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EXHIBIT 99.5
SECURITY AGREEMENT
XXXXXX GROUP, LLC (hereinafter called "Debtor"), whose address is 0000
X. Xxxxxxxx, Xxxxx X, Xxxxxxx, Xxxxx 00000, for value received and intending to
be legally bound, hereby grants to XXXXX X. XXXXX (hereinafter called "Secured
Party"), whose address is 00000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx, 00000, a
security interest in the following property:
All of Debtor's right, title and interest in certain Common
Stock, Warrants, and Options of Equlanet Communications Corp,(OTC
BB:ENET.OB) in the quantity of 3,900,000 shares, and 170,000 @ 1.00
Warrants and Options assigned to Debtor on the date hereof, as well as
all proceeds or payments 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. Specific
securities are identified on Schedule A attached hereto.
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 under a certain Promissory
Note of even date in the original principal amount of $250,000.00, executed by
Debtor and payable to Secured Party and all 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.
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Except where the context otherwise requires, words importing the
singular number shall include the plural number and vice versa. Debtor hereby
represents, warrants and agrees that:
1. (a) Debtor is the sole owner and holder of the Collateral free and
clear of all liens and security interests; (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 or acquired for use primarily for
business purposes.
2. (a) The Collateral will be kept at Debtor's place of business listed
in section 3 of this agreement; Debtor will give Secured Party at least 30 days
prior written notice of any change in the location of the Collateral within the
State of Texas; and (b) Debtor will not remove the Collateral from the State of
Texas without the prior written consent of Secured Party.
3. The principal place of business and chief executive office of Debtor
is the address for Debtor shown in the preamble of this agreement. Debtor will
immediately notify Secured Party in writing of any change in Debtor's place of
business or chief executive office, and of any additional place of business.
4. Debtor will defend the Collateral against any claims and demands of
all persons at any time claiming the same or any interest therein.
5. 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
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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 foregoing, 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, 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.
6. 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, 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.
7. (a) Debtor will insure the Collateral with companies acceptable to
the Secured Party against such casualties and in such amounts as the Secured
Party shall reasonably require, with a loss payable clause in favor of the
Debtor and Secured Party, as their interests may appear, and the Secured Party
is hereby authorized to collect sums which may become due under any of said
policies and apply the same to the obligations hereby secured.
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(b) Debtor will at all times keep the Collateral in good order and
repair and will not waste or destroy the Collateral or any part thereof.
8. 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 reasonable 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.
9. 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.
10. Secured Party may at its option, but without any obligation to do
so, pay for the account of Debtor, any taxes, liens or security interests 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 the 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
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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 be a part of the Obligations hereby
secured and recoverable in all respects.
11. 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.
12. Until default, Debtor may have possession of the Collateral and use
it in any lawful manner except that Debtor will apply any proceeds or payments
received with respect to the Collateral to the Obligations immediately upon
receipt thereof.
13. The happening of any one or more default under the Obligations shall
constitute a default under this agreement.
14. 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 Texas from time to time (the "UCC")
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 costs and expenses, including legal expenses and attorneys'
fees as specified in any 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
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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 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, but Secured Party shall have the
right to apply all or any part of such 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.
15. 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 and, in this
connection, TO THE EXTENT NOT PROHIBITED BY LAW, DEBTOR EXPRESSLY WAIVES ANY
CONSTITUTIONAL RIGHTS OF DEBTOR WITH REGARD TO NOTICE OR ANY JUDICIAL PROCESS OR
HEARING PRIOR TO THE EXERCISE OF THE RIGHTS OF SECURED PARTY TO TAKE POSSESSION
OR CONTROL OF THE COLLATERAL UPON THE HAPPENING OF ANY OF THE EVENTS OR
CONDITIONS CONSTITUTING A DEFAULT.
16. 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
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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 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 any 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 its successors and assigns.
Debtor waives all rights to the marshalling of its assets including, without
limitation, the Collateral.
17. All recitals in any 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.
18. 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 will promptly advise Secured Party
thereof, and Debtor will 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,
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at any time or times, included in the Collateral, whether as proceeds or
otherwise, Debtor will promptly deliver the same to Secured Party without demand
therefor by Secured Party.
19. This agreement has been delivered in the State of Texas and shall be
construed in accordance with the laws of such State, 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 Texas 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. TO THE EXTENT
LAWFUL, ANY LITIGATION ARISING HEREUNDER OR RELATED HERETO OR TO THE NOTE
EXECUTED IN CONNECTION HEREWITH SHALL BE TRIED BY THE STATE COURTS FOR THE
COUNTY OR THE FEDERAL COURT OF THE UNITED STATES FEDERAL DISTRICT WHERE THE
PRINCIPAL OFFICE OF SECURED PARTY IS LOCATED, WHICHEVER IS APPLICABLE, AND
DEBTOR HEREBY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS
AND WAIVES ALL OBJECTIONS TO VENUE THEREIN.
20. 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 loan evidenced by the note executed
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in connection herewith, or to collect the note executed herewith, or to enforce
the rights of Secured Party under this agreement, or any of the other documents
securing or pertaining to the loan evidenced by the note executed in connection
herewith (whether or not any legal or other proceeding is instituted), which
amounts will include all 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.
21. 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 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.
22. All rights to marshalling of assets of Debtor, including any such
right with respect to the Collateral, are hereby waived by Debtor.
23. 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 this 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
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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 as above provided or necessitate the
sale or disposition thereof in parcels or in severalty.
24. 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 proceeds of the loan will be disbursed in,
Houston, Texas.
IN WITNESS WHEREOF, this agreement is executed the 15th day of December,
1999.
/s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx, President
XXXXXX GROUP, LLC
