Exhibit 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of March 12, 2004, between FARADAY
FINANCIAL, INC., a Delaware corporation (the "Lender"), and VIDEO INTERNET
BROADCASTING CORPORATION, a Washington corporation (hereinafter, the "Company").
WHEREAS, the Company has entered into a Loan Agreement, dated as of
March 23, 2004 (as amended and in effect from time to time, the "Loan
Agreement"), with the Lender, pursuant to which the Lender, subject to the terms
and conditions contained therein, has made loans to the Company; and
WHEREAS, as a condition to the Lender's making any loans to the Company
under the Loan Agreement, the Company is required to execute and deliver to the
Lender a security agreement in substantially the form hereof; and
WHEREAS, the Company wishes to grant a security interest in favor of
the Lender as herein provided.
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Loan Agreement. The
term "State", as used herein, means the State of Washington. 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. The term "Obligations"; as used herein, means
all of the indebtedness, obligations and liabilities of the Company to the
Lender, 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 Loan Agreement, any promissory notes or other
instruments or agreements executed and delivered pursuant thereto or in
connection therewith or this Agreement, and the term "Event of Default"; as used
herein, means the failure of the Company to pay or perform any of the
Obligations as and when due to be paid or performed under the terms of the Loan
Agreement.
2. Grant of Security Interest. The Company hereby grants to the Lender,
to secure the payment and performance in full of all of the Obligations, a
security interest in and pledges and assigns to the Lender the following
properties, assets and rights of the Company, wherever located, whether now
owned or hereafter acquired or arising, and all cash and non-cash proceeds and
products thereof (all of the same being hereinafter called the "Collateral"):
all personal and fixture property of every kind and nature including without
limitation all goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents (negotiable and
nonnegotiable), accounts (including health-care-insurance receivables), chattel
paper (whether tangible or electronic), deposit accounts, letters-of-credit,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
supporting obligations, any other contract rights or rights to the payment of
money, insurance claims and proceeds, oil, gas and other minerals, and all
general intangibles (including all payment intangibles). The Lender acknowledges
that the attachment of its security interest in any commercial tort claim as
original collateral is subject to the Company's compliance with Section 4.7.
3. Authorization to File Financing Statements. The Company hereby
irrevocably authorizes the Lender 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 (i)
as all assets of the Company 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, or
(ii) as being of an equal or lesser scope or with greater detail, 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 the Company is an organization, the type of organization and any
organization identification number issued to the Company 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 Company agrees to furnish any such
information to the Lender promptly upon the Lender's request. The Company also
ratifies its authorization for the Lender to have filed in any Uniform
Commercial Code jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.
4. Other Actions. Further to insure the attachment, perfection and
first priority of, and the ability of the Lender to enforce, the Lender's
security interest in the Collateral, the Company agrees, in each case at the
Company's expense, to take the following actions with respect to the following
Collateral and without limitation on the Company's other obligations contained
in this Agreement:
4.1. Promissory Notes and Tangible Chattel Paper. If the
Company shall at any time hold or acquire any promissory notes or tangible
chattel paper, the Company shall forthwith endorse, assign and deliver the same
to the Lender, accompanied by such instruments of transfer or assignment duly
executed in blank as the Lender may from time to time specify.
4.2. Deposit Accounts. For each deposit account that the
Company at any time opens or maintains, the Company shall, at the Lender's
request and option, pursuant to an agreement in form and substance satisfactory
to the Lender, either (a) cause the depository bank to agree to comply, without
further consent of the Company, at any time with instructions from the Lender to
such depository bank directing the disposition of funds from time to time
credited to such deposit account, or (b) arrange for the Lender to become the
customer of the depository bank with respect to the deposit account, with the
Company being permitted, only with the consent of the Lender, to exercise rights
to withdraw funds from such deposit account. The provisions of this paragraph
shall not apply to (i) any deposit account for which the Company, the depository
bank and the Lender have entered into a cash collateral agreement specially
negotiated among the Company, the depository bank and the Lender for the
specific purpose set forth therein, (ii) a deposit account for which the Lender
is the depository bank and is in automatic control, and (iii) any deposit
accounts specially and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of the Company's
salaried employees
4.3. Investment Property. If the Company shall at any time
hold or acquire any certificated securities, the Company shall forthwith
endorse, assign and deliver the same to the Lender, accompanied by such
instruments of transfer or assignment duly executed in blank as the Lender may
from time to time specify. If any securities now or hereafter acquired by the
Company are uncertificated and are issued to the Company or its nominee directly
by the issuer thereof, the Company shall immediately notify the Lender thereof
and, at the Lender's request and option, pursuant to an agreement in form and
substance satisfactory to the Lender, either (a) cause the issuer to agree to
comply, without further consent of the Company or such nominee, at any time with
instructions from the Lender as to such securities, or (b) arrange for the
Lender to become the registered owner of the securities. If any securities,
whether certificated or uncertificated, or other investment property now or
hereafter acquired by the Company are held by the Company or its nominee through
a securities intermediary or commodity intermediary, the Company shall
immediately notify the Lender thereof and, at the Lender's request and option,
pursuant to an agreement in form and substance satisfactory to the Lender,
either (i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply, in each case without further consent of the
Company or such nominee, at any time with entitlement orders or other
instructions from the Lender to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply any
value distributed on account of any commodity contract as directed by the Lender
to such commodity intermediary, or (ii) in the case of financial assets or other
investment property held through a securities intermediary, arrange for the
Lender to become the entitlement holder with respect to such investment
property, with the Company being permitted, only with the consent of the Lender,
to exercise rights to withdraw or otherwise deal with such investment property.
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The provisions of this paragraph shall not apply to any financial assets
credited to a securities account for which the Lender is the securities
intermediary.
4.4. Collateral in the Possession of a Bailee. If any
Collateral is at any time in the possession of a bailee, the Company shall
promptly notify the Lender thereof and, at the Lender's request and option,
shall promptly obtain an acknowledgement from the bailee, in form and substance
satisfactory to the Lender, that the bailee holds such Collateral for the
benefit of the Lender and such bailee's agreement to comply, without further
consent of the Company, at any time with instructions of the Lender as to such
Collateral.
4.5. Electronic Chattel Paper and Transferable Records. If the
Company at any time holds or acquires an interest in any electronic chattel
paper or any "transferable record," as that term is defined in Section 201 of
the federal Electronic Signatures in Global and National Commerce Act, or in
ss.16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Company shall promptly notify the Lender thereof and, at the
request and option of the Lender, shall take such action as the Lender may
reasonably request to vest in the Lender control, under ss.9-105 of the Uniform
Commercial Code, of such electronic chattel paper or control under Section 201
of the federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, ss.16 of the Uniform Electronic Transactions Act, as so in
effect in such jurisdiction, of such transferable record.
4.6. Letter-of-credit Rights. If the Company is at any time a
beneficiary under a letter of credit now or hereafter, the Company shall
promptly notify the Lender thereof and, at the request and option of the Lender,
the Company shall, pursuant to an agreement in form and substance satisfactory
to the Lender, either (i) arrange for the issuer and any confirmer or other
nominated person of such letter of credit to consent to an assignment to the
Lender of the proceeds of the letter of credit or (ii) arrange for the Lender to
become the transferee beneficiary of the letter of credit, with the Lender
agreeing, in each case, that the proceeds of the letter to credit are to be
applied to the outstanding Obligation.
4.7 Commercial Tort Claims. If the Company shall at any time
hold or acquire a commercial tort claim, the Company shall immediately notify
the Lender in a writing signed by the Company of the particulars thereof and
grant to the Lender in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to the Lender.
4.8. Other Actions as to any and all Collateral. The Company
further agrees, upon request of the Lender and at the Lender's option, to take
any and all other actions as the Lender may determine to be necessary or useful
for the attachment, perfection and first priority of, and the ability of the
Lender to enforce, the Lender's security interest in any and all of the
Collateral, 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 the Company's signature
thereon is required therefor, (b) causing the Lender'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 the Lender
to enforce, the Lender'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 the Lender to enforce, the
Lender's security interest in such Collateral, (d) obtaining governmental and
other third party waivers, consents and approvals in form and substance
satisfactory to the Lender, including, without limitation, any consent of any
licensor, lessor or other person obligated on Collateral, (e) obtaining waivers
from mortgagees and landlords in form and substance satisfactory to the Lender
and (f) taking all actions under any earlier versions of the Uniform Commercial
Code or under any other law, as reasonably determined by the Lender to be
applicable in any relevant Uniform Commercial Code or other jurisdiction,
including any foreign jurisdiction.
5. Relation to Other Security Documents. The provisions of this
Agreement supplement the provisions of any real estate mortgage or deed of trust
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granted by the Company to the Lender and 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
the Lender hereunder.
5.1. Patent and Trademark Assignments. Concurrently herewith
the Company is executing and delivering to the Lender the Patent Assignment and
the Trademark Assignment pursuant to which the Company is assigning to the
Lender certain Collateral consisting of patents and patent rights and
trademarks, service marks and trademark and service xxxx rights, together with
the goodwill appurtenant thereto. The provisions of the Patent Assignment and
the Trademark Assignment are supplemental to the provisions of this Agreement,
and nothing contained in the Patent Assignment or the Trademark Assignment shall
derogate from any of the rights or remedies of the Lender hereunder. Neither the
delivery of, nor anything contained in, the Patent Assignment or the Trademark
Assignment shall be deemed to prevent or postpone the time of attachment or
perfection of any security interest in such Collateral created hereby.
5.2. Copyright Memorandum. Concurrently herewith the Company
is executing and delivering to the Lender for recording in the United States
Copyright Office (the "Copyright Office') a Memorandum of Grant of Security
Interest in Copyrights. The Company represents and warrants to the Lender that
such Memorandum identifies all now existing material copyrights and other rights
in and to all material copyrightable works of the Company, identified, where
applicable, by title, author and/or Copyright Office registration number and
date. The Company represents and warrants to the Lender that it has registered
all material copyrights with the Copyright Office, as identified in such
Memorandum. The Company covenants, promptly following the Company's acquisition
thereof, to provide to the Lender like identifications of all material
copyrights and other rights in and to all material copyrightable works hereafter
acquired by the Company, to register such copyrights with Copyright Office and
to execute and deliver to the Lender a supplemental Memorandum of Grant of
Security Interest in Copyrights, in form and substance satisfactory to Lender,
modified to reflect such subsequent acquisitions and registrations.
6. Representations and Warranties Concerning Company's Legal Status.
The Company has previously delivered to the Lender a certificate signed by the
Company and entitled "Perfection Certificate" (the "Perfection Certificate").
The Company represents and warrants to the Lender as follows: (a) the Company's
exact legal name is that indicated on the Perfection Certificate and on the
signature page hereof, (b) the Company 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 the Company's organizational
identification number or accurately states that the Company has none, (d) the
Perfection Certificate accurately sets forth the Company's place of business or,
if more than one, its chief executive office, as well as the Company's mailing
address, if different, (e) all other information set forth on the Perfection
Certificate pertaining to the Company is accurate and complete and (f) there has
been no change in any of such information since the date on which the Perfection
Certificate was signed by the Company.
7. Covenants Concerning Company's Legal Status. The Company covenants
with the Lender as follows: (a) without providing at least 30 days prior written
notice to the Lender, the Company will not 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 the Company does not
have an organizational identification number and later obtains one, the Company
will forthwith notify the Lender of such organizational identification number,
and (c) the Company will not change its type of organization, jurisdiction of
organization or other legal structure.
8. Representations and Warranties Concerning Collateral, Etc. The
Company further represents and warrants to the Lender as follows: (a) the
Company is the owner of the Collateral, free from any right or claim of any
person or any adverse lien, security interest or other encumbrance, except for
the security interest created by this Agreement, (b) none of the Collateral
constitutes, or is the proceeds of, "farm products" as defined in
ss.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) the
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Company holds no commercial tort claim except as indicated on the Perfection
Certificate, and (e) the Company 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) there has been no change in any of such information since the date on
which the Perfection Certificate was signed by the Company.
9. Covenants Concerning Collateral, Etc. The Company further covenants
with the Lender as follows: (a) the Collateral, to the extent not delivered to
the Lender pursuant to ss.4, will be kept at those locations listed on the
Perfection Certificate and the Company will not remove the Collateral from such
locations, without providing at least 30 days prior written notice to the
Lender, (b) except for the security interest herein granted, the Company shall
be the owner of the Collateral free from any right or claim of any other person
or any lien, security interest or other encumbrance, and the Company shall
defend the same against all claims and demands of all persons at any time
claiming the same or any interests therein adverse to the Lender, (c) the
Company shall not pledge, mortgage or create, or suffer to exist any right of
any person in or claim by any person to the Collateral, or any security
interest, lien or other encumbrance in the Collateral in favor of any person,
other than the Lender, (d) the Company will keep the Collateral in good order
and repair and will not use the same in violation of law or any policy of
insurance thereon, (e) the Company will permit the Lender, or its designee, to
inspect the Collateral at any reasonable time, wherever located, (f) the Company
will pay promptly when due all taxes, assessments, governmental charges and
levies upon the Collateral or incurred in connection with the use or operation
of such Collateral or incurred in connection with this Agreement, (g) the
Company will continue to operate 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, and (h) the Company will not sell or otherwise dispose, or offer
to sell or otherwise dispose, of the Collateral or any interest therein except
for sales of inventory in the ordinary course of business.
10. Insurance.
10.1. Maintenance of Insurance. The Company will maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall be in
accordance with general practices of businesses engaged in similar activities in
similar geographic areas. Such insurance shall be in such minimum amounts that
the Company will not be deemed a co-insurer under applicable insurance laws,
regulations and policies and otherwise shall be in such amounts, contain such
terms, be in such forms and be for such periods as may be reasonably
satisfactory to the Lender. In addition, all such insurance shall be payable to
the Lender as loss payee. Without limiting the foregoing, the Company will (i)
keep all of its physical property insured with casualty or physical hazard
insurance on an "all risks" basis, with broad form flood and earthquake
coverages and electronic data processing coverage, with a full replacement cost
endorsement and an "agreed amount" clause in an amount equal to 100% of the full
replacement cost of such property, (ii) maintain all such workers' compensation
or similar insurance as may be required by law and (iii) maintain, in amounts
and with deductibles equal to those generally maintained by businesses engaged
in similar activities in similar geographic areas, general public liability
insurance against claims of bodily injury, death or property damage occurring,
on, in or about the properties of the Company; business interruption insurance;
and product liability insurance.
10.2. Insurance Proceeds. The proceeds of any casualty
insurance in respect of any casualty loss of any of the Collateral shall,
subject to the rights, if any, of other parties with an interest having priority
in the property covered thereby, (i) so long as no Default or Event of Default
has occurred and is continuing and to the extent that the amount of such
proceeds is less than $1,500, be disbursed to the Company for direct application
by the Company solely to the repair or replacement of the Company's property so
damaged or destroyed and (ii) in all other circumstances, be held by the Lender
as cash collateral for the Obligations. The Lender may, at its sole option,
disburse from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as the Lender may reasonably
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prescribe, for direct application by the Company solely to the repair or
replacement of the Company's property so damaged or destroyed, or the Lender may
apply all or any part of such proceeds to the Obligations.
10.3. Continuation of Insurance. All policies of insurance
shall provide for at least 90 days prior written cancellation notice to the
Lender. In the event of failure by the Company to provide and maintain insurance
as herein provided, the Lender may, at its option, provide such insurance and
charge the amount thereof to the Company. The Company shall furnish the Lender
with certificates of insurance and policies evidencing compliance with the
foregoing insurance provision.
11. Collateral Protection Expenses; Preservation of Collateral.
11.1. Expenses Incurred by Lender. In the Lender's discretion,
if the Company fails to do so, the Lender may discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral, make repairs
thereto and pay any necessary filing fees or insurance premiums. The Company
agrees to reimburse the Lender on demand for all expenditures so made. The
Lender shall have no obligation to the Company to make any such expenditures,
nor shall the making thereof be construed as a waiver or cure any Default or
Event of Default.
11.2. Lender's Obligations and Duties. Anything herein to the
contrary notwithstanding, the Company shall remain obligated and liable under
each contract or agreement comprised in the Collateral to be observed or
performed by the Company thereunder. The Lender 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 the Lender of any payment relating to any of
the Collateral, nor shall the Lender be obligated in any manner to perform any
of the obligations of the Company under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Lender 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 the Lender or to which
the Lender may be entitled at any time or times. The Lender's sole duty with
respect to the custody, safe keeping and physical preservation of the Collateral
in its possession, under ss.9-207 of the Uniform Commercial Code of the State or
otherwise, shall be to deal with such Collateral in the same manner as the
Lender deals with similar property for its own account.
12. Securities and Deposits. The Lender may at any time, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Lender
may demand, xxx for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Lender to the Company may at any time be
applied to or set off against any of the Obligations.
13. Notification to Account Debtors and Other Persons Obligated on
Collateral. The Company shall, at the request and option of the Lender, notify
account debtors and other persons obligated on any of the Collateral of the
security interest of the Lender in any account, chattel paper, general
intangible, instrument or other Collateral and that payment thereof is to be
made directly to the Lender or to any financial institution designated by the
Lender as the Lender's agent therefor, and the Lender may itself, without notice
to or demand upon the Company, so notify account debtors and other persons
obligated on Collateral. After the making of such a request or the giving of any
such notification, the Company shall hold any proceeds of collection of
accounts, chattel paper, general intangibles, instruments and other Collateral
received by the Company as trustee for the Lender without commingling the same
with other funds of the Company and shall turn the same over to the Lender in
the identical form received, together with any necessary endorsements or
assignments. The Lender shall apply the proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other Collateral received by
the Lender to the Obligations, such proceeds to be immediately credited after
final payment in cash or other immediately available funds of the items giving
rise to them.
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14. Power of Attorney
14.1. Appointment and Powers of Lender. The Company hereby
irrevocably constitutes and appoints the Lender 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 the Company or in the Lender'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 and, without limiting the generality
of the foregoing, hereby gives said attorneys the power and right, on behalf of
the Company, without notice to or assent by the Company, to do the following:
(a) 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
as fully and completely as though the Lender were the absolute owner thereof for
all purposes, and to do, at the Company's expense, at any time, or from time to
time, all acts and things which the Lender deems necessary or useful to protect,
preserve or realize upon the Collateral and the Lender's security interest
therein, in order to effect the intent of this Agreement, all no less fully and
effectively as the Company might do, including, without limitation, (i) the
filing and prosecuting of registration and transfer applications with the
appropriate federal, state or local agencies or authorities with respect to
trademarks, copyrights and patentable inventions and processes, (ii) upon
written notice to the Company, the exercise of voting rights with respect to
voting securities, which rights may be exercised, if the Lender 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
(b) to the extent that the Company's authorization
given in Section 3 is not sufficient, to file such financing statements with
respect hereto, with or without the Company's signature, or a photocopy of this
Agreement in substitution for a financing statement, as the Lender may deem
appropriate and to execute in the Company's name such financing statements and
amendments thereto and continuation statements which may require the Company's
signature.
14.2. Ratification by Company. To the extent permitted by law,
the Company hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and is irrevocable.
14.3. No Duty on Lender. The powers conferred on the Lender
hereunder are solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Lender 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 the Company for any act or failure
to act, except for the Lender's own gross negligence or willful misconduct.
15. Rights and Remedies. If an Event of Default shall have occurred and
be continuing, the Lender, without any other notice to or demand upon the
Company, 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 as 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 the Lender may, so far as the
Company can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Lender may in its
discretion require the Company to assemble all or any part of the Collateral at
such location or locations within the jurisdiction(s) of the Company's principal
office(s) or at such other locations as the Lender 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, the Lender shall give to
the Company at least five Business 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. The Company hereby
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acknowledges that five Business Days prior written notice of such sale or sales
shall be reasonable notice. In addition, the Company waives any and all rights
that it may have to a judicial hearing in advance of the enforcement of any of
the Lender'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.
16. Standards for Exercising Rights and Remedies. To the extent that
applicable law imposes duties on the Lender to exercise remedies in a
commercially reasonable manner, the Company acknowledges and agrees that it is
not commercially unreasonable for the Lender (a) to fail to incur expenses
reasonably deemed significant by the Lender 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 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 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 the Company, 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 the Lender against risks of loss, collection or
disposition of Collateral or to provide to the Lender a guaranteed return from
the collection or disposition of Collateral, or (1) to the extent deemed
appropriate by the Lender, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Lender in the
collection or disposition of any of the Collateral. The Company acknowledges
that the purpose of this Section 16 is to provide non-exhaustive indications of
what actions or omissions by the Lender would fulfill the Lender's duties under
the Uniform Commercial Code of the State or any other relevant jurisdiction in
the Lender's exercise of remedies against the Collateral and that other actions
or omissions by the Lender shall not be deemed to fail to fulfill such duties
solely on account of not being indicated in this Section 16. Without limitation
upon the foregoing, nothing contained in this Section 16 shall be construed to
grant any rights to the Company or to impose any duties on the Lender that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 16.
17. No Waiver by Lender, etc. The Lender shall not be deemed to have
waived any of its rights and remedies in respect of the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Lender. No
delay or omission on the part of the Lender 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 the Lender
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 the Lender deems expedient.
18. Suretyship Waivers by Company. The Company waives 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, the Company assents 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 the Lender may deem advisable. The Lender 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 11.2. The Company further waives any and all other suretyship defenses.
8
19. Marshalling. The Lender 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, the Company hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Lender'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, the Company hereby irrevocably waives the
benefits of all such laws.
20. Proceeds of Dispositions; Expenses. The Company shall pay to the
Lender on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Lender in protecting, preserving or
enforcing the Lender'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 Collateral
shall, to the extent actually received in cash, be applied to the payment of the
Obligations in such order or preference as the Lender 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 the
Company. In the absence of final payment and satisfaction in full of all of the
Obligations, the Company shall remain liable for any deficiency.
21. Overdue Amounts. Until paid, all amounts due and payable by the
Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest 18% per
annum.
22. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH. The Company agrees that any
action or claim arising out of any dispute in connection with this Agreement,
any rights or obligations hereunder or the performance or enforcement of such
rights or obligations may be brought in the courts of the State or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Company by
mail at the address specified in Section 10 of the Loan Agreement. The Company
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court.
23. Waiver of Jury Trial. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR
ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Company waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Company (i) certifies that neither the Lender nor any
representative, agent or attorney of the Lender has represented, expressly or
otherwise, that the Lender would not, in the event of litigation, seek to
enforce the foregoing waivers or other waivers contained in this Agreement and
(ii) acknowledges that, in entering into the Loan Agreement, the Lender is
relying upon, among other things, the waivers and certifications contained in
this Section 23.
9
24. 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 the
Company and its successors and assigns, and shall inure to the benefit of the
Lender 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. The Company acknowledges receipt of a copy of this
Agreement.
[signature page follows]
10
IN WITNESS WHEREOF, intending to be legally bound, the Company has
caused this Agreement to be duly executed as of the date first above written.
VIDEO INTERNET BROADCASTING CORPORATION
By: /s/ X.X. Xxxxxx
---------------------------------
Title: President
ACCEPTED:
FARADAY FINANCIAL, INC.
By: /s/ Xxxxx Xxxxxx
------------------------
Title: President
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF WASHINGTON )
ss.
COUNTY OF )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of March, 2004, personally appeared X.X. Xxxxxx to me
known personally, and who, being by me duly sworn, deposes and says that he is
the president of VIEDO INTERNET BROADCASTING CORPORATION, and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said President acknowledged said instrument to be
the free act and deed of said corporation.
/s/
------------------------------
Notary Public
My commission expires:
11
PERFECTION CERTIFICATE
(UCC Financing Statements)
The undersigned, the __________________ and the _______________________
of VIDEO INTERNET BROADCASTING CORPORATION, a Washington corporation (the
"Company"), hereby certifies, with reference to a certain Security Agreement,
dated as of March ___, 2004 (terms defined in such Security Agreement having the
same meanings herein as specified therein), between the Company and FARADAY
FINANCIAL, INC., a Delaware corporation (the "Lender"), to the Lender as
follows:
1. Name. The exact legal name of the Company as that name appears on
its Articles of Incorporation is as follows:
2. Other Identifying Factors.
(a) The following is the mailing address of the Company:
(b) If different from its mailing address, the Company's place
of business or, if more than one, its chief executive office is located at the
following address:
Address County State
------- ------ -----
(c) The following is the type of organization of the Company:
(d) The following is the jurisdiction of the Company's
organization:
(e) The following is the Company's state issued organizational
identification number [state "None" if the state does not issue such a number]:
3. Other Names, Etc.
(a) The following is a list of all other names (including
trade names or similar appellations) used by the Company, or any other business
or organization to which the Company became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, now or at any time during the past five years:
(b) Attached hereto as Schedule 3 is the information required
in Section 2 for any other business or organization to which the Company became
the successor by merger, consolidation, acquisition, change in form, nature or
jurisdiction of organization or otherwise, now or at any time during the past
five years:
4. Other Current Locations.
(a) The following are all other locations in the United States
of America in which the Company maintains any books or records relating to any
of the Collateral consisting of accounts, instruments, chattel paper, general
intangibles or mobile goods:
12
Address County State
------- ------ -----
(b) The following are all other places of business of the
Company in the United States of America:
Address County State
------- ------ -----
(c) The following are all other locations in the United States
of America where any of the Collateral consisting of inventory or equipment is
located:
Address County State
------- ------ -----
(d) The following are the names and addresses of all persons
or entities other than the Company, such as lessees, consignees, warehousemen or
purchasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral consisting of instruments, chattel paper,
inventory or equipment:
Name and Mailing Address County State
------------------------ ------ -----
5. Prior Locations.
(a) Set forth below is the information required by Section
4(a) or (b) with respect to each location or place of business previously
maintained by the Company at any time during the past five years in a state in
which the Company has previously maintained a location or place of business at
any time during the past four months:
Address County State
------- ------ -----
(b) Set forth below is the information required by Section
4(c) or (d) with respect to each other location at which, or other person or
entity with which, any of the Collateral consisting of inventory or equipment
has been previously held at any time during the past twelve months:
Address County State
------- ------ -----
6. Fixtures. Attached hereto as Schedule 6 is the information required
by UCC ss.9-502(b) or former UCC ss.9-402(5) of each state in which any of the
Collateral consisting of fixtures are or are to be located and the name and
address of each real estate recording office where a mortgage on the real estate
on which such fixtures are or are to be located would be recorded.
7. Unusual Transactions. Except for those purchases, acquisitions and
other transactions described on Schedule 3 or on Schedule 7 attached hereto, all
of the Collateral has been originated by the Company in the ordinary course of
the Company's business or consists of goods which have been acquired by the
Company in the ordinary course from a person in the business of selling goods of
that kind.
13
8. File Search Reports. Attached hereto as Schedule 8(A) is a true copy
of a file search report from the Uniform Commercial Code filing officer (or, if
such officer does not issue such reports, from an experienced Uniform Commercial
Code search organization acceptable to the Lender) (i) in each jurisdiction
identified in Section 2(d) or in Sections 4 or 5 with respect to each name set
forth in Section 1 or 3, (ii) from each filing officer in each real estate
recording office identified on Schedule 6 with respect to real estate on which
Collateral consisting of fixtures are or are to be located and (iii) in each
jurisdiction in which any of the transactions described in Schedule 3 or 7 took
place with respect to the legal name of the person from which the Company
purchased or otherwise acquired any of the Collateral. Attached hereto as
Schedule 8(B) is a true copy of each financing statement or other filing
identified in such file search reports.
9. UCC Filings. A duly authorized financing statement, in a form
acceptable to the Lender and containing the indication of the Collateral set
forth on Schedule 9(A) has been duly filed in the central Uniform Commercial
Code filing office in the jurisdiction identified in Section 2(d) and in each
real estate recording office referred to on Schedule 6 hereto. Attached hereto
as Schedule 9(B) is a true copy of each such filing duly acknowledged or
otherwise identified by the filing office. All filing fees and taxes payable in
connection with the filings described in this Section 9 have been paid.
IN WITNESS WHEREOF, the undersigned have hereunto signed this
Certificate on March 23, 2004.
/s/ X.X. Xxxxxx
------------------------------------
Title:
/s/ W. Xxxxx Xxxx
------------------------------------
Title:
14
