SECURITY AGREEMENT
|
Exhibit 10.4 |
SECURITY AGREEMENT, dated as of December 11, 2007 (this “Agreement”), by and among
Continental Fuels, Inc., a Nevada corporation (the “Company”), the subsidiaries listed on Schedule A hereto
(the “Subsidiaries”), Universal Property Development and Acquisition Corporation, a Nevada corporation
(“UPDA and the Subsidiaries, collectively, the “Guarantors”) (the Company and the Guarantors are collectively
referred to as the “Debtors”), and Sheridan Asset Management LLC, a Delaware limited liability company
(“Sheridan” and collectively with each of its endorsees, transferees and assigns, the “Secured Party”), as the
holder of the Company’s Subordinated Secured Term Promissory Note due December 11, 2010 (the “Term
Note”) in the original aggregate principal amount of $5,500,000 (the “Term Loan”) and the Company’s
Secured Revolving Promissory Note due December 11, 2010 (the “Revolving Note” and collectively with the
Term Note, the “Notes”) in the aggregate principal amount of $3,000,000 (the “Revolving Loan” and
collectively with the Term Loan, the “Loans”).
|
W I T N E S S E T H: |
WHEREAS, pursuant to the Notes and the Loan Agreement, dated the date hereof (the “Loan
Agreement”), by and among the Company, UPDA nd the Secured Party, the Secured Party has severally
agreed to extend the Loans to the Company evidenced by the Notes;
WHEREAS, the Company has agreed to cause any and all of its Subsidiaries to execute a
Subsidiary Guarantee in the form of Exhibit A attached hereto dated as of the date hereof (the “Guaranty”),
pursuant to which the Subsidiaries shall jointly and severally guaranty and act as surety for payment of such
Loans;
WHEREAS, UPDA has executed Guaranties pursuant to which they shall guaranty and act as
surety for payment of such Loans; and
WHEREAS, in order to induce the Secured Party to extend the Loans evidenced by the Notes, the
Company has agreed to, and to cause each of the Guarantors to, execute and deliver to the Secured Party
this Agreement and to grant the Secured Party, a perfected security interest in its property to secure the
prompt payment, performance and discharge in full of all of the Obligations (as hereinafter defined).
NOW, THEREFORE, in consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
|
1 |
1. Certain Definitions. As used in this Agreement, the following terms shall have the
meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are
defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial tort claim”, “deposit
account”, “document”, “equipment”, “fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the
respective meanings given such terms in Article 9 of the UCC. Terms used and not otherwise defined in this
Agreement or the UCC shall have the meaning provided in the Notes and the Loan Agreement.
(a) “Business Day” shall have the meaning set forth in the Loan Agreement.
(b) “Collateral” shall include the following personal property of the Debtors, whether
presently owned or existing or hereafter acquired or coming into existence, wherever situated, and all
additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products
and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and
of insurance covering the same and of any tort claims in connection therewith, all Pledged Securities
(defined below) and all dividends, interest, cash, notes, securities, equity interest or other property at any
time and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for, any
or all of the Pledged Securities:
(i) All goods, including, without limitations, (A) all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and general tools,
fixtures, test and quality control devices and other equipment of every kind and nature and wherever
situated, together with all documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and
all other items used and useful in connection with any Debtor’s businesses and all improvements thereto;
and (B) all inventory;
(ii) All contract rights and other general intangibles, including, without
limitation, all partnership interests, membership interests, stock or other securities, rights under any of the
Organizational Documents, agreements related to the Pledged Securities, licenses, distribution and other
agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed by any
Debtor), computer software development rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, trademarks, service marks, trade styles, trade names, patents,
patent applications, copyrights, Intellectual Property, and income tax refunds;
(iii) All accounts, together with all instruments, all documents of title
representing any of the foregoing, all rights in any merchandising, goods, equipment, motor vehicles and
trucks which any of the same may represent, and all right, title, security and guaranties with respect to each
account, including any right of stoppage in transit;
|
2 |
(iv) All documents, letter-of-credit rights, instruments and chattel paper;
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or not deposited in such
deposit accounts);
(vii) All investment property;
(viii) All supporting obligations; and
(ix) All files, records, books of account, business papers, and computer
programs; and
(x) the products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(ix) above.
Without limiting the generality of the foregoing, the “Collateral” shall include all
investment property and general intangibles respecting ownership and/or other equity interests in the
Company, UPDA and each Subsidiary, including, without limitation, the shares of capital stock and the other
equity interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the
terms hereof), and any other shares of capital stock and/or other equity interests of any other direct or
indirect subsidiary of any Debtor obtained in the future, and, in each case, all certificates representing such
shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or
equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any
of the foregoing (all of the foregoing being referred to herein as the “Pledged Securities”) and all rights
arising under or in connection with the Pledged Securities, including, but not limited to, all dividends, interest
and cash.
Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by operation of applicable law
or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such
applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by applicable law, this Agreement shall
create a valid security interest in such asset and, to the extent permitted by applicable law, this Agreement
shall create a valid security interest in the proceeds of such asset.
|
3 |
(c) “Intellectual Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or foreign laws
or otherwise, including, without limitation, (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or unregistered and whether published
or unpublished, all registrations and recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and applications in the United States Copyright
Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade dress, service marks,
logos, domain names and other source or business identifiers, and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any political subdivision thereof, or
otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues,
renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of
action for infringement of the foregoing.
(d) “Necessary Endorsement” shall mean undated stock powers endorsed in blank
or other proper instruments of assignment duly executed and such other instruments or documents as the
Secured Party may reasonably request.
(e) “Obligations” means all of the Debtors’ obligations under this Agreement, the
Notes, the Guaranties, the Subordinate Guaranties, the Security Documents, the Loan Agreement and any
other instruments, agreements or other documents executed and/or delivered in connection herewith or
therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from any of the Secured Party as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted, extended or modified from time
to time. Without limiting the generality of the foregoing, the term “Obligations” shall include, without
limitation: (i) principal of and interest on the Notes and the Loans extended pursuant thereto; (ii) any and all
other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time under or in
connection with this Agreement, the Notes, the Guaranty and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but
not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.
|
4 |
(f) “Organizational Documents” means with respect to any of the Company, UPDA
or any Subsidiary, the documents by which such Debtor was organized (such as a certificate of
incorporation, certificate of limited partnership or articles of organization, and including, without limitation,
any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Debtor (such as bylaws, a partnership agreement or an operating, limited
liability or members agreement).
(g) “UCC” means the Uniform Commercial Code of the State of New York and or any
other applicable law of any state or states which has jurisdiction with respect to all, or any portion of, the
Collateral or this Agreement, from time to time. It is the intent of the parties that defined terms in the UCC
should be construed in their broadest sense so that the term “Collateral” will be construed in its broadest
sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the
definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.
2. Grant of Perfected Security Interest. As an inducement for the Secured Party to extend
the Loans as evidenced by the Notes and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, each Debtor hereby unconditionally and
irrevocably pledges, grants and hypothecates to the Secured Party a continuing and perfected security
interest in and to, a lien upon and a right of set-off against all of such Debtor’s respective right, title and
interest of whatsoever kind and nature in and to, the Collateral (the “Security Interest”).
3. Delivery of Certain Collateral. Contemporaneously or prior to the execution of this
Agreement, each Debtor shall deliver or cause to be delivered to the Secured Party (a) any and all
certificates and other instruments representing or evidencing the Pledged Securities, and (b) any and all
certificates and other instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements. The Debtors are, contemporaneously with the execution hereof,
delivering to the Secured Party, or have previously delivered to the Secured Party, a true and correct copy of
each Organizational Document governing any of the Pledged Securities.
4. Representations, Warranties, Covenants and Agreements of the Debtors. Each
Debtor, jointly and severally, represents and warrants to, and covenants and agrees with, the Secured Party
as follows:
|
5 |
(a) Each Debtor which is a corporation has the requisite corporate power and
authority to enter into this Agreement and otherwise to carry out its obligations hereunder. The execution,
delivery and performance by each such Debtor of this Agreement and the filings contemplated therein have
been duly authorized by all necessary action on the part of such Debtor and no further action is required by
such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the
legal, valid and binding obligation of each Debtor, enforceable against each Debtor in accordance with its
terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization and
similar laws of general application relating to or affecting the rights and remedies of creditors and by general
principles of equity.
(b) The Debtors have no place of business or offices where their respective books of
account and records are kept (other than temporarily at the offices of its attorneys or accountants) or places
where Collateral is stored or located, except as set forth on Schedule A attached hereto. Except as
specifically set forth on Schedule A, each Debtor is the record owner of the real property where such
Collateral is located, and there exist no mortgages or other liens on any such real property. Except as
disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor.
(c) Except as set forth on Schedule B attached hereto, the Debtors are the sole
owner of the Collateral (except for non-exclusive licenses granted by any Debtor in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights or claims, and are fully
authorized to grant the Security Interest. There is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement, license or transfer or any
notice of any of the foregoing (other than those that will be filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral. So long as this Agreement shall be in effect, the
Debtors shall not execute and shall not knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument (except to the extent filed or recorded in favor of the
Secured Party pursuant to the terms of this Agreement).
(d) Except as set forth on Schedule I attached hereto, no written claim has been
received that any Collateral or Debtor’s use of any Collateral violates the rights of any third party. There has
been no adverse decision to any Debtor’s claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction or to any Debtor’s right to keep and maintain such Collateral in full force and
effect, and there is no proceeding involving said rights pending or, to the best knowledge of any Debtor,
threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other
governmental authority.
|
6 |
(e) Each Debtor shall at all times maintain its books of account and records relating
to the Collateral at its principal place of business and its Collateral at the locations set forth on Schedule A
attached hereto and may not relocate such books of account and records or tangible Collateral unless it
delivers to the Secured Party at least thirty (30) days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States) and (ii) evidence that
appropriate financing statements under the UCC and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security Interest to create in favor of the Secured
Party a valid, perfected and continuing perfected first priority lien in the Collateral.
(f) This Agreement creates in favor of the Secured Party a valid, security interest in
the Collateral, securing the payment and performance of the Obligations. Upon making the filings described
in the immediately following paragraph, all security interests created hereunder in any Collateral which may
be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected.
Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately
following paragraph, the recordation of the Intellectual Property Security Agreement (as defined below) with
respect to copyrights and copyright applications in the United States Copyright Office referred to in
paragraph (p), the execution and delivery of deposit account control agreements satisfying the requirements
of Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtors, and the delivery of the
certificates and other instruments provided in Section 3, no action is necessary to create, perfect or protect the
security interests created hereunder. Without limiting the generality of the foregoing, except for the filing of
said financing statements, the recordation of said Intellectual Property Security Agreement, and the
execution and delivery of said deposit account control agreements, no consent of any third parties and no
authorization, approval or other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for (i) the execution, delivery and performance of this Agreement, (ii) the creation
or perfection of the Security Interests created hereunder in the Collateral or (iii) the enforcement of the rights
of the Secured Party hereunder.
(g) Each Debtor hereby authorizes the Secured Party to file one or more financing
statements under the UCC, with respect to the Security Interest with the proper filing and recording agencies
in any jurisdiction deemed proper by them.
(h) The execution, delivery and performance of this Agreement by the Debtors does
not (i) violate any of the provisions of any Organizational Documents of any Debtor which is a corporation or
any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to any Debtor or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing any Debtor’s debt or otherwise) or other understanding to
which any Debtor is a party or by which any property or asset of any Debtor is bound or affected. No
consent (including, without limitation, from stockholders or creditors of any Debtor) is required for any Debtor
to enter into and perform its obligations hereunder.
|
7 |
(i) The capital stock and other equity interests listed on Schedule H hereto
represent all of the capital stock and other equity interests in the Company owned by UPDA, and represent
all capital stock and other equity interests owned, directly or indirectly, by the Company. All of the Pledged
Securities are validly issued, fully paid and nonassessable, and each Debtor is the legal and beneficial
owner of its Pledged Securities, free and clear of any lien, security interest or other encumbrance except for
the Security Interests created by this Agreement.
(j) The ownership and other equity interests in partnerships and limited liability
companies (if any) included in the Collateral (the “Pledged Interests”) by their express terms do not provide
that they are securities governed by Article 8 of the UCC and are not held in a securities account or by any
financial intermediary.
(k) Each Debtor shall at all times maintain the liens and Security Interest provided
for hereunder as valid and perfected first priority liens and security interests in the Collateral in favor of the
Secured Party until this Agreement and the Security Interest hereunder shall be terminated pursuant to
Section 11 hereof. Each Debtor hereby agrees to defend the same against the claims of any and all
persons and entities. Each Debtor shall safeguard and protect all Collateral for the account of the Secured
Party. At the request of the Secured Party, each Debtor will sign and deliver to the Secured Party at any
time or from time to time one or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Secured Party and will pay the cost of filing the same in all public offices wherever filing is,
or is deemed by the Secured Party to be, necessary or desirable to effect the rights and obligations provided
for herein. Without limiting the generality of the foregoing, each Debtor shall pay all fees, taxes and other
amounts necessary to maintain the Collateral and the Security Interest hereunder, and each Debtor shall
obtain and furnish to the Secured Party from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain the priority of the Security Interest
hereunder.
(l) No Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral (except for non-exclusive licenses granted by a Debtor in its ordinary course
of business and sales of inventory by a Debtor in its ordinary course of business) without the prior written
consent of the Secured Party.
(m) Each Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate any such Collateral (or cause to
be operated or located) in any area excluded from insurance coverage.
|
8 |
(n) Each Debtor shall maintain with financially sound and reputable insurers,
insurance with respect to the Collateral against loss or damage of the kinds and in the amounts customarily
insured against by entities of established reputation having similar properties similarly situated and in such
amounts as are customarily carried under similar circumstances by other such entities and otherwise as is
prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement
cost thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and
the insurer issuing such policy to certify to the Secured Party that (a) the Secured Party will be named as
lender loss payee and additional insured under each such insurance policy; (b) if such insurance be
proposed to be cancelled or materially changed for any reason whatsoever, such insurer will promptly notify
the Secured Party and such cancellation or change shall not be effective as to the Secured Party for at least
thirty (30) days after receipt by the Secured Party of such notice, unless the effect of such change is to
extend or increase coverage under the policy; and (c) the Secured Party will have the right (but no
obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice
from the insurer of such default. If no Event of Default (as defined in the Notes) exists and if the proceeds
arising out of any claim or series of related claims do not exceed $50,000, loss payments in each instance
will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which
the loss was incurred to the extent reasonably feasible, and any loss payments or the balance thereof
remaining, to the extent not so applied, shall be payable to the applicable Debtor, provided, however, that
payments received by any Debtor after an Event of Default occurs and is continuing or in excess of $50,000
for any occurrence or series of related occurrences shall be paid to the Secured Party and, if received by
such Debtor, shall be held in trust for and immediately paid over to the Secured Party unless otherwise
directed in writing by the Secured Party. Copies of such policies or the related certificates, in each case,
naming the Secured Party as lender loss payee and additional insured shall be delivered to the Secured
Party at least annually and at the time any new policy of insurance is issued.
(o) Each Debtor shall, within ten (10) days of obtaining knowledge thereof, advise
the Secured Party promptly, in sufficient detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on the value of the Collateral or on the
Secured Party’s security interest therein.
(p) Each Debtor shall promptly execute and deliver to the Secured Party such further
deeds, mortgages, assignments, security agreements, financing statements or other instruments,
documents, certificates and assurances and take such further action as the Secured Party may from time to
time request and may in its sole discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, if applicable, the execution and delivery of a separate security
agreement with respect to each Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) in
which the Secured Party has been granted a security interest hereunder, substantially in a form acceptable
to the Secured Party, which Intellectual Property Security Agreement, other than as stated therein, shall be
subject to all of the terms and conditions hereof.
|
9 |
(q) Each Debtor shall permit the Secured Party and its representatives and agents to
inspect the Collateral at any time, and to make copies of records pertaining to the Collateral as may be
requested by the Secured Party from time to time.
(r) Each Debtor shall take all steps reasonably necessary to diligently pursue and
seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect
of the Collateral.
(s) Each Debtor shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process levied against any
Collateral and of any other information received by such Debtor that may materially affect the value of the
Collateral, the Security Interest or the rights and remedies of the Secured Party hereunder.
(t) All information heretofore, herein or hereafter supplied to the Secured Party by or
on behalf of any Debtor with respect to the Collateral is accurate and complete in all material respects as of
the date furnished.
(u) The Debtors shall at all times preserve and keep in full force and effect their
respective valid existence and good standing and any rights and franchises material to its business.
(v) No Debtor will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate structure, or identity, or add any new
fictitious name unless it provides at least twenty (20) days prior written notice to the Secured Party of such
change and, at the time of such written notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue perfected the perfected Security Interest granted and evidenced by
this Agreement.
(w) No Debtor may consign any of its Inventory or sell any of its Inventory on xxxx and
hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Secured
Party which shall not be unreasonably withheld, except to the extent such consignment or sale does not
exceed fifteen percent (15%) of the total value of all of the Company’s finished goods in Inventory.
(x) No Debtor may relocate its chief executive office to a new location without
providing thirty (30) days prior written notification thereof to the Secured Party and so long as, at the time of
such written notification, such Debtor provides any financing statements or fixture filings necessary to
perfect and continue perfected the perfected Security Interest granted and evidenced by this Agreement.
|
10 |
(y) Each Debtor which is a corporation was organized and remains organized solely
under the laws of the state set forth next to such Debtor’s name in the first paragraph of this Agreement and
on Schedule A. Schedule D attached hereto sets forth each Debtor’s organizational identification number
or, if any Debtor does not have one, states that one does not exist.
(z) (i) The actual name of each Debtor is the name set forth in the preamble above
and on Schedule A; (ii) no Debtor has any trade names except as set forth on Schedule E attached hereto;
(iii) no Debtor has used any name other than that stated in the preamble hereto, Schedule A or as set forth
on Schedule E for the preceding five years; and (iv) no entity has merged into any Debtor or been acquired
by any Debtor within the past five years except as set forth on Schedule E.
(aa) At any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by the secured party to perfect the
Security Interest created hereby, the applicable Debtor shall deliver such Collateral to the Secured Party.
(bb) Each of the Company, UPDA and each Subsidiary, in its capacity as issuer,
hereby agrees to comply with any and all orders and instructions of the Secured Party regarding the
Pledged Interests consistent with the terms of this Agreement without the further consent of any Debtor as
contemplated by Section 8-106 (or any successor section) of the UCC. Further, each Debtor agrees that it
shall not enter into a similar agreement (or one that would confer “control” within the meaning of Article 8 of
the UCC) with any other person or entity.
(cc) Each Debtor shall cause all tangible chattel paper constituting Collateral to be
delivered to the Secured Party, or, if such delivery is not possible, then to cause such tangible chattel paper
to contain a legend noting that it is subject to the Security Interest created by this Agreement. To the extent
that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying
chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).
(dd) Reserved.
(ee) To the extent that any Collateral consists of letter-of-credit rights, the applicable
Debtor shall cause the issuer of each underlying letter of credit to consent to an assignment of the proceeds
thereof to the Secured Party.
|
11 |
(ff) To the extent that any Collateral is in the possession of any third party, the
applicable Debtor shall join with the Secured Party in notifying such third party of the Secured Party’ Security
Interest in such Collateral and shall use its best efforts to obtain an acknowledgement and agreement from
such third party with respect to the Collateral, in form and substance satisfactory to the Secured Party.
(gg) If any Debtor shall at any time hold or acquire a commercial tort claim, such
Debtor shall promptly notify the Secured Party in a writing signed by such Debtor of the particulars thereof
and grant to the Secured Party in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Secured
Party.
(hh) Each Debtor shall immediately provide written notice to the Secured Party of any
and all accounts which arise out of contracts with any governmental authority and, to the extent necessary to
perfect or continue the perfected status of the Security Interest in such accounts and proceeds thereof, shall
execute and deliver to the Secured Party an assignment of claims for such accounts and cooperate with the
Secured Party in taking any other steps required, in their judgment, under the Federal Assignment of Claims
Act or any similar federal, state or local statute or rule to perfect or continue the perfected status of the
Security Interest in such accounts and proceeds thereof.
(ii) The Company, UPDA and each Subsidiary shall cause each subsidiary of such
Debtor to immediately become a party hereto (an “Additional Debtor”), by executing and delivering an
Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the
provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver
replacement schedules for, or supplements to all other Schedules to (or referred to in) this Agreement, as
applicable, which replacement schedules shall supersede, or supplements shall modify, the Schedules then
in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions, good
standing certificates, incumbency certificates, organizational documents, financing statements and other
information and documentation as the Secured Party may reasonably request. Upon delivery of the
foregoing to the Secured Party, the Additional Debtor shall be and become a party to this Agreement with
the same rights and obligations as the Debtors, for all purposes hereof as fully and to the same extent as if it
were an original signatory hereto and shall be deemed to have made the representations, warranties and
covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all
references herein to the “Debtors” shall be deemed to include each Additional Debtor.
(jj) Each Debtor shall vote the Pledged Securities of such Debtor to comply with the
covenants and agreements set forth herein and in the Notes.
|
12 |
(kk) Each of the Company, UPDA and each Subsidiary shall register the pledge of the
applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Party on
the books of such issuer. Further, except with respect to certificated securities delivered to the Secured
Party, the applicable Debtor shall deliver to the Secured Party an acknowledgement of pledge (which, where
appropriate, shall comply with the requirements of the relevant UCC with respect to perfection by
registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm
that: (a) it has registered the pledge on its books and records; and (b) at any time directed by the Secured
Party during the continuation of an Event of Default, such issuer will transfer the record ownership of such
Pledged Securities into the name of any designee of the Secured Party, will take such steps as may be
necessary to effect the transfer, and will comply with all other instructions of the Secured Party regarding
such Pledged Securities without the further consent of the applicable Debtor.
(ll) In the event that, upon an occurrence of an Event of Default, the Secured Party
shall sell all or any of the Pledged Securities to another party or parties (herein called the “Transferee”) or
shall purchase or retain all or any of the Pledged Securities, each Debtor shall, to the extent applicable: (i)
deliver to the Secured Party or the Transferee, as the case may be, the articles of incorporation, bylaws,
minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other Organizational Documents and records of
the Debtors and their direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations of the
persons then serving as officers and directors of the Debtors and their direct and indirect subsidiaries, if so
requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental or
regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or
retention of the Pledged Securities by the Secured Party and allow the Transferee or the Secured Party to
continue the business of the Debtors and their direct and indirect subsidiaries.
(mm) Without limiting the generality of the other obligations of the Debtors hereunder,
each Debtor shall promptly (i) cause to be registered at the United States Copyright Office all of its material
copyrights, (ii) cause the Security Interest contemplated hereby with respect to all Intellectual Property
registered at the United States Copyright Office or United States Patent and Trademark Office to be duly
recorded at the applicable office, and (iii) give the Secured Party notice whenever it acquires (whether
absolutely or by license) or creates any additional material Intellectual Property.
(nn) Each Debtor will from time to time, at the joint and several expense of the
Debtors, promptly execute and deliver all such further instruments and documents, and take all such further
action as may be necessary or desirable, or as the Secured Party may reasonably request, in order to
perfect and protect any Security Interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce their rights and remedies hereunder and with respect to any Collateral or to
otherwise carry out the purposes of this Agreement.
|
13 |
(oo) Schedule F attached hereto lists all of the patents, patent applications,
trademarks, trademark applications, registered copyrights, and domain names owned by any of the Debtors
as of the date hereof. Schedule F lists all material licenses in favor of any Debtor for the use of any patents,
trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the
Debtors have been duly recorded at the United States Patent and Trademark Office and all material
copyrights of the Debtors have been duly recorded at the United States Copyright Office.
(pp) Except as set forth on Schedule G attached hereto, none of the account debtors
or other persons or entities obligated on any of the Collateral is a governmental authority covered by the
Federal Assignment of Claims Act or any similar federal, state or local statute or rule in respect of such
Collateral.
5. Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement
consists of nonvoting equity or ownership interests (regardless of class, designation, preference or rights)
that may be converted into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is
agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement
of any of the Secured Party’ rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the Organizational Documents or
agreements to which any Debtor is subject or to which any Debtor is party.
6. Defaults. The following events shall be “Events of Default”:
(a) The occurrence of an Event of Default (as defined in the Notes) under the Notes;
(b) Any representation or warranty of any Debtor in this Agreement shall prove to
have been incorrect in any material respect when made;
(c) The failure by any Debtor to observe or perform any of its obligations hereunder
for two (2) Business Days; or
|
14 |
(d) If any provision of this Agreement shall at any time for any reason be declared to
be null and void, or the validity or enforceability thereof shall be contested by any Debtor, or a proceeding
shall be commenced by any Debtor, or by any governmental authority having jurisdiction over any Debtor,
seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any Debtor has
any liability or obligation purported to be created under this Agreement.
7. Duty To Hold In Trust.
(a) Upon the occurrence of any Event of Default and at any time thereafter, each
Debtor shall, upon receipt of any revenue, income, dividend, interest or other sums subject to the Security
Interest, whether payable pursuant to the Notes or otherwise, or of any check, draft, note, trade acceptance
or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured
Party and shall forthwith endorse and transfer any such sums or instruments, or both (to the extent permitted
by law), to the Secured Party for application to the satisfaction of the Obligations.
(b) If any Debtor shall become entitled to receive or shall receive any securities or
other property (including, without limitation, shares of Pledged Securities or instruments representing
Pledged Securities acquired after the date hereof, or any options, warrants, rights or other similar property or
certificates representing a dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection with any reorganization of such
Debtor or any of its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise), such Debtor agrees
to (i) accept the same as the agent of the Secured Party; (ii) hold the same in trust on behalf of and for the
benefit of the Secured Party; and (iii) to deliver any and all certificates or instruments evidencing the same to
the Secured Party on or before the close of business on the fifth Business Day following the receipt thereof
by such Debtor, in the exact form received together with the Necessary Endorsements, to be held by the
Secured Party subject to the terms of this Agreement as Collateral.
8. Rights and Remedies Upon Default.
(a) Upon the occurrence of any Event of Default and at any time thereafter, the
Secured Party, acting through any agent it appoints for such purpose, shall have the right to exercise all of
the remedies conferred hereunder and under the Notes, and the Secured Party shall have all the rights and
remedies of a secured party under the UCC. Without limitation, the Secured Party shall have the following
rights and powers to the extent permitted by applicable law:
(i) The Secured Party shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance of any person, any premises where the
Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall assemble
the Collateral and make it available to the Secured Party at places which the Secured Party shall reasonably
select, whether at such Debtor’s premises or elsewhere, and make available to the Secured Party, without
rent, all of such Debtor’s respective premises and facilities for the purpose of the Secured Party taking
possession of, removing or putting the Collateral in saleable or disposable form.
|
15 |
(ii) Upon notice to the Debtors by the Secured Party, all rights of each
Debtor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise
and all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized to
receive and retain, shall cease. Upon such notice, the Secured Party shall have the right to receive any
interest, cash dividends or other payments on the Collateral and, at its option, to exercise in its discretion all
voting rights pertaining thereto. Without limiting the generality of the foregoing, the Secured Party shall have
the right (but not the obligation) to exercise all rights with respect to the Collateral as if it were the sole and
absolute owners thereof, including, without limitation, to vote and/or to exchange, at its sole discretion, any
or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries.
(iii) The Secured Party shall have the right to operate the business of each
Debtor using the Collateral and shall have the right to assign, sell, lease or otherwise dispose of and deliver
all or any part of the Collateral, at public or private sale or otherwise, either with or without special conditions
or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times
and at such place or places, and upon such terms and conditions as the Secured Party may deem
commercially reasonable, all without (except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to any Debtor or right of redemption of a Debtor, which are
hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the
Secured Party may, unless prohibited by applicable law which cannot be waived, purchase all or any part of
the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of
any Debtor, which are hereby waived and released.
(iv) The Secured Party shall have the right (but not the obligation) to notify
any account debtors and any obligors under instruments or accounts to make payments directly to the
Secured Party and to enforce the Debtors’ rights against such account debtors and obligors.
(v) The Secured Party may (but is not obligated to) direct any financial
intermediary or any other person or entity holding any investment property to transfer the same to the
Secured Party or their designee.
(vi) The Secured Party may (but is not obligated to) transfer any or all
Intellectual Property registered in the name of any Debtor at the United States Patent and Trademark Office
and/or Copyright Office into the name of the Secured Party or any designee or any purchaser of any
Collateral.
|
16 |
(b) The Secured Party may comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral. The Secured Party may sell the Collateral without giving any
warranties and may specifically disclaim such warranties. If the Secured Party sells any of the Collateral on
credit, the Debtors will only be credited with payments actually made by the purchaser in cash. In addition,
to the extent permitted by applicable law, each Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Secured Party’ rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take immediate possession of the
Collateral and to exercise its rights and remedies with respect thereto.
(c) For the purpose of enabling the Secured Party to further exercise rights and
remedies under this Section 8 or elsewhere provided by agreement or applicable law, each Debtor hereby
grants to the Secured Party an irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Debtor) to use, license or sublicense following an Event of Default, any
Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same may be
located, and including in such license access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the compilation or printout thereof.
9. Applications of Proceeds. The proceeds of any such sale, lease or other disposition of
the Collateral hereunder shall be applied first, to the expenses of retaking, holding, storing, processing and
preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred
in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Secured Party in enforcing its rights hereunder and in connection with collecting, storing and disposing of
the Collateral, and then to satisfaction of the other Obligations, and to the payment of any other amounts
required by applicable law, after which the Secured Party shall pay to the applicable Debtor any surplus
proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient
to pay all amounts to which the Secured Party is legally entitled, the Debtors will be liable for the deficiency,
together with interest thereon, at the rate of eighteen percent (18%) per annum or the lesser amount
permitted by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed by the
Secured Party to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all
claims, damages and demands against the Secured Party arising out of the repossession, removal,
retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the
Secured Party as determined by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
|
17 |
10. Securities Law Provision. Each Debtor recognizes that the Secured Party may be
limited in its ability to effect a sale to the public of all or part of the Pledged Securities by reason of certain
prohibitions in the Securities Act of 1933, as amended, or other federal or state securities laws (collectively,
the “Securities Laws”), and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Pledged Securities for their own account, for
investment and not with a view to the distribution or resale thereof. Each Debtor agrees that sales so made
may be at prices and on terms less favorable than if the Pledged Securities were sold to the public, and that
the Secured Party has no obligation to delay the sale of any Pledged Securities for the period of time
necessary to register the Pledged Securities for sale to the public under the Securities Laws. Each Debtor
shall cooperate with the Secured Party in its attempt to satisfy any requirements under the Securities Laws
(including, without limitation, registration thereunder if requested by the Secured Party) applicable to the sale
of the Pledged Securities by the Secured Party.
11. Costs and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs
and expenses incurred in connection with any filing required hereunder, including without limitation, any
financing statements pursuant to the UCC, continuation statements, partial releases and/or termination
statements related thereto or any expenses of any searches reasonably required by the Secured Party. The
Debtors shall also pay all other claims and charges which in the reasonable opinion of the Secured Party
might prejudice, imperil or otherwise affect the Collateral or the Security Interest therein. The Debtors will
also, upon demand, pay to the Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which the Secured Party may
incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any
of the rights of the Secured Party under the Notes. Until so paid, any fees payable hereunder shall be added
to the principal amount of the Notes and shall bear interest at the Default Rate.
|
18 |
12. Responsibility for Collateral. The Debtors assume all liabilities and responsibility in
connection with all Collateral, and the Obligations shall in no way be affected or diminished by reason of the
loss, destruction, damage or theft of any of the Collateral or its unavailability for any reason. The Secured
Party agrees to act in accordance with commercially reasonable standards and the UCC. Without limiting
the generality of the foregoing, (a) no Secured Party (i) has any duty (either before or after an Event of
Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral,
or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall
remain obligated and liable under each contract or agreement included in the Collateral to be observed or
performed by such Debtor thereunder. The Secured Party shall have no obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party
of any payment relating to any of the Collateral, nor shall the Secured Party be obligated in any manner to
perform any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the Secured Party in respect of the
Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to the Secured Party may be entitled at any time or times.
13. Security Interest Absolute. All rights of the Secured Party and all obligations of the
Debtors hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of this Agreement, the Notes or any agreement entered into in connection with the foregoing,
or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of,
or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Notes or any other agreement entered into in connection with the foregoing; (c) any
exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or
consent to departure from any other collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Secured Party to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense available to a Debtor, or a discharge of all or
any part of the Security Interest granted hereby. Until the Obligations shall have been paid and performed in
full, the rights of the Secured Party shall continue even if the Obligations are barred for any reason,
including, without limitation, the running of the statute of limitations or bankruptcy. Each Debtor expressly
waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance.
In the event that at any time any transfer of any Collateral or any payment received by the Secured Party
hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable
preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall
be deemed to be otherwise due to any party other than the Secured Party, then, in any such event, each
Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or
satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions hereof. Each Debtor waives all
right to require the Secured Party to proceed against any other person or entity or to apply any Collateral
which the Secured Party may hold at any time, or to marshal assets, or to pursue any other remedy. Each
Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation
secured hereby.
|
19 |
14. Term of Agreement. This Agreement and the Security Interest shall terminate on the date
on which all payments under the Notes have been indefeasibly paid in full and all other Obligations have
been paid or discharged; provided, however, that all indemnities of the Debtors contained in this Agreement
shall survive and remain operative and in full force and effect regardless of the termination of this
Agreement.
15. Power of Attorney; Further Assurances.
(a) Each Debtor authorizes the Secured Party, and does hereby make, constitute
and appoint the Secured Party and its officers, agents, successors or assigns with full power of substitution,
as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the Secured Party or such
Debtor, to (i) endorse any note, checks, drafts, money orders or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in respect of the Collateral that may come
into possession of the Secured Party; (ii) sign and endorse any financing statement pursuant to the UCC or
any invoice, freight or express xxxx, xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other documents relating to the
Collateral; (iii) pay or discharge taxes, liens, security interests or other encumbrances at any time levied or
placed on or threatened against the Collateral; (iv) demand, collect, receipt for, compromise, settle and xxx
for monies due in respect of the Collateral; (v) transfer any Intellectual Property or provide licenses
respecting any Intellectual Property; and (vi) generally, at the option of the Secured Party, and at the
expense of the Debtors, at any time, or from time to time, execute and deliver any and all documents and
instruments and to do all acts and things which the Secured Party deems necessary to protect, preserve and
realize upon the Collateral and the Security Interest granted therein in order to effect the intent of this
Agreement and the Notes all as fully and effectually as the Debtors might or could do; and each Debtor
hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as
long as any of the Obligations shall be outstanding. The designation set forth herein shall be deemed to
amend and supersede any inconsistent provision in the Organizational Documents or other documents or
agreements to which any Debtor is subject or to which any Debtor is a party. Without limiting the generality
of the foregoing, after the occurrence and during the continuance of an Event of Default, the Secured Party
is specifically authorized to execute and file any applications for or instruments of transfer and assignment of
any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and
Trademark Office and the United States Copyright Office.
(b) On a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies in any jurisdiction, including,
without limitation, the jurisdictions indicated on Schedule C attached hereto, all such instruments, and take
all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the
Secured Party, to perfect the Security Interest granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a
perfected security interest in all the Collateral under the UCC.
|
20 |
(c) Each Debtor hereby irrevocably appoints the Secured Party as such Debtor’s
attorney-in-fact, with full authority in the place and instead of such Debtor and in the name of such Debtor,
from time to time in the Secured Party’ discretion, to take any action and to execute any instrument which
the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of such Debtor where permitted
by law, which financing statements may (but need not) describe the Collateral as “all assets” or “all personal
property” or words of like import, and ratifies all such actions taken by the Secured Party. This power of
attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as
long as any of the Obligations shall be outstanding.
16. Notices. All notices, requests, demands and other communications hereunder shall be
subject to the notice provision of the Loan Agreement.
17. Other Security. To the extent that the Obligations are now or hereafter secured by
property other than the Collateral or by the guarantee, endorsement or property of any other person, firm,
corporation or other entity, then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or
affecting any of the Secured Party’ rights and remedies hereunder.
18. Intentionally Omitted.
19. Miscellaneous.
(a) No course of dealing between the Debtors and the Secured Party, nor any failure
to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege
hereunder or under the Notes shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Notes or by any other agreements, instruments or documents or by
law shall be cumulative and may be exercised singly or concurrently.
|
21 |
(c) This Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof and is intended to supersede all prior negotiations, understandings and
agreements with respect thereto. Except as specifically set forth in this Agreement, no provision of this
Agreement may be modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.
(d) In the event any provision of this Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, unless such provision is narrowed by judicial construction,
this Agreement shall, as to such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of
such invalidity, prohibition or unenforceability without invalidating the remaining portion of such provision or
the other provisions of this Agreement and without affecting the validity or enforceability of such provision or
the other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver, and no such waiver shall be
deemed a waiver of any subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of each party
hereto and its successors and assigns.
(g) Each party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the provisions and purposes of this
Agreement.
(h) All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law thereof. Each Debtor agrees that
all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated
by this Agreement and the Notes (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each Debtor hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If any party shall commence a
proceeding to enforce any provisions of this Agreement, then the prevailing party in such proceeding shall
be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such proceeding.
|
22 |
(i) This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken together shall constitute one and
the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature
shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed)
the same with the same force and effect as if such facsimile signature were the original thereof.
(j) All Debtors shall jointly and severally be liable for the obligations of each Debtor
to the Secured Party hereunder.
(k) Each Debtor shall indemnify, reimburse and hold harmless the Secured Party
and its partners, members, shareholders, officers, directors, employees and agents (collectively,
“Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and
expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from
or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct
of the Indemnitee as determined by a final, nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any other indemnification provision in the
Notes, the Loan Agreement or any other agreement, instrument or other document executed or delivered in
connection herewith or therewith.
|
23 |
(l) Nothing in this Agreement shall be construed to subject the Secured Party to
liability as a partner in any Debtor or any if its direct or indirect subsidiaries that is a partnership or as a
member in any Debtor or any of its direct or indirect subsidiaries that is a limited liability company, nor shall
the Secured Party be deemed to have assumed any obligations under any partnership agreement or limited
liability company agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries or
otherwise, unless and until any the Secured Party exercises its right to be substituted for such Debtor as a
partner or member, as applicable, pursuant hereto.
(m) To the extent that the grant of the Security Interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any Debtor or any direct or
indirect subsidiary of any Debtor, such Debtor hereby grants, or shall cause its Subsidiary to grant, such
consent and approval and waive any such noncompliance with the terms of said documents. The Company
shall cause each of its subsidiaries formed or acquired on or subsequent to the date hereof to become a
Guarantor for all purposes of this Agreement by executing and delivering an Assumption Agreement in the
form attached as Annex 1 to the Subsidiary Guarantee.
|
[SIGNATURE PAGES FOLLOW] |
|
24 |
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed
on the day and year first above written.
|
__________________________________________ |
|
UNIVERSAL PROPERTY DEVELOPMENT AND ACQUISITION |
|
__________________________________________ |
|
CONTINENTAL TRADING ENTERPRIZES, INC. |
|
__________________________________________ |
|
US PETROLEUM DEPOT INC. |
|
__________________________________________ |
|
25 |
|
SHERIDAN ASSET MANAGEMENT LLC |
|
__________________________________________ |
|
26 |
