REVOLVING LINE OF CREDIT
LOAN AGREEMENT
This
agreement
("Agreement") is made and entered into effective as of the
14th day of April, 2004 (the "Effective Date") by and among United Capital
Mortgage Corporation, an Arkansas corporation
("Borrower") and
Absolute Return
Europe Fund, Ltd. ("ARE") and Florian Homm
("Homm") (ARE and Homm, collectively,
the "Lender").
RECITALS:
Borrower
desires to obtain from
Lender a revolving line of credit (the
"Loan") and Lender is willing to make the Loan, but only on the terms and
conditions hereinafter set forth.
NOW,
THEREFORE in
consideration
of the premises and
the mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1.
LOAN.
1.1 REVOLVING LINE OF
CREDIT. Subject to the
terms and
conditions
contained herein and in the other
documents, instruments and agreements executed
in connection with the Loan (the "Loan
Documents"),
Lender agrees to lend
to
Borrower the Loan as a revolving
line of credit
against which Lender
will make
advances (the "Advances") from time to time
for the purpose of providing working
capital to Borrower. Subject to the terms hereof,
Borrower shall have the right
to obtain Advances, repay Advances and
obtain additional Advances; however, all
of the Advances hereunder shall be viewed
as a single loan. At no time shall the
unpaid principal balance of the Loan exceed
Two Million Dollars
($2,000,000.00)
(the "Maximum Amount") and all Advances of the
Loan shall be made on or before
December 31, 2004 (the "Maturity Date"),
unless otherwise extended at the option
of Borrower pursuant to Section 1.2 hereof.
Lender's obligation to make Loans to
Borrower under this Agreement is
hereinafter referred to as the "Commitment".
1.2 OPTION TO EXTEND.
Borrower shall have
the option to extend the
Maturity Date without penalty or interest for a period
of 8.5 months ending on
August 15, 2005 by (a) providing Lender written notice of its intention to
extend the Maturity Date at any time prior to
December 31, 2004; rovided,
however, that there has been no Event of
Default, which has not been cured or
waived by Lender.
1.3 NOTE. The Loan
shall be evidenced
by a promissory note (the
"Note") of even date herewith in a form approved by Lender in the Maximum
Amount, payable in accordance with the
terms thereof.
Interest on the principal
amount outstanding from time to time shall be charged
as provided in the
Note
and should such rate of interest as
calculated thereunder exceed that allowed by
law, the applicable rate of interest will be the maximum rate of interest
allowed by applicable law.
1.4 PREPAYMENTS.
Borrower may from time to time, prepay all or part
of the outstanding principal balance of the
Loan.
2.
ADVANCES.
2.1 CONDITIONS
PRECEDENT TO ADVANCES.
Lender shall have
complete
discretion as to whether to make any and
all Advances hereunder.
<PAGE>
2.2 REQUEST FOR ADVANCES. Advances may be made by Lender at the
oral
or written request of the persons named in
Section 12.2 hereof,
any one acting
alone, who are authorized to request
Advances and direct disposition of any such
Advances until written notice of the revocation of such authority is
received
from Borrower by Lender.
2.3 Subject to this
Section 2, the
Borrower shall be entitled to
borrow, repay and reborrow the principal
amount of this Loan at any time during
the term of this Loan.
2.4 The parties
acknowledge
that the advance
previously
made by
Lender to UCAP in the amount of $1,000,000
on March 31, 2004 shall be considered
an Advance under this Agreement.
3.
COLLATERAL
AND GUARANTY
3.1 The repayment by Borrower of its indebtedness under the Loan
and
the Note, and the performance by Borrower of all obligations under this
Agreement shall be secured by a security
interest in all of the
Collateral of
UCMC as such term is defined in and
pursuant to a Security Agreement of even
date herewith in a form approved by Lender
(the "UCMC Security Agreement").
3.2 The repayment by Borrower of its indebtedness under the Loan
and
the Note, and the performance by Borrower of all obligations under this
Agreement shall be further secured by a security interest in all of the
Collateral of UCAP Incorporated,
a Colorado
corporation and parent
corporation
of borrower ("UCAP") as such term is defined in and pursuant to a Security
Agreement of even date herewith in a form
approved by Lender (the "UCAP Security
Agreement").
3.3 Borrower and UCAP shall execute and deliver, or shall cause to
be executed and delivered, UCC financing statements and such other documents
relating to and perfecting Lender's security interest in the Collateral as
Lender may from time to time request.
3.4 The repayment by Borrower of its indebtedness under the Loan
and
the Note, and the performance by Borrower of all obligations under this
Agreement shall be further secured by a pledge of all of the issued and
outstanding stock of Borrower by UCAP
pursuant to a Pledge
Agreement of even
date herewith in a form approved by Lender
(the "Pledge Agreement").
4.
GUARANTY.
As additional consideration for Lender's commitment to
make the Loan, UCAP shall guaranty
the full and punctual payment (whether at
stated maturity, upon acceleration or otherwise) of the principal of and
interest on the Note pursuant to a Guaranty Agreement of even date herewith
in a form approved by Lender (the
"Guaranty Agreement").
5.
REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT.
Borrower represents and warrants to Lender as follows:
5.1 Borrower is a corporation duly organized, validly existing and
in good standing under the laws of
Arkansas, and is
qualified to do business in
all jurisdictions in which it is required
to be qualified.
5.2 The execution and
delivery by Borrower of, and the performance
by Borrower of its obligations under, this
Agreement and the Note have been duly
authorized by all requisite action on the part of Borrower and
do not and will
not (i) violate any provision of Borrower's
organizational
documents, (ii)
any
law or any judgment, order or ruling of any court or
governmental
agency, or
(iii) be in conflict with, result in a breach of, or constitute, following
notice or lapse of time or both,
a default under any material indenture,
-2-
<PAGE>
agreement or other instrument to which Borrower is a
party or by which Borrower
or any of its property is bound.
5.3 This Agreement
and the Note
constitute
the legal,
valid and
binding agreements of Borrower enforceable
in accordance with their terms.
5.4 Except
as reported in the reports filed by UCAP with the
Securities and Exchange Commission or as otherwise provided to Lender in
writing, there are no pending or threatened
actions or proceedings
before any
court or administrative or governmental agency that may, individually or
collectively, adversely affect the
financial condition or business operations of
Borrower.
5.5 The financial
statements
previously
delivered by Borrower
to
Lender, fairly and accurately present the
financial condition of Borrower as of
such date and have been prepared in accordance with generally accepted
accounting principles consistently applied. Since the date of such
financial
statements, there has been no material
adverse change in the financial condition
of Borrower, and, after reasonable inquiry,
there exists no material contingent
liability or obligation assertable against
Borrower, except as disclosed in such
financial statements.
5.6 All federal, state and other tax returns of Borrower required
by
law to be filed have been completed in full and have been duly filed,
and all
taxes, assessments and withholdings shown
on such returns or billed to Borrower
have been paid, and Borrower maintains
adequate reserves and accruals in respect
of all such federal, state and other taxes,
assessments and withholdings. There
are no assessments pending against Borrower for any
taxes or withho
