EX-10.4
Schedule 3
SECURITY AGREEMENT
Dated March 31, 2003
Mesa, Maricopa County, Arizona
Telecommunication Products, Inc., a Colorado corporation, (hereinafter
called "Debtor"), whose address is 0000 Xxxxxxxx Xxxx., Xxxxx X, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, for value received and intending to be legally bound, hereby
grants to Coast Communications, Inc., a Nevada corporation, (hereinafter called
"Secured Party"), whose address is c/o Johnson, Rasmussen, Xxxxxxxx & Xxxxx,
P.L.C., 00 Xxxxx Xxxxxxxxx, Xxxx, Xxxxxxx 00000, a security interest in the
following property:
1. Any and all of Debtor's rights, title, benefits, and interests now owned or
hereafter acquired in Hotel Movie Network (hereinafter called "HMN"), including
HMN's accounts receivable; and
2. Any and all of HMN's rights, title, benefits, and interests now owned or
hereafter acquired in any and all of HMN's capital equipment; and
3. Any and all other personal assets of HMN;
4. Together with any and all proceeds received should any of the foregoing be
sold, exchanged, collected or otherwise disposed of (all of which is hereafter
called the "Collateral"); provided, however, no provisions herein shall be
construed as or deemed authority for Debtor to sell, exchange or otherwise
dispose of the Collateral or any portion thereof without the express prior
written consent of Secured Party, which consent shall not be unreasonably
withheld. The security interest granted hereby to Secured Party secures the
payment of all indebtedness, liabilities and obligations of Debtor to Secured
Party (hereinafter collectively called the "Obligations"), whether joint or
several, direct or indirect, absolute or contingent due or to become due, now
existing or hereafter arising, and all renewals, extensions and rearrangements
of the Obligations, and any of the same, including, without limitation, the
Promissory Note of even date herewith (hereinafter the "Promissory Note"),
together with any and all extensions and rearrangements, amendments,
supplements, modifications and renewals of the foregoing, and including all
reasonable costs and expenses and attorneys' fees and legal expenses payable by
Secured Party in connection herewith or therewith, and also secures the
performance by Debtor of the agreements hereinafter set forth.
5. Debtor hereby represents, warrants and agrees that:
6. (a) Debtor is the sole owner and holder of the Collateral free and clear of
all liens and security interests except the security interest granted hereby;
(b) Debtor has the authority to enter into and perform this agreement and to
grant the security interests created hereby; and (c) the Collateral is being
used for use primarily for business purposes.
7. (a) To the extent possible, the Collateral will be kept at HMN's place of
business listed in Section 3 of this agreement; Debtor will give Secured Party
at least thirty (30) days prior written notice of any change in the location of
the Collateral within or without the States of the United States & territories;
and (b) Debtor will not remove the Collateral from the States of the United
States & territories without the prior written consent of Secured Party.
8. The chief executive office of HMN is Xxxx X.X. XxXxxxx.
9. Debtor will defend the Collateral against any claims and demands of all
Persons at any time claiming the same or any interest therein.
10. Except for those in favor of Secured Party, no financing statement or
security agreement covering any Collateral or any proceeds thereof is currently
or will be on file in any public office. Debtor hereby authorizes Secured Party
to file, in jurisdictions where this authorization will be given effect, a
financing statement signed only by Secured Party describing the Collateral in
the same manner as it is described herein; and from time to time, at the request
of Secured Party, Debtor will execute one or more financing statements and such
other documents (and pay the cost of filing or recording the same in all public
offices deemed necessary or desirable by Secured Party) and do such other acts
and things, all as Secured Party may request, to establish and maintain a valid
security interest in the Collateral (free of all other liens and claims
whatsoever except as otherwise provided herein) to secure the payment of the
Obligations. In connection with the forgoing, it is agreed and understood
between the parties hereto (and Secured Party is hereby authorized to carry out
and implement the following agreements and understandings and Debtor hereby
agrees to pay the costs thereof) that Secured Party may, at any time or times,
file as a financing statement any counterpart, copy or reproduction of this
agreement signed by Debtor if Secured Party shall elect so to file, and it is
also agreed and understood that Secured Party may, if deemed necessary or
desirable, file (or sign and file) as a financing statement any carbon copy of,
or photographic or other reproduction of, this agreement or of any financing
statement executed in connection with this agreement.
11. Debtor will not (a) permit any liens, encumbrances or security interests
(other than Secured Party's liens) to attach to any of the Collateral; (b)
permit any of the Collateral to be levied upon under any legal process; (c)
sell, transfer, lease or otherwise dispose of any of the Collateral or any
interest therein (other than in the ordinary course of business), or offer to do
so, without the prior express written consent of Secured Party; and (d) permit
anything to be done that may impair the value of any of the Collateral or the
security intended to be afforded thereby or hereby.
12. Debtor will not use the Collateral or permit the Collateral to be used in
violation of any statute, ordinance or other law which could result in a
material adverse effect upon its business or financial condition or which could
result in loss or forfeiture of the Collateral or which could result in loss or
impairment of (or priority with respect to) Secured Party's interest in the
Collateral; and Debtor will permit Secured Party and its agents, representatives
and employees to examine the Collateral at all times, and for such purpose,
Secured Party may enter upon or into any premises where the Collateral may be
located without being guilty of a trespass. Debtor will furnish to Secured Party
upon request all pertinent information regarding the Collateral.
13. Debtor will protect the title and possession of the Collateral and will, at
Debtor's own cost and expense, promptly pay when due all taxes, assessments,
maintenance charges and other impositions of every kind and character charged,
levied, assessed or imposed against the Collateral or real property, if any, to
which the Collateral may be affixed or any part thereof, as the same become
payable and before they become delinquent, and upon request of Secured Party
shall furnish due proof of such payment to Secured Party promptly after payment.
14. Secured Party may at its option, but without any obligation to do so, pay,
for the account of Debtor, any taxes, liens or security interest or other
encumbrances at any time levied or placed on the Collateral, pay for the
maintenance and preservation of the Collateral, prosecute or defend any suits in
relation to security interests arising pursuant to this agreement and insure and
keep insured the Collateral in an amount not to exceed the Obligations
hereunder. Any such amounts which may be so paid out by Secured Party and all
sums paid for insurance premiums, as aforesaid, including, without limitation,
the costs, expenses and attorneys' fees paid in any suit affecting the
Collateral when necessary to protect the security interest hereof shall bear
interest from the date of such payments at the rate stated as the default rate
in the Promissory Note and shall be paid by Debtor to Secured party upon demand
at such place as Secured Party may designate and shall be a part of the
Obligations hereby secured and recoverable in all respects.
15. Debtor will pay promptly when due all taxes and assessments upon the
Collateral, its use or operation, upon this agreement and upon any note or notes
or other writing evidencing the Obligations, or any of them, including
documentary or other taxes.
16. Until default, Debtor may have possession of the Collateral and use it in
any lawful manner not inconsistent with this agreement or the Promissory Note
and not inconsistent with any policy of insurance thereon.
17. The happening of any one or more "Event of Default" set forth in Section 3
of the Promissory Note shall constitute a default under this agreement.
18. Upon the occurrence of any default specified in this agreement, Secured
Party may, in addition to any other rights and remedies which it may have,
immediately and without demand, exercise any or all of the rights and remedies
granted to a secured party upon default under the Uniform Commercial Code as
adopted and amended in the State of Arizona from time to time (the "UCC") and
under the Promissory Note or any other writing evidencing any of the Obligations
secured hereby; and upon the request or demand of Secured Party, Debtor shall,
at Debtor's expense, assemble the Collateral and make it available to Secured
Party at a convenient place acceptable to Secured Party; and Debtor shall
promptly pay to Secured Party any and all reasonable costs and expenses,
including legal expenses and attorneys' fees (as specified in the Promissory
Note or any other evidence of the Obligations held by Secured Party, but in any
event, which shall include attorneys' fees of the suit, out of court, in trial,
on appeal, or in bankruptcy proceedings), incurred or paid by Secured Party in
protecting and enforcing the rights of Secured Party hereunder, including
Secured Party's right to take possession of the Collateral and to hold, prepare
for sale, sell and dispose of such Collateral. Any notice of sale, disposition
or other intended action by Secured Party sent to Debtor at the address
specified in the preamble of this agreement, or to such other address of Debtor
as may from time to time be shown on Secured Party's records, at least ten (10)
days prior to such action, shall constitute reasonable notice to Debtor. Upon
disposition by Secured Party of any property in which Secured Party has a
security interest hereunder, Debtor shall be and remain liable for any
deficiency; and Secured Party shall account to Debtor for any surplus to (or to
hold the same as a reserve against) all or any of the Obligations of Debtor to
Secured Party, whether or not they or any of them be then due, and in such order
of application as Secured Party may from time to time elect.
19. The right of Secured Party to take possession or control of the Collateral
upon the happening of any of the events or conditions constituting a default may
be exercised without resort to any court proceeding or judicial process whatever
and without any hearing whatever thereon.
20. No waiver by Secured Party of any default shall operate as a waiver of any
other default or of the same default on a future occasion. No delay or omission
on the part of Secured Party in exercising any right or remedy shall operate as
a waiver thereof, and no single or partial exercise by Secured Party of any
right or remedy shall preclude or affect any other or further exercise thereof
or the exercise of any other right or remedy. The provisions of this agreement
are cumulative to the provisions of the Promissory Note and any other writing
evidencing or pertaining to any of the Obligations secured by this agreement,
and Secured Party shall have all the benefits, rights and remedies of and under
the Promissory Note and any other writing evidencing any of the Obligations
secured hereby. The singular pronoun, when used herein, shall include the
singular and plural, as applicable, and the use of any gender shall include all
genders. All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all obligations of Debtor shall bind Debtor's
successors and assigns. Debtor waives all rights to the marshaling of Debtor's
assets including, without limitation, the Collateral.
21. All recitals in any instrument or assignment or any other instrument
executed by Secured Party incident to the sale, transfer, assignment, lease or
other disposition or utilization of the Collateral or any part thereof hereunder
shall be full proof of the matters stated therein and no other proof shall be
requisite to establish full legal propriety of the sale or other action taken by
Secured Party or of any fact, condition or thing incident thereto and all
prerequisites of such sale or other action or any fact, condition or thing
incident thereto shall be presumed conclusively to have been performed or to
have occurred.
22. If any certificate of title or similar document is, at any time and pursuant
to the laws of any jurisdiction, issued or outstanding with respect to the
Collateral or any part thereof, Debtor shall promptly cause the interest of
Secured Party to be properly noted thereon; and Debtor will further promptly
deliver to Secured Party any such certificate of title or similar document
issued or outstanding at any time with respect to such Collateral. If any
instruments, chattel paper, money or monies, or documents are, at any time or
times included in Collateral, whether as proceeds or otherwise, Debtor will
promptly deliver the same to Secured Party upon demand there for by Secured
Party.
23. This agreement shall be construed in accordance with the laws of the State
of Arizona, including the UCC and applicable federal law; provided, however,
that if additional rights or remedies are hereafter granted to secured parties
by the laws of the State of Arizona or by applicable federal law, Secured Party
shall also have and may exercise any such rights or remedies. Wherever possible,
each provision of this agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this agreement
shall be prohibited by, or invalid under, applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
agreement. To the extent permitted by applicable law, Debtor hereby waives any
provision of law that renders any provision hereof prohibited or unenforceable
in any respect.
24. Debtor will pay all out-of-pocket fees (including, but not limited to, legal
fees and attorneys' fees) incurred by Secured Party in connection with the
preparation of this agreement, the Promissory Note and other documents securing
or pertaining to the Promissory Note. Debtor will promptly reimburse Secured
Party for all amounts expended, advanced or incurred by Secured Party to satisfy
any obligation of Debtor under this agreement or any of the other documents
securing or pertaining to the Promissory Note, to enforce the rights of Secured
Party under this agreement, or any of the other documents securing or pertaining
to the Promissory Note (whether or not any legal or other proceeding is
instituted), which amounts will include all reasonable court costs, attorneys'
fees, fees of auditors and accountants, and investigation expenses reasonably
incurred by Secured Party to third parties in connection with any such matters.
25. Debtor represents and warrants to Secured Party that the value of the
consideration received and to be received, directly or indirectly, by Debtor as
a result of the credit or other financial accommodations granted and extended by
Secured Party to Debtor, including, without limitation, the benefits derived by
Debtor under the Promissory Note, is fair consideration to Debtor and reasonably
worth at least as much as the Obligations, and that the financial accommodations
granted and extended by Secured Party have benefitted and may reasonably be
expected to benefit Debtor, directly or indirectly.
26. All right to marshaling of assets of Debtor, including any such right with
respect to the Collateral, are hereby waived by Debtor.
27. The execution and delivery of this agreement in no manner shall impair or
affect any other security (by endorsement or otherwise) for the payment of the
Obligations and no security taken hereafter as security for payment of any part
or all of the Obligations shall impair in any manner or affect the agreement,
all such present and future additional security to be considered as cumulative
security. Any of the Collateral may be released from this agreement without
altering, varying or diminishing in any way the force, effect, lien, security
interest or charge of this agreement as to the Collateral not expressly
released, and this agreement shall continue as a first lien security interest
and charge on all of the Collateral not expressly released until all sums and
indebtedness secured hereby have been paid in full. Any future assignment or
attempted assignment or transfer of the interest of Debtor in and to any of the
Collateral shall not deprive Secured Party of the right to sell or otherwise
dispose of or utilize all of the Collateral shall not deprive Secured Party of
the right to sell or otherwise dispose of or utilize all of the Collateral as
above provided or necessitate the sale or disposition thereof in parcels or in
severalty.
28. This agreement may be executed in one or more counterparts, each of which
shall constitute an original, but when taken together shall constitute but one
and the same agreement. This agreement has been substantially negotiated in,
delivered and accepted at, and the financial benefits extended by Secured Party
to Debtor occurred in, Maricopa County, Arizona.
29. IN WITNESS WHEREOF, this agreement has been duly executed as of the date
hereinabove first written. "Debtor"
Telecommunication Products, Inc.
By_________________________
Xxxxxx X. Xxxxxxx
Its: President
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA)
Subscribed, sworn to and acknowledged before me by _______________________,
_______________ of Telecommunication Products, Inc., this _____ day of
_______________, 2003.
-------------------------------
Notary Public
My Commission expires: _______________
