Exhibit 10.2
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of June 20, 2003, by and between ▇▇. ▇. ▇▇▇▇▇▇,
Mr. H.E. ▇▇▇▇▇▇▇, Burest Holding BV, ▇▇. ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, and
▇▇▇▇▇ ▇▇▇▇▇▇ (collectively, and severally, the "Borrower" or and each a
"Grantor"), Satellite Enterprises Corp., a Nevada corporation (the "Guarantor")
and Future Ventures, Ltd., a Turks & Caicos company ("Lender"), in connection
with that certain Debenture, dated as of the date hereof, by and between Lender
and Borrower.
The parties acknowledge the following facts and circumstances:
The parties agree and acknowledge that at the request of Grantor, Lender
has agreed to lend to the Borrower the sum of $76,888.24, which represents the
unpaid balance of the purchase price of certain securities, which is due and
payable to Lender on September 2, 2003. Such obligation is represented by that
certain Debenture, dated as of the date hereof, by and between Lender and
Borrower (the "Debenture"). To induce Lender to enter into the Debenture and
other agreements, Guarantor has agreed to guaranty payment and performance of
the Debenture, provided that recourse for any default thereunder shall be
limited to acceptance of the Collateral (as defined below) as full satisfaction
of Guarantor's obligations hereunder.
Accordingly, the Grantor and the Lender hereby agree as follows:
1. Definitions of Terms Used Herein. As used herein, the following terms
shall have the following meanings:
(a) "Collateral" means 3,740,484 shares of common stock of Satellite
Enterprises Corp., a Nevada corporation, and any Proceeds
thereof.
(b) "Proceeds" means any consideration received from the sale,
exchange, lease or other disposition of any asset or property
which constitutes Collateral, any other value received as a
consequence of the possession of any Collateral and any payment
received from any insurer or other person or entity as a result
of the destruction, loss, theft or other involuntary conversion
of whatever nature of any asset or property that constitutes
Collateral, and shall include, without limitation, all cash and
negotiable instruments received or held by the Lender pursuant to
any lockbox or similar arrangement relating to the payment of
Accounts Receivable.
(c) "Escrow Agent" means Corporate Legal Services, LLP.
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2. Security Interests. As security for the full and timely payment and/or
performance, as the case may be, of each and every covenant, promise
and agreement contained in the Debenture (the "Obligations"), the
Grantor hereby creates and grants to the Lender, its successors and
its assigns, a security interest in the Collateral (the "Security
Interest"). Without limiting the foregoing, the Lender is hereby
authorized to file one or more financing statements, continuation
statements or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting its Security Interest
in the Collateral, naming the Grantor as debtor and the Lender as
secured party. To perfect the Security Interest, Lender may retain the
Collateral, in the possession of Escrow Agent.
3. Guarantor hereby unconditionally guarantees the full payment and
performance of the Debenture.
4. Further Assurances. The Grantor agrees, at its expense, to execute,
acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Lender may
from time to time reasonably request for the assuring and preserving
of the Security Interest and the rights and remedies created hereby,
including, without limitation, the payment of any fees and taxes
required in connection with the execution and delivery of this
Agreement, the granting of the Security Interest and the filing of any
financing statements or other documents in connection herewith.
5. Taxes; Encumbrances. At its option, the Lender may discharge past due
taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral, and the Grantor agrees to
reimburse the Lender on demand for any payment made or any expense
incurred by it pursuant to the foregoing authorization.
6. Representations and Warranties. The Grantor represents and warrants to
the Lender that:
(a) Title and Authority. It has (i) rights, interest in and to the
Collateral in which it is granting a security interest hereunder
and (ii) the requisite power and authority to grant to the Lender
the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with
the terms of this Agreement, without the consent or approval of
any other person other than any consent or approval which has
been obtained.
(b) Filing. Fully executed Uniform Commercial Code financing
statements and other such documents as may be necessary
containing a description of the Collateral shall have been, or
shall be delivered to the Lender in a form such that they can be,
filed of record in every governmental, municipal or other office
in every jurisdiction in which any portion of the Collateral is
located necessary to publish notice of and protect the validity
of and to establish a valid, legal and perfected security
interest in favor of the Lender in respect of the Collateral in
which a security interest may be perfected by filing in the
United States and its territories and possessions, and no further
or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with
respect to the filing of Uniform Commercial Code continuation
statements.
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(c) Validity of Security Interest. The Security Interest constitutes
a valid, legal and perfected first priority security interest in
all of the Collateral for payment and performance of the
Obligations.
(d) Information Regarding Names. It has disclosed in writing to the
Lender any trade names used to identify it in its business or in
the ownership of its properties.
(e) Survival of Representations and Warranties. All representations
and warranties of the Grantor contained in this Agreement shall
survive the execution, delivery and performance of this Agreement
until the termination of this Agreement.
7. Protection of Security. The Grantor shall, at its own cost and
expense, take any and all actions reasonably necessary to defend title
to the Collateral owned by it against all persons and to defend the
Security Interest of the Lender in such Collateral, and the priority
thereof, against any adverse mortgage, pledge, security interest,
Lien, charge or other encumbrance of any nature whatsoever.
8. Continuing Obligations of the Grantor. The Grantor shall remain liable
to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement, interest
or obligation relating to the Collateral, all in accordance with the
terms and conditions thereof, and shall indemnify and hold harmless
the Lender from any and all such liabilities.
9. Use and Disposition of Collateral. Without the prior written consent
of Lender, the Grantor shall not make nor permit to be made any
assignment, pledge or hypothecation of the Collateral, or grant any
security interest in the Collateral except for the Security Interest.
The Grantor shall not make nor permit to be made any transfer of any
Collateral, except Inventory in the ordinary course of business and as
otherwise permitted by the Loan Documents, and the Grantor shall
remain at all times in possession of the Collateral owned by it other
than transfers to the Lender pursuant to the provisions hereof and as
otherwise provided in this Agreement or the Loan Documents.
10. Proxy. The Lender hereby irrevocably grants to Grantor, for so long as
no Event of Default exists under the Debenture, the sole and absolute
right to vote all of the shares representing the Collateral. In
addition, Lender shall not have the right to sell, transfer,
hypothecate or otherwise alienate the shares representing the
Collateral until ninety days following Lender's written notice of an
Event of Default sent to the Borrower.
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11. Collections.
Upon the occurrence and during the continuance of an Event of
Default, the Lender shall have the right, as the true and lawful agent
of the Grantor, with power of substitution for the Grantor and in the
Grantor's name, the Lender's name or otherwise, for the use and
benefit of the Lender (i) to receive, endorse, assign and/or deliver
any and all notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Collateral or any part thereof;
(ii) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (iii) to sign
the name of the Grantor on any invoice or ▇▇▇▇ of lading relating to
any of the Collateral; (iv) to sell or transfer any of the Collateral,
subject to the provisions of Section 10 hereof; (v) to commence and
prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise
realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (vi) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to or
pertaining to all or any of the Collateral; and (vii) subject to the
provisions of Section 10 above, to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and
completely as though the Lender were the absolute owner of the
Collateral for all purposes; provided, however, that nothing herein
contained shall be construed as requiring or obligating the Lender to
make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Lender or to present or
file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in
respect thereof or any property covered thereby, and no action taken
by the Lender or omitted to be taken with respect to the Collateral or
any part thereof shall give rise to any defense, counterclaim or
offset in favor of the Grantor or to any claim or action against the
Lender in the absence of the gross negligence or willful misconduct of
the Lender. It is understood and agreed that the appointment of the
Lender as the agent of the Grantor for the purposes set forth above in
this Section 11 is coupled with an interest and is irrevocable. The
provisions of this Section 11 shall in no event relieve the Grantor of
any of its obligations hereunder or under the Loan Documents with
respect to the Collateral or any part thereof or impose any obligation
on the Lender to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by
the Lender of any other or further right which it may have on the date
of this Agreement or hereafter, whether hereunder or by law or
otherwise.
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12. Remedies upon Default. Upon the occurrence and during the continuance
of an Event of Default, the Grantor agrees to deliver each item of
Collateral to the Lender on demand, and it is agreed that the Lender
shall have the right to take any or all of the following actions at
the same or different times: with or without legal process and with or
without previous notice or demand for performance, to take possession
of the Collateral and without liability for trespass (except for
actual damage caused by the Lender's gross negligence or willful
misconduct) to enter any premises where the Collateral may be located
for the purpose of taking possession of or removing the Collateral
and, generally, to exercise any and all rights afforded to a secured
party under, and subject to its obligations contained in, the Uniform
Commercial Code as in effect in any state or other applicable law.
Without limiting the generality of the foregoing, the Grantor agrees
that the Lender shall have the right, subject to the mandatory
requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral, at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or
for future delivery as the Lender shall deem appropriate. Each such
purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of the Grantor, and the
Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which the Grantor now has or may at any
time in the future have under any rule of law or statute now existing
or hereafter enacted. Without limiting the foregoing, upon the
occurrence and during the continuance of an Event of Default,
immediately upon Lender's demand Grantor shall transfer all Cash,
including but not limited to all proceeds of Collateral, to Lender,
and shall execute all documents reasonably requested by Lender to
effectuate an assignment of all of Grantor's deposit accounts and
account balances to Lender at any and all financial institutions at
which such deposits exist at the time of such demand.
13. The Lender shall give the Grantor ten (10) days' written notice (which
the Grantor agrees is reasonable notice) of the Lender's intention to
make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of
a sale at a broker's board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on
which the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or
places as the Lender may fix and state in the notice (if any) of such
sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the
Lender may (in its sole and absolute discretion) determine. The Lender
shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of
such Collateral shall have been given. The Lender may, without notice
or publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. In case
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any sale of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Lender
until the sale price is paid by the purchaser or purchasers thereof,
but the Lender shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public sale made pursuant
to this Section 14, the Lender may bid for or purchase, free (to the
extent permitted by law) from any right of redemption, stay or
appraisal on the part of the Grantor (all said rights being also
hereby waived and released to the extent permitted by law), with
respect to the Collateral or any part thereof offered for sale and the
Lender may make payment on account thereof by using any claim then due
and payable to the Lender from the Grantor as a credit against the
purchase price, and the Lender may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further
accountability to the Grantor therefore. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Lender shall be free to carry
out such sale and purchase pursuant to such agreement, and the Grantor
shall not be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the
Lender shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it,
the Lender may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
14. Application of Proceeds. The proceeds of any collection or sale of
Collateral, as well as any Collateral consisting of cash, shall be
applied by the Lender as follows:
(a) FIRST, to the payment of all reasonable costs and expenses
incurred by the Lender in connection with such collection or sale
or otherwise in connection with this Agreement or any of the
Obligations, including, but not limited to, all court costs and
the reasonable fees and expenses of its agents and legal counsel,
the repayment of all advances made by the Lender hereunder on
behalf of the Grantor and any other reasonable costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder;
(b) SECOND, to the payment in full of principal and interest in
respect of the Loan then outstanding;
(c) THIRD, to the payment in full of all Obligations (other than
those referred to above) owed to the Lender; and
(d) FOURTH, to the Grantor, its successors and assigns, or as a court
of competent jurisdiction may otherwise direct.
15. Upon any sale of the Collateral by the Lender (including, without
limitation, pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Lender or of the officer
making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers
shall not be obligated to see to the application of any part of the
purchase money paid over to the Lender or such officer or be
answerable in any way for the misapplication thereof.
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16. Security Interest Absolute. All rights of the Lender hereunder, the
Security Interest, and all obligations of the Grantor hereunder, shall
be absolute and unconditional irrespective of (i) any lack of validity
or enforceability of the Debenture, any other agreement with respect
to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (ii) any change in the time, manner
or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or consent to any
departure from the Debenture, or any other agreement or instrument,
(iii) any exchange, release or non-perfection of any other Collateral,
or any release or amendment or waiver of or consent to or departure
from any guarantee, for all or any of the Obligations, or (iv) any
other circumstance which might otherwise constitute a defense
available to, or discharge of, the Grantor or any other obligor in
respect of the Obligations or in respect of this Agreement.
17. No Waiver. No failure on the part of the Lender to exercise, and no
delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy by the Lender preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not exclusive of
any other remedies provided by law. The Lender shall not be deemed to
have waived any rights hereunder or under any other agreement or
instrument unless such waiver shall be in writing and signed by such
parties.
18. Lender Appointed Attorney-in-Fact. The Grantor hereby appoints the
Lender its attorney-in-fact solely for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any
instrument which the Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and
coupled with an interest.
19. Lender's Fees and Expenses. The Grantor shall be obligated to, upon
demand, pay to the Lender the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its counsel
and of any experts or agents which the Lender may incur in connection
with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization
upon, any of the Collateral, (iii) the exercise or enforcement of any
of the rights of the Lender hereunder, or (iv) the failure by the
Grantor to perform or observe any of the provisions hereof. In
addition, the Grantor indemnifies and holds the Lender harmless from
and against any and all liability incurred by the Lender hereunder or
in connection herewith, unless such liability shall be due to the
gross negligence or willful misconduct of the Lender. Any such amounts
payable as provided hereunder or thereunder shall be additional
Obligations secured hereby.
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20. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns, except that the Grantor shall not be permitted to assign this
Agreement or any interest herein or in the Collateral, or any part
thereof, or any cash or property held by the Lender as Collateral
under this Agreement, except as contemplated by this Agreement or the
Debenture.
21. Governing Law. (a) This Agreement shall be construed in accordance
with and governed by the laws of the state of California, except to
the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, which shall be governed by the
appropriate jurisdiction relating to the specific Collateral itself.
Venue for any action under this Agreement or the Debenture shall be in
the Superior Court located in Los Angeles, California. The prevailing
party in any dispute arising hereunder shall be entitled to recover
all of its reasonable attorney's fees and costs of defense,
prosecution or litigation. The Grantor hereby expressly and
irrevocably submits to the jurisdiction of the state and federal
courts of the State of California, city of Los Angeles, for the
purpose of any such litigation as set forth above and irrevocably
agrees to be bound by any final judgment rendered thereby in
connection with such litigation. The Grantor further irrevocably
consents to the service of process by registered mail, postage
prepaid, or by personal service within or without the State of
California. The Grantor hereby expressly and irrevocably waives, to
the fullest extent permitted by law, any objection which it may have
or hereafter may have to the laying of venue of any such litigation
brought in any such court referred to above and any claim that any
such litigation has been brought in any inconvenient forum. To the
extent that the Grantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, the
Grantor hereby irrevocably waives such immunity in respect of its
obligations under this agreement and the Debenture.
(b) Waiver of Jury Trial. The parties hereby knowingly, voluntarily
and intentionally waive any rights they may have to a trial by
jury in respect of any litigation based hereon, or arising out
of, under, or in connection with, this agreement, or any course
of conduct, course of dealing, statements (whether oral or
written) or actions of any of the parties hereto.
22. Notices. All communications and notices hereunder shall be in writing
and given as provided in the Debenture.
23. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable the
remaining provisions contained herein shall not in any way be affected
or impaired.
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24. Section Headings. Section headings used herein are for convenience
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
25. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument. This
Agreement shall be effective when a counterpart which bears the
signature of the Grantor shall have been delivered to the Lender.
26. Termination. This Agreement and the Security Interest shall terminate
when all the Obligations have been fully and indefeasibly paid in
cash, at which time the Lender shall execute and deliver to the
Grantor all Uniform Commercial Code termination statements and similar
documents which the Grantor shall reasonably request to evidence such
termination; provided, however, that all indemnities of the Grantor
contained in this Agreement shall survive, and remain operative and in
full force and effect regardless of, the termination of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first above written.
SATELLITE ENTERPRISES CORP.
a Nevada corporation
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
Grantor:
▇▇▇▇▇ ▇▇▇▇▇▇, and each Borrower,
each under Power of Attorney
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇, individually and Attorney in Fact
Lender:
Future Ventures, Ltd.
a Turks & Caicos company
By: Sterling Nominees Ltd.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇,
Director and Authorized Representative
