SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made as of
the date set forth on the signature page hereof (the "Effective Date") by
AMERICAN AIR NETWORK ALASKA, INC., a Nevada corporation (the "Debtor"), in favor
of HOME ENERGY SAVINGS CORP (the "Secured Party").
W I T N E S S E T H:
WHEREAS, reference is herein made to that certain Stock Purchase
Agreement by and between the Secured Party and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇") dated of even date herewith, wherein the Secured Party has agreed
to sell to ▇▇▇▇▇▇▇▇▇ all of Secured Party's right, title and interest in 51
shares of capital stock of the Debtor (the "Shares"), in exchange for $25,000
cash and the execution of the Note (defined below);
WHEREAS, ▇▇▇▇▇▇▇▇▇ is a principal of American Air Network, Inc., which
company is believed to be the only other holder of capital stock of the Debtor;
WHEREAS, it is a condition precedent to the consummation of the Stock
Purchase Agreement that the Debtor enter into this Security Agreement to secure
the payment of the Note; and
WHEREAS, Debtor will benefit, directly or indirectly, from the
acquisition of the Shares by ▇▇▇▇▇▇▇▇▇ from the Secured Party and the granting
of this Security Agreement.
NOW, THEREFORE, in consideration of the cash sum of $10.00 paid by the
Secured Party to the Debtor, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties, the
parties covenant and agree as follows:
1. Parties, Security Interest. The Debtor, for valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby grants, transfers, and assigns unto the Secured
Party, a security interest in the Collateral described in paragraph 2
hereof to secure the Obligations described in paragraph 3 hereof.
2. Collateral. The Collateral which is the subject of this
security agreement consists of:
(a) all of the Debtor's Accounts and General Intangibles (as
those terms are defined in the Uniform Commercial Code in effect from
time to time in the State of Nevada) arising or otherwise due prior to
the Effective Date, including without limitation, all refunds of
deposits or other refunds due to the Debtor from whatever source
arising or otherwise due prior to the Effective Date, including
specifically, but without limitation, (i) those certain possible
Federal corporate income tax refunds claimed to be due to the Debtor
pursuant to those certain respective Form 1120 U.S. Corporate Income
Tax Returns executed or to be executed by the Debtor covering taxable
periods in years 2003, 2004 and 2005 (the "Tax Refund"), and (ii) an
engine reserve refund believed to be due from Security Aviation
estimated to be $25,000, and
(b) all proceeds (including insurance proceeds), and all other
profits or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of,
or realization upon, the above-described property, including, without
limitation, all claims of the Debtor against third-parties for loss of,
damage to or destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance in respect of, any of
Debtor's above-described property, in each case whether now existing or
hereafter arising.
All such property, rights and interests which Secured Party is herein
granted a security interest is hereinafter called the "Collateral". To
perfect such interest in the Tax Refund, the Debtor hereby agrees that,
among other things, it shall, at the time of execution of this
Agreement, (i) execute the Form 8050, Direct Deposit of Corporate Tax
Refund attached hereto marked Exhibit A, directing the payment of the
referenced claimed Tax Refund to an agreed upon escrow account, and
(ii) execute that certain Escrow Agreement attached hereto marked
Exhibit B (the "Escrow Agreement") providing for the establishment of
such an escrow account and the engagement of the escrow agent named
therein.
3. Obligations. The security interest granted herein secures
the payment of the indebtedness evidenced by that certain promissory
note (sometimes referred to herein as the "Note"), dated as of the date
hereof (hereinafter called the "Obligations"), in the original
principal sum of SEVENTY-FIVE THOUSAND AND NO/ 100 DOLLARS
($75,000.00), executed by ▇▇▇▇▇▇▇▇▇, payable to the order of Secured
Party, bearing interest and being payable as therein provided, and all
renewals, extensions and rearrangements of all of such items of
obligations or indebtedness and of any part thereof.
4. General Covenants and Warranties. Debtor represents and
warrants to Secured Party and covenants and agrees as follows:
(a) The Debtor (i) is a corporation duly organized
and validly existing under the laws of the jurisdiction of its
formation; (ii) has all requisite power and authority to own its assets
and carry on its business as now being or as proposed to be conducted;
and (iii) is qualified to do business in all jurisdictions in which the
nature of its business makes such qualification necessary and where
failure to so qualify would have a material adverse effect on its
business, condition (financial or otherwise), operations, prospects, or
properties. The Debtor has the power and authority to execute, deliver,
and perform its obligations under this Security Agreement.
(b) The execution, delivery, and performance by the
Debtor of this Security Agreement and the other documents executed by
Debtor in connection herewith and compliance with the terms and
provisions hereof and thereof have been duly authorized by all
requisite corporate action on the part of the Debtor and do not and
will not (a) violate or conflict with, or result in a breach of, or
require any consent under (i) the articles of incorporation and bylaws
of the Debtor, (ii) any applicable law, rule, or regulation or any
order, writ, injunction, or decree of any court, governmental authority
or arbitrator, or (iii) any agreement or instrument to which the Debtor
is a party or by which it or any of its property is bound or subject,
or (b) constitute a default under any such agreement or instrument, or
result in the creation or imposition of any lien or other encumbrance
upon any of the Collateral.
(c) This Security Agreement constitutes, and the
other documents executed by the Debtor in connection herewith when
delivered, shall constitute legal, valid, and binding obligations of
the Debtor, enforceable against the Debtor in accordance with their
respective terms, except as limited by bankruptcy, insolvency, or other
laws of general application relating to the enforcement of creditors'
rights.
(d) Except for the security interest granted hereby,
Debtor is and will continue to be the owner and holder of the
Collateral free from any adverse claim, security interest, encumbrance
or other right, title or interest of any person other than Secured
Party; and Debtor has full power and lawful authority to sell and
assign the Collateral and to grant to Secured Party a first and prior
security interest therein as herein provided.
(e) Debtor authorizes Secured Party to file, in
jurisdictions where this authorization will be given effect, a
financing statement. Debtor will, if necessary, join Secured Party in
executing one or more financing statements, pursuant to the Uniform
Commercial Code, in form satisfactory to Secured Party, and will pay
the cost of filing same and from time to time whenever filing or
recording of any such financing statement or of this Security Agreement
is deemed by Secured Party to be necessary or desirable, it being
further stipulated in this regard that Secured Party may also at any
time or times sign any counterpart of this Security Agreement signed by
Debtor and file same as a financing statement if Secured Party shall
elect so to do.
(f) Debtor will not assign or sell, or offer to sell,
hypothecate or otherwise transfer or dispose of the Collateral or any
interest therein without the written consent of Secured Party.
(g) Debtor will keep the Collateral free from any
lien, security interest or encumbrance other than liens, security
interests or encumbrances in favor of Secured Party.
(h) Debtor will take all action necessary to maintain
and preserve all security for the Collateral at all times as valid,
subsisting and perfected as to all the property affected and covered
thereby and to maintain the priority and validity of the security for
the Collateral as against the rights, claims and interests of all other
persons and parties whomsoever, other than Secured Party.
(i) If any taxes or governmental assessments of any
kind or character shall be levied upon or against the Collateral, same
shall be promptly paid before delinquency by Debtor, and if any of such
taxes or governmental assessments are not paid by Debtor prior to
delinquency thereof, the Secured Party may at its option pay such taxes
or assessments and any interests, costs or penalties in connection
therewith, or any part thereof; and Secured Party shall be the sole
judge of the legality or validity thereof and of the amount necessary
to discharge same.
(j) In the event Secured Party shall pay any such
taxes, assessments, interests, costs, penalties, or expenses incident
to or in connection with the collection of the Collateral or protection
or enforcement of the Collateral or any security therefor, Debtor, upon
demand of Secured Party, shall pay to Secured Party the full amount
thereof; and so long as Secured Party shall be entitled to any such
payment, this Security Agreement shall operate as security therefor as
fully and to the same extent as it operates as security for payment of
the other Obligations secured hereunder, and for the enforcement of
such repayment Secured Party shall have every right and remedy provided
for enforcement of payment of the Obligations secured hereunder.
Amounts demanded by Secured Party pursuant to this Section 4(j) shall
accrue interest at the maximum interest rate permitted by applicable
law if not paid within 5 days following the date of demand by Secured
Party.
(k) When all of the Obligations shall have been paid
in full, if this Security Agreement has not theretofore been
foreclosed, Secured Party or other holder of the Obligations shall
reassign to Debtor, without recourse or warranty, express or implied,
the then existing rights, titles and interest of Secured Party in and
to the Collateral, the cost of such reassignment to be borne by Debtor,
and Secured Party shall pay to Debtor the surplus money, if any, then
in the hands of Secured Party representing collections on or proceeds
of the Collateral not theretofore applied toward payment of the
Obligations.
5. Default. Debtor shall be in default under this Security
Agreement upon the happening of any of the following events or
conditions ("events of default"):
(a) Default in the payment when due of any of the
Obligations;
(b) Any other default as defined or described in the
Note;
(c) Failure or refusal of Debtor to perform or
observe any of the covenants, duties or agreements herein imposed upon
or agreed to be performed or observed by Debtor and continuance of such
failure or refusal for 30 days after notice from Secured Party (unless
such breach is of a type which cannot reasonably be cured within such
time, in which event, such breach shall not be a default hereunder if
Debtor commences action to cure such default within such period and
diligently pursues the curing of such breach thereafter);
(d) Any representation or warranty made or deemed
made by the Debtor (or its officers) in this Security Agreement or any
other document executed by the Debtor in connection herewith or in any
certificate, report, notice, or financial statement furnished at any
time in connection with this Security Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to
have been made;
(e) The levy of any attachment, execution, or other
process against Debtor or any of the Collateral; and
(f) Dissolution, termination of existence,
insolvency, or business failure of Debtor or any other endorser,
guarantor or surety of any of the Obligations, commission of an act of
bankruptcy by the Debtor or any party liable for all or any portion of
the Obligations, or appointment of receiver or other legal
representative for any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceedings under
any bankruptcy or insolvency law by or against Debtor or any other
endorser, guarantor or surety for any of the Obligations.
6. Remedies - General. In the event of default in the payment
of any of the Obligations or any other amount payable thereunder, when
due, or upon the happening of any of the events of default specified in
paragraph 5 hereof, and at any time thereafter, at the option of the
holder thereof, the Secured Party accelerates the Obligations such that
they become immediately due and payable, Secured Party shall have and
may exercise with reference to the Collateral and Obligations any or
all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted in the State of Nevada, and as otherwise
granted herein or under any other applicable law or under any other
agreement executed by Debtor, including, without limitation, the right
and power to collect on the accounts receivable constituting the
Collateral in Secured Party's own name or in the name of the Debtor
and, subject to the terms of the Escrow Agreement, to the extent any
proceeds from the collection of such accounts have been deposited in
the Escrow Account, apply such proceeds toward payment of any costs and
expenses and attorneys' fees and legal expenses thereby incurred by
Secured Party and toward payment of the Obligations in such order or
manner as Secured Party may elect. To the extent permitted by law,
Debtor expressly waives any notice of sale or other disposition of the
Collateral or exercise of any other rights or remedies of Debtor or
formalities prescribed by law relative to sale or disposition of the
Collateral or exercise of any other right or remedy of Secured Party
existing after default hereunder. To the extent that any such notice is
required and cannot be waived, Debtor agrees that if such notice is
mailed, postage prepaid, to Debtor at Debtor's address specified herein
five (5) days before the time of the sale or disposition, or such
lesser time as is reasonable under the circumstances, such notice shall
be deemed reasonable and shall fully satisfy any requirement for giving
of notice.
7. Secured Party's Duty. Secured Party's duty with reference
to the Collateral in Secured Party's possession shall be solely to use
reasonable care in the physical preservation of such Collateral.
Secured Party shall not be responsible in any way for any depreciation
in the value of the Collateral nor shall any duty or responsibility
whatsoever rest upon Secured Party to take necessary steps to preserve
rights against prior parties. Protest and all demands and notices of
any action taken by Secured Party under this Security Agreement, or in
connection with any Collateral, except as otherwise provided in this
Security Agreement, or in connection with any Collateral, except as
otherwise provided in this Security Agreement, are hereby waived, and
any indulgence of Secured Party, substitution for, exchange or release
of any person liable on the Collateral is hereby assented and consented
to. Unless the Collateral is in Secured Party's possession, it shall
remain in Debtor's possession or control at all time at Debtor's risk
of loss.
8. Definitions. Subject to any express definitions set forth
herein, all terms used herein which are defined in the Uniform
Commercial Code of Nevada have the same meaning herein as in said Code.
9. Other Security for Obligations. The execution and delivery
of this Security 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
the Obligations shall impair in any manner or affect this Security
Agreement, all such present and future additional security to be
considered as cumulative security. Any of the Collateral may be
released from this Security Agreement without altering, varying or
diminishing in any way the force, effect, lien, security interest, or
charge of this Security Agreement as to the Collateral not expressly
released, and this Security Agreement shall continue as a first and
prior lien, security interest and charge on all of the Collateral not
expressly released until all the Obligations secured hereby have been
paid in full. Any future assignment or attempted assignment 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.
10. Usury Savings Clause. If maturity of the Obligations shall
be accelerated for any reason, the Obligations thereupon shall be
credited for the full amount of interest, if any, then unearned which
has been collected theretofore by Secured Party. Notwithstanding any
other provision of this Security Agreement or in the Obligations,
Debtor shall never be liable for unearned interest on the Obligations
and shall never be required to pay interest thereon at a rate in excess
of the maximum applicable rate permitted by law, and should any rate
provided for herein or in any note or other instrument evidencing any
of the Obligations exceed the maximum rate permitted by law, such
excess rate shall be reduced to the maximum legal rate as same shall be
established by the laws of the State of Texas or, to the extent
applicable, the laws of the United States of America.
11. Subrogation. Secured Party is hereby subrogated to all of
Debtor's interests, rights and remedies in respect to the Collateral
and all security now or hereafter existing with respect thereto and all
guaranties and endorsements thereof and with respect thereto.
12. Notices. Any notice or demand to Debtor hereunder or in
connection herewith may be given and shall conclusively be deemed and
considered to have been given and received upon the deposit thereof, in
writing, duly stamped and addressed to Debtor at the address stated
herein, in the U.S. Mails; but actual notice, however given or
received, shall always be effective.
13. No Waiver. No delay or omission on the part of Secured
Party in exercising any right hereunder shall operate as a waiver of
any such right or any other right. A waiver on any one or more
occasions shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. The remedies of Secured Party hereunder
are cumulative, and the exercise of any one or more of the remedies
provided for herein shall not be construed as an election or as a
waiver of any of the other remedies of Secured Party provided for
herein or existing by law or otherwise.
14. Successors and Assigns. All rights of Secured Party
hereunder shall inure to the benefit of Secured Party's heirs,
administrators, legal representations, personal representatives,
successors and assigns; and all obligations of Debtor shall bind the
administrators, legal representatives, personal representatives,
successors and assigns of Debtor. Secured Party may assign this
Security Agreement without the prior consent of Debtor.
15. Paragraph Headings Informational Only. The paragraph
headings in this Security Agreement are inserted for information and
convenience only, and are in no way intended to describe, interpret,
define, or limit the scope, extent or intent of this Security Agreement
or any provision hereof.
16. Singular/Plural. As used in this Security Agreement and
when required by the context, each number (singular and plural) shall
include all numbers, and each gender shall include all genders; and
unless the context otherwise requires, the word "person" shall include
"corporation", firm or association".
17. Nevada Law Controlling. The law governing this secured
transaction shall be that of the State of Nevada existing as of the
date hereof; provided that if any additional rights or remedies are
hereafter granted to secured parties by the law of Nevada, Secured
Party shall also have and may exercise any such additional rights or
remedies.
18. Addresses. The address of Debtor for the purpose of this
Security Agreement is:
American Air Network Alaska, Inc.
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The address of Secured Party for the purpose of this Security Agreement is:
Home Energy Savings Corp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
19. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT HEREOF.
SIGNED and delivered as of the 24th day of August, 2006.
DEBTOR:
AMERICAN AIR NETWORK ALASKA, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: President/CEO
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THE STATE OF Virginia ss.
COUNTY OF Loudon ss.
This instrument was acknowledged before me on the 7th day of September,
2006, by ▇▇▇▇▇ ▇▇▇▇▇▇▇, the President/CEO of AMERICAN AIR NETWORK ALASKA, INC.,
a Nevada corporation, on behalf of said corporation.
My commission expires: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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1-31-09 Notary Public, State of VA
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CONSENT TO TERMS OF SECURITY AGREEMENT
The undersigned, American Air Network, Inc., a Missouri corporation
("AANI"), being the owner of all right, title and interest to forty-nine percent
(49%) of the capital stock of the Debtor, hereby believes that the Debtor will
benefit, directly or indirectly, from the sale of stock of Debtor in accordance
with that certain Stock Purchase Agreement (the "Stock Purchase Agreement"),
entered into by and between ▇▇▇▇▇▇▇▇▇ and Secured Party, with the terms of such
sale being more particularly described therein, and does hereby join in the
execution of this Security Agreement for the limited purpose of consenting to
(a) the sale of the Shares by Secured Party to ▇▇▇▇▇▇▇▇▇ pursuant to the terms
and provisions of the Stock Purchase Agreement, (b) the pledge of the Collateral
owned by the Debtor to secure payment of the Note and certain obligations of
▇▇▇▇▇▇▇▇▇, as contemplated by the terms of the Stock Purchase Agreement, and (c)
the terms and provisions of this Security Agreement and to cause the Debtor to
be bound by the terms and provisions set forth herein.
SOLE REMAINING STOCKHOLDER:
AMERICAN AIR NETWORK, INC.,
a Missouri corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: President
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