Exhibit 10.14
*000000000000009001095507012004
BUSINESS LOAN AGREEMENT (ASSET BASED)
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Principal Loan Date Maturity Loan No. Call/Coll Account Officer Ititials
$1,500,000.00 07 01-2004 06/11/2005 9001 2 7350 9372834 34705
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item. Any item above
containing has been omitted due to text length
limitations.
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Borrower: VIDEO INTERNET BROADCASTING Lender: ZIONS FIRST NATIONAL BANK
CORPORATION PROVO REGION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS BUSINESS LOAN AGREEMENT (ASSET BASED} dated July 1, 2004, is made and
executed between VIDEO INTERNET BROADCASTING CORPORATION ("Borrower") and ZIONS
FIRST NATIONAL BANK ("Lender") on the following terns and conditions. Borrower
has received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those
which may be described on any exhibit or schedule attached to this Agreement
("Loan"). Borrower understands and agrees that: (A) in granting, renewing, or
extending any Loan, Lender is relying upon Borrower's representations,
warranties, and agreements as set forth in this Agreement; (B) the granting,
renewing, or extending of any Loan by Lender at all times shall be subject to
Lender's sole judgment and discretion; and (C) all such Loans shall be and
remain subject to the terms and conditions of this Agreement- TERM. This
Agreement shall be effective as of July 1, 2004, and shall continue in full
force and effect until such time as all of Borrower's Loans in favor of Lender
have been paid in full, including principal, interest, costs, expenses,
attorneys' fees, and other fees and charges, or until such time as the parties
may agree in writing-to terminate this Agreement.
ADVANCE AUTHORITY - The following person currently is authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
his or her authority: W. ▇▇▇▇▇ ▇▇▇▇, President of VIDEO INTERNET BROADCASTING
CORPORATION.
LINE OF CREDIT - Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:
Conditions Precedent to Each Advance. Lender's obligation to make any Advance to
or for the account of Borrower under this Agreement is subject to the following
conditions precedent, with all documents, instruments, opinions, reports, and
other items required under this Agreement to be in form and substance
satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered by
Borrower to Lender.
(2) Lender shall have received such opinions of counsel, supplemental
opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall
be in full force and effect.
(4) All guaranties required by Lender for the credit facility(ies)
shall have been executed by each Guarantor, delivered to Lender, and be
in full force and effect.
(5) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, books, records, and
operations, and Lender shall be satisfied as to their condition.
(6) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Rebated Documents as are then due
and payable.
(7) There shall not exist at the time of any Advance a condition which
would constitute an Event of Default under this Agreement, and Borrower
shall have delivered to Lender the compliance certificate called for in
the paragraph below tilled "Compliance Certificate."
Making Loan Advances. Advances under this credit facility, as well as directions
for payment from Borrower's accounts, may be requested orally or in writing by
authorized persons. Lender may, but need not, require that all oral requests be
confirmed in writing. Each Advance shall be conclusively deemed to have been
made at the request of and for the benefit of Borrower (1) when credited to any
deposit account of Borrower maintained with Lender or {21 when advanced in
accordance with the instructions of an authorized person. Lender, at its option,
may set a cutoff time, after which all requests for Advances will be treated as
having been requested on the next succeeding Business Day.
Mandatory Loan Repayments. If at any time the aggregate principal
amount of the outstanding Advances shall exceed the applicable
Borrowing Base, Borrower, immediately upon written or oral notice from
Lender, shall pay to Lender an amount equal to the difference between
the outstanding principal balance of the Advances and the Borrowing
Base. On the Expiration Date, Borrower shall pay to Lender in full the
aggregate unpaid principal amount of all Advances then outstanding and
all accrued unpaid interest, together with all other applicable fees,
costs and charges, if any, not yet paid.
Loan Account. Lender shall) maintain on its books a record of account
in which Lender shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with the
credit facility. Lender shelf provide Borrower with periodic statements
of Borrower's account, which statements shall be considered to be
correct and conclusively binding on Borrower unless Borrower notifies
Lender to the contrary within thirty (30) days after Borrower's receipt
of any such statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loan, obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such property
and assets as Lender may require. Lender's Security Interests in the Collateral
shall be continuing liens and shall include the proceeds and products of the
Collateral, including without limitation the proceeds of any insurance. With
respect to the Collateral, Borrower agrees and represents and warrants to
Lender:
Perfection of Security Interests. Borrower agrees to execute all
documents perfecting Lender's Security Interest and to take whatever
actions are requested ay Lender to perfect and continue Lender's
Security Interests in the Collateral. Upon request of Lender, Borrower
will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Borrower will note Lender's interest
upon any and all chattel paper and instruments if not delivered to
Lender for possession by Lender. Contemporaneous with the execution of
this Agreement, Borrower will execute one or more UCC financing
statements and any similar statements as may be required by applicable
law, and Lender will file such financing statements and all such
similar statements in the appropriate location or locations. Borrower
hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue
any Security Interest. Lender may at any time, and without further
authorization from Borrower, the a carbon, photograph, facsimile, or
other reproduction of any financing statement for use as a financing
statement. Borrower will reimburse Lender for all expenses for the
perfection, termination, and the continuation of the perfection of
Lender's security interest in the Collateral. Borrower promptly will
notify Lender before any change in Borrower's name including any change
to the assumed business names of Borrower. Borrower also promptly will
notify Lender before any change in Borrower's Social Security Number or
Employer Identification Number. Borrower further agrees to notify
Lender in writing prior to any change in address or location of
Borrower's principal governance office or should Borrower merge or
consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter
shall, keep correct and accurate records of the Collateral, all of
which records shall be available to Lender or Lender's representative
upon demand ' for inspection and copying at any reasonable time. With
respect to the Accounts, Borrower agrees to keep and maintain such
records as Lender may require, including without limitation information
concerning Eligible Accounts and Account balances and agings. Records
related to Accounts (Receivables) are or will be located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The above is an accurate and
complete list of all locations at which Borrower keeps or maintains
business records concerning Borrower's collateral.
Collateral Schedules. Concurrently with the execution and delivery of
this Agreement, Borrower shall execute and deliver to Lender schedules
of Accounts and schedules of Eligible Accounts in form and substance
satisfactory to the Lender. Thereafter supplemental schedules shall be
delivered according to the following schedule: With respect to Eligible
Accounts, schedules shall be delivered Every 30 days.
Representations and Warranties Concerning Accounts. With respect to the
Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (2) All Account information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and
(3) Lender, its assigns, or agents shall have the right at any time and
at Borrower's expense to inspect, examine, and audit Borrower's records
and to confirm with Account Debtors the accuracy of such Accounts.
Remittance Account. Borrower agrees that Lender may at any time require
Borrower to institute procedures whereby the payments and other
proceeds of the Accounts shall be paid by the Account Debtors under a
remittance account or lock box arrangement with Lender, or Lender's
agent, or with one or more financial institutions designated by Lender.
Borrower further agrees that, if no Event of Default exists under this
Agreement, any and all of such funds received under such a remittance
account or lock box arrangement shall, at Lender's sole election and
discretion, either be (1) paid or turned over to Borrower; (2)
deposited into one or more accounts for the benefit of Borrower (which
deposit accounts shall be subject to a security assignment in favor of
Lender); (3) deposited into one or more accounts for the joint benefit
of Borrower and Lender (which deposit accounts shall likewise be
subject to a security assignment in favor of Lender); (4) paid or
turned over to Lender to be applied to the Indebtedness in such order
and priority as Lender may determine within its sole discretion; or (5)
any combination of the foregoing as Lender shall determine from time to
time. Borrower further agrees that, should one or more Events of
Default exist, any and all funds received under such a remittance
account or lock box arrangement shall be paid or turned over to Lender
to be applied to the Indebtedness, again in such order and priority as
Lender may determine within its sole discretion.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the following
documents for the Loan: (1) the Note; (2) Security Agreements granting
to Lender security interests in the Collateral; (3) financing
statements and all other documents perfecting Lender's Security
Interests; (4) evidence of insurance as required below; (5) guaranties;
(6) together with all such Related Documents as Lender may require for
the Loan; all in form and substance satisfactory to Lender and Lender's
counsel.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender
or its counsel, may require.
Fees and Expenses Under This Agreement. Borrower shall have paid to
Lender all fees, costs, and expenses specified in this Agreement and
the Related Documents as are then due and payable.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and
correct.
No Event of Default. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this
Agreement or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Washington. Borrower is
duly authorized to transact business in the State of Utah and all other
states in which Borrower is doing business, having obtained all
necessary filings, governmental licenses and approvals for each state
in which Borrower is doing business. Specifically, Borrower is, and at
all times shall be, duly qualified as a foreign corporation in all
states in which the failure to so qualify would have a material adverse
effect on its business or financial condition. Borrower has the full
power and authority to own its properties and to transact the business
in which it is presently engaged or presently proposes to engage.
Borrower maintains an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Unless Borrower has designated otherwise in writing, the principal
office is the office at which Borrower keeps its books and records
including its records concerning the Collateral. Borrower will notify
Lender prior to any change in the location of Borrower's state of
organization or any change in Borrower's name. Borrower shall do all
things necessary to preserve and to keep in full force and affect its
existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any
governmental or quasi-governmental authority or court applicable to
Borrower and Borrower's business activities.
Assumed Business Names. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete
list of all assumed business names under which Borrower does business:
None authorized by all necessary action by Borrower and do not conflict
with, result in a violation of, or constitute a default under (1) any
provision of (a) Borrower's articles of incorporation or organization,
or bylaws, or (b) any agreement or other instrument binding upon
Borrower or (2) any law, governmental regulation, court decree, or
order applicable to Borrower or to Borrower's properties.
Financial information. Each of Borrower's financial statements supplied
to Lender truly and completely disclosed Borrower's financial condition
as of the date of the statement, and there has been no material adverse
change in Borrower's financial condition subsequent to the date of the
most recent financial statement supplied to Lender. Borrower has no
material contingent obligations except as disclosed in such financial
statements.
Legal Effect. This Agreement constitutes, and any instrument or
agreement Borrower is required to give under this Agreement when
delivered will constitute legal, valid, and binding obligations of
Borrower enforceable against Borrower in accordance with their
respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes
not presently due and payable, Borrower owns and has good title to all
of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements
relating to such properties. All of Borrower's properties are titled in
Borrower's legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five l5) years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender
in writing, Borrower represents and warrants that: (1) During the
period of Borrower's ownership of Borrower's Collateral, there has been
no use, generation, manufacture, storage, treatment, disposal, release
or threatened release of any Hazardous Substance by any person on,
under, about or from any of the Collateral. (2) Borrower has no
knowledge of, or reason to believe that there has been (a) any breach
or violation of any Environmental Laws; (b) any use, generation,
manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance on, under, about or from the
Collateral by any prior owners or occupants of any of the Collateral;
or (c) any actual or threatened litigation or claims of any kind by any
person relating to such matters. (3) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the Collateral
shall use, generate, manufacture, store, treat, dispose of or release
any Hazardous Substance on, under, about or from any of the Collateral;
and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation all Environmental Laws. Borrower
authorizes Lender and its agents to enter upon the Collateral to make
such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and
for Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the Collateral for
hazardous waste and Hazardous Substances. Borrower hereby (1) releases
and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under any such laws, and (2) agrees to indemnify and hold
harmless Lender against any and all claims, fosses, liabilities,
damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of
the Agreement or as a consequence of any use, generation, manufacture,
storage, disposal, release or threatened release of a hazardous waste
or substance on the Collateral. The provisions of this section of the
Agreement, including the obligation to indemnify, shall survive the
payment of the Indebtedness and the termination, expiration or
satisfaction of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event
has occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other
events, if any, that have been disclosed to and acknowledged by Lender
in writing.
Taxes. To the hest of Borrower's knowledge, all of Borrower's tax
returns and reports that are or were required to be filed, have been
filed, and all taxes, assessments and other governmental charges have
been paid in full, except those presently being or to be contested by
Borrower in good faith in the ordinary course of business an for which
adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior or
that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements {if
any), and all Related Documents are binding upon the signers thereof,
as well as upon their successors, representatives and assigns, an are
legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of
(1) all material adverse changes in Borrower's financial condition, and
(2) all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
GAAP, applied on a consistent basis, and permit Lender to examine and
audit Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Annual Statements. As soon as available, but in no event later than 45
days after the end of each fiscal year, Borrower's balance sheet and
income statement for the year ended, prepared by Borrower.
Tax Returns. As soon as available after the applicable filing date for
the tax reporting period ended, Federal and other governmental tax
returns, prepared by Borrower.
All financial reports required to be provided under this Agreement
shall be prepared in accordance with GAAP, applied on a consistent
basis and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, as Lender may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages
and with insurance companies acceptable to Lender. Borrower, upon
request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be cancelled or
diminished without at least ten (10) days prior written notice to
Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or
is offered a security interest for the Loans, Borrower will provide
Lender with such lender's loss payable or other endorsements as Lender
may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender
may reasonably request, including without [imitation the following: (1)
the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property
values on the basis of which insurance has been obtained, and the
manner of determining those values; and (6) the expiration date of the
policy. In addition, upon request of Lender (however not more often
than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value
or replacement cost of any Collateral. The cost of such appraisal shall
be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, executed by the
guarantors named below, on Lender's forms, and in the amounts and under
the conditions set forth in those guaranties.
Names of Guarantors Amounts
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustees
of THE ▇▇▇▇▇ FAMILY
TRUST, DATED MAY 22, 2000 Unlimited
HOMENET UTAH, INC Unlimited
▇▇▇▇▇ ▇▇▇▇▇▇, Individually Unlimited
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually Unlimited
R. ▇▇▇▇▇ ▇▇▇▇▇, Individually Unlimited
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▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇, Individually Unlimited
▇▇▇▇▇▇ ▇▇▇▇▇▇, Individually Unlimited
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the date on which penalties would attach and all
lawful claims that, if unpaid, might become a lien or charge upon any
of Borrower's properties, income, or profits.
Performance. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender. Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.
Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of
any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings as
may be requested by Lender or any governmental authority relative to
any substance, or any waste or by-product of any substance defined as
toxic or a hazardous substance under applicable federal, state, or
local law, rule, regulation, order or directive, at or affecting any
property or any facility owned, leased or used by Borrower.
Compliance with Governmental Requirements, Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy of
the Collateral, including without limitation, the Americans With
Disabilities Act. Borrower may contest in good faith any such law,
ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender's sole opinion,
Lender's interests in the Collateral are not jeopardized. Lender may
require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or Loans and Borrower's
other properties and to examine or audit Borrower's books, accounts,
and records and to make copies and memoranda of Borrower's books,
accounts, and records. If Borrower now or at any lime hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such
records} in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of
any records it may request, all at Borrower's expense.
Environmental Compliance and Reports. Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or
omission on Borrower's part or on the part of any third party, on
property owned and/or occupied by Borrower, any environmental activity
where damage may result to the environment, unless such environmental
activity is pursuant to and in' compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within
thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with
any environmental activity whether or not there is damage to the
environment and/or other natural resources. Additional Assurances.
Make, execute and deliver to Lender such promissory notes, mortgages,
deeds of trust, security agreements, assignments, financing statements,
instruments, documents and other agreements as Lender or its attorneys
may reasonably request to evidence and secure the Loans and to perfect
all Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except federal, state or local income or franchise taxes
imposed on Lender), reserve requirements, capital adequacy requirements or other
obligations which would (A) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement relates, (B) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or
(C) reduce the rate of return on Lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefor, within five (5) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may but shall not he obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the Indebtedness and, at Lender's option, will {A} be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or {C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated by
this Agreement, create, incur or assume indebtedness for borrowed
money, including capital leases, (2) sell, transfer, mortgage, assign,
pledge, lease, grant a security interest in, or encumber any of
Borrower's assets (except as allowed as Permitted Liens), or (3) sell
with recourse any of Borrower's accounts, except to Lender.
Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or
(3) pay any dividends on Borrower's stock (other than dividends payable
in its stock), provided, however that notwithstanding the foregoing,
but only so long as no Event of Default has occurred and is continuing
or would result from the payment of dividends, if Borrower is a
"Subchapter S Corporation" (as defined in the Internal Revenue Code of
1986, as amended}, Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of Borrower's stock, or purchase
or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance
money or assets to any other person, enterprise or entity, (2)
purchase, create or acquire any interest in any other enterprise or
entity, or (3) incur any obligation as surety or guarantor other than
in the ordinary course of business.
Agreements. Borrower will not enter into any agreement containing any
provisions which would be violated or breached by the performance of
Borrower's obligations under this Agreement or in connection herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
{A} Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (El Lender in
good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure, even though no Event of Default shall have
occurred.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any ▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.
DEFAULT, Each of the following shall constitute an Event of Default under this
Agreement: Payment Default. Borrower fails to make any payment when due under
the Loan.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or
in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's or any Grantor's
property or Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement or any of the
Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter. Insolvency. The
dissolution or termination of Borrower's existence as a going business,
the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral document to create a valid and perfected security
interest or lien} at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness. In the event of a
death, Lender, at its option, may, but shall not be required to, permit
the Guarantor's estate to assume unconditionally the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in
doing so, cure arty Event of Default.
Change In Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired. Insecurity. Lender in ▇▇▇▇ ▇▇▇▇▇
believes itself insecure.
Right to Cure, if any default, other than a default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been
given a notice of a similar default within the preceding twelve (12)
months, it may be cured if Borrower or Grantor, as the case may be,
after receiving written notice from Lender demanding cure of such
default: (1} cure the default within fifteen {15} days; or (2) if the
cure requires more than fifteen (15) days, immediately initiate steps
which Lender deems in Lender's sole discretion to be sufficient to cure
the default and thereafter continue and complete all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the Insolvency subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.
AUTHORIZATION TO VERIFY ACCOUNTS RECEIVABLE. Borrower hereby authorizes Lender
to verify its accounts receivable through written and/or verbal verification
methods at the discretion of the Lender.
WAIVER OF CLAIMS. BORROWER (i) _REPRESENTS THAN THEY HAVE NO DEFENSES TO OR
SETOFFS AGAINST ANY indebtedness OR OTHER OBLIGATIONS OWING TO LENDER OR ITS
AFFILIATES (THE OBLIGATIONS NOR CLAIMS AGAINST LENDER OR ITS AFFILILIATES FOR
ANY MATTER WHATSOEVER, RELATED OR UNRELATED TO THE OBLIGATIONS, AND (iii RELEASE
LENDER AND ITS AFFILIATES FROM ALL CLAIMS, CAUSES OF ACTION, AND COSTS, IN LAW
OR EQUITY, EXISTING AS OF THE DATE OF THIS AGREEMENT WHICH BORROWER HAS OR MAY
HAVE BY REASON OF ANY MATTER OF ANY CONCEIVABLE KIND OR CHARACTER WHATSOEVER,
RELATED OR UNRELATED TO THE OBLIGATIONS, INCLUDING THE SUBJECT MATTER OF THIS
AGREEMENT. THIS PROVISION SHALL NOT APPLY TO CLAIMS FOR PERFORMANCE OF EXPRESS
CONTRACTUAL OBLIGATIONS OWING TO BORROWER BY LENDER OR ITS AFFILIATES.
BORROWING BASE CERTIFICATE. Upon Borrower's request for an initial advance under
the Line of Credit, and at any time that the Line of Credit has $500,000.00
balance or greater, and Borrower requests an advance, Borrower shall furnish to
Lender a Borrowing Base Certificate. In addition, during such times as there is
an outstanding balance owing on the Line of Credit, Borrower shall furnish to
Lender the following:
Borrowing Base Certificate. Borrower shall furnish to Lender a Borrowing Base
Certificate certified by an authorized officer/employee of Borrower, within 30
days of each month end in form acceptable to Lender. DEFINITION OF NOTE. Note as
referenced herein is hereby deleted in its entirety and replaced with the
following:
Note: The word "Note" means and includes without (imitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note or
notes therefor.
TIME OUT OF DEBT. For a period of at least thirty (30) days each calendar year,
30 days of which must be consecutive, Borrower shelf not have an outstanding
balance under the Promissory Note in the amount of $1,500,000.00.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by The alteration
or amendment. Arbitration Disclosures
1. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO
ONLY VERY LIMITED REVIEW BY A COURT.
2. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE
IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.
3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN
COURT.
4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK
MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED.
5. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR
WAS AFFILIATED WITH THE BANKING INDUSTRY. 5. ARBITRATION WILL
APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT JUST THOSE
CONCERNING THE AGREEMENT. 7. IF YOU HAVE QUESTIONS ABOUT
ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION
ASSOCIATION.
(a) Any claim or controversy ("Dispute") between or among the parties
and their employees, agents, affiliates and assigns, including, but not
limited to, Disputes arising out of or relating to this agreement, this
arbitration provision ("arbitration clause"), or any related agreements
or instruments relating hereto or delivered in connection herewith
("Related Agreements and including, but not limited to, a Dispute based
on or arising from an alleged tort, shall at the request of any party
be resolved by binding arbitration in accordance with the applicable
arbitration rules of the American Arbitration Association {the
"Administrator"). The provisions of this arbitration clause shall
survive any termination, amendment, or expiration of this agreement or
Related Agreements. The provisions of this arbitration clause shall
supersede any prior arbitration agreement between or among the parties.
(b) The arbitration proceedings shall be conducted in a city mutually
agreed by the parties. Absent such an agreement, arbitration will be
conducted in Salt Lake City, Utah or such other place as may be
determined by the Administrator. The Administrator and the
arbitrator(s) snail have the authority to the extent practicable to
take any action to require the arbitration proceeding to be completed
and the arbitrator(s)' award issued within 150 days of the tiling of
the Dispute- with the Administrator. The arbitrator.
(c) shall have the authority to impose sanctions on any party that
fails to comply with time periods imposed by the Administrator or the
arbitrator{s}, including the
sanction of summarily dismissing any Dispute or defense with prejudice. The
arbitrator(s) shall have the authority to resolve any Dispute regarding the
terms of this agreement, this arbitration clause, or Related Agreements,
including any claim or controversy regarding the arbitrability of any Dispute.
All [imitations periods applicable to any Dispute or defense, whether by statute
or agreement, shall apply to any arbitration proceeding hereunder and the
arbitrator(s) shall have the authority to decide whether any Dispute or defense
is barred by a limitations period and, if so, to summarily enter an award
dismissing any Dispute or defense on that basis. The doctrines of compulsory
counterclaim, res judiceta, and collateral estoppel shall apply to any
arbitration proceeding hereunder so that a party must state as a counterclaim in
the arbitration proceeding any claim or controversy which arises out of the
transaction or occurrence that is the subject matter of the Dispute. The
arbitrators} may in the arbitrator(s)' discretion and at the request of any
party: (1} consolidate in a single arbitration proceeding any other claim
arising out of the same transaction involving another party to that transaction
that is bound by an arbitration clause with Lender, such as borrowers,
guarantors, sureties, and owners of collateral; and (2) consolidate or
administer multiple arbitration claims or controversies as a class action in
accordance with Rule 23 of the Federal Rules of Civil Procedure, {c} The
arbitrators shall be selected in accordance with the rules of the Administrator
from panels maintained by the Administrator. A single arbitrator shall have
expertise in the subject matter of the Dispute. Where three arbitrators conduct
an arbitration proceeding, the Dispute shall be decided by a majority vote of
the three arbitrators, at least one of whom must have expertise in the subject
matter of the Dispute and at least one of whom must be a practicing attorney.
The arbitrator(s) shall award to the prevailing party recovery of all costs and
fees (including attorneys' fees and costs, arbitration administration fees and
costs, and arbitrator{s}' fees). The arbitrator(s), either during the pendency
of the arbitration proceeding or as part of the arbitration award, also may
grant provisional or ancillary remedies including but not limited to an award of
injunctive relief, foreclosure, sequestration, attachment, replevin,
garnishment, or the appointment of a receiver. (d) Judgment upon an arbitration
award may be entered in any court having jurisdiction, subject to the following
limitation: the arbitration award is binding upon the parties only if the amount
does not exceed Four Million Dollars {54,000,000.00}; if the award exceeds that
limit, either party may demand the right to a court trial. Such a demand must be
filed with the Administrator within thirty (30} days following the date of the
arbitration award; if such a demand is not made with that time period, the
amount of the arbitration award shall be binding. The computation of the total
amount of an arbitration award shall include amounts awarded for attorneys' fees
and costs, arbitration administration fees and costs, and arbitrator(s)' fees.
{e) No provision of this arbitration clause, nor the exercise of any rights
hereunder, shall limit the right of any party to: {1} judicially or_
non-judicially foreclose against any real or personal property collateral or
other security; (2) exercise self-help remedies, including but not limited to
repossession and setoff rights; or (3) obtain from a court having jurisdiction
thereover any provisional or ancillary remedies including but not limited to
injunctive relief, foreclosure, sequestration, attachment, replevin,
garnishment, or the appointment of a receiver. Such rights can be exercised at
any time, before or after initiation of an arbitration proceeding, except to the
extent such action is contrary to the arbitration award. The exercise of such
rights shall not constitute a waiver of the right to submit any Dispute to
arbitration, and any claim or controversy related to the exercise of such rights
shall be a Dispute to be resolved under the provisions of this arbitration
clause. Any party may initiate arbitration with the Administrator. If any party
desires to arbitrate a Dispute asserted against such party in a complaint,
counterclaim, cross-claim, or third-party complaint thereto, or in an answer or
other reply to any such pleading, such party must make an appropriate motion to
the trial court seeking to compel arbitration, which motion must be filed with
the court within 45 days of service of the pleading, or amendment thereto,
setting forth such Dispute. if arbitration is compelled after commencement of
litigation of a Dispute, the party obtaining an order compelling arbitration
shall commence arbitration and pay the Administrator's filing fees and costs
within 45 days of entry of such order. Failure to do so shall constitute an
agreement to proceed with litigation and waiver of the right to arbitrate. In
any arbitration commenced by a consumer regarding a consumer Dispute, Lender
shall pay one half of the Administrator's filing fee, up to $250.
(f) Notwithstanding the applicability of any other law to this agreement, the
arbitration clause, or Related Agreements between or among the parties, the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq., shall apply to the
construction and interpretation of this arbitration clause. If any provision of
this arbitration clause should be determined to be unenforceable, all other
provisions of this arbitration clause shall remain in full force and effect.
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's
costs and expenses, including Lender's reasonable attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this Agreement.
Lender may hire or pay someone else to help enforce this Agreement, and Borrower
shell pay the costs and expenses of such enforcement. Costs and expenses include
Lender's reasonable attorneys' fees and legal expenses whether or not Lender's
salaried employee and whether or not there is a lawsuit, including reasonable
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also shall pay all court
costs and such additional fees as may be directed by the court. Caption
Headings. Caption headings in this Agreement are for convenience purposes only
and are not to be used to interpret or define the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's sale or
transfer, whether now or later, of one or more participation interests in the
Loan to one or more purchasers, whether related or unrelated to Lender. Lender
may provide, without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy Borrower may have with respect to such matters.
Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such interests in the
Loan and will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower further
waives all rights of offset or counterclaim that it may have now or later
against lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loan irrespective of the failure or insolvency
of any holder of any interest in the Loan. Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have against
Lender.
Governing Law. This Agreement will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Utah. This Agreement
has been accepted by Lender in the State of Utah. Choice of Venue, if there is a
lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of
the courts of SALT LAKE County, State of Utah.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate as
a waiver of such right or any ether right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Borrower, or between Lender and any Grantor, shall constitute a
waiver of any of Lender's rights or of any of Borrower's or any Grantor's
obligations as to any future transactions. Whenever the consent of Lender is
required under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
Notices. Unless otherwise provided by applicable law, any notice
required to be given under this Agreement or required by law shall be
given in writing, and shall be effective when actually delivered in
accordance with the law or with this Agreement, when actually received
by telefacsimiie (unless otherwise required by law), when deposited
with a nationally recognized overnight courier, or, if mailed, when
deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near
the beginning of this Agreement. Any party may change its address for
notices under this Agreement by giving format written notice to the
other parties, specifying that the purpose of the notice is to change
the party's address. For notice purposes, Borrower agrees to keep
Lender informed at all times of Borrower's current address. Unless
otherwise provided by applicable law, if there is more than one
Borrower, any notice given by Lander to any Borrower is deemed to be
notice given to all Borrowers. Severability. if a court of competent
jurisdiction finds any provision of this Agreement to be illegal,
invalid, or unenforceable as to any circumstance, that finding shall
not make the offending provision illegal, invalid, or unenforceable as
to any other circumstance. If feasible, the offending provision shall
be considered modified so that it becomes legal, valid and enforceable.
if the offending provision cannot be so modified, it shall be
considered deleted from this Agreement. Unless otherwise required by
law, the illegality, invalidity, or unenforceability of any provision
of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement. Subsidiaries
and Affiliates of Borrower. To the extent the context of any provisions
of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word "Borrower" as used
in this Agreement shall include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no.
circumstances shall this Agreement be construed to require Lender to
make any Loan or other financial accommodation to any of Borrower's
subsidiaries or affiliates. Successors and Assigns. All covenants and
agreements by or on behalf of Borrower contained in this Agreement or
any Related Documents shall bind Borrower's successors and assigns and
shall inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower's rights
under this Agreement or any interest therein, without the prior written
consent of Lender. Survival of Representations and Warranties. Borrower
understands and agrees that in extending Loan Advances, Lender is
relying on all representations, warranties, and covenants made by
Borrower in this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement or the Related
Documents. Borrower further agrees that regardless of any investigation
made by Lender, all such representations, warranties and covenants will
survive the extension of Loan Advances and delivery to Lender of the
Related Documents, shall be continuing in nature, shall be deemed made
and redated by Borrower at the time each Loan Advance is made, and
shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to
occur.
Time is of the Essence. Time is of the essence in the performance of this
Agreement. DEFINITIONS. The following capitalized words and terms shall have the
following meanings when used in this Agreement. Unless specifically stated to
the contrary, all references to dollar amounts shall mean amounts in lawful
money of the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial Code.
Accounting words and terms not otherwise defined in this Agreement shall have
the meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:
Account. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).
Advance. The word "Advance" means a disbursement of Loan funds made, or
to be made, to Borrower or on Borrower's behalf under the terms and
conditions of this Agreement. Agreement. The word "Agreement" means
this Business Loan Agreement {Asset Based), as this Business Loan
Agreement (Asset Based) may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement (Asset Based) from time to time. Borrower. The word
"Borrower" means VIDEO INTERNET BROADCASTING CORPORATION and includes
all co-signers and co-makers signing the Note. Borrowing Base. The
words "Borrowing Base" mean as determined by Lender from time to time,
the lesser of {1) $1,500,000.00 or (2) the sum of 65.00% of the
aggregate amount of Eligible Accounts plus 1,500,000.00 of the Eligible
Time Certificate Deposit.
Business Day_ The words "Business Day" mean a day on which commercial
banks are open in the State of Utah. Collateral. The word "Collateral"
means all property and assets granted as collateral security for a
Loan, whether real or personal property, whether granted directly or
indirectly, whether granted now or in the future, and whether granted
in the form of a security interest, mortgage, collateral mortgage, deed
of trust, assignment, pledge, crop pledge, chattel mortgage, collateral
chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any
other security or lien interest whatsoever, whether created by raw,
contract, or otherwise. The word Collateral also includes without
limitation all collateral described in the Collateral section of this
Agreement. Eligible Accounts. The words 'Eligible Accounts" mean at any
time, all of Borrower's Accounts which contain selling terms and
conditions acceptable to Lender. The net amount of. any Eligible
Account against which Borrower may borrow shall exclude all returns,
discounts, credits, and offsets of any nature. Unless otherwise agreed
to by Lender in writing, eligible Accounts do not include:
(1} Accounts with respect to which the Account Debtor is employee or
agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a subsidiary
of, or affiliated with Borrower or its shareholders, officers, or
directors.
(3i Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.
(41 Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(51 Accounts which are subject to dispute, counterclaim, or setoff.
(6) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account
Debtor.
(7) Accounts with respect to which Lender, in its sole discretion,
deems the creditworthiness or financial 'condition of the Account
Debtor to be unsatisfactory.
{8} Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or
debtor-in-relief acts; or who has had appointed a trustee, custodian,
or receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or
fails generally to pay its debts including its payrolls) as such debts
become due.
(9) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States.
(10) Accounts which have not been paid in full within 60 days from due
date or 90 days from the invoice date. The entire balance of any
Account of any single Account Debtor will be ineligible whenever the
portion of the Account which has not been paid within 60 days from due
data or 90 days from the invoice date is in excess of 20.000% of the
total amount outstanding on the Account.
(11) That portion of the Accounts of any single Account Debtor which
exceeds 10.000% of all of Borrower's Accounts.
(12) Accounts with respect to which the Account Debtor is not a
resident of the United States or one of the following Canadian
Provinces: British Columbia, Alberta, Saskatchewan, Manitoba, or
Ontario, except to the extent such Accounts are supported by insurance,
bonds, or other assurances satisfactory to Lender, Accounts which
Lender in its sole discretion reasonably deems ineligible
Environmental Laws. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without [imitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 IJ,S:C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("▇▇▇▇"), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or federal laws, rules, or regulations adopted pursuant
thereto.
Event of Default. The words "Event of Default" mean any of the events of default
set forth in this Agreement in the default section of this Agreement.
Expiration Date. The words "Expiration Date" mean the date of termination of
Lender's commitment to lend under this Agreement. GAAP. The word "GAAP" means
generally accepted accounting principles. Grantor. The word "Grantor" means each
and all of the persons or entities granting a Security Interest in any
Collateral for the Loan, including without limitation ail Borrowers granting
such a Security Interest. Guarantor The word "Guarantor" means any guarantor,
surety, or accommodation party of any or all of the Loan. Guaranty. The word
"Guaranty" means the guaranty from Guarantor to Lender, including without
limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without limitation
any and all hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term "Hazardous Substances" also
includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos.
Indebtedness. The word "indebtedness" means and includes without limitation all
Loans, together with all other obligations, debts and liabilities of Borrower to
Lender, or any one or more of them, as well as all claims by Lender against
Borrower, or any one or more of them; whether now or hereafter existing,
voluntary or involuntary, due or not due, absolute or contingent, liquidated or
unliquidated; whether Borrower may be liable individually or jointly with
others; whether Borrower may be obligated as a guarantor, surety, or otherwise;
whether recovery upon such indebtedness may be or hereafter may become barred by
any statute of limitations; and whether such indebtedness may be or hereafter
may become otherwise unenforceable. Lender. The word "Lender" means ZIONS FIRST
NATIONAL BANK, its successors and assigns. Loan. The word "Loan" means any and
all loans and financial accommodations from Lender to Borrower whether now or
hereafter existing, and however evidenced, including without limitation those
loans and financial accommodations described herein or described on any exhibit
or schedule attached to this Agreement from time to time.
Note. The word "Note" means the Note executed by VIDEO INTERNET BROADCASTING
CORPORATION in the principal amount of $1,500,000.00 dated July 1, 2004,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement. Permitted
Liens. The words "Permitted Liens" mean (1) liens and security interests
securing Indebtedness owed by Borrower to Lender; (2) liens for taxes,
assessments, or similar charges either not yet due or being contested in good
faith; (3) liens of material men, mechanics, warehousemen, or carriers, or other
like liens arising in the ordinary course of business and securing obligations
which are not yet delinquent; (4} purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the date of
this Agreement or permitted to be incurred under the paragraph of this Agreement
titled "Indebtedness and liens"; 15i liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the Lender in
writing; and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the
net value of Borrower's assets. Primary Credit Facility. The words "Primary
Credit Facility" mean the credit facility described in the Line of Credit
section of this Agreement.
Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Loan.
Security Agreement. The wards "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings or
other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest,
Security Interest. The words "Security Interest" mean, without limitation, any
and all types of collateral security, present and future, whether in the form of
a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment,
pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or
title retention contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever whether created by law, contract,
or otherwise.
FINAL AGREEMENT. Borrower understands that this Agreement and the related loan
documents are the final expression of the agreement between Lender and Borrower
and may not be contradicted by evidence of any alleged oral agreement.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED} AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED JULY 1, 2004,
BORROWER: LENDER:
ZIONS FIRST NATIONAL BANK
________________________________________ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Authorized Signer
W. ▇▇▇▇▇ ▇▇▇▇, President
VIDEO INTERNET BROADCASTING CORPORA ION
Borrower: VIDEO INTERNET BROADCASTING CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ZIONS FIRST NATIONAL BANK PROVO REGION
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Principal Amount: S1,500,000.00 Initial Rate: 6.250% Date of Note: July 1, 2004
PROMISE TO PAY. VIDEO INTERNET BROADCASTING CORPORATION ("Borrower") promises to
pay to ZIONS FIRST NATIONAL BANK ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Million Five Hundred
Thousand & 001100 Dollars 01,500,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each advance until
repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on June 11, 2005. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning July 11, 2004, with all subsequent interest payments to
be due on the same day of each month after that. Unless otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid
interest: then to principal: and then to any unpaid collection costs. The annual
interest rate for this Note is computed on a 3651360 basis; that is, by applying
the ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing. VARIABLE
INTEREST RATE. The interest rate on this Note is subject to change from time to
time based on changes in an independent index which is the Prime Rate. Prime
Rate is to be strictly interpreted and is not intended to serve any purpose
other than providing an index to determine the variable interest rate used
herein. It is not the lowest rate at which Zions First National Bank may make
loans to any of its customers, either now or in the future. Prime Rate means an
index which is determined daily by the published commercial loan variable rate
index held by any two of the following banks: ▇.▇. ▇▇▇▇▇▇ Chase & Co., ▇▇▇▇▇
Fargo Bank N.A., and Bank of America N.A. In the event no two of the above banks
have the same published rate, the bank having the median rate will establish the
Prime Rate (the "Index"). The Index is not necessarily the lowest rate charged
by Lender on its loans. If the Index becomes unavailable' during the term of
this loan, Lender may designate a substitute index after notice to Borrower.
Lender will tell Borrower the current Index rate upon Borrower's request. The
interest rate change will not occur more often than each Day. Borrower
understands that Lender may make loans based on other rates as well. The Index
currently is 4.250% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 2.000 percentage points over
the Index, resulting in an initial rate of 6.250% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments of accrued unpaid interest.
Rather, early payments will reduce the principal balance due. Borrower agrees
not to send Lender payments marked "paid in full", "without recourse", or
similar language. If Borrower sends such a payment, Lender may accept it without
losing any of Lender's rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: Zions First National Bank,
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 5.000 percentage points over
the Index. The interest rate will not exceed the maximum rate permitted by
applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note: Payment Default. Borrower fails to make any payment
when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in
any of the related documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations
under this Note or any of the related documents. False Statements. Any
warranty, representation or statement made or furnished to Lender by
Borrower or on Borrower's behalf under this Note or the related
documents is false or misleading in any material respect, either now or
at the time made or furnished or becomes false or misleading at any
time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower. Creditor or Forfeiture Proceedings. Commencement of
foreclosure or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral securing
the ▇▇▇▇. This includes a garnishment of any of Borrower's accounts,
including deposit accounts, with Lender. However, this Event of Default
shall not apply if there is a good faith dispute by Borrower as to the
validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding end if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with
Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion,
as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any guaranty of the indebtedness evidenced by this
Note. In the event of a death, Lender, at its option, may, but shall
not be required to, permit the Guarantor's estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure any Event of Default.
Change In Ownership, Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower. Adverse Change. A
material adverse change occurs in Borrower's financial condition, or
Lender believes the prospect of payment or performance of this Note is
impaired. Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is
curable and if Borrower has not been given a notice of a breach of the
same provision of this Note within the preceding twelve (12) months, it
may be cured if Borrower, after receiving written notice from Lender
demanding cure of such default: f1) cures the default within fifteen
(15) days; or (2) if the cure requires more than fifteen (15) days,
immediately initiates steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount. ATTORNEYS' FEES; EXPENSES. Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Borrower will
pay Lender that amount. This includes, subject to any limits under applicable
law, Lender's reasonable attorneys' fees and Lender's legal expenses, whether or
not there is a lawsuit, including without limitation all reasonable attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), and appeals. If not prohibited by
applicable law, Borrower also will pay any court costs, in addition to all other
sums provided by law. GOVERNING LAW. This Note will be governed by, construed
and enforced in accordance with federal law and the laws of the State of Utah.
This Note has been accepted by Lender in the State of Utah. CHOICE OF VENUE. If
there is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of SALT LAKE County, State of Utah.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored. RIGHT OF SETOFF. To the extent
permitted by applicable law, Lender reserves a right of setoff in all Borrower's
accounts with Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else and all accounts
Borrower may open in the future. However, this does not include any ▇▇▇ or ▇▇▇▇▇
accounts, or any trust accounts for which setoff would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the indebtedness against any and all such accounts,
and, at Lender's option, to administratively freeze all such accounts to allow
Lender to protect Lender's charge and setoff rights provided in this paragraph.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following person currently is authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
his or her authority: W. ▇▇▇▇▇ ▇▇▇▇, President of VIDEO INTERNET BROADCASTING
CORPORATION. Borrower agrees to be liable for all sums either: (A) advanced in
accordance with the instructions of an authorized person or (BI credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (A) Borrower or any guarantor is
in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (B) Borrower or any guarantor ceases doing business or is
insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; (D) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (E) Lender in good faith
believes itself insecure.
ARBITRATION DISCLOSURES.
1. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY
LIMITED REVIEW BY A COURT.
2. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT,
INCLUDING THEIR RIGHT TO A JURY TRIAL.
3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.
4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING
IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK MODIFICATION OF ARBITRATORS'
RULINGS IS VERY LIMITED.
5. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED
WITH THE BANKING INDUSTRY.
6. ARBITRATION WILL APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT ▇▇.▇▇ THOSE
CONCERNING THE AGREEMENT.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE
AMERICAN ARBITRATION ASSOCIATION. la) Any claim or controversy ("Dispute")
between or among the parties and their employees, agents, affiliates, and
assigns, including, but not limited to, Disputes arising out of or relating to
this agreement, this arbitration provision ("arbitration clause'), or any
related agreements or instruments relating hereto or delivered in connection
herewith ("Related Agreements"), and including, but not limited to, a Dispute
based on or arising from an alleged tort, shall at the request of any party be
resolved by binding arbitration in accordance with the applicable arbitration
rules of the American Arbitration Association (the 'Administrator"). The
provisions of this arbitration clause shall survive any termination, amendment,
or expiration of this agreement or Related Agreements. The provisions of this
arbitration clause shall supersede any prior arbitration agreement between or
among the parties. (b) The arbitration proceedings shall be conducted in a city
mutually agreed by the parties. Absent such an agreement, arbitration will be
conducted in Salt Lake City, Utah or such other place as may be determined by
the Administrator. The Administrator and the arbitrator{s) shall have the
authority to the extent practicable to take any action to require the
arbitration proceeding to be completed and the arbitrator(s)' award issued
within 150 days of the filing of the Dispute with the Administrator. The
arbitrator(s) shall have the authority to impose sanctions on any party that
fails to comply with time periods imposed by the Administrator or the
arbitrator(s), including the sanction of summarily dismissing any Dispute or
defense with prejudice. The arbitrator(s) shall have the authority to resolve
any Dispute regarding the terms of this agreement, this arbitration clause, or
Related Agreements, including any claim or controversy regarding the
arbitrability of any Dispute. All limitations periods applicable to any Dispute
or defense, whether by statute or agreement, shall apply to any arbitration
proceeding hereunder and the arbitrator(s) shall have the authority to decide
whether any Dispute or defense is barred by a limitations period and, if so, to
summarily enter an award dismissing any Dispute or defense on that basis. The
doctrines of compulsory counterclaim, res judicata, and collateral estoppel
shall apply to any arbitration proceeding hereunder so that a party must state
as a counterclaim in the arbitration proceeding any claim or controversy which
arises out of the transaction or occurrence that is the subject matter of the
Dispute. The arbitrator(s) may in the arbitrator(s)' discretion and at the
request of any party: (1) consolidate in a single arbitration proceeding any
other claim arising out of the same transaction involving another party to that
transaction that is bound by an arbitration clause with Lender, such as
borrowers, guarantors, sureties, and owners of collateral; and (2) consolidate
or administer multiple arbitration claims or controversies as a class action in
accordance with Rule 23 of the Federal Rules of Civil Procedure.
(C) The arbitrator(s) shall be selected in accordance with the rules
of the Administrator from panels maintained by the Administrator. A
single arbitrator shall have expertise in the subject matter of the
Dispute. Where three arbitrators conduct an arbitration proceeding,
the Dispute shall be decided by a majority vote of the three
arbitrators, at least one of whom must have expertise in the subject
matter of the Dispute and at least one of whom must be a practicing
attorney. The arbitrators) shall award to the prevailing party
recovery of all costs and fees {including attorneys' fees and costs,
arbitration administration fees and costs, and arbitrator(s)' fees).
The arbitrator{s), either during the pendency of the arbitration
proceeding or as part of the arbitration award, also may grant
provisional or ancillary remedies including but not limited to an
award of injunctive relief, foreclosure, sequestration, attachment,
replevin, garnishment, or the appointment of a receiver. (d) Judgment
upon an arbitration award may be entered in any court having
jurisdiction, subject to the following limitation: the arbitration
award is binding upon the parties only if the amount does not exceed
Four Million Dollars ($4,000,000.00); if the award exceeds that limit,
either party may demand the right to a court trial. Such a demand must
be filed with the Administrator within thirty (30) days following the
date of the arbitration award; if such a demand is not made with that
time period, the amount of the arbitration award shall be binding. The
computation of the total amount of an arbitration award shall include
amounts awarded for attorneys' fees and costs, arbitration
administration fees and costs, and arbitrator(s)' fees.
(a) No provision of this arbitration clause, nor the exercise of any
rights hereunder, shall limit the right of any party to: (1)
judicially or non-judicially foreclose against any real or personal
property collateral or other security; (2) exercise self-help
remedies, including but not limited to repossession and setoff rights;
or (3) obtain from a court having jurisdiction thereover any
provisional or ancillary remedies including but not limited to
injunctive relief, foreclosure, sequestration, attachment, replevin,
garnishment, or the appointment of a receiver. Such rights can be
exercised at any time, before or after initiation of an arbitration
proceeding, except to the extent such action is contrary to the
arbitration award. The exercise of such rights shall not constitute a
waiver of the right to submit any Dispute to arbitration, and any
claim or controversy related to the exercise of such rights shall be a
Dispute to be resolved under the provisions of this arbitration
clause. Any party may initiate arbitration with the Administrator. If
any party desires to arbitrate a Dispute asserted against such party
in a complaint, counterclaim, cross-claim, or third-party complaint
thereto, or in an answer or other reply to any such pleading, such
party must make an appropriate motion to the trial court seeking to
compel arbitration, which motion must be filed with the court within
45 days of service of the pleading, or amendment thereto, setting
forth such Dispute. If arbitration is compelled after commencement of
litigation of a Dispute, the party obtaining an order compelling
arbitration shall commence arbitration and pay the Administrator's
filing fees and costs within 45 days of entry of such order. Failure
to do so shall constitute an agreement to proceed with litigation and
waiver of the right to arbitrate. In any arbitration commenced by a
consumer regarding a consumer Dispute, Lender shall pay one half of
the Administrator's filing fee, up to $250. (f) Notwithstanding the
applicability of any other law to this agreement, the arbitration
clause, or Related Agreements between or among the parties, the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq., shall apply to
the construction and interpretation of this arbitration clause. If any
provision of this arbitration clause should be determined to be
unenforceable, all other provisions of this arbitration clause shall
remain in full force and effect.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
PROMISSORY NOTE.
BORROWER:
VIDEO INTERN BROADCASTING CORPORATION
By: /s/W.KellyRyan
-----------------------
W. ▇▇▇▇▇ ▇▇▇▇,
President of VIDEO
INTERNET BROADCASTING CORPORATION