SECURITY AGREEMENT
(FORELAND ASPHALT CORPORATION--FIXTURES)
This Security Agreement (this "Agreement"), dated as of February 4, 1999,
is from FORELAND ASPHALT CORPORATION, a Utah corporation ("Debtor"), to ENERGY
INCOME FUND, L.P., a Delaware limited partnership ("Secured Party").
RECITALS
A. Foreland Corporation, a Nevada corporation ("Foreland Corp.") and
Secured Party are parties to a Financing Agreement dated as of January 6, 1998
(the "Original Financing Agreement") between Foreland Corp. and Eagle Springs
Production Limited Liability Company, a Nevada limited liability company ("Eagle
Springs"), as borrowers, and Secured Party.
B. By a First Amendment to Financing Agreement dated as of August 10,
1998 (the "First Amendment to Financing Agreement") by and among Foreland Corp.,
Eagle Springs, Foreland Refining Corporation, a Texas corporation ("Foreland
Refining"), Foreland Asset Corporation, a Nevada corporation ("Foreland Asset"),
Petrosource Transportation, a Utah corporation now known as Foreland
Transportation, Inc. ("Transportation"), and Debtor, as borrowers, and Secured
Party, the Original Financing Agreement was amended to, among other things, add
Debtor, Foreland Refining, Foreland Asset and Transportation as borrowers
thereunder. Foreland Corp., Eagle Springs, Foreland Refining, Foreland Asset,
Transportation and Debtor are referred to collectively as "Borrowers".
C. By a Second Amendment to Financing Agreement of even date herewith
(the "Second Amendment to Financing Agreement") by and among Borrowers and
Secured Party, Secured Party agreed to, on the terms and conditions set forth
therein, make Loans (as defined below) to Borrowers for the purpose of, among
other things, Debtor's acquisition of a membership interest in Cowboy Asphalt
Terminal, L.L.C., a Utah limited liability company ("Cowboy"). The Original
Financing Agreement as amended by the First Amendment to Financing Agreement and
the Second Amendment to Financing Agreement and as it may be further amended
from time to time is herein referred to as the "Financing Agreement".
D. Pursuant to the Financing Agreement, Secured Party has agreed to
extend credit by agreeing to make, subject to the terms and conditions set forth
in the Financing Agreement, the following loans (collectively, the "Loans") to
Borrowers: (i) a Refinancing Loan (as such term is defined in the Financing
Agreement) in an aggregate principal amount of up to $674,279.34; (ii) a
Development Loan (as such term is defined in the Financing Agreement) in an
aggregate principal amount of up to $7,175,720.66; and (iii) an Acquisition Loan
(as such term is defined in the Financing Agreement) in an aggregate principal
amount of up to $9,050,000, in each case in one or more advances and for the
purposes set forth in the Financing Agreement.
E. Debtor, Foreland Refining, Foreland Asset, and Eagle Springs are
wholly-owned subsidiaries of Foreland Corp., and Transportation is a wholly-
owned subsidiary of Foreland Asset. Debtor is the owner of a 33.33% membership
interest in Cowboy.
F. Cowboy owns the property, rights and interests described on Exhibit A
attached hereto (the "Cowboy Properties").
G. It is a condition precedent to such extension of credit by Secured
Party pursuant to the Financing Agreement that, among other things, Debtor shall
have executed and delivered to Secured Party a pledge and security agreement
granting to Secured Party a security interest in the Collateral (as defined
below).
AGREEMENT
In consideration of the foregoing recitals and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Secured Party to extend such credit under the Financing
Agreement, Debtor hereby agrees with Secured Party as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
Section 1.1. General Definitions. As used herein, the terms "Agreement,"
"Debtor," "Secured Party," "Foreland Corp.," "Original Financing Agreement,"
"Eagle Springs," "First Amendment to Financing Agreement," "Foreland Refining,"
"Foreland Asset," "Transportation," "Borrowers," "Second Amendment to Financing
Agreement," "Cowboy," "Financing Agreement," "Loans" and "Cowboy Properties"
shall have the meanings ascribed thereto above, and the following terms shall
have the following meanings:
(a) The term "Acquisition Note" shall mean the Acquisition Note,
dated as of January 6, 1998, in the maximum principal amount of $2,327,000
made by Foreland Corp. and Eagle Springs, as amended and supplemented by
First Allonge to Acquisition Note, dated August 10, 1998, and executed by
Borrowers, which, among other things, added Foreland Refining, Foreland
Asset, Transportation and Debtor as makers and obligors thereunder.
(b) The term "Affiliate" shall mean, with respect to any Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with such Person, and any other Person that is an officer, director, or
full-time employee of such other Person.
(c) The term "Business Day" shall mean any day on which national
banking institutions in Massachusetts are open for the transaction of
banking business.
(d) The term "Code" shall mean the Uniform Commercial Code currently
in effect in the Commonwealth of Massachusetts; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, priority or exercise of remedies of Secured Party's
security interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the Commonwealth of
Massachusetts, the term "Code" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection, priority or exercise of remedies
and for purposes of definitions related to such provisions.
(e) The term "Collateral" shall mean all property of whatever type,
in which Secured Party at any time has a security interest pursuant to
Section 2.1.
(f) The term "Commitment" shall mean the agreement or commitment by
Secured Party to make loans or otherwise extend credit to Borrowers under
the Financing Agreement, and any other agreement, commitment, statement of
terms or other document contemplating the making of loans or advances or
other extension of credit by Secured Party to or for the account of
Borrowers which is now or at any time hereafter intended to be secured by
the Collateral under this Agreement.
(g) The term "Cowboy Real Property" shall mean the real property
described on Exhibit A attached hereto, located in Xxxxx County, Utah, the
legal description of which is attached as Exhibit B hereto.
(h) The term "Default" shall mean any Event of Default or any event
that with the giving of notice or the passage of time, or both, would
constitute an Event of Default.
(i) The term "Development Note" shall mean the Development Note,
dated as of January 6, 1998, in the maximum principal amount of $13,893,000
made by Foreland Corp. and Eagle Springs, as amended and supplemented by
First Allonge to Development Note, dated August 10, 1998, and executed by
Borrowers, which, among other things, added Foreland Refining, Foreland
Asset, Transportation and Debtor as makers and obligors thereunder.
(j) The term "Environmental Laws" shall have the meaning ascribed
thereto in Subsection 3.1(f).
(k) The term "Event of Default" shall have the meaning ascribed
thereto in Section 5.1.
(l) The term "Fixtures" shall have the meaning ascribed thereto in
Subsection 2.1(a).
(m) The term "Hazardous Materials" shall have the meaning ascribed
thereto in Subsection 3.1(f).
(n) The term "Hydrocarbons" shall have the meaning ascribed thereto
in the Refinery Deed of Trust.
(o) The terms "Indemnified Party" and "Indemnified Parties" shall
have the meanings ascribed thereto in Article VI.
(p) The term "Lien" shall mean any lien, security interest, burden,
adverse claim, option, put, call, warrant or other charge, encumbrance or
restriction of any kind.
(q) The term "Notes" shall mean the Refinancing Note, the Development
Note and the Acquisition Note.
(r) The term "Obligations" shall mean all present and future
indebtedness, obligations and liabilities of whatever type which are or
shall be secured pursuant to Section 2.2.
(s) The term "Obligation Documents" shall mean this Agreement, the
Financing Agreement, the Notes, and all other documents and instruments
under, by reason of which, or pursuant to which any or all of the
Obligations are evidenced, governed, secured or otherwise dealt with, and
all other agreements, certificates, legal opinions, documents, instruments
and other writings heretofore or hereafter delivered in connection herewith
or therewith.
(t) The term "Other Collateral" shall mean all property, rights and
interests (present and future, personal and real, tangible and intangible)
of Borrowers (whether now owned or hereafter acquired by operation of law
or otherwise), or in which Borrowers otherwise (whether now or hereafter)
have any rights, including, without limitation, all fixtures, accounts,
goods, inventory, instruments, equipment, chattel paper, documents and
general intangibles (as such terms are defined in the Code), that now or
hereafter constitute or are intended to constitute security for any of the
Obligations under any Obligation Document but that do not constitute
Collateral under this Agreement.
(u) The term "Other Liable Party" shall mean any Person, other than
Debtor, who may now or may at any time hereafter be primarily or
secondarily liable for any of the Obligations or who may now or may at any
time hereafter have granted to Secured Party a security interest or lien
upon any property as security for the Obligations including, without
limitation, Borrowers.
(v) The term "Person" shall mean an individual, corporation,
association, partnership, limited liability company, joint stock company,
joint venture, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint venture, court or governmental unit or
any agency or subdivision thereof, or any legally recognizable entity.
(w) The term "Proposed Hydrocarbon Contracts" shall have the meaning
ascribed thereto in Section 3.2(t).
(x) The term "Refinancing Note" shall mean the Refinancing Note,
dated as of January 6, 1998, in the maximum principal amount of $680,000
made by Foreland Corp. and Eagle Springs, as amended and supplemented by
First Allonge to Refinancing Note, dated August 10, 1998, and executed by
Borrowers, which, among other things, added Foreland Refining, Foreland
Asset, Transportation and Debtor as makers and obligors thereunder.
(y) The term "Refinery Deed of Trust" shall mean the Deed of Trust,
Security Agreement, Assignment of Rents, Profits and Proceeds, Financing
Statement and Fixture Filing dated as of August 11, 1998, from Foreland
Corp., Foreland Refining and Foreland Asset, as debtors, to First American
Title Company of Nevada, as trustee for the benefit of Secured Party, and
recorded or to be recorded in the real property records of Xxx County,
State of Nevada.
(z) The term "Refinery Facilities" shall mean (i) the refinery and
related facilities located in part in the E/2 SE/4 of Section 24, T. 9 N.,
R. 56 E., M.D.M., County of Xxx, State of Nevada, and sometimes referred to
as the Eagle Springs Refinery, and (ii) the refinery and related facilities
located in part on 63 acres within or adjacent to the Tonopah Airport,
County of Xxx, State of Nevada.
(aa) The term "Related Person" shall mean Secured Party, each
Affiliate of Secured Party, each Other Liable Party and Cowboy.
(bb) The term "RTI Agreement" shall mean that certain Assignment and
Agreement entered into on September 11, 1998 by and among Cowboy, Crown Asphalt
Products Company, a Utah corporation, Debtor and Refinery Technologies, Inc., a
Utah corporation, a true and correct copy of which has previously been furnished
to Secured Party.
Section 1.2. References. Reference is hereby made to the Financing
Agreement for a statement of the terms thereof. All capitalized terms used in
this Agreement which are defined in the Financing Agreement and not otherwise
defined herein shall have the same meanings herein as set forth therein. All
terms used in this Agreement which are defined in Article 9 of the Code and not
otherwise defined herein or in the Financing Agreement shall have the same
meanings herein as set forth therein, except where the context otherwise
requires.
Section 1.3. Exhibits and Schedules. All exhibits and schedules attached
to this Agreement are a part hereof for all purposes.
Section 1.4. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including without
limitation, references in Section 2.1) also refer to and include all renewals,
extensions, amendments, modifications, supplements or restatements of any such
agreement, instrument or document, provided that nothing contained in this
Section 1.4 shall be construed to authorize any Person to execute or enter into
any such renewal, extension, amendment, modification, supplement or restatement.
Section 1.5. References and Titles. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, Subsections, and other subdivisions
refer to the Exhibits, Schedules, Articles, Sections, Subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles and
headings appearing at the beginning of any subdivision are for convenience only
and do not constitute any part of any such subdivision and shall be disregarded
in construing the language contained in this Agreement. The words "this
Agreement", "herein", "hereof", "hereby", "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The phrases "this Section" and "this Subsection"
and similar phrases refer only to the Sections or Subsections hereof in which
the phrase occurs. The word "or" is not exclusive. Pronouns in masculine,
feminine and neuter gender shall be construed to include any other gender.
Words in the singular form shall be construed to include the plural, and words
in the plural form shall be construed to include the singular, unless the
context otherwise requires.
ARTICLE II
SECURITY INTEREST
Section 2.1. Grant of Security Interest. As security for all of the
Obligations, Debtor hereby pledges and assigns to Secured Party and grants to
and for the benefit of Secured Party a continuing security interest in all of
the following whether now owned or hereafter acquired (by operation of law of
otherwise):
(a) Fixtures. All fixtures in any form and of any kind located on
the Cowboy Real Property, whether now or hereafter existing, which are
owned by Debtor or in which Debtor otherwise has any rights (any and all of
the foregoing herein collectively called "Fixtures").
(b) Proceeds. All proceeds and products of, and accessions to, any
and all of the foregoing and, to the extent not otherwise included, any
payments under insurance (whether or not Secured Party is the loss payee
thereof) or under any indemnity, warranty or guaranty by reason of loss to
or otherwise with respect to any of the foregoing.
In each case, the foregoing shall be covered by this Agreement, whether Debtor's
ownership or other rights therein are presently held or hereafter acquired (by
operation of law or otherwise) and howsoever Debtor's interests therein may
arise or appear (whether by ownership, security interest, claim or otherwise).
Section 2.2. Obligations Secured. The security interest created hereby
in the Collateral constitutes a continuing security interest for all of the
following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred or arising:
(a) Credit Payment. The payment by Borrowers, as and when due and
payable, of all amounts from time to time owing by Borrowers, or any of
them, under or with respect to the Financing Agreement, the Notes and the
other Obligation Documents or any other instrument now or hereafter
delivered in connection with or as security for the Financing Agreement,
the Notes or the other Obligation Documents or any part thereof.
(b) Other Indebtedness. All loans and future advances made by
Secured Party to Borrowers, or any of them, and all other debts,
obligations and liabilities of every kind and character of Borrowers, or
any of them, now or hereafter existing in favor of Secured Party, whether
such debts, obligations or liabilities be direct or indirect, primary or
secondary, joint or several, fixed or contingent, and whether originally
payable to Secured Party or to a third party and subsequently acquired by
Secured Party and whether such debts, obligations or liabilities are
evidenced by notes, open account, overdraft, indorsement, security
agreement, guaranty or otherwise (it being contemplated that one or more of
Borrowers may hereafter become indebted to Secured Party in further sum or
sums but Secured Party shall have no obligation to extend further
indebtedness by reason of this Agreement).
(c) Performance. The due performance and observance by Borrowers of
all of their other obligations and undertakings from time to time existing
under or with respect to the Obligation Documents or any other instrument
now or hereafter delivered in connection with or as security for any of the
Obligation Documents.
(d) Renewals. All renewals, extensions, amendments, modifications,
supplements or restatements of or substitutions for any of the foregoing.
Section 2.3 Delivery of Collateral. All certificates and instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of Secured Party pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party. Secured Party shall have the right at any time, in its
discretion and without notice to Debtor, to transfer to or register in the name
of Secured Party or any of its nominees any or all of the Collateral.
Section 2.4 Limitation on Recourse. Except as otherwise provided
herein, in no event shall Debtor have any personal liability for payment of
principal and interest on the Notes. Secured Party shall look solely to the
Collateral for the payment of such principal and interest and shall not seek a
deficiency or other personal judgment against Debtor for such principal and
interest in the event that any sale of the Collateral shall be insufficient to
satisfy the Notes. Nothing herein contained shall, however, impair any right,
remedy or security of Secured Party with respect to the Collateral under this
Agreement, the Notes, the Financing Agreement or any other Obligation Document,
nor limit Debtor's obligations to perform any of Debtor's other obligations
under this Agreement, the Notes, the Financing Agreement or any other Obligation
Document, including, without limitation, Secured Party's obligation to indemnify
Secured Party as set forth in the Obligation Documents. Notwithstanding the
foregoing limitation of recourse, Debtor shall remain fully liable for:
(a) Fraud, breach of trust, or any material misrepresentation by
Debtor or any other Borrower in the Obligation Documents or any other
documents or instruments evidencing, securing or relating to the Loans;
(b) Waste of a material nature to any part of the Collateral or the
Other Collateral caused by Debtor's or any other Borrower's gross
negligence or willful and wanton neglect or abuse of the Collateral or the
Other Collateral or, with respect to portions of the Collateral and Other
Collateral not operated by any of the Borrowers, failure to exert
reasonable control appropriate for an owner that is not also the operator;
(c) Failure to pay taxes, insurance, assessments, charges for labor
or materials, or other charges, fees or assessments that can create or
result in liens on any portion of the Collateral or the Other Collateral;
(d) Any beaches of warranty or defects of title to the Collateral or
the Other Collateral;
(e) Any breach of a warranty or representation contained in this
Agreement or any other Obligation Document; failure to perform any covenant
or other agreement contained in this Agreement or any other Obligation
Document, or any indemnity contained in this Agreement or any other
Obligation Document;
(f) Any attempt to communicate in any manner with the purchasers of
Hydrocarbons or other products from the Collateral or Other Collateral
after the delivery to such purchasers of a notice directing payments to be
made directly to Secured Party (as set forth in section 3.1 of the Refinery
Deed of Trust) in an attempt to hinder or interfere with the rights of
Secured Party;
(g) The return of, or reimbursement for, all monies received by
Debtor or any other Borrower from the purchasers of Hydrocarbons or other
products from the Collateral or Other Collateral for monies attributable to
Hydrocarbons or other products from the Collateral or Other Collateral
after receipt by any such purchaser of a notice directing payments to be
made directly to Secured Party;
(h) Any attempt to hinder or interfere with the foreclosure of or
other realization on the Collateral or the Other Collateral (whether by
judicial action, power of sale, trustee's sale or otherwise), including
without limitation the filing of a lis pendens, the initiation of any
lawsuit or the requesting of injunctive relief from any court or tribunal,
having the effect of hindering or delaying the exercise by Secured Party
(or the Trustee under the Refinery Deed of Trust) of any right or remedy
under this Agreement or any other Obligation Document; and
(i) After an Event of Default, Debtor or any other Borrower shall
fail or refuse to execute and deliver to Secured Party any instrument
reasonably requested by Secured Party and prepared at Borrowers' expense,
which is necessary to fully vest title to the Collateral or the Other
Collateral in Secured Party or the purchaser(s) of all or part of the
Collateral or the Other Collateral pursuant to any sale as provided for in
this Agreement or any other Obligation Document.
Debtor shall be fully and personally liable for all attorneys' fees
and costs and expenses incurred by Debtor arising out of any of the
foregoing paragraphs (a) through (i).
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. Representations and Warranties. Debtor represents and
warrants as follows:
(a) Corporate Matters; Enforceability. Debtor is a corporation duly
organized, validly existing and in good standing in the State of Utah, and
Debtor is duly qualified as a foreign corporation and in good standing in
each jurisdiction where such qualification is necessary or appropriate.
The execution and delivery of this Agreement and the performance by Debtor
of the transactions contemplated herein are within Debtor's corporate
powers and have been duly authorized by all necessary action, corporate and
otherwise. This Agreement constitutes the legal, valid and binding
obligations of Debtor, enforceable against Debtor in accordance with its
terms.
(b) Ownership and Liens. Debtor has good and marketable title to the
Collateral free and clear of all Liens, except for the security interest
created by this Agreement, the RTI Agreement and the security interests and
other encumbrances expressly permitted by the Financing Agreement. No
dispute, right of setoff, counterclaim or defense exists with respect to
all or any part of the Collateral. No effective financing statement or
other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except such as may have been
filed in favor of Secured Party relating to this Agreement and such as may
have been filed to perfect or protect any security interest expressly
permitted by the Financing Agreement. Cowboy is the owner of record of the
Cowboy Real Property, a true and correct legal description of which is set
forth on Exhibit B hereto.
(c) No Conflicts or Consents. Neither the ownership or the intended
use of the Collateral by Debtor, nor the grant of the security interest by
Debtor to Secured Party herein, nor the exercise by Secured Party of its
rights or remedies hereunder, will (i) conflict with any provision of
(A) any applicable domestic or foreign law, statute, rule or regulation,
(B) the articles or certificate of incorporation, charter or bylaws of
Debtor, or (C) any agreement, judgment, license, order or permit applicable
to or binding upon Debtor, or (ii) result in or require the creation of any
lien, charge or encumbrance upon any assets or properties of Debtor or any
Related Person except as expressly contemplated in the Obligation
Documents. Except as expressly contemplated in the Obligation Documents or
the LLC Agreement, no consent, approval, authorization or order of, and no
notice to or filing with any court, governmental authority or third party
is required in connection with the grant by Debtor of the security interest
herein, or the exercise by Secured Party of its rights and remedies
hereunder.
(d) Security Interest. Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral
to Secured Party in the manner provided herein, free and clear of any Lien,
except as expressly permitted in the Financing Agreement. This Agreement
creates a valid and binding security interest in favor of Secured Party in
the Collateral securing the Obligations. The taking possession by Secured
Party of all instruments and cash constituting Collateral from time to
time, the filing of the financing statements delivered concurrently
herewith by Debtor to Secured Party will perfect, and establish the first
priority of, Secured Party's security interest hereunder in the Collateral
securing the Obligations. No further or subsequent filing, recording,
registration, other public notice or other action is necessary or desirable
to perfect or otherwise continue, preserve or protect such security
interest except for continuation statements or filings upon the occurrence
of the events stated in Subsection 3.3(m).
(e) Location of Borrowers, Records and Collateral. Schedule 3.1(e)
sets forth the addresses of Borrowers' chief executive offices and
principal places of business, the offices where the records concerning the
Collateral and the Other Collateral are kept, and the addresses where the
Collateral and the Other Collateral is located.
(f) Environmental. (i) The Collateral and the Other Collateral is,
and, except as previously disclosed to Secured Party in writing, to the
best of Debtor's knowledge, at all times has been, operated in compliance
with all applicable Environmental Laws (as hereinafter defined); and,
except as previously disclosed to Secured Party in writing, to the best of
Debtor's knowledge, no condition exists with respect to the Collateral, the
Other Collateral, or other property owned or operated by Borrowers or any
affiliate of or party related to Borrowers that would or could reasonably
be expected to subject Borrowers, any affiliate of or party related to
Borrowers, or Secured Party to any damages (including without limitation,
actual, consequential, exemplary and punitive damages), material liability
(absolute or contingent, determined or determinable), penalties, injunctive
relief or cleanup costs under any applicable Environmental Laws, or that
require or could reasonably be expected to require cleanup, removal,
remedial action or other response by Borrowers, any affiliate of or party
related to Borrowers, or Secured Party pursuant to any applicable
Environmental Laws.
(ii) Borrowers have not received and, to the best of Debtor's
knowledge, none of their affiliates have received, and none of Borrowers'
or their affiliates' or related parties' predecessors in title to the
Collateral and the Other Collateral have received, any notice from a
governmental agency asserting or alleging a violation of any Environmental
Laws as they relate to the Collateral and the Other Collateral.
(iii) There are no pending or threatened suits, actions,
claims or proceedings against Borrowers or their affiliates or related
parties or, to the best of Debtor's knowledge, Borrowers' or their
affiliates' predecessors in title, arising from or related to, directly or
indirectly, any Environmental Laws as they relate to the Collateral and the
Other Collateral.
(iv) Neither Borrowers, any affiliate of or party related to
Borrowers, any part of the Collateral or the Other Collateral, nor, to the
best of Debtor's knowledge, Borrowers' or any affiliate's or related
parties' predecessors are subject to any judgment, decree, order or
citation related to or arising out of any Environmental Laws, and neither
Borrowers nor any affiliate or party related to Borrowers have been named
or listed as a potentially responsible party by any governmental or other
entity in a matter arising under or relating, directly or indirectly, to
any Environmental Laws.
(v) Borrowers have obtained or caused to be obtained all
permits, licenses, and approvals required under all Environmental Laws to
operate the Collateral and the Other Collateral.
(vi) Except as previously disclosed to Secured Party in writing,
there are not now, nor to the best of Debtor's knowledge have there ever
been, Hazardous Materials (as hereinafter defined) discharged, leaked,
spilled or released in, on, to, from or at the Collateral, the Other
Collateral or other properties owned or operated by Borrowers or any of
their affiliates or stored, treated, or recycled at or in tanks or other
facilities thereon or related thereto which give rise or could reasonably
be expected to give rise to material liability under any Environmental
Laws.
(vii) The use which Borrowers make and intend to make of the
Collateral and the Other Collateral will not result in: (a) the use or
storage of any Hazardous Materials on, in or in connection with the
Collateral or the Other Collateral, or disposal of any Hazardous Materials
from the Collateral or the Other Collateral except in compliance with all
applicable Environmental Laws, or (b) the treatment, processing, discharge
or release of any Hazardous Materials on, in, to or from the Collateral or
the Other Collateral except in compliance with all applicable Environmental
Laws.
(viii) There are no underground storage tanks, surface
impoundments, or wastewater injection xxxxx located on or in the Collateral
or the Other Collateral.
As used herein, the term "Environmental Laws" shall mean any one
or more of the following: (1) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendment and Reauthorization Act of 1986, 42 U.S.C. S 9601 et seq.
("CERCLA"); (2) the Resource Conservation and Recovery Act, as amended by
the Hazardous and Solid Waste Amendment of 1984, 42 U.S.C. S 6901 et seq.
("RCRA"); (3) the Clean Air Act, 42 U.S.C. S 7401 et seq.; (4) the Federal
Water Pollution Control Act, 33 U.S.C. S 1251 et seq.; (5) the Toxic
Substances Control Act, 15 U.S.C. S 2601 et seq.; (6) the Federal Safe
Drinking Water Act, 42 U.S.C. SS 300f to 300j-11; (7) the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. S 1101 et seq.;
(8) the Hazardous Materials Transportation Act, 49 U.S.C. S 1801 et seq.;
and (9) all other foreign, federal, state, tribal and local laws (whether
common or statutory), rules, regulations, consent agreements, compliance
schedules, and orders directly and/or indirectly relating to public health
and safety, air pollution, water pollution, noise control, wetlands,
oceans, waterways, and/or the presence, use, generation, manufacture,
transportation, processing, treatment, handling, discharge, release,
disposal, or recovery of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or materials and/or underground
storage tanks, including, without limitation, all rules, regulations and
orders of all state and local governmental bodies, authorities and agencies
pertaining or relating to the exploration, development, regulation and
conservation of oil and gas resources, as each of the foregoing laws,
rules, regulations, consent agreements, compliance schedules and orders may
be enacted, amended, supplemented, or reauthorized from time to time.
As used herein, the term "Hazardous Materials" shall mean any one
or more of the following substances, wastes and materials: (1) any
substance, waste or material defined as a "hazardous substance," "hazardous
material," "hazardous waste," "pollutant," "contaminant," "toxic material,"
or "toxic substance," in any of the applicable Environmental Laws, or in
the standards, criteria, rules and/or regulations promulgated pursuant to
any of said Environmental Laws (including without limitation Hydrocarbons);
and (2) any substance, waste or material, the presence of which requires
investigation or remediation under any Environmental Laws.
Section 3.2. Affirmative Covenants. Unless Secured Party shall otherwise
consent in writing, Debtor shall at all times comply with the covenants and
agreements contained in this Section 3.2 from the date hereof and so long as any
part of the Obligations or the Commitment is outstanding.
(a) Ownership and Liens. Debtor shall maintain good and marketable
title to all Collateral free and clear of all liens, security interests,
adverse claims or other charges or encumbrances, except for the security
interest created by this Agreement and the security interests and other
encumbrances expressly permitted by the Financing Agreement. Debtor shall
use its best efforts to resolve any dispute, right of setoff, counterclaim
or defense with respect to all or any part of the Collateral. Debtor shall
cause to be terminated any financing statement or other security instrument
with respect to the Collateral, except such as may exist or as may have
been filed in favor of Secured Party and such as may exist or as may have
been filed to perfect or protect any security interest expressly permitted
by the Financing Agreement. Debtor shall defend Secured Party's right,
title and special property and security interest in and to the Collateral
against the claims of any Person.
(b) Further Assurances. Debtor shall, at its expense and at any time
and from time to time, promptly execute and deliver all further instruments
and documents and take all further action that may be necessary or
desirable or that Secured Party may reasonably request in order (i) to
perfect and protect the security interest created or purported to be
created hereby and the first priority of such security interest; (ii) to
enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to the Collateral; or (iii) to otherwise effect the
purposes of this Agreement, including without limitation (A) executing and
filing such financing or continuation statements, or amendments thereto, as
may be necessary or desirable or that Secured Party may request in order to
perfect and preserve the security interest created or purported to be
created hereby, and (B) furnishing to Secured Party from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party
may reasonably request, all in reasonable detail.
(c) Information. Debtor shall furnish to Secured Party any
information that Secured Party may from time to time reasonably request
concerning any covenant, provision or representation contained herein or
any other matter in connection with the Collateral or Obligation Documents.
(d) Chattel Paper, Documents, Instruments and Cash. Debtor shall at
all times cause any certificates, chattel paper, documents or instruments
which are a part of the Collateral to be valid and genuine. Debtor shall
cause all chattel paper included in the Collateral to have only one
original counterpart which constitutes chattel paper or collateral within
the meaning of the Code or the law of any applicable jurisdiction. Upon
request by Secured Party, Debtor shall deliver to Secured Party all cash
and all originals of certificates, chattel paper, documents or instruments
which are included in the Collateral. Upon request by Secured Party,
Debtor shall xxxx each chattel paper which is a part of the Collateral with
a legend indicating that such chattel paper is subject to the security
interest granted by this Agreement.
(e) Punctual Payment and Performance. Debtor shall, and shall cause
the other Borrowers to, duly and punctually pay the principal and interest
on the Loans and to perform all its obligations and covenants under the
Obligation Documents.
(f) Existence; Maintenance of Collateral. Debtor shall, and shall
cause each other Borrower to, do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence,
rights and franchises, except when failure to do so would not have a
material adverse effect on Debtor or such other Borrower, as the case may
be. Debtor shall, and shall cause each other Borrower to, cause all of its
property, rights and interests that constitute Collateral or Other
Collateral under any Obligation Document and its business to be maintained
and kept, in accordance with sound field practices, in good condition,
repair and working order and supplied with all necessary equipment and
shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof.
(g) Title to Properties. Debtor shall, and shall cause each other
Borrower to, maintain good and marketable title to all of its property,
rights and interests that constitute Collateral or Other Collateral under
any Obligation Document, free and clear of all Liens, except for Liens
expressly permitted by the Financing Agreement. Debtor shall, and shall
cause each other Borrower to, warrant and forever defend its right, title
and interest in such property and assets against the claims and demands of
every Person whatsoever claiming or which may claim the same or any part
thereof. Debtor shall cause Cowboy Asphalt Terminal, L.L.C. to maintain
good and marketable title to the Cowboy Real Property and the buildings,
improvements and structures described on Exhibit A hereto or located on the
Cowboy Real Property by or on behalf of Cowboy after the date of this
Agreement (excluding buildings, improvements and structures either (i)
located on the Cowboy property by a member of Cowboy other than Debtor on
its own behalf that do not constitute Cowboy property or (ii) designated
for the exclusive use of a member of Cowboy other than Debtor in accordance
with the LLC Agreement), and to warrant and forever defend its right, title
and interest in such property and assets against the claims and demands of
every Person whatsoever claiming or which may claim the same or any part
thereof.
(h) Insurance. Debtor shall, and shall cause each other Borrower to,
acquire and continue to maintain, with financially sound and reputable
insurers, insurance with respect to its respective properties and business
against such liabilities, casualties, risks and contingencies and in such
types and amounts as is customary in the case of Persons engaged in the
same or similar businesses and similarly situated; provided, however, that
Debtor shall, and Debtor shall cause each other Borrower to, maintain
liability insurance in the amount of not less than $2,000,000 with a
deductible not to exceed $25,000 per claim. Debtor shall, and shall cause
each other Borrower to, furnish or cause to be furnished copies of binders
relating to such insurance to Secured Party prior to Funding and from time
to time a summary of the insurance coverage of Debtor and the other
Borrowers in form and substance satisfactory to Secured Party and if
requested to furnish Secured Party copies of the applicable policies. In
the case of any fire, accident or other casualty causing loss or damage to
the properties of Debtor or any other Borrower, Debtor shall, and shall
cause such Borrower to, use the proceeds of such policies (i) to repair or
replace the damaged property, or (ii) subject to Secured Party's prior
written consent and notwithstanding any restriction on prepayment, to
prepay the Obligations without premium or penalty.
(i) Taxes and Other Claims. Debtor shall, and shall cause each other
Borrower to, duly pay and discharge before the same shall become due or
delinquent all taxes, assessments and other governmental charges imposed
upon Debtor or such Borrower, as the case may be, and its respective
properties, sales and activities, or any part thereof, or upon the income
or profits therefrom, or burdening any of Debtor's or such Borrower's
properties or assets, as the case may be, as well as all claims for labor,
materials or supplies, including all claims incurred in connection with the
operation of Debtor's and such Borrower's respective businesses, properties
and assets, which if unpaid might by law become a lien or charge upon any
of Debtor's or such Borrower's property; provided, however, that any such
tax, assessment, charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested by Debtor or such Borrower, as
the case may be, in good faith by appropriate proceedings and if Debtor or
such Borrower, as the case may be, shall have set aside on its books
adequate reserves with respect thereto; and provided, further, that Debtor
shall, and shall cause each other Borrower to, pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security
therefor.
(j) Securities Filings. Debtor shall, and shall cause each other
Borrower to, duly file or cause to be filed, within the times and within
the manner prescribed by law (including all permitted extensions), all
federal and state securities and blue sky filings that are required to be
filed by, or with respect to, Debtor or such Borrower, as the case may be,
including without limitation all filings required to be made pursuant to
the Securities Exchange Act of 1934, as amended. Debtor shall, and shall
cause each other Borrower to, deliver to Secured Party copies of all
filings made by such Person with the Securities and Exchange Commission and
any state securities commission or agency within three days of such filing.
If a filing to be made by Debtor or any other Borrower with the Securities
and Exchange Commission or a state securities commission or agency refers
to Secured Party, preliminary copies of such filing shall be delivered to
Secured Party and to Secured Party's counsel no later than five Business
Days prior to such filing with a final copy delivered to Secured Party at
the time of filing. Debtor shall, and shall cause each other Borrower to,
deliver to Secured Party copies of all press releases at the time of
release; unless such release refers to Secured Party, in which case advance
copies shall be delivered to Secured Party and to Secured Party's counsel
no later than two Business Days prior to such release.
(k) Inspection of Properties and Books. Debtor shall, and shall
cause each other Borrower to, permit Secured Party and its authorized
representatives to (i) visit and inspect any of its properties and to
examine its books and records (and to make copies thereof and extracts
therefrom; provided, that Secured Party will use its reasonable efforts to
preserve the confidentiality of any information derived therefrom), and
(ii) discuss the affairs, finances and accounts of Debtor or such Borrower,
as the case may be, with, and to be advised as to the same by, the officers
of Debtor and such Borrower, independent accountants, and independent
engineers all at such reasonable times and intervals as Secured Party may
reasonably request.
(l) Compliance with Laws, Contracts, Licenses and Permits. Debtor
shall, and shall cause each other Borrower to, comply with (i) all Permits
and Requirements of Law, (ii) the provisions of its charter or
organizational documents and bylaws, (iii) all agreements and instruments
by which it or any of its properties may be bound, and (iv) all applicable
decrees, orders and judgments, except in each case where noncompliance
would not have a material adverse effect on the business, assets or
financial condition of Debtor or such Borrower, as the case may be. If at
any time while any part of the Obligations or the Commitment is
outstanding, any authorization, consent, approval, permit or license from
any officer, agency or instrumentality of any government shall become
necessary or required in order that Debtor or any other Borrower may
fulfill any of its obligations under any Obligation Document, Debtor shall,
and shall cause such Borrower to, immediately take all reasonable steps
within its power to obtain such authorization, consent, approval, permit or
license and furnish Secured Party with evidence thereof.
(m) Litigation. Debtor shall, and shall cause each other Borrower
to, promptly give Secured Party notice of all legal or arbitral
proceedings, and of all proceedings before any governmental or regulatory
authority or agency, to which Debtor or such Borrower is a party or which
affects Debtor or such Borrower and of which Debtor or such Borrower is
aware, except for proceedings before any governmental or regulatory
authority or agency occurring in the ordinary course of Debtor's or such
Borrower's business, and that would not have a material adverse effect upon
Debtor's or such Borrower's business or its properties and assets if
determined adversely to Debtor or such Borrower, as the case may be.
(n) Notices. Debtor shall, and shall cause each other Borrower to,
promptly after acquiring knowledge thereof, notify Secured Party in writing
of the occurrence of any Event of Default and of any material adverse
change in the business, assets or financial condition of Debtor or such
Borrower, as the case may be. If any Person shall give any notice or take
any other action with respect to a claimed default (whether or not
constituting an Event of Default) under any Obligation Document or any
other note, evidence of indebtedness, indenture or other obligation to
which or with respect to which Debtor or any other Borrower is a party or
obligor, whether as principal or surety, Debtor shall, and shall cause such
Borrower to, forthwith give written notice thereof to Secured Party,
describing the notice or action and the nature of the claimed default.
Debtor shall, and shall cause each other Borrower to, promptly notify
Secured Party (i) if any representation or warranty of Debtor or such
Borrower contained in this Agreement or any other Obligation Document is
discovered to be or becomes untrue, or (ii) if Debtor or such Borrower
fails to perform or comply with any covenant or agreement contained in this
Agreement or any other Obligation Document or it is reasonably anticipated
that Debtor or such Borrower will be unable to perform or comply with any
covenant or agreement contained in this Agreement or any other Obligation
Document. Debtor shall, and shall cause each other Borrower to, cause all
the representations and warranties of Borrowers contained in this Agreement
and the other Obligation Documents to be true and correct in all material
respects from time to time and at all times.
(o) Use of Loan Proceeds. Debtor shall, and shall cause each other
Borrower to, use the proceeds of the Loans solely for the purposes
expressly permitted by the Financing Agreement. Debtor shall, and shall
cause each other Borrower to, maintain any funds that have been advanced
for such purposes, but not expended, at a depository institution
satisfactory to Secured Party and Debtor shall, and shall cause such
Borrower to, deliver copies of all invoices for expenditure of such funds
to Secured Party.
(p) Key Employee. Debtor shall cause Foreland Corp. to continue to
employ N. Xxxxxx Xxxxxx as President of Foreland Corp. on a full-time basis
with substantially the same responsibilities as of the date of this
Agreement.
(q) Environmental Laws Compliance. Debtor shall, and shall cause
each other Borrower to:
(i) Comply with all applicable Environmental Laws as they relate
to the Properties and shall, and shall cause each other Borrower to,
maintain and obtain, or cause to be maintained and obtained, all permits,
licenses and approvals now or hereafter required under all applicable
Environmental Laws as they relate to the Collateral and the Other
Collateral;
(ii) Not do or permit anything to be done that will subject the
Collateral or the Other Collateral, Debtor, any other Borrower or Secured
Party to any liability under any applicable Environmental Laws as they
relate to the Collateral and the Other Collateral, assuming disclosure to
governmental authorities of all relevant facts, conditions and
circumstances, if any, pertaining to the Collateral or the Other
Collateral;
(iii) Promptly notify Secured Party in writing of any
Environmental Complaint relating to the Collateral or the Other Collateral
which is known to Debtor or such Borrower, as the case may be, or any other
existing, pending or threatened investigation or inquiry by any
governmental authority relating to the Collateral or the Other Collateral
known to Debtor or such Borrower, as the case may be, and in connection
with any applicable Environmental Laws.
(iv) Take, or cause to be taken, all steps necessary to determine
that no Hazardous Materials have been: (i) used or stored on, in or in
connection with any Collateral or Other Collateral that Debtor or any other
Borrower acquires with any funds that Debtor or such Borrower receives from
Secured Party in accordance with the Financing Agreement, or disposed from
such Collateral or Other Collateral, or (ii) treated, processed,
discharged, or released on, to, in or from such Collateral or Other
Collateral, except, in each case, in full compliance with all applicable
Environmental Laws;
(v) Not cause or permit: (i) the use or storage of Hazardous
Materials on, in or in any manner in connection with the Collateral or
Other Collateral, or (ii) the treatment, processing, discharge or release
of any Hazardous Materials on, to, in or from the Collateral or Other
Collateral, except, in each case, in full compliance with all applicable
Environmental Laws;
(vi) Keep, or cause the Collateral and the Other Collateral to be
kept, free of any and all Hazardous Materials, and shall, and shall cause
each other Borrower to, remove the same (or if removal is prohibited by
applicable law, shall, and shall cause each other Borrower to, take
whatever action is required by applicable law) promptly upon discovery of
such Hazardous Materials at Borrowers' sole cost and expense, except in
full compliance with all applicable Environmental Laws; and
(vii) Provide, upon Secured Party's reasonable request, at
any time, and from time to time, inspections, tests and audits of the
Collateral and the Other Collateral from an engineering or consulting firm
approved by Secured Party indicating the presence or absence of Hazardous
Materials on the Collateral and the Other Collateral and compliance with
all applicable Environmental Laws.
(r) Change of Control. Debtor shall, and shall cause each other
Borrower to, use its best efforts to not permit a Change of Control to
occur and shall, and shall cause each other Borrower to, notify Secured
Party within five Business Days of obtaining information that a Change in
Control of such Person may occur or is contemplated by any Person.
(s) Operation of Assets. Debtor shall operate the Collateral and
shall cause the other Borrowers to operate the Other Collateral, including
without limitation the Refinery Facilities, continuously in a good and
workmanlike manner, in accordance with the best usage of operators of
similar facilities and assets and in accordance with industry standards,
and in conformity in all material respects with all applicable laws, rules,
regulations and orders of all federal, state, tribal and local governmental
bodies, authorities and agencies and in conformity in all material respects
with the provisions of all leases, licenses, subleases, sublicenses,
permits, easements, rights-of-way, servitudes, franchises, grants,
certificates and authorizations or other contracts and agreements
comprising a part of the Collateral or Other Collateral.
(t) Contract Approval. Debtor shall, and shall cause each other
Borrower to, submit to Secured Party for its review and approval at least
ten days in advance of the date such Borrower intends to enter into a
contract (including a modification or amendment of any existing contract),
each proposed contract for the refining, fractionating, treatment,
marketing, purchase, sale, transportation, exchange, manufacturing or
processing of Hydrocarbons if such contract was not in effect as of the
date of this Agreement and has a term of ninety days or more ("Proposed
Hydrocarbon Contracts"). Debtor shall not, and shall cause each other
Borrower not to, enter into any Proposed Hydrocarbon Contracts that
establish pricing and have a term of one year or more or make deliveries
thereunder without obtaining Secured Party's prior written approval, which
approval shall not be unreasonably withheld if Secured Party's security
position is not adversely affected thereby.
(u) Additional Information. For so long as any part of the
Obligations or the Commitment is outstanding, Debtor shall, and shall cause
each other Borrower to, permit Secured Party to substantially participate
in, and influence the conduct of, management of Borrowers through the
exercise of any and all of the following rights (provided, however, that
Secured Party shall have no right to direct the management of any
Borrower):
(i) promptly provide to Secured Party such information as
Secured Party shall reasonably request regarding Debtor's or such
Borrower's business, financial condition and prospects;
(ii) if Secured Party reasonably believes that financial or other
developments affecting Debtor or such Borrower have impaired or are likely
to impair Debtor's or such Borrower's ability to perform its obligations
under this Agreement, permit Secured Party, upon request, reasonable access
to Debtor's and such Borrower's management or Board of Directors to present
its views with respect to such developments;
(iii) provide to Secured Party the financial information
required in Section 7.3 of the Financing Agreement; and
(iv) permit Secured Party to make the examinations and
inspections of properties, books and records, and to consult with Debtor's
and such Borrower's officers, as required in Section 7.11 of the Financing
Agreement.
Section 3.3. Negative Covenants. Unless Secured Party otherwise consents
in writing, Debtor shall at all times comply with the covenants contained in
this Section 3.3 from the date hereof and so long as any part of the Obligations
or the Commitment is outstanding.
(a) Transfer or Encumbrance. Debtor shall not sell, assign (by
operation or law or otherwise), transfer, exchange, lease or otherwise
dispose of any of the Collateral, nor shall Debtor xxxxx x Xxxx on or in or
execute, file or record any financing statement or other security
instrument with respect to the Collateral, nor shall Debtor deliver actual
or constructive possession of the Collateral to any other Person, other
than (i) Liens or financing statements in favor of Secured Party or
expressly permitted by the Financing Agreement; or (ii) sales or leases,
other than during the continuance of an Event of Default, of Inventory in
the ordinary course of business.
(b) Impairment of Security Interest. Debtor shall not take or fail
to take any action that would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) Possession of Collateral. Debtor shall not cause or permit the
removal of any item of the Collateral from its possession, control or risk
of loss, nor shall Debtor cause or permit the removal of any item of the
Collateral from the location specified herein other than removal in
connection with (i) sales or leases, other than during the continuance of
an Event of Default, of Inventory in the ordinary course of business; or
(ii) possession of Collateral by Secured Party or by a bailee selected by
Secured Party who is holding the Collateral for the benefit of Secured
Party.
(d) Compromise of Collateral. Debtor shall not adjust, settle,
compromise, amend or modify any of the Collateral, other than any
adjustment, settlement, compromise, amendment or modification, other than
during the continuance of an Event of Default, of any General Intangible
which does not detrimentally affect the rights or benefits of Secured Party
hereunder or the value of such General Intangible to Secured Party
hereunder.
(e) Possession of Chattel Paper, Documents or Instruments. Debtor
shall not cause or permit any certificates, chattel paper, documents or
instruments which are included in the Collateral at any time to be in the
actual or constructive possession of any Person other than Debtor or
Secured Party.
(f) Use of Proceeds. Debtor shall not, and shall cause each other
Borrower not to, use the proceeds of the Loans for any purpose not
expressly permitted by the Financing Agreement. Debtor shall not, and
shall cause each other Borrower not to, without Secured Party's prior
written approval, make any expenditure of the Development Loan in an amount
in excess of 110% of the amount stated in the AFE pertaining to such
expenditure that was approved by Secured Party.
(g) Dividends, Distributions and Redemptions. Debtor shall not, and
shall cause each other Borrower not to, declare or pay any dividend,
purchase, redeem or otherwise acquire for value any of its stock now or
hereafter outstanding, or return any capital or make any other distribution
to its stockholders or members, except to the extent such declaration,
payment, purchase, redemption, acquisition or return is solely between
Borrowers.
(h) Nature of Business. Debtor shall not, and shall cause each other
Borrower not to, engage in any business other than oil and gas exploration,
development, production, processing, refining, transportation and
marketing, and business activities ancillary thereto.
(i) Restrictions on Liens. Debtor shall not, and shall cause each
other Borrower not to, create or incur, or suffer to be created or incurred
or to exist, any Lien (other than Liens expressly permitted by the
Financing Agreement) upon any of its properties, rights and interests that
constitute Collateral or Other Collateral under any of the Obligation
Documents, whether now owned or hereafter acquired, or upon the proceeds,
income or profits therefrom, and shall, and shall cause each other Borrower
to, pay all vendor payables and other trade payables when due.
(j) Collateral Sales. Except as set forth in Sections 7.6 and 7.7 of
the Financing Agreement, Debtor shall not, and shall cause each other
Borrower not to, sell, lease, assign, transfer or otherwise dispose of any
of the Collateral or the Other Collateral, except for (i) sales of
Hydrocarbons in the ordinary course of Borrowers' respective businesses,
and (ii) as otherwise permitted pursuant to the Obligation Documents.
(k) Sale or Discount of Receivables. Debtor shall not, and shall
cause each other Borrower not to, discount or sell any of their notes
receivable or accounts receivable.
(l) Affiliate Transactions. Debtor shall not, and shall cause each
other Borrower not to, engage in any transaction with any of their
Affiliates, except on terms no less favorable than are obtainable in arms-
length transactions with third parties.
(m) Financing Statement Filings. Debtor recognizes that financing
statements pertaining to the Collateral and the Other Collateral have been
or may be filed where any Borrower maintains any Collateral or Other
Collateral, has its records concerning any Collateral or Other Collateral
or has its chief executive office or chief place of business. Without
limitation of any other covenant herein, Debtor shall not, and shall cause
each other Borrower not to, cause or permit any change to be made in its
name, identity or corporate structure, or any change to be made to a
jurisdiction other than as represented in Section 3.1(e) in (i) the
location of any Collateral or Other Collateral, (ii) the location of any
records concerning any Collateral or Other Collateral, or (iii) the
location of its chief executive office or principal place of business, or
any change to be made to the record owner of the Cowboy Real Property as
represented in Subsection 3.1(b), unless such Borrower has notified Secured
Party of such change at least thirty days prior to the effective date of
such change, and shall have first taken all action required by Secured
Party for the purpose of further perfecting or protecting the security
interest in favor of Secured Party in the Collateral and Other Collateral.
Each notice furnished to Secured Party pursuant to this Subsection 3.3(m)
shall expressly state that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements
or other notices for the purposes of continuing perfection of Secured
Party's security interest in the Collateral and Other Collateral.
(n) Mergers and Sales of Assets. Debtor shall not, and shall cause
each other Borrower not to, merge or consolidate with or into any other
entity unless Debtor or such other Borrower, as the case may be, is the
surviving entity and no Event of Default has occurred or will occur as a
result of such merger or consolidation. Debtor shall not, and shall cause
each other Borrower not to, lease, sell or transfer all, or substantially
all, of its property assets or business to any other Person, or dispose of
or sell any material portion of its assets, property or business, or
dispose of any equity in any Affiliate.
(o) No Loans or Guarantees to Officers, Directors, Managers or
Shareholders/Partners. Debtor shall not, and shall cause each other
Borrower not to, directly or indirectly, make any guarantee, loan, advance,
extension of credit, commitment to fund, or commitment to satisfy in any
way, any debt, liability, or other obligation to pay any Person (except for
the other Borrowers), including its officers, directors, managers,
employees, shareholders, partners or any Affiliate of such Person,
including, without limitation (a) an obligation to any bank under any
letter of credit, (b) an obligation to maintain working capital or equity
capital of the business other than the initial investment, or (c) an
obligation to otherwise maintain the net worth or solvency of the business,
with respect to any business in which Debtor or such other Borrower is
engaged other than the business described in section 7.18 of the Financing
Agreement. Debtor shall not, and shall cause each other Borrower not to,
make any repayment on any Indebtedness owed to any of their respective
Affiliates, or any shareholder, member, officer, director, manager or
Affiliate of such Person, except as expressly permitted pursuant to the
Financing Agreement.
(p) Foreclosure. Debtor shall not, and shall cause each other
Borrower not to, attempt in any way to hinder or interfere with the
exercise of the power of sale granted in any of the Obligation Documents,
including without limitation the filing of a lis pendens, the initiation of
any lawsuit or the requesting of injunctive relief from any court or
tribunal, or any other action which would have the effect of hindering or
delaying the exercise by Secured Party of any right or remedy under this
Agreement or any other Obligation Document, and Debtor shall, and shall
cause each other Borrower to execute and deliver to Secured Party any
instrument reasonably requested by Secured Party and prepared at Debtor's
expense, which is necessary to fully vest title to the Collateral and the
Other Collateral or the purchaser(s) of all or part of the Collateral or
the Other Collateral pursuant to any sale as provided for in the Obligation
Documents.
ARTICLE IV
POWERS AND AUTHORIZATIONS
Section 4.1. Additional Financing Statement Filings. Debtor hereby
authorizes Secured Party to file, without the signature of Debtor where
permitted by law, one or more financing or continuation statements, and
amendments thereto, relating to the Collateral. Debtor further agrees that a
carbon, photographic or other reproduction of this Agreement or any financing
statement describing any Collateral is sufficient as a financing statement and
may be filed in any jurisdiction Secured Party may deem appropriate.
Section 4.2. Power of Attorney. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact and proxy, with full authority in the
place and stead of Debtor and in the name of Debtor or otherwise, from time to
time in Secured Party's discretion to take any action and to execute any
instrument which Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation (i) to obtain and
adjust insurance required to be paid to Secured Party pursuant to
Section 3.2(h), (ii) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral, (iii) to receive, endorse and collect
any drafts or other instruments, documents and chattel paper in connection with
clause (i) or clause (ii) above, (iv) to file any claims or take any action or
institute any proceedings which Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Collateral, and (v) to execute and
file one or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Such appointment is coupled with an interest and
shall be irrevocable from the date hereof and so long as any part of the
Obligations or the Commitment is outstanding.
Section 4.3. Performance by Secured Party. If Debtor fails to perform
any agreement or obligation contained herein, Secured Party may itself, at its
option and in its sole discretion, perform, or cause performance of, such
agreement or obligation, and the expenses of Secured Party incurred in
connection therewith shall be payable by Debtor under Section 7.4; provided,
however, that nothing herein shall impose any obligation of any kind whatsoever
on Secured Party to perform under any obligation or agreement of Debtor.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.1. Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" hereunder:
(a) Failure of Debtor to pay any fee or other amount due Secured
Party under this Agreement within 10 days after the date that any such
payment is due;
(b) Failure of Debtor to perform or observe any covenant, agreement,
indemnity, condition or provision in this Agreement and such failure shall
continue for 30 days after written notice of such failure has been given to
Debtor;
(c) Any of Debtor's representations or warranties made in this
Agreement or any statement or certificate at any time given in writing
pursuant hereto or in connection herewith shall be false or misleading in
any material respect as of the date made or deemed made; or
(d) An "Event of Default" as defined in the Financing Agreement shall
occur.
Section 5.2. Remedies. Upon the occurrence of any Event of Default, or
at any time thereafter, in addition to all other rights, powers and remedies
herein conferred, conferred in the other Obligation Documents or conferred by
operation of law, Secured Party may declare the Obligations immediately due,
payable and performable, including all principal and interest remaining unpaid
on the Notes and all other amounts secured hereby or thereby, all without
demand, presentment or notice, all of which are hereby expressly waived; and
from time to time in its discretion, without limitation and without notice
except as expressly provided below Secured Party may:
(a) Exercise with respect to the Collateral all the rights and
remedies of a secured party on default under the Code (whether or not the
Code applies to the affected Collateral);
(b) Require Debtor to, and Debtor hereby agrees that it shall at its
expense and upon request of Secured Party forthwith, assemble all or part
of the Collateral as directed by Secured Party and make it available to
Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties;
(c) Reduce its claim to judgment or foreclose or otherwise enforce,
in whole or in part, the security interest created hereby by any available
judicial procedure;
(d) Dispose of, at its office, on the premises of Debtor or
elsewhere, all or any part of the Collateral, as a unit or in parcels, by
public or private proceedings, and by way of one or more contracts (it
being agreed that the sale of any part of the Collateral shall not exhaust
Secured Party's power of sale, but sales may be made from time to time, and
at any time, until all of the Collateral has been sold or until the
obligations have been paid and performed in full), and at any such sale it
shall not be necessary to exhibit any of the Collateral;
(e) Buy the Collateral, or any portion thereof, at any public sale;
(f) Buy the Collateral, or any portion thereof, at any private sale
if the Collateral is of a type customarily sold in a recognized market or
is of a type that is the subject of widely distributed standard price
quotations;
(g) Apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Debtor hereby
consents to any such appointment; and
(h) At its discretion, retain the Collateral in satisfaction of the
Obligations whenever the circumstances are such that Secured Party is
entitled to do so under the Code or otherwise.
Debtor agrees that, to the extent notice of sale shall be required by law, five
days' notice to Debtor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
Section 5.3. Sale of Securities. Debtor recognizes that Secured Party
may be unable to effect a public sale of any or all the portions of Collateral
that constitute securities by reason of certain prohibitions contained in the
Securities Act of 1933, as amended and applicable state securities laws, but may
be compelled to resort to one or more private sales thereof to a restricted
group of purchasers who will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Debtor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. Secured Party shall be under no obligation to
delay a sale of any of such securities for the period of time necessary to
permit Debtor to register such securities for public sale under the Securities
Act of 1933, as amended, or under applicable state securities laws.
Section 5.4. Application of Proceeds. Upon the occurrence of any Event
of Default, or at any tine thereafter, Secured Party may in its discretion apply
any cash held by Secured Party as Collateral, and any cash proceeds received by
Secured Party with respect to any sale of, collection from, or other realization
upon all or any part of the Collateral, to any or all of the following in such
order as Secured Party may elect:
(a) To the repayment of the reasonable out-of-pocket costs and
expenses, including attorneys' fees and legal expenses, incurred by Secured
Party in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder; or (iv) the
failure of Debtor to perform or observe any of the provisions hereof;
(b) To the payment or other satisfaction of any liens and other
encumbrances upon any of the Collateral;
(c) To the reimbursement of Secured Party for the amount of any
obligations of Debtor or any Other Liable Party paid or discharged by
Secured Party pursuant to the provisions of this Agreement or the other
Obligation Documents, and of any expenses of Secured Party payable by
Debtor hereunder or under the other Obligation Documents;
(d) To the satisfaction of any other Obligations or any other
indebtedness of Debtor to Secured Party;
(e) By holding the same as Collateral;
(f) To the payment of any other amounts required by applicable law
(including without limitation, Section 9-504(1)(c) of the Code or any
successor or similar, applicable statutory provision); and
(g) By delivery to Debtor or to whomsoever shall be lawfully entitled
to receive the same or as a court of competent jurisdiction shall direct.
Section 5.5. Deficiency. In the event that the proceeds of any sale,
collection or realization of or upon the Collateral by Secured Party are
insufficient to pay all amounts to which Secured Party is legally entitled,
Debtor shall be liable for the deficiency, together with interest thereon as
provided in the governing Obligation Documents or (if no interest is so
provided) at such other rate as shall be fixed by applicable law, together with
the costs of collection and the fees and expenses of any attorneys employed by
Secured Party to collect such deficiency.
Section 5.6. Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial process or judicial
hearing, Debtor expressly waives, renounces and knowingly relinquishes any legal
right which might otherwise require Secured Party to enforce its rights by
judicial process. In so providing for non-judicial remedies, Debtor recognizes
and concedes that such remedies are consistent with the usage of trade, are
responsive to commercial necessity, and are the result of a bargain at arm's
length. Nothing herein is intended to prevent Secured Party or Debtor from
resorting to judicial process at either party's option.
Section 5.7. Other Recourse. Debtor waives any right to require Secured
Party to proceed against any other Person, exhaust any Collateral or other
security for the Obligations, or to have any Other Liable Party joined with
Debtor in any suit arising out of the Obligations or this Agreement, or pursue
any other remedy in Secured Party's power. Debtor further waives any and all
notice of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Obligations of
any Other Liable Party from time to time. Debtor further waives any defense
arising by reason of any disability or other defense of any Other Liable Party
or by reason of the cessation from any cause whatsoever of the liability of any
other Liable Party. Until all of the Obligations shall have been paid in full
and the Commitment has terminated or expired, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy which Secured
Party has or may hereafter have against any Other Liable Party, and waives any
benefit of and any right to participate in any other security whatsoever now or
hereafter held by Secured Party. No action which Secured Party may take or omit
to take in connection with any of the Obligation Documents or any of the
Obligations shall release or diminish Debtor's obligations, liabilities, duties
or agreements hereunder, including without limitation, from time to time:
(a) taking or holding any other property of any type from any other Person as
security for the obligations, and exchanging, enforcing, waiving and releasing
any or all of such other property, (b) applying the Collateral or such other
property and directing the order or manner of sale thereof as Secured Party may
in its discretion determine which is not inconsistent with the Obligation
Documents, (c) renewing, extending for any period, accelerating, modifying,
compromising, settling or releasing any of the obligations of any Other Liable
Party with respect to any or all of the obligations or other security for the
obligations, (d) waive, enforce, modify, amend or supplement any of the
provisions of any Obligation Document with any Person other than Debtor, and
(e) release or substitute any Other Liable Party.
Section 5.8. Remedies Not Exclusive. All rights, powers and remedies
herein conferred are cumulative, and not exclusive, of (i) any and all other
rights and remedies herein conferred or provided for, (ii) any and all other
rights, powers and remedies conferred or provided for in the Obligation
Documents, and (iii) any and all rights, powers and remedies conferred, provided
for or existing at law or in equity, and Secured Party shall, in addition to the
rights, powers and remedies herein conferred or provided for, be entitled to
avail itself of all such other rights, powers and remedies as may now or
hereafter exist at law or in equity for the collection of and enforcement of the
Obligations and the enforcement of the warranties, representations, covenants,
indemnities and other agreements contained in this Agreement and the Obligation
Documents. Each and every such right, power and remedy may be exercised from
time to time and as often and in such order as may be deemed expedient by
Secured Party and the exercise of any such right, power or remedy shall not be
deemed a waiver of the right to exercise, at the same time or thereafter, any
other right, power or remedy. No delay or omission by Secured Party or other
person in the exercise of any right, power or remedy will impair any such right,
power or remedy or operate as a waiver thereof or of any other right, power or
remedy then or thereafter existing.
ARTICLE VI
ENVIRONMENTAL INDEMNITY
Debtor agrees to indemnify, defend, and hold harmless Secured Party, its
affiliates and related parties, and their respective directors, officers,
shareholders, partners, members, employees, consultants and agents
(individually, an "Indemnified Party," and collectively, "Indemnified Parties")
from and against, and shall reimburse and pay Indemnified Parties with respect
to, any and all claims, demands, liabilities, losses, damages (including without
limitation actual, consequential, exemplary and punitive damages), causes of
action, judgments, penalties, fees, costs and expenses (including without
limitation attorneys' fees, court costs and legal expenses and consultant's and
expert's fees and expenses) of any and every kind or character, known or
unknown, fixed or contingent, that may be imposed upon, asserted against, or
incurred or paid by or on behalf of any Indemnified Party on account of, in
connection with, or arising out of (a) the breach of any representation or
warranty of Debtor relating to Environmental Laws or Hazardous Materials or any
matter that would, but for the disclosure of such matter to Secured Party in
writing in accordance with Section 3.1(f), constitute or give rise to the breach
of any representation or warranty of Debtor relating to Environmental Laws or
Hazardous Materials, (b) the failure of Borrowers to perform any agreement,
covenant or obligation required to be performed by Borrowers relating to
Environmental Laws or Hazardous Materials, (c) any violation of or failure to
comply with any Environmental Law now existing or hereafter occurring, (d) the
removal of Hazardous Materials from the Collateral or the Other Collateral (or
if removal is prohibited by law, the taking of whatever action is required by
law), (e) any act, omission, event or circumstance existing or occurring or
resulting from or in connection with the ownership, construction, occupancy,
operation, use or maintenance of the Collateral or the Other Collateral,
regardless of whether the act, omission, event or circumstance constituted a
violation of or failure to comply with any Environmental Law at the time of its
existence or occurrence, and (f) any and all claims or proceedings (whether
brought by private party or governmental agency) for bodily injury, property
damage, abatement or remediation, environmental damage, or impairment or any
other injury or damage resulting from or relating to any Hazardous Material
located upon or migrating into, on, from or through the Collateral or the Other
Collateral (whether or not any or all of the foregoing was caused by Borrowers,
a prior owner of the Collateral or the Other Collateral, an operator or prior
operator of the Collateral or the Other Collateral, their respective tenants or
subtenants, or any third party and whether or not the alleged liability is
attributable to the handling, storage, use, treatment, processing, distribution,
manufacture, generation, discharge, transportation or disposal of such Hazardous
Material or the mere presence of such Hazardous Material on the Collateral or
the Other Collateral). Without limiting the generality of the foregoing, it is
the intention of Debtor and Debtor agrees that the foregoing indemnities shall
apply to each Indemnified Party with respect to claims, demands, liabilities,
losses, damages (including without limitation actual, consequential, exemplary
and punitive damages), causes of action, judgments, penalties, fees, costs,
court costs and legal expenses and consultant's and expert's fees and expenses,
of any kind or character, known or unknown, fixed or contingent, that in whole
or in part are caused by or arise out of the negligence of such Indemnified
Party; however, such indemnities shall not apply to any Indemnified Party to the
extent the subject of the indemnification is caused by or arises out of the
gross negligence or willful misconduct of such Indemnified Party. Any amount to
be paid hereunder by Debtor to Secured Party or for which Debtor has indemnified
an Indemnified Party shall be a demand obligation owing by Debtor to Secured
Party and shall bear interest at the Default Rate until paid, and shall
constitute a part of the Obligations and shall be indebtedness secured and
evidenced by this Agreement. The foregoing agreements shall be perpetual and
shall survive the payment or satisfaction of the Obligations and the release of
this Agreement and the foreclosure or other termination of the liens and
security interests created by this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Notices. Any notice or communication required or permitted
hereunder shall be given as provided in the Financing Agreement.
Section 7.2. Entire Agreement. This Agreement (including the Exhibits
hereto) and the Obligation Documents constitutes the entire understanding
between the parties with respect to the subject matter hereof and supersedes all
negotiations, prior discussions and prior agreements and understandings relating
to such subject matter.
Section 7.3. Indemnity. Debtor agrees to indemnify, defend and hold
harmless Secured Party, upon request, from and against any and all claims,
losses and liabilities (whether or not caused by Secured Party's negligence)
growing out of or resulting from this Agreement (including without limitation,
enforcement of this Agreement); provided, however, that Debtor shall not be
required to indemnify Secured Party for that portion of any such claims, losses
or liabilities which are proximately caused by Secured Party's gross negligence
or willful misconduct. If any Person (including, without limitation, any
Related Person) ever alleges such gross negligence or willful misconduct by
Secured Party, the indemnification provided for in this section shall
nonetheless be paid upon demand, subject to later adjustment or reimbursement,
until such time as a court of competent jurisdiction enters a final judgment as
to the extent and effect of the alleged gross negligence or willful misconduct.
Section 7.4. Costs and Expenses. Debtor shall upon demand pay to Secured
Party the amount of any and all costs and expenses, including the fees and
disbursements of Secured Party's counsel and of any experts and agents, which
Secured Party may incur in connection with (a) the transactions which give rise
to this Agreement, (b) the preparation of this Agreement and the perfection and
preservation of the security interest created under this Agreement, (c) the
administration of this Agreement, (d) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (e) the exercise or enforcement of any of the rights of Secured
Party hereunder, or (f) the failure by Debtor to perform or observe any of the
provisions hereof, except expenses resulting from Secured Party's gross
negligence or willful misconduct. This Section 7.4 shall not govern matters
that are covered by Article VI.
Section 7.5. Amendments. No amendment of any provision of this Agreement
shall be effective unless it is in writing and signed by Debtor and Secured
Party, and no waiver of any provision of this Agreement, and no consent to any
departure by Debtor therefrom, shall be effective unless it is in writing and
signed by Secured Party, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and to
the extent specified in such writing.
Section 7.6. Preservation of Rights. No failure on the part of Secured
Party to exercise, and no delay in exercising, any right hereunder or under any
other Obligation Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Obligations. The rights of Secured Party under any Obligation
Document against any party thereto are not conditional or contingent on any
attempt by Secured Party to exercise any of its rights under any other
Obligation Document against such party or against any other Person.
Section 7.7. Unenforceability. All rights, powers and remedies hereunder
conferred shall be exercisable by Secured Party only to the extent not
prohibited by applicable law; and all waivers or relinquishments of rights and
similar matters shall only be effective to the extent such waiver or
relinquishments are not prohibited by applicable law. If any provision of this
Agreement or of any of the Obligation Documents is invalid or unenforceable in
any jurisdiction, such provision shall be fully and severable from this
Agreement and the other provisions hereof and the Obligation Documents shall
remain in full force and effect in such jurisdiction and the remaining
provisions hereof shall be liberally construed in favor of Secured Party in
order to carry out the provisions and intent hereof. The invalidity of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any such provision in any other jurisdiction.
Section 7.8. Survival of Agreements. All representations and warranties
of Debtor herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of the
other Obligation Documents and the creation of the Obligations.
Section 7.9. Other Liable Party. Neither this Agreement nor the exercise
by Secured Party or the failure of Secured Party to exercise any right, power or
remedy conferred herein or by law shall be construed as relieving any Other
Liable Party from liability on the Obligations or any deficiency thereon. This
Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased or irrespective of the validity or
enforceability of any other Obligation Document to which Debtor or any Other
Liable Party may be a party, and notwithstanding the reorganization, death,
incapacity or bankruptcy of any Other Liable Party, and notwithstanding the
reorganization or bankruptcy or other event or proceeding affecting any Other
Liable Party.
Section 7.10. Binding Effect and Assignment. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on
Debtor and its successors and permitted assigns, and (b) shall inure, together
with all rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing, Secured Party may assign or otherwise transfer its
rights under any Obligation Document to any other Person, and such other Person
shall thereupon become vested with all of the benefits with respect thereto
granted to Secured Party, herein or otherwise. None of the rights or
obligations of Debtor hereunder may be assigned or otherwise transferred without
the prior written consent of Secured Party.
Section 7.11. Termination. It is contemplated by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding obligations. Upon the satisfaction in full
of the Obligations, upon the termination or expiration of the Commitment and any
other commitment of Secured Party to extend credit to Debtor, and upon written
request delivered by Debtor to Secured Party, the security interest created by
this Agreement shall terminate and all rights to the Collateral shall revert to
Debtor. Upon such event, Secured Party shall, upon Debtor's request and at
Debtor's expense (a) return to Debtor such of the Collateral as shall not have
been sold or otherwise disposed of or applied pursuant to the terms hereof, and
(b) execute and deliver to Debtor such documents as Debtor shall reasonably
request to evidence such termination. The termination of the security interests
created by this Agreement, shall not terminate or otherwise affect Secured
Party's right or ability to exercise any right, power or remedy on account of
any claim for breach of warranty or representation, for failure to perform any
covenant or other agreement, under any indemnity or for fraud, deceit or other
misrepresentation or omission.
Section 7.12. Financing Statement. This Agreement shall be deemed to be
and may be enforced from time to time as an assignment, contract, financing
statement, fixture filing, pledge agreement or security agreement, and from time
to time as one or more thereof is appropriate under applicable state law. A
carbon, photographic or other reproduction of this Agreement or of any financing
statement in connection herewith shall be sufficient as a financing statement
for any and all purposes.
Section 7.13. Rate of Interest. All interest required hereunder and under
the Obligations shall be calculated on the basis of a year of 360 days.
Section 7.14. Execution in Counterparts. This Agreement may be executed
in one or more original counterparts. Each counterpart shall be deemed to be an
original for all purposes, and all counterparts shall together constitute but
one and the same instrument.
Section 7.15 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. DEBTOR HEREBY:
(A) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY
TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES, THE
FINANCING AGREEMENT OR ANY OTHER DOCUMENTS AND INSTRUMENTS EVIDENCING, SECURING
OR RELATING TO THE OBLIGATIONS OR ANY TRANSACTION PROVIDED FOR THEREIN OR
ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (B) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (C) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND
(D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE
NOTES, THE FINANCING AGREEMENT AND ANY OTHER DOCUMENTS AND INSTRUMENTS
EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS AND THE TRANSACTIONS
PROVIDED FOR HEREIN AND THEREIN, BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION.
Section 7.16 USURY SAVINGS. IT IS THE INTENTION OF THE PARTIES HERETO TO
COMPLY WITH ALL APPLICABLE USURY LAWS; ACCORDINGLY, IT IS AGREED THAT
NOTWITHSTANDING ANY PROVISIONS TO THE CONTRARY IN THIS INSTRUMENT, THE NOTES,
THE FINANCING AGREEMENT OR ANY OTHER DOCUMENTS OR INSTRUMENTS EVIDENCING,
SECURING OR OTHERWISE RELATING TO THE OBLIGATIONS, IN NO EVENT SHALL SUCH
DOCUMENTS OR INSTRUMENTS REQUIRE THE PAYMENT OR PERMIT THE COLLECTION OF
INTEREST (WHICH TERM, FOR PURPOSES HEREOF, SHALL INCLUDE ANY AMOUNT WHICH, UNDER
APPLICABLE LAW, IS DEEMED TO BE INTEREST, WHETHER OR NOT SUCH AMOUNT IS
CHARACTERIZED BY THE PARTIES AS INTEREST) IN EXCESS OF THE MAXIMUM AMOUNT
PERMITTED BY SUCH LAWS. IF ANY EXCESS INTEREST IS UNINTENTIONALLY CONTRACTED
FOR, CHARGED OR RECEIVED UNDER THE NOTES OR UNDER THE TERMS OF THIS INSTRUMENT,
THE FINANCING AGREEMENT OR ANY OTHER DOCUMENTS OR INSTRUMENTS EVIDENCING,
SECURING OR RELATING TO THE OBLIGATIONS, OR IN THE EVENT THE MATURITY OF THE
INDEBTEDNESS EVIDENCED BY THE NOTES IS ACCELERATED IN WHOLE OR IN PART, OR IN
THE EVENT THAT ALL OR PART OF THE PRINCIPAL OR INTEREST OF THE NOTES SHALL BE
PREPAID, SO THAT THE AMOUNT OF INTEREST CONTRACTED FOR, CHARGED OR RECEIVED
UNDER THE AMOUNT OF INTEREST CONTRACTED FOR, CHARGED OR RECEIVED UNDER THE NOTES
OR UNDER THIS INSTRUMENT, THE FINANCING AGREEMENT OR ANY OTHER DOCUMENTS OR
INSTRUMENTS EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS, ON THE AMOUNT
OF PRINCIPAL ACTUALLY OUTSTANDING FROM TIME TO TIME UNDER THE NOTES SHALL EXCEED
THE MAXIMUM AMOUNT OF INTEREST PERMITTED BY THE APPLICABLE USURY LAWS, THEN IN
ANY SUCH EVENT (A) THE PROVISIONS OF THIS SECTION SHALL GOVERN AND CONTROL,
(B) NEITHER DEBTOR OR THE OTHER BORROWERS NOR ANY OTHER PERSON OR ENTITY NOW OR
HEREAFTER LIABLE FOR THE PAYMENT THEREOF, SHALL BE OBLIGATED TO PAY THE AMOUNT
OF SUCH INTEREST TO THE EXTENT THAT IT IS IN EXCESS OF THE MAXIMUM AMOUNT OF
INTEREST PERMITTED BY SUCH APPLICABLE USURY LAWS, (C) ANY SUCH EXCESS WHICH MAY
HAVE BEEN COLLECTED SHALL BE EITHER APPLIED AS A CREDIT AGAINST THE THEN UNPAID
PRINCIPAL AMOUNT THEREOF OR REFUNDED TO BORROWERS AT SECURED PARTY'S OPTION,
AND (D) THE EFFECTIVE RATE OF INTEREST SHALL BE AUTOMATICALLY REDUCED TO THE
MAXIMUM LAWFUL RATE OF INTEREST ALLOWED UNDER THE APPLICABLE USURY LAWS AS NOW
OR HEREAFTER CONSTRUED BY THE COURTS HAVING JURISDICTION THEREOF. IT IS FURTHER
AGREED THAT WITHOUT LIMITATION OF THE FOREGOING, ALL CALCULATIONS OF THE RATE OF
INTEREST CONTRACTED FOR, CHARGED OR RECEIVED UNDER THE NOTES OR UNDER THIS
AGREEMENT, THE FINANCING AGREEMENT OR ANY OTHER DOCUMENTS OR INSTRUMENTS
EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS WHICH ARE MADE FOR THE
PURPOSE OF DETERMINING WHETHER SUCH RATE EXCEEDS THE MAXIMUM LAWFUL RATE OF
INTEREST, SHALL BE MADE, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAWS, BY
AMORTIZING, PRORATING, ALLOCATING AND SPREADING IN EQUAL PARTS DURING THE PERIOD
OF THE FULL STATED TERM OF THE OBLIGATIONS EVIDENCED THEREBY, ALL INTEREST AT
ANY TIME CONTRACTED FOR, CHARGED OR RECEIVED FROM BORROWERS OR OTHERWISE BY
SECURED PARTY IN CONNECTION WITH THE OBLIGATIONS.
Section 7.17 GOVERNING LAW. THIS INSTRUMENT AND ALL MATTERS ARISING UNDER
OR GROWING OUT HEREOF SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS, AND THE LAWS OF THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO
THE VALIDITY, CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY
INTERESTS AND OTHER RIGHTS AND REMEDIES OF THIS AGREEMENT GRANTED HEREIN ARE
PURSUANT TO APPLICABLE LAW GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
COMMONWEALTH OF MASSACHUSETTS. EXCEPT AS TO THE VALIDITY, CREATION, PERFECTION
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED HEREBY, DEBTOR AND
SECURED PARTY AGREE THAT THE TRANSACTIONS PROVIDED FOR HEREIN BEAR A REASONABLE
RELATIONSHIP TO THE COMMONWEALTH OF MASSACHUSETTS AND THAT THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS GOVERNS (A) ISSUES RELATING TO THE TRANSACTIONS
PROVIDED FOR HEREIN, INCLUDING THE VALIDITY AND ENFORCEABILITY OF AN AGREEMENT
RELATING TO SUCH TRANSACTIONS OR A PROVISION OF AN AGREEMENT, AND (B) THE
INTERPRETATION OR CONSTRUCTION OF AN AGREEMENT RELATING TO SUCH TRANSACTIONS OR
A PROVISION OF AN AGREEMENT.
This Agreement is executed and delivered as of the date first above
written.
DEBTOR:
FORELAND ASPHALT CORPORATION, a
Utah corporation
By: /s/ Xxxxx X. Xxxxxx, President
Taxpayer I.D. No. 00-0000000
SECURED PARTY:
ENERGY INCOME FUND, L.P., a
Delaware limited partnership
By: EIF GENERAL PARTNER, L.L.C., a
Delaware limited liability company, its
General Partner
By: /s/ Xxxxxx X. Xxxxxxx, a Managing Director
Taxpayer I.D. No. 00-0000000
