SECURITY AGREEMENT
FOR
VALUE RECEIVED,
IELEMENT CORPORATION, a Nevada Corporation referred to as "Debtor”, assigns and
grants to XXXXXXX XXXXXXXXXX, and its successors and assigns, referred to here
as "Secured Party", a security interest in all of the following
property:
A.All
accounts, contract rights, instruments, chattel paper, general intangibles,
goods, and inventory owned by Debtor, at the date of this Agreement;
B.All
accounts, contract rights, instruments, chattel paper, general intangibles,
goods, and inventory with respect to Debtor at any time subsequently acquired
by
Debtor or which come into existence at any time in the future;
C.All
proceeds of all such accounts, contract rights, instruments, chattel paper,
general intangibles, goods, and inventory;
D.The
equipment, tools, improvements, fixtures, furniture, supplies or other property
of Debtor some of which is listed on the attachments hereto, and all other
goods
and property of the same classes subsequently acquired or owned by Debtor;
Together
with all attachments, parts, proceeds, products, replacements and accessions
of
that property, all of which is referred to here as the "Collateral" to secure
the payment of that certain indebtedness evidenced by the Secured Promissory
Notes executed by US Wireless Online, Inc. in the amount of $150,000.00 and
$141,178.74 dated the same date as this Agreement, referred to here as the
"Promissory Note" and any and all extensions or renewals and any and all other
liabilities or obligations of Debtors to Secured Party now existing or
subsequently arising, including amounts owed by US Wireless Online, Inc. to
Commonwealth ($9,375.00), XXXX ($34,095.65) and various equipment leases
totaling $16,480.19, all of which are referred to here as the
"Obligations".
Debtor
warrants, represents, covenants and agrees that:
1.DEFINITIONS.
As used
here, the following words shall have their usual meaning under the Texas Uniform
Commercial Code clarified as follows:
a.
"Account" means a right to payment for goods sold and for goods leased and
for
services rendered, or any of them, and includes a right to payment which has
been earned under a contract right and includes all accounts
receivable;
b.
"Contract Right" means a right to payment under a Contract not yet earned by
performance;
c.
"Instrument" means a negotiable instrument or other writing which evidences
a
right to payment of money;
d.
"Chattel Paper" means a writing which evidences both a monetary obligation
and a
security interest in or lease of specific goods;
e.
"General Intangible" means any personal property other than goods, accounts,
chattel paper, documents, instruments, and money, and specifically includes
but
is not limited to goodwill, trade names, copyrights, patents, tax refunds,
utility and other deposit accounts;
f.
"Inventory" means goods held for sale or being processed or furnished for sale
in Debtors’ businesses, as now or hereafter conducted and other tangible
property owned or hereafter acquired and held to be furnished under contracts
for service or used or consumed in Debtor’s businesses;
g.
"Goods" means all articles of tangible personal property, sold, supplied, or
otherwise disposed of; and,
h.
"Purchaser" includes the Buyer of goods from Debtors, the customer for whom
services have been rendered or materials furnished by Debtors, or the party
with
whom Debtor has contracted.
2.LOCATION.
The
Collateral will be kept at its present locations. Debtor will not change the
location of the collateral without Secured Party's prior written
consent.
3.DEBTORS’
DUTIES.
Debtors
shall,
a.
Collect its accounts and sell its inventory only in the ordinary course of
business;
b.
Keep,
in accordance with generally accepted accounting principals consistently
applied, accurate and complete records of its accounts, contract rights,
inventory, assets and liabilities;
c.
Pay
and discharge when due all taxes, assessments, levies and other charges on
the
Collateral or for its use or operation or on this Agreement or on any note
or
notes evidencing the obligations;
d.
Give
Secured Party financial statements, reports, certificates, lists and other
data
concerning the accounts, contract rights, inventory, equipment and business
of
Debtors as Secured Party may from time to time request;
e.
Permit
Secured Party or its representative to examine Debtors’ books and records at any
time and to inspect and check the Collateral at any time;
f.
Except
for already disclosed encumbrances, at all times keep the Collateral free from
any further adverse lien, security interest or encumbrance;
g.
Except
upon written consent of Secured Party, not make or agree to any alteration,
modification or cancellation of or credits, allowances or adjustments to any
account, contract right or chattel paper which is part of the
Collateral.
4.DEBTORS’
WARRANTIES, REPRESENTATIONS AND COVENANTS.
Debtor
warrants, represents and covenants to Secured Party that:
a.
The
Collateral is used for business purposes;
b.
Except
for the security interest granted here and except for those encumbrances already
disclosed, Debtors are the owner of the Collateral free from any adverse lien,
security interest or encumbrance;
c.
Debtors will defend the Collateral against all claims and demands of all persons
at any time claiming any interest in the Collateral;
d.
Debtors will not sell, transfer, lease or otherwise dispose or offer to dispose
of any of the Collateral or any interest in the Collateral without the prior
written consent of Secured Party, except that until the occurrence of an event
of default Debtors may sell inventory in the ordinary course of Debtors’
business, the proceeds of which sale shall be Collateral under this Security
Agreement;
e.
Debtors will not encumber, lien or grant a further security interest in the
Collateral to anyone other than Secured Party without the prior written consent
of Secured Party;
f.
Debtors will not waste or destroy the Collateral or any part of the
Collateral;
g.
Debtors will not use the Collateral in violation of any statute, law or
ordinance;
h.
Debtors will at all times maintain the Collateral in good condition, repair
and
appearance;
i.
Each
account, contract right and chattel paper which is part of the Collateral is
genuine and enforceable in accordance with its terms against the party obligated
to pay the same (the "Account Debtor"); and,
j.
Debtors knows of no Account Debtor that has any defense, set-off, claim or
counter-claim against Debtor which can be asserted against Secured
Party.
0.XXXXXXXXX.
Debtors
will, at all times, keep the Collateral insured against loss, damage, theft
and
any other risk as Secured Party may require in the amounts (but not less than
the full insurable value) in Companies and under the policies and in the form,
and for the period, as shall be satisfactory to Secured Party. Each insurance
policy shall provide that loss under the policy and proceeds payable under
the
policy shall be payable to Secured Party as its interest may appear (and Secured
Party may apply any proceeds of the insurance which may be received by Secured
Party toward payment of the obligations, whether or not due in the order of
application as Secured Party may determine). Each insurance policy shall provide
20 days written minimum cancellation notice to Secured Party. Each insurance
policy shall, if Secured Party so requests, be deposited with Secured Party.
Secured Party may act as attorney-in-fact for Debtor in obtaining, settling,
and
canceling the insurance and endorsing any drafts.
6.SECURED
PARTY MAY PERFORM; POSSESION.
At its
option, Secured Party may discharge taxes, liens, security interest and other
encumbrances at any time levied or placed on the Collateral, may pay for
insurance on the Collateral, and may pay for the maintenance and preservation
of
the Collateral, if Debtors fails to do so timely. Debtors agree to reimburse
Secured Party on demand for any payment made, or any expense incurred, by
Secured Party, pursuant to the above authorization. Until default, Debtors
may
have possession of the Collateral and use it in any lawful matter not
inconsistent with this Agreement and not inconsistent with any policy of
insurance on the Collateral. This authorization does not create any duty on
behalf of Secured Party to make any payment or perform any acts as described
in
this paragraph.
7.RIGHT
TO INSPECT.
The
Secured Party and its representatives shall have the right at reasonable times
to enter on the Debtors’ business premises and any premises where the Collateral
is located for the purpose of inspecting the Collateral and after default for
the purpose of taking possession of the Collateral.
8.DEFAULT.
Debtors
shall be in default under this Agreement on the happening of any of the
following events or conditions:
a.
Failure or omission to pay when due any obligation (or any installment of or
interest on an obligation), or default in the payment or performance of any
obligation, covenant, agreement, or other liability contained or referred to
in
this Agreement;
b.
Any
warranty, representation or statement made or furnished to Secured Party by
or
on behalf of Debtors proves to have been false or misleading in any material
respect when made or furnished;
c.
Loss,
theft, substantial damage, destruction, sale or encumbrance to or of any of
the
Collateral, or the making of any levy, seizure or attachment of or on the
Collateral;
d.
If
Debtors becomes insolvent or unable to pay debts as they mature or make an
assignment for the benefit of creditors, or any proceeding is instituted by
or
against Debtors alleging that the Debtors are or a Debtor is insolvent or unable
to pay debts as they mature or Debtor makes any preferential payment or
fraudulent transfer pursuant to Texas law, the US Bankruptcy Code, or other
applicable law, or a receiver, liquidator or trustee of Debtor or any of
Debtor's property is appointed, or any petition for the bankruptcy,
reorganization or arrangement of the Debtor, pursuant to the US Bankruptcy
Code
or any similar statute, is filed, or Debtor is adjudicated bankrupt or
insolvent;
e.
Entry
of any judgment against Debtor;
f.
The
attempted assumption of this Security Agreement by anyone without the prior
written consent of Secured Party.
9.EFFECT
OF DEFAULT.
On the
occurrence of any default or at any time after default, Secured Party may,
at
its option, declare all obligations secured or any of them (not withstanding
any
provisions of the obligations) to be immediately due and payable without demand
or notice of any kind, and the same shall immediately become and be due and
payable without demand or notice; and Secured Party shall have and may exercise
from time to time all rights and remedies of a Secured Party under the Texas
Uniform Commercial Code and all rights and remedies available to it under any
other applicable loss; and on request or demand of Secured Party, Debtor shall,
at its expense, assemble the Collateral and make it available to the Secured
Party at a convenient place acceptable to Secured Party; and Debtor shall
promptly pay all costs of Secured Party of collection of any and all the
obligations and enforcement of rights under this Security Agreement, including,
but not limited to, reasonable attorney's fees and legal expenses and expenses
of any repairs to any of the Collateral and expenses of any repairs to any
realty or the property to which any of the Collateral may be affixed or be
a
part. Unless the Collateral is perishable or threatens to decline speedily
in
value or is of a type customarily sold on a recognized market, Secured Party
will give Debtor reasonable notice of the time and place of any public sale
of
the Collateral or of the time after which any private sale or any other intended
disposition of the Collateral is to be made. The requirements of reasonable
notice shall be met if the notice is mailed, postage pre-paid, to the Debtor
at
the address of Debtor shown at the beginning of this Agreement at least five
days before the time of the sale or disposition. Expenses of retaking, holding,
preparing for sale, selling, or the like shall include Secured Party's
reasonable attorney's fees and legal expenses. On disposition of any Collateral
after the occurrence of any default under this Agreement, 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
the surplus (or to hold the same as a reserve) against all or any of the
obligations, whether or not they, or any of them, be then due, and in the order
of application as Secured Party may from time to time elect. Nothing herein,
shall be construed to require Secured Party to sell or dispose of Collateral
and
Secured Party may elect to retain all or some of the Collateral for its own
use
giving credit to Debtor for the fair market value thereof.
10.MISCELLANEOUS.
Time is
of the essence of this Agreement. No waiver by Secured Party of any default
shall operate as a waiver of any other default or of the same default of a
future occasion. No delay or omission on the part of Secured Party in exercising
any right or remedy shall operate as a waiver of that right or remedy, and
no
single or partial exercise by Secured Party of any right or remedy shall
preclude any other or further exercise of that right or remedy or the exercise
of any other right or remedy. The provisions of this Agreement are cumulative
and in addition to the provisions of any note secured by this Agreement, and
Secured Party shall have all the benefits, rights and remedies of and under
any
note secured by this Agreement. This Agreement shall become effective as of
the
date of this Agreement. All rights of Secured Party hereunder shall inure to
the
benefit of its successors and assign; and all obligations of Debtor shall bind
the successors and assigns of Debtor. Any reference to “Debtor” or “Debtors”
shall mean the singular and the plural and each and both of them individually
and together.
00.XXXXXXXXXXXX.
This
Agreement has been delivered in the State of Texas and shall be construed in
the
accordance with the laws of Texas. Whenever possible, each provision of this
Agreement shall be interpreted in a manner a to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or
invalid under applicable law, that provision shall be ineffective to the extent
of the prohibition or invalidity, without invalidating the remainder of the
provision or the remaining provisions of this Agreement. This Agreement shall
not be construed for or against either party by reason of being responsible
for
its drafting.
12.CONTINUING
AGREEMENT.
This
Security Agreement is a continuing Agreement which shall remain in force until
the Promissory Note and other Obligations are paid and performed in full. In
addition, the debtor agrees to execute any further documentation in order for
the secured party to perfect recorded financing statements in the jurisdiction
of the secured party’s choice.
DEBTOR:
IELEMENT
CORPORATION
__________________________________
_______________________________________
Witness
Signature By:
Xxxx
Xxxxx
Title:
President
__________________________________
Printed
Name of Witness
__________________________________
Witness
Signature
__________________________________
Printed
Name of Witness
STATE
OF
__________________
COUNTY
OF
__________________
The
foregoing instrument was acknowledged before me this ______ day of
__________________, 200___, by Xxxx Xxxxx, as President of IELEMENT CORPORATION,
(
) who
is personally known to me or ( ) who has produced
_______________________________ as identification.
____________________________________
(Seal)
Notary
Public
____________________________________
My
Commission Expires: Printed
Notary Signature
SECURED
PARTY:
XXXXXXX
XXXXXXXXXX
__________________________________
___________________________________
Witness
Signature By:
Xxxxxxx Xxxxxxxxxx
__________________________________
Printed
Name of Witness
__________________________________
Witness
Signature
__________________________________
Printed
Name of Witness
STATE
OF
__________________
COUNTY
OF
__________________
The
foregoing instrument was acknowledged before me this ______ day of
__________________, 200___, by Xxxxxxx Xxxxxxxxxx,
who is
personally known to me or who has produced _________________________ as
identification.
____________________________________
(Seal)
Notary
Public
____________________________________
My
Commission Expires: Printed
Notary Signature
