT OF OBLIGATIONS.
---------------------------
Any amount due and owing on the Note or any of the Obligations,
whether by its terms or as otherwise provided herein, is not paid when due,
and such default continues uncured for five (5) days.
9.2 MISREPRESENTATION.
------------------
Any warranty, representation, or certificate in this Agreement, the
Loan Documents or any other agreement with APS shall be false in any
material respect when made or at the time any of the Loans are made.
9.3 NON-PERFORMANCE.
----------------
Any failure to perform or default in the performance of any covenant,
condition or agreement contained in this Agreement.
9.4 DEFAULT UNDER LOAN DOCUMENTS.
-----------------------------
A default under any of the covenants, conditions or agreements in any
other Loan Document (all of which covenants, conditions and agreements
contained therein are hereby incorporated in this Agreement by express
reference) shall be an Event of Default under this Agreement.
9.5 ASSIGNMENT FOR CREDITORS.
-------------------------
(a) Q Comm makes an assignment for the benefit of creditors or
fails to pay, or admits in writing its inability to pay its debts as
they mature; or
(b) if a trustee of any substantial part of the assets of Q Comm
is applied for or appointed, and in the case of such trustee being
appointed in a proceeding brought against Q Comm, Q Comm, by any
action or failure to act indicates its approval of, consent to, or
acquiescence in such appointment.
9.6 BANKRUPTCY.
-----------
Any proceeding involving Q Comm is commenced by or against Q Comm
under any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law or statute of the federal
government or any state government, and in the case of any
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such proceeding being instituted against Q Comm, (i) Q Comm, by any action
or failure to act indicates its approval of, consent to or acquiescence
therein, or (ii) an order shall be entered approving the petition in such
proceedings and such order is not vacated, stayed on appeal or otherwise
shall not have ceased to continue in effect within sixty (60) days after
the entry thereof.
9.7 JUDGMENTS.
----------
The rendering against Q Comm of an arbitration award, judgment,
decree, or order for the payment of money in excess of $250,000 which is
not fully covered by insurance.
9.8 CHANGE IN CONTROL.
------------------
A Change of Control shall occur if: (i) any person or "group" as
defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Act") becomes the "beneficial owner" (as defined in the Act) of 35%
or more of the voting power of Q Comm, or (ii) any sale, conveyance,
assignment or other transfer, directly or indirectly, of 35% or more of the
voting power of Q Comm occurs, or (iii) the grant of a security interest in
any ownership interest of any Person, directly or indirectly controlling Q
Comm, provided, however, that Xxxx Xxxxxx shall be entitled to pledge or
sell (a) up to 500,000 of his shares of stock in Q Comm International, Inc.
to any Person other than APS, and (b) any number of his shares of stock in
Q Comm International, Inc. to APS.
9.9 COLLATERAL IMPAIRMENT.
----------------------
The levy, attachment, or the filing of any Lien against, any of the
Collateral, or the loss, theft, destruction, seizure or forfeiture, or the
occurrence of any material deterioration or impairment of any of the
Collateral or any of the collateral under any security agreement securing
any of the Obligations.
10. REMEDIES.
---------
Upon the occurrence of an Event of Default, APS shall have all rights,
powers and remedies set forth in the Loan Documents or as otherwise provided at
law or in equity. Notwithstanding the foregoing, upon the occurrence of an Event
of Default pursuant to Article 9 hereof except for Events of Default pursuant to
Sections 9.5(a), 9.6 or 9.8, APS agrees not to pursue any of its remedies for a
period of sixty (60) days after APS delivers written notice of such Event of
Default to Q Comm (the "Forbearance Period") during which time Q Comm shall have
the right to cure such default or to pay the Obligations in full. However,
nothing shall prevent APS from taking action necessary to preserve the
Collateral. Without limiting the generality of the foregoing, APS may, at its
option upon the occurrence of an Event of Default but only after the expiration
of the Forebearance Period, if any, declare its commitments to Q Comm to be
terminated and all Obligations to be immediately due and payable, provided,
however, that upon the occurrence of an Event of Default under Section 9.5(a),
9.6 or 9.8, all commitments of APS to Q Comm shall immediately terminate and all
Obligations shall be automatically due and payable, all without demand, notice
or further action of any kind required on the part of APS. Q Comm hereby waives
any and all presentment, demand, notice of dishonour, protest, and all other
notices (other than the notice required in this Section 10) and demands in
connection with the enforcement of APS's rights under the Loan Documents, and
hereby consents to, and waives notice of release, with or without consideration,
or of any Collateral, notwithstanding anything contained herein or in the Loan
Documents to the contrary. In addition to the foregoing:
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10.1 POSSESSION AND ASSEMBLY OF COLLATERAL.
--------------------------------------
APS may, without notice, demand or legal process of any kind, take
possession of any or all of the Collateral (in addition to Collateral of
which APS already has possession), wherever it may be found.
10.2 SALE OF COLLATERAL.
-------------------
APS may sell any or all of the Collateral at public or private sale,
upon such terms and conditions as APS may reasonably deem proper, and APS
may purchase any or all of the Collateral at any such sale. APS may apply
the net proceeds, after deducting all reasonable costs, expenses,
attorneys' and paralegals' fees incurred or paid at any time in the
collection, protection and sale of the Collateral and the Obligations, to
the payment of the Note and/or any of the other Obligations, returning the
excess proceeds, if any, to Q Comm. Q Comm shall remain liable for any
amount remaining unpaid after such application, with interest. Any
notification of intended disposition of the Collateral required by law
shall be conclusively deemed reasonably and properly given if given by APS
at least ten (10) business days before the date of such disposition.
10.3 UCC AND OFFSET RIGHTS.
----------------------
APS may exercise, from time to time, any and all rights and remedies
available to it under the UCC or under any other applicable law in addition
to, and not in lieu of, any rights and remedies expressly granted in this
Agreement or in any other Loan Document, and may, without demand or notice
of any kind, appropriate and apply toward the payment of such of the
Obligations, whether matured or unmatured, including reasonable costs of
collection and reasonable attorneys' and paralegals' fees, and in such
order of application as APS may, from time to time, elect, any indebtedness
of APS to Q Comm, however created or arising, including, but not limited
to, balances, credits, deposits, accounts or moneys of Q Comm in the
possession, control or custody of, or in transit to APS.
10.4 ADDITIONAL REMEDIES.
--------------------
APS shall have the right and power to:
(a) instruct Q Comm, at its own expense, to notify any parties
obligated on any of the Collateral, including, but not limited to, any
Account Debtors, to make payment directly to APS of any amounts due or
to become due thereunder, or APS may directly notify such obligors of
the security interest of APS, and/or of the assignment to APS of the
Collateral and direct such obligors to make payment to APS of any
amounts due or to become due with respect thereto, and thereafter,
collect any such amounts due on the Collateral directly from such
Persons obligated thereon;
(b) enforce collection of any of the Collateral, including, but not
limited to, any Accounts, by suit or otherwise, or make any compromise
or settlement with respect to any of the Collateral, or surrender,
release or exchange all or any part thereof, or compromise, extend or
renew for any period (whether or not longer than the original period)
any indebtedness thereunder; or
(c) take possession or control of any proceeds and products of any of
the Collateral, including the proceeds of insurance thereon.
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10.5 ATTORNEY-IN-FACT.
-----------------
Q Comm hereby irrevocably makes, constitutes and appoints APS (and any
officer of APS or any Person designated by APS for that purpose) as Q
Comm's true and lawful proxy and attorney-in-fact (and agent-in-fact) in Q
Comm's name, place and stead, with full power of substitution, only upon
the occurrence and during the continuance of an Event of Default after any
Forbearance Period has expired, to (i) take such actions as are permitted
in this Agreement, (ii) execute such financing statements and other
documents and to do such other acts as APS may reasonably require to
perfect and preserve APS's security interest in, and to enforce such
security interests in the Collateral, and (iii) carry out any remedy
provided for in this Agreement, including, without limitation, endorsing Q
Comm's name to checks, drafts, instruments and other items of payment, and
proceeds of the Collateral, executing change of address forms with the
postmaster of the United States Post Office serving the address of Q Comm,
changing the address of Q Comm to that of APS, opening all envelopes
addressed to Q Comm and applying any payments contained therein to the
Obligations. Q Comm hereby acknowledges that the constitution and
appointment of such proxy and attorney-in-fact are coupled with an interest
and are irrevocable until all of the Obligations shall have been
indefeasibly paid and satisfied in full and this Agreement and each of the
other Loan Documents shall have terminated pursuant to the respective terms
and provisions thereof.
10.6 NO WAIVER.
----------
No Event of Default shall be waived by APS except in writing. No
failure or delay on the part of APS in exercising any right, power or
remedy hereunder shall operate as a waiver of the exercise of the same or
any other right at any other time; nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder.
There shall be no obligation on the part of APS to exercise any remedy
available to APS in any order. The remedies provided for herein are
cumulative and not exclusive of any remedies provided at law or in equity.
11. MISCELLANEOUS.
--------------
11.1 ENTIRE AGREEMENT.
-----------------
This Agreement together with the Loan Documents constitutes the
complete and integrated agreement of the parties on the subject matter
hereof. No promises, either expressed or implied, exist between Q Comm and
APS, unless contained herein. This Agreement together with the Loan
Documents supersedes all negotiations, representations, warranties,
commitments, offers, contracts (whether oral or written) on the subject
matter hereof prior to or contemporaneous with the execution hereof.
11.2 AMENDMENTS; WAIVERS.
--------------------
No amendment, modification, termination, discharge or waiver of any
provision of this Agreement or of the Loan Documents, or consent to any
departure by Q Comm therefrom, shall in any event be effective unless the
same shall be in writing and signed by APS, and then such waiver or consent
shall be effective only for the specific purpose for which given.
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11.3 WAIVER OF JURY TRIAL.
---------------------
APS AND Q COMM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL
PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL,
OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF
DEALING IN WHICH APS AND Q COMM ARE ADVERSE PARTIES. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR APS GRANTING ANY FINANCIAL ACCOMMODATION TO Q COMM.
11.4 LITIGATION.
-----------
TO INDUCE APS TO MAKE THE LOANS, Q COMM IRREVOCABLY AGREES THAT ALL
ACTIONS ARISING, DIRECTLY OR INDIRECTLY, AS A RESULT OR CONSEQUENCE OF THIS
AGREEMENT, THE NOTE, ANY OTHER AGREEMENT WITH APS OR THE COLLATERAL, SHALL
BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING THEIR SITUS IN THE CITY
OF NEW HAVEN, CONNECTICUT. Q COMM HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN
SAID CITY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. Q COMM
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO Q COMM AS SET FORTH HEREIN IN THE MANNER PROVIDED BY
APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
11.5 ASSIGNABILITY.
--------------
At any time after an Event of Default occurs and after the expiration
of any Forbearance Period, if applicable, APS may assign APS's rights in
this Agreement, the Note, the Obligations, or any part thereof. Neither APS
(if no Event of Default occurs) nor Q Comm may sell or assign this
Agreement or any other Loan Document or any portion thereof, either
voluntarily or by operation of law, without the prior written consent of
the other party. Any attempted assignment in contravention of this Section
shall be void. This Agreement shall be binding upon APS and Q Comm and
their respective proper assigns, legal representatives and successors. All
references herein to Q Comm shall be deemed to include any successors,
whether immediate or remote.
11.6 GOVERNING LAW.
--------------
This Agreement, the Loan Documents and the Note shall be delivered and
accepted in and shall be deemed to be contracts made under and governed by
the internal laws of the State of Connecticut, and for all purposes shall
be construed in accordance with the laws of such State, without giving
effect to the choice of law provisions of such State.
11.7 ENFORCEABILITY.
---------------
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to
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such jurisdiction, be severable and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.8 SURVIVAL OF Q COMM REPRESENTATIONS.
-----------------------------------
All covenants, agreements, representations and warranties made by Q
Comm herein shall, notwithstanding any investigation by APS, be deemed
material and relied upon by APS and shall survive the making and execution
of this Agreement and the Loan Documents and the issuance of the Note, and
shall be deemed to be continuing representations and warranties until such
time as Q Comm has fulfilled all of its Obligations to APS, and APS has
been paid in full. APS, in extending financial accommodations to Q Comm, is
expressly acting and relying on such representations and warranties.
11.9 TIME OF ESSENCE.
----------------
Time is of the essence in making payments of all amounts due APS under
this Agreement and in the performance and observance by Q Comm of each
covenant, agreement, provision and term of this Agreement.
11.10 COUNTERPARTS.
-------------
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument. Any such
counterpart may be delivered by facsimile transmission and shall be deemed
the equivalent of any originally signed counterpart and shall be fully
admissible in any enforcement proceedings regarding this Agreement.
11.11 NOTICES.
--------
All notices, requests, demands and other communications provided for
hereunder shall be in writing, sent by certified or registered mail,
postage prepaid, by Federal Express, UPS, DHL or other overnight carrier,
by facsimile (with receipt confirmed) or telegram (with receipt confirmed)
or delivered in person, and addressed as follows:
If to Q Comm: Q COMM, INC.
Q COMM INTERNATIONAL, INC.
0000 Xxxxx 0000 Xxxx
Xxxx, Xxxx 00000
Attention: Xxxx Xxxxxx
Fax: 000-000-0000
With a copy to: Xxxxxx & Whitney LLP
000 Xxxxx Xxxx Xxxxxx; Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: 000-000-0000
Page 21 of 24
LOAN AND SECURITY AGREEMENT BY AND BETWEEN
Q COMM INTERNATIONAL INC. AND AMERICAN PAYMENT SYSTEMS, INC.
--------------------------------------------------------------------------------
If to APS: APS, Inc.
One Hamden Center
0000 Xxxxxxx Xxx.
Xxxxxx, XX 00000
Attention: President
Fax: 000-000-0000
With a copy to: Much Shelist Freed Xxxxxxxxx Xxxxx & Xxxxxxxxxx,
P.C.
000 Xxxxx Xx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Fax: 000-000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this subsection. No notice to or demand on Q Comm in any case shall entitle Q
Comm to any other or further notice or demand in similar or other circumstances.
11.12 INDEMNIFICATION.
----------------
Q Comm agrees to defend (with counsel reasonably satisfactory to APS),
protect, indemnify and hold harmless each Indemnified Party from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and distributions of any
kind or nature (including, without limitation, the disbursements and the
reasonable fees of counsel for each Indemnified Party thereto, which shall
also include, without limitation, reasonable attorneys' fees and time
charges of attorneys who may be employees of APS, any parent corporation or
affiliated corporation of APS), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations, including, without limitation, securities, Environmental Laws
and commercial laws and regulations, under common law or in equity, or
based on contract or otherwise) in any manner relating to or arising out of
this Agreement or any of the Loan Documents, or any act, event or
transaction related or attendant thereto, the preparation, execution and
delivery of this Agreement and the Loan Documents, including, but not
limited to, the making or issuance and management of the Loans, the use or
intended use of the proceeds of the Loans, the enforcement of APS's rights
and remedies under this Agreement, the Loan Documents, the Note, any other
instruments and documents delivered hereunder, or under any other agreement
between Q Comm and APS; provided, however, that Q Comm shall not have any
obligations hereunder to any Indemnified Party with respect to matters
caused by or resulting from (i) the willful misconduct or gross negligence
of such Indemnified Party or (ii) the breach of this Agreement or any other
Loan Document by APS. To the extent that the undertaking to indemnify set
forth in the preceding sentence may be unenforceable because it violates
any law or public policy, Q Comm shall satisfy such undertaking to the
maximum extent permitted by applicable law. Any liability, obligation,
loss, damage, penalty, cost or expense covered by this indemnity shall be
paid to each Indemnified Party on demand, and, failing prompt payment,
shall. together with interest thereon at the Default Rate from the date
incurred by each Indemnified Party until paid by Q Comm be added to the
Page 22 of 24
LOAN AND SECURITY AGREEMENT BY AND BETWEEN
Q COMM INTERNATIONAL INC. AND AMERICAN PAYMENT SYSTEMS, INC.
--------------------------------------------------------------------------------
Obligations of Q Comm and be secured by the Collateral. The provisions of
this Section 11.12 shall survive the satisfaction and payment of the other
Obligations and the termination of this Agreement.
11.13 CONFIDENTIALITY.
----------------
The provisions relating to confidentiality contained in the
Transaction Agreement shall continue to be applicable to this Agreement.
11.14 JOINT AND SEVERAL OBLIGATIONS.
------------------------------
The Obligations of Q Comm hereunder constitute the joint and several
obligations of Q Comm, Inc. and Q Comm International, Inc. Therefore, each
of such parties shall have full and complete responsibility for all
Obligations, irrespective of whether APS elects to take action against
either of them.
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
Page 23 of 24
LOAN AND SECURITY AGREEMENT BY AND BETWEEN
Q COMM INTERNATIONAL INC. AND AMERICAN PAYMENT SYSTEMS, INC.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, Q Comm and APS have executed this Loan and Security
Agreement as of the date first above written.
Q COMM, INC.,
a Utah corporation
By:/s/ Xxxx Xxxxxx
---------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
Q COMM INTERNATIONAL, INC.,
a Utah corporation
By:/s/ Xxxx Xxxxxx
---------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
AMERICAN PAYMENT SYSTEMS, INC.,
a Connecticut corporation
By: /s/
---------------------------
Name:
-------------------------
Title:
-------------------------
Page 24 of 24
