SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (this “Agreement”) is
dated as of January 3, 2005, and is by and among IC
MARKETING, INC., a
Nevada corporation (“ICM”),
AMERICAN
CONSUMER PUBLISHING ASSOCIATION, INC., an
Oregon corporation (“ACPA”),
RAYBOR
MANAGEMENT, INC., a
Delaware corporation (“RMI”), and
BACK 2
BACK’S, INC., an
Oregon corporation (“B2B” and
together with ICM, ACPA, RMI, and B2B are sometimes collectively referred to in
this Agreement as the “Issuers”), and
C3 CAPITAL
PARTNERS, L.P., a
Delaware limited partnership, its successors and assigns (together with its
successors and assigns, “Purchaser”).
RECITALS
The
following recitals are a material part of this Agreement.
A. Issuers
and Purchaser are parties to that certain Securities Purchase Agreement of even
date herewith (as the same may hereafter be modified, amended, restated or
supplemented from time to time, the “Securities
Purchase Agreement”),
pursuant to which, among other things, the Issuers have agreed to issue and
sell, and Purchaser has agreed to purchase from Issuers, an initial 12% Secured
Note in the principal amount of $1,500,000.00 and may issue one or more such 12%
Secured Notes (in an aggregate amount not to exceed $3,000,000.00) during the
term of the Securities Purchase Agreement, as and to the extent contemplated
therein.
B. To induce
Purchaser to enter into the Securities Purchase Agreement and to purchase the
Notes as contemplated in the Securities Purchase Agreement, the Issuers have
agreed to grant to the Purchaser a security interest in all of their respective
existing and future property to secure all of their respective existing and
future obligations to the Purchaser, including all of their respective
Obligations under the Securities Purchase Agreement.
C. Issuers
are parties to that certain Business Loan Agreement with Washington Mutual Bank
(“WaMu”) dated
June 28, 2004 and certain other loan documents related thereto (collectively,
the “WaMu
Loan Documents”)
pursuant to which WaMu has extended credit to Issuers and has taken a security
interest (the “WaMu
Lien”) in
certain real property assets and all personal property assets of Issuers.
D. Concurrently
with the execution of the Securities Purchase Agreement, Issuers, Freedom
Financial, Inc., Purchaser and WaMu are entering into an Intercreditor Agreement
of even date (the “Intercreditor
Agreement”)
reflecting the relative rights and obligations of the parties thereto with
respect to the obligations owed to WaMu under the WaMu Loan Documents
(collectively the “WaMu
Loan Obligations”), the
Obligations owed to Purchaser under the Investment Documents, and the collateral
provided to WaMu and Purchaser, respectively, to secure their respective
obligations.
AGREEMENT
NOW,
THEREFORE, to induce the Purchaser to enter into the Securities Purchase
Agreement and to extend the credit reflected in the purchase of the Notes, and
in recognition that the Purchaser would not enter into the Securities Purchase
Agreement or purchase the Notes but for Issuers’ promises and agreements
hereunder, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged by the parties, the Issuers and the
Purchaser agree as follows:
1. Definitions. All
capitalized terms used in this Agreement without definition have the definitions
given to them in the Securities Purchase Agreement. The term “State,” as
used herein, means the State of Missouri. All terms defined in the Uniform
Commercial Code of the State and used herein shall have the same definitions
herein as specified therein. However, if a term is defined in Article 9 of the
Uniform Commercial Code of the State differently than in another Article of the
Uniform Commercial Code of the State, the term has the meaning specified in
Article 9. “Obligations” means
all of the indebtedness, obligations and liabilities of the Issuers to
Purchaser, individually or collectively, whether direct or indirect, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising under or in respect of the Notes, the Warrants, the Securities Purchase
Agreement, the other Investment Documents, any promissory notes or other
instruments or agreements executed and delivered pursuant thereto or in
connection therewith, or any other promissory notes or other instruments or
agreements obligating Issuers to Purchaser. “Event
of Default” means
any failure of any Issuer to pay the Obligations when due or perform as and when
due to be performed any action under the terms of the Securities Purchase
Agreement, the Notes, or the other Investment Documents, after giving effect to
all applicable grace, notice and cure periods.
2. Grant
of Security Interest. The
Issuers hereby jointly and severally and collectively grant to Purchaser a
security interest in all of each of the Issuer’s right, title and interest in
all of its property, wherever located, whether such property or right, title or
interest therein or thereto is now owned or existing or hereafter acquired or
arising, including all of the following (collectively, the “Collateral”):
(a) All
accounts and accounts receivable, including present and future rights to payment
for goods, merchandise or inventory sold or leased or for services rendered,
including those which are not evidenced by instruments or chattel paper, and
whether or not they have been earned by performance, whether or not the same are
listed on any schedules, reports or assignments furnished to Purchaser from time
to time, whether now existing or created at any time hereafter, accounts,
proceeds of any letters of credit on which Issuer is named as beneficiary,
contract rights, chattel paper, instruments, documents, insurance proceeds, and
all such obligations whatsoever owing to Issuer, together with all instruments
and all documents of title representing any of the foregoing, all rights in any
goods, merchandise or inventory that any of the same may represent, all rights
in any returned or repossessed goods, merchandise and inventory, and supporting
obligations with respect to each of the foregoing, including any right of
stoppage in transit, replevin and reclamation and all other rights and remedies
of an unpaid vendor or lienor, and any liens held by the Issuer as a mechanic,
contractor, subcontractor, processor, materialman, machinist, manufacturer,
artisan or otherwise;
(b) All
equipment, machinery, tools, fittings, furniture and fixtures, and all parts and
accessions relating to any of the foregoing;
(c) All
inventory, general intangibles relating to or arising out of inventory, goods
manufactured or acquired for sale or lease, and any piece goods, raw materials,
work in process and finished merchandise goods, incidentals, office supplies,
packaging materials, and any and all items, including machinery and equipment
used or consumed in the operation of the business of Issuer and which contribute
to the finished product or to the sale, promotion and shipment thereof, in which
Issuer now or at any time hereafter may have an interest whether or not such
inventory is listed in any agreement with or reports furnished to Purchaser from
time to time;
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(d) All
general intangibles, contract rights, claims and causes of action (including
claims and causes of action arising in tort), tax refunds, insurance proceeds,
rights to receive money or property generally, books, records (in whatever form
maintained by or on behalf of the Issuer), customer and supplier lists, ledgers,
invoices, drawings, copyrights, plans, specifications, trade names, trademarks,
service marks, goodwill, licenses, franchises, trade secrets, computer programs,
object codes, source codes, manuals, know-how, inventions, designs, patents,
patent applications, and all other intellectual property of any nature or
description whatsoever
(e) All
investment property, securities (whether certificated or uncertificated),
security entitlements, securities accounts, commodity contracts, commodity
accounts and all other financial assets;
(f) All
instruments, including all promissory notes, guarantys, liens, and all writings
which evidence a right to the payment of money;
(g) All
chattel paper, including all writings which evidence both a monetary obligation
and a security interest in or a lease of specific goods;
(h) All
deposit accounts, including any demand, time or like account with a financial
institution (whether or not maintained with Purchaser) and the balances thereof,
and all certificates of deposit;
(i) All
property (other than that described in subsections (a) through (h) above) in
which a security interest may now or hereafter attach or otherwise be created
under the Code or other applicable law; and
(j) All
additions and accessions to, replacements and substitutions for, products and
proceeds of, and rents, offspring, revenues, and profits from, the property and
the use or operation of the property described in subsections (a) through (i)
above, whether tangible or intangible, and, to the extent not otherwise
included, all payments under any insurance policy (whether or not Purchaser is
the loss payee thereof) and under any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral.
To the
extent that the Uniform Commercial Code does not apply to any item of the
Collateral, it is the intention of the parties and this Agreement that Purchaser
have a common law pledge and/or collateral assignment of such item of
Collateral.
3. Authorization
to File Financing Statements. The
Issuers hereby irrevocably authorize Purchaser at any time and from time to time
to file in any filing office in any Uniform Commercial Code jurisdiction any
initial financing statements and amendments thereto that (a) indicate the
Collateral as all assets of any Issuer or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the Uniform Commercial Code of the State or such jurisdiction,
and (b) provide any other information required by part 5 of Article 9 of the
Uniform Commercial Code of the State, or such other jurisdiction, for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether any Issuer is an organization, the type of organization
and any organizational identification number issued to such Issuer and, (ii) in
the case of a financing statement filed as a fixture filing or indicating
Collateral as as-extracted collateral or timber to be cut, a sufficient
description of real property to which the Collateral relates. The Issuers agree
to furnish any such information to Purchaser promptly following receipt of
Purchaser’s written request. The Issuers also ratify their authorization for
Purchaser to have filed in any Uniform Commercial Code jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date
hereof.
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4. Actions
as to Any and All Collateral. Issuers
further agree, at the request and option of Purchaser, to take any and all other
actions Purchaser may determine to be necessary or useful for the attachment,
perfection and first priority of, Purchaser’s security interest in any and all
of the Collateral, including, without limitation, (a) causing Purchaser’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 Purchaser to enforce, Purchaser’s security interest in such
Collateral, (b) 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, Purchaser’s
security interest in such Collateral, (c) obtaining governmental and other third
party waivers, consents and approvals in form and substance satisfactory to
Purchaser, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and (d) obtaining waivers from mortgagees
and landlords in form and substance satisfactory to Purchaser.
5. Relation
to Other Security Documents. The
provisions of this Agreement supplement the provisions of any real estate
mortgage or deed of trust granted by Issuers to Purchaser which secures the
payment or performance of any of the Obligations. Nothing contained in any such
real estate mortgage or deed of trust shall derogate from any of the rights or
remedies of Purchaser hereunder.
6. Representations
and Warranties Concerning Issuers’ Legal Status. Issuers
have previously delivered to Purchaser a certificate signed by Issuers and
entitled “Perfection Certificate” (the “Perfection
Certificate”).
Issuers represent and warrant to Purchaser as follows: (a) each Issuer’s exact
legal name is that indicated on the Perfection Certificate and on the signature
page hereof, (b) each Issuer is an organization of the type, and is organized in
the jurisdiction set forth in the Perfection Certificate, (c) the Perfection
Certificate accurately sets forth each Issuer’s organizational identification
number or accurately states that each Issuer has none, (d) the Perfection
Certificate accurately sets forth each Issuer’s place of business or, if more
than one, its chief executive office, as well as each Issuer’s mailing address,
if different, (e) all other information set forth on the Perfection Certificate
pertaining to each Issuer is accurate and complete, and (f) that there has been
no change in any information provided in the Perfection Certificate since the
date on which it was executed by Issuers.
7. Covenants
Concerning Issuers’ Legal Status. Issuers
covenant with Purchaser as follows: (a) without providing at least 14 days’
prior written notice to Purchaser, no Issuer will change its name, its place of
business or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, (b) if a Issuer does not
have an organizational identification number and later obtains one, such Issuer
shall forthwith notify Purchaser of such organizational identification number,
and (c) without providing at least 14 days’ prior written notice to Purchaser,
no Issuer will change its type of organization, jurisdiction of organization or
other legal structure.
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8. Representations
and Warranties Concerning Collateral, etc. Issuers
further represent and warrant to Purchaser as follows: (a) Issuers are the owner
of or have other rights in or power to transfer the Collateral, free from any
right or claim or any person or any adverse lien, security interest or other
encumbrance, except for the security interest created by this Agreement and
Permitted Liens (as defined in the Securities Purchase Agreement), (b) none of
the Collateral constitutes, or is the proceeds of, “farm products” as defined in
Section 9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of
the account debtors or other persons obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such Collateral, (d)
Issuers hold no commercial tort claim except as indicated on the Perfection
Certificate, and (e) each Issuer has at all times operated its business in
compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances, (f) all other information set forth on the
Perfection Certificate pertaining to the Collateral is accurate and complete,
and (g) that there has been no change in any information provided in the
Perfection Certificate since the date on which it was executed by
Issuers.
9. Collateral
Protection Expenses; Preservation of Collateral.
9.1. Expenses
Incurred by Purchaser. In
Purchaser’s discretion after written notice to Issuers, if Issuers fail to do
so, Purchaser may discharge taxes and other Liens at any time levied or placed
on any of the Collateral, maintain any of the Collateral, make repairs thereto
and pay any necessary filing fees or insurance premiums provided that the
respective Issuer is not timely taking action in good faith to challenge the
subject taxes or remove the subject Liens. Issuers agree to reimburse Purchaser
on demand for all expenditures so made. Purchaser shall have no obligation to
Issuers to make any such expenditures, nor shall the making thereof be construed
as the waiver or cure of any default or Event of Default.
9.2 Issuers’
Obligations and Duties.
Anything herein to the contrary notwithstanding, Issuers shall remain obligated
and liable under each contract or agreement comprised in the Collateral to be
observed or performed by any Issuer thereunder except for contracts that are
terminated or allowed to lapse in the ordinary course of Issuers’ business as
previously conducted. Purchaser shall not have any obligation or liability under
any such contract or agreement by reason of or arising out of this Agreement or
the receipt by Purchaser of any payment relating to any of the Collateral, nor
shall Purchaser be obligated in any manner to perform any of the obligations of
Issuers under or pursuant to any such contract or agreement, to make inquiry as
to the nature or sufficiency of any payment received by Purchaser in respect of
the Collateral or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to Purchaser or to which Purchaser may be entitled at any
time or times. Purchaser’s sole duty with respect to the custody, safe keeping
and physical preservation of the Collateral in its possession, under Section
9-207 of the Uniform Commercial Code of the State or otherwise, shall be to deal
with such Collateral in the same manner as Purchaser deals with similar property
for its own account.
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10. Securities
and Deposits. Upon
the occurrence and during the continuation of any Event of Default, Purchaser
may (at its option) at any time after written notice to Issuers of its intent to
do so, (i) take action to foreclose upon any Securities Collateral, receive any
income thereon and hold such income as additional Collateral or apply it to the
Obligations, and/or (ii) demand, xxx for, collect, or make any settlement or
compromise that it deems desirable with respect to the Collateral.
11. Notification
to Account Debtors and Other Persons Obligated on
Collateral. Upon
the occurrence and during the continuation of any Event of Default, Issuers
shall, at the option of Purchaser and after written notice by Purchaser, notify
account debtors and other persons obligated on any of the Collateral of the
security interest of Purchaser in any account, chattel paper, general
intangible, instrument or other Collateral and that payment thereof is to be
made directly to Purchaser or to any financial institution designated by
Purchaser as Purchaser’s agent therefor, and Purchaser may itself, without
notice to or demand upon Issuers, so notify account debtors and other persons
obligated on Collateral. After the making of such a request or the giving of any
such notification, Issuers shall hold any proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other Collateral received by
Issuers as trustee for Purchaser without commingling the same with other funds
of Issuers and shall turn the same over to Purchaser in the identical form
received, together with any necessary endorsements or assignments.
12. Power
of Attorney.
12.1. Appointment
and Powers of Purchaser. Issuers
hereby irrevocably constitutes and appoints Purchaser and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of Issuers, or any Issuer, or in Purchaser’s own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments that may be necessary or
useful to accomplish the purposes of this Agreement upon the occurrence and
during the continuation of any Event of Default. Without limiting the generality
of the foregoing, hereby gives said attorneys the power and right, on behalf of
Issuers, without notice to or assent by any Issuer, to do the
following:
(a) upon the
occurrence and during the continuance of any Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise dispose
of or deal with any of the Collateral in such manner as is consistent with the
Uniform Commercial Code of the State, and to do, at Issuers’ expense, at any
time, or from time to time, all acts and things which Purchaser deems necessary
or useful to protect, preserve or realize upon the Collateral and Purchaser’s
security interest therein, in order to effect the intent of this Agreement, all
at least as fully and effectively as Issuers might do, including, without
limitation, (i) the filing and prosecuting of registration and transfer
applications with the appropriate federal, state, local or other agencies or
authorities with respect to trademarks, copyrights and patentable inventions and
processes, (ii) upon written notice to Issuers, the exercise of voting rights
with respect to voting securities, which rights may be exercised, if Purchaser
so elects, with a view to causing the liquidation of assets of the issuer of any
such securities, and (iii) the execution, delivery and recording, in connection
with any sale or other disposition of any Collateral, of the endorsements,
assignments or other instruments of conveyance or transfer with respect to such
Collateral; and
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(b) to the
extent that Issuers’ authorization given in Section
3 is not
sufficient, to file such financing statements with respect hereto, with or
without any Issuer’s signature, or a photocopy of this Agreement in substitution
for a financing statement, as Purchaser may deem appropriate and to execute in
any Issuer’s name such financing, statements and amendments thereto and
continuation statements which may require any Issuer’s signature.
This
power of attorney is a power coupled with an interest and is
irrevocable.
12.2. No
Duty on Purchaser. The
powers conferred on Purchaser hereunder are solely to protect its interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Purchaser shall be accountable only for the amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to Issuers for
any act or failure to act, except for Purchaser’s own gross negligence or
willful misconduct.
13. Rights
and Remedies. If an
Event of Default shall have occurred and be continuing, Purchaser, without any
other notice to or demand upon Issuers, shall have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the
rights and remedies of a secured party under the Uniform Commercial Code of the
State and any additional rights and remedies which may be provided to a secured
party in any jurisdiction in which Collateral is located, including, without
limitation, the right to take possession of the Collateral, and for that purpose
Purchaser may, so far as Issuers can give authority therefor, enter upon any
premises on which the Collateral may be situated and remove the same therefrom.
Purchaser may in its discretion require Issuers to assemble all or any part of
the Collateral at such location or locations within the jurisdiction(s) of each
Issuer’s principal office(s) or at such other locations as Purchaser may
reasonably designate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Purchaser shall give to Issuers at least 10 days’ prior written notice
of the time and place of any public sale of Collateral or of the time after
which any private sale or any other intended disposition is to be made. Issuers
hereby acknowledge that 10 days’ prior written notice of such sale or sales
shall be reasonable notice. In addition, Issuers waive any and all rights that
they may have to a judicial hearing in advance of the enforcement of any of
Purchaser’s rights and remedies hereunder, including, without limitation, its
right following an Event of Default to take immediate possession of the
Collateral and to exercise its rights and remedies with respect thereto.
14. Standards
for Exercising Rights and Remedies. To the
extent that applicable law imposes duties on Purchaser to exercise remedies in a
commercially reasonable manner, Issuers acknowledge and ,agree that it is not
commercially unreasonable for Purchaser (a) to fail to incur expenses reasonably
deemed significant by Purchaser to prepare Collateral for disposition or
otherwise to fail to complete raw material or work in process into finished
goods or other finished products for disposition, (b) to fail to obtain third
party consents (which are not reasonably obtainable) for access to Collateral to
be disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
fail to remove liens or encumbrances on or any adverse claims against
Collateral, (d) to exercise collection remedies against account debtors and
other persons obligated on Collateral directly or through the use of paid
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
persons, whether or not in the same business as Issuers, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure Purchaser against
risks of loss, collection or disposition of Collateral or to provide to
Purchaser a guaranteed return from the collection or disposition of Collateral,
or (1) to the extent deemed appropriate by Purchaser, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
Purchaser in the collection or disposition of any of the Collateral. Issuers
acknowledges that the purpose of this Section
14 is to
provide non-exhaustive indications of what actions or omissions by Purchaser
would fulfill Purchaser’s duties under the Uniform Commercial Code or other law
of the State or any other relevant jurisdiction in Purchaser’s exercise of
remedies against the Collateral and that other actions or omissions by Purchaser
shall not be deemed to fail to fulfill such duties solely on account of not
being indicated in this Section
14. Without
limitation upon the foregoing, nothing contained in this Section
14 shall be
construed to grant any rights to Issuers or to impose any duties on Purchaser
that would not have been granted or imposed by this Agreement or by applicable
law in the absence of this Section
14.
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15. No
Waiver by Purchaser, etc. Purchaser
shall not be deemed to have waived any of its rights or remedies in respect of
the Obligations or the Collateral unless such waiver shall be in writing and
signed by Purchaser. No delay or omission on the part of Purchaser in exercising
any right or remedy shall operate as a waiver of such right or remedy or any
other right or remedy. A waiver on any one occasion shall not be construed as a
bar to or waiver of any right or remedy on any future occasion. All rights and
remedies of Purchaser with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as Purchaser deems expedient.
16. Suretyship
Waivers by Issuers. To the
extent that Issuers are deemed sureties under this Agreement, Issuers waive
demand, notice, protest, notice of acceptance of this Agreement, notice of loans
made, credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description. With
respect to both the Obligations and the Collateral, to the extent that Issuers
are deemed sureties under this Agreement, such Issuers assent to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as Purchaser may deem advisable. Purchaser shall have no duty
as to the collection or protection of the Collateral or any income therefrom,
the preservation of rights against prior parties, or the preservation of any
rights pertaining thereto beyond the safe custody thereof as set forth in
Section
9.2. Issuers
further waive any and all other suretyship defenses.
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17. Marshalling.
Purchaser shall not be required to marshal any present or future collateral
security (including but not limited to the Collateral) for, or other assurances
of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of its
rights and remedies hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, Issuers hereby agree that they will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of Purchaser’s rights and remedies under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
Issuers hereby irrevocably waive the benefits of all such laws.
18. Proceeds
of Dispositions; Expenses. Issuers
shall pay to Purchaser on demand any and all expenses, including reasonable
attorneys’ fees and disbursements, incurred or paid by Purchaser in protecting,
preserving or enforcing Purchaser’s rights and remedies under or in respect of
any of the Obligations or any of the Collateral. After deducting all of said
expenses, the residue of any proceeds of collection or sale or other disposition
of the Collateral shall, to the extent actually received in cash, be applied to
the payment of the Obligations in such order or preference as Purchaser may
determine, proper allowance and provision being made for any Obligations not
then due. Upon the final payment and satisfaction in full of all of the
Obligations and after making any payments required by Sections 9-608(a)(1)(C) or
9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be
returned to Issuers. In the absence of final payment and satisfaction in full of
all of the Obligations, Issuers shall remain liable for any
deficiency.
19. Subordination.
Notwithstanding anything to the contrary in this Agreement, the payment of
principal and interest on the Notes, the collection and enforcement of the
Obligations, and the Purchaser’s rights and remedies under this Agreement,
including with respect to the Collateral, and the priority of Purchaser’s Liens
on the Collateral shall be, to the extent set forth in the Intercreditor
Agreement, subordinate and junior in right to the WaMu Loan Documents, the WaMu
Lien and the WaMu Loan Obligations.
20. Governing
Law; Consent to Forum. This
Agreement shall be governed by the laws of the State of Missouri without giving
effect to any choice of law rules thereof; provided,
however, that if
any of the Collateral shall be located in any jurisdiction other than Missouri,
the laws of such jurisdiction shall govern the method, manner and procedure for
foreclosure of Purchaser’s security interest, lien or mortgage upon such
collateral and the enforcement of Purchaser’s other remedies in respect of such
Collateral to the extent that the laws of such jurisdiction are different from
or inconsistent with the laws of Missouri. AS PART OF THE CONSIDERATION FOR NEW
VALUE THIS DAY RECEIVED, EACH OF THE ISSUERS HEREBY CONSENTS TO THE JURISDICTION
OF ANY STATE COURT LOCATED WITHIN XXXXXXX COUNTY, MISSOURI OR FEDERAL COURT IN
THE WESTERN DISTRICT OF MISSOURI, AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED OR REGISTERED MAIL AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
UPON ACTUAL RECEIPT THEREOF. EACH OF THE ISSUERS WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN
AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.
ISSUERS FURTHER AGREES NOT TO ASSERT AGAINST HOLDER (EXCEPT BY WAY OF A DEFENSE
OR COUNTERCLAIM IN A PROCEEDING INITIATED BY HOLDER) ANY CLAIM OR OTHER
ASSERTION OF LIABILITY WITH RESPECT TO THIS NOTE, THE OTHER INVESTMENT
DOCUMENTS, HOLDER’S CONDUCT OR OTHERWISE IN ANY JURISDICTION OTHER THAN THE
FOREGOING JURISDICTIONS.
9
21. WAIVER
OF JURY TRIAL AND COUNTERCLAIMS. TO THE
FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION
TO HOLDER, EACH OF THE ISSUERS HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH
PURCHASER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR IN ANY COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT, THE
OBLIGATIONS, THE COLLATERAL, OR THE PURCHASER’S CONDUCT IN RESPECT OF ANY OF THE
FOREGOING.
22. Miscellaneous. The
headings of each section of this Agreement are for convenience only and shall
not define or limit the provisions thereof. This Agreement and all rights and
obligations hereunder shall be binding upon Issuers and their respective
successors and assigns, and shall inure to the benefit of Purchaser and its
successors and assigns. If any term of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. Issuers acknowledge receipt of a copy of this
Agreement.
23. Termination
upon Repayment of Notes. This
Agreement shall terminate upon the Purchaser’s receipt of the final payment of
all amounts due and outstanding under the Notes. Upon such termination,
Purchaser shall take all such action as may be required to release and terminate
the security interests, Liens, transfers, grants of power, and assignments
created, provided or effectuated in this Agreement.
[Remainder
of page intentionally left blank; signature page follows.]
10
IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first written
above.
| ISSUERS: | IC
MARKETING, INC.,
a
Nevada corporation
By:
____________________________
Name:
__________________________
Title:
___________________________
AMERICAN
CONSUMER PUBLISHING ASSOCIATION, INC.,
an
Oregon corporation
By:
____________________________
Name:
__________________________
Title:
___________________________
RAYBOR
MANAGEMENT, INC.,
a
Delaware corporation
By:
____________________________
Name:
__________________________
Title:
___________________________
BACK
2 BACK’S, INC.,
an
Oregon corporation
By:
____________________________
Name:
__________________________
Title:
___________________________ |
| PURCHASER: | C3
CAPITAL PARTNERS, L.P.,
a
Delaware limited partnership
By: C3
Partners, LLC
Its: General
Partner
By:
____________________________
Name:
____________________________
Title: Manager |
[SIGNATURE
PAGE TO SECURITY AGREEMENT]
