SECURITY AGREEMENT
Exhibit 10.2
This SECURITY AGREEMENT (this “Agreement”), dated as of December 13, 2007, among
Grantors listed on the signature pages hereof and those additional entities that hereafter become
parties hereto by executing the form of Supplement attached hereto as Annex 1
(collectively, jointly and severally, the “Grantors” and each, individually, a
“Grantor”), and XXXXX FARGO FOOTHILL, LLC, a Delaware limited liability company, in its
capacity as administrative agent for the Lender Group and the Bank Product Provider (together with
its successors and assigns, the “Agent”).
WITNESSETH:
WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented, renewed, extended, replaced or otherwise modified from time to time,
including all schedules thereto, the “Credit Agreement”) among FOOTHILLS RESOURCES, INC., a
Nevada corporation (“Foothills or Parent”) each of its Subsidiaries that are
signatories thereto (each Subsidiary together with Parent, are referred to hereinafter each
individually as “Borrower”, and individually and collectively, jointly and severally as the
“Borrowers”), the lenders from time to time party thereto as “Lenders” (“Lenders”),
and Agent, the Lender Group has agreed to make certain financial accommodations available to
Borrowers from time to time pursuant to the terms and conditions thereof, and
WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group and the Bank
Product Provider in connection with the transactions contemplated by the Credit Agreement and this
Agreement, and the other Loan Documents, and
WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other
Loan Documents and to induce the Lender Group to make and extend financial accommodations to
Borrowers as provided for in the Credit Agreement, Grantors have agreed to grant a continuing
security interest in and to the Collateral in order to secure the prompt and complete payment,
observance and performance of, among other things, the Secured Obligations, and
NOW, THEREFORE, for and in consideration of the recitals made above and other good and
valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Defined Terms. All capitalized terms used herein (including in the preamble and
recitals hereof) without definition shall have the meanings ascribed thereto in the Credit
Agreement. Any terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement;
provided, however, that if the Code is used to define any term used herein and if
such term is defined differently in different Articles of the Code, the definition of such term
contained in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in
this Agreement, as used in this Agreement, the following terms shall have the following meanings:
(a) “Account” means an account (as that term is defined in the Code).
(b) “Account Debtor” means an account debtor (as that term is defined in the Code).
(c) “Books” means books and records (including each Grantor’s Records indicating,
summarizing, or evidencing such Grantor’s assets (including the Collateral) or liabilities, and
each Grantor’s Records relating to such Grantor’s business operations or financial condition), and
each Grantor’s goods or General Intangibles related to such information).
(d) “Borrowers” has the meaning specified therefor in the recitals to this Agreement.
(e) “Chattel Paper” means chattel paper (as that term is defined in the Code) and
includes tangible chattel paper and electronic chattel paper.
(f) “Code” means the New York Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory provisions
of law, any or all of the attachment, perfection, priority, or remedies with respect to Agent’s
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority, or remedies.
(g) “Collateral” has the meaning specified therefor in Section 2.
(h) “Commercial Tort Claims” means commercial tort claims (as that term is defined in
the Code), and includes those commercial tort claims listed on Schedule 1 attached hereto
(“Commercial Tort Claims”).
(i) “Copyrights” means works of authorship (whether or not published, and whether or
not copyrightable) and copyrights and copyright registrations, and also includes (i) the copyright
registrations and recordings thereof and all applications in connection therewith listed on
Schedule 2 attached hereto and made a part hereof, (ii) all reissues, restorations,
reversions, continuations, extensions or renewals thereof, (iii) all income, royalties, damages
and payments now and hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments for past or
future infringements or dilutions thereof, (iv) the right to xxx for past, present and future
infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (vi) all of each Grantor’s rights corresponding thereto
throughout the world.
(j) “Copyright Security Agreement” means each Copyright Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit A attached hereto.
(k) “Credit Agreement” has the meaning specified therefor in the recitals to this
Agreement.
(l) “Deposit Account” means a deposit account (as that term is defined in the Code).
(m) “Equipment” means equipment (as that term is defined in the Code).
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(n) “General Intangibles” means general intangibles (as that term is defined in the
Code) and, in any event, includes payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action, goodwill
(including the goodwill associated with any Trademark), Patents, Trademarks, Copyrights, URLs and
domain names, industrial designs, other industrial or Intellectual Property or rights therein or
applications therefor, whether under license or otherwise, rights in programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims, rights in computer
programs, information contained on computer disks or tapes, software, literature, reports,
catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax
refunds, and tax refund claims, interests in a partnership or limited liability company which do
not constitute a security under Article 8 of the Code, and any other personal property other than
Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment
Related Property, and Negotiable Collateral.
(o) “Grantor” and “Grantors” have the meanings specified therefor in the
recitals to this Agreement.
(p) “Intellectual Property” means Patents, Copyrights, Trademarks, the goodwill
associated with such Trademarks, trade secrets and customer lists, and Intellectual Property
Licenses.
(q) “Intellectual Property Licenses” means rights under or interests in any Patent,
Trademark, Copyright or other Intellectual Property, including software license agreements with
any other party, whether the applicable Grantor is a licensee or licensor under any such license
agreement, including the license agreements listed on Schedule 3 attached hereto and made
a part hereof, and the right to use the foregoing in connection with the enforcement of the Lender
Group’s rights under the Loan Documents, including the right to prepare for sale and sell any and
all Inventory and Equipment now or hereafter owned by any Grantor and now or hereafter covered by
such licenses.
(r) “Inventory” means inventory (as that term is defined in the Code).
(s) “Investment Related Property” means (i) investment property (as that term is
defined in the Code), and (ii) all of the following (regardless of whether classified as
investment property under the Code): all Pledged Interests, Pledged Operating Agreements, and
Pledged Partnership Agreements.
(t) “Negotiable Collateral” means letters of credit, letter-of-credit rights,
instruments, promissory notes, drafts, and documents (as that term is defined in the Code) and, in
any event, including payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, choses or things in action and goodwill (including the
goodwill associated with any Trademark, Patent, or Copyright).
(u) “Patents” means inventions, discoveries and ideas, whether patentable or not, and
all patents, registrations and patent applications therefor, including (i) the patents and patent
applications listed on Schedule 4 attached hereto and made a part hereof and all reissues,
continuations, continuations in part, substitutes, extensions or, (ii) all renewals thereof and
improvements thereon, (iii) all income, royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements or dilutions
thereof, (iv) the right to xxx for past, present and
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future infringements and dilutions thereof, and (v) all of each Grantor’s rights
corresponding thereto throughout the world.
(v) “Patent Security Agreement” means each Patent Security Agreement among Grantors,
or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Provider, in
substantially the form of Exhibit B attached hereto.
(w) “Pledged Companies” means each Person listed on Schedule 5 hereto as a
“Pledged Company”, together with each other Person, all or a portion of whose Stock, is acquired
or otherwise owned by a Grantor after the Closing Date.
(x) “Pledged Interests” means all of each Grantor’s right, title and interest in and
to all of the Stock now or hereafter owned by such Grantor, regardless of class or designation,
including all substitutions therefor and replacements thereof, all proceeds thereof and all rights
relating thereto, also including any certificates representing the Stock, the right to request
after the occurrence and during the continuation of an Event of Default that such Stock be
registered in the name of Agent or any of its nominees as permitted by the applicable organization
documents for such entity, the right to receive any certificates representing any of the Stock and
the right to require that such certificates be delivered to Agent together with undated powers or
assignments of investment securities with respect thereto, duly endorsed in blank by such Grantor,
all warrants, options, share appreciation rights and other rights, contractual or otherwise, in
respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or
other compensation by way of income or liquidating distributions, in cash or in kind, and cash,
instruments, and other property from time to time received, receivable, or otherwise distributed
in respect of or in addition to, in substitution of, on account of, or in exchange for any or all
of the foregoing.
(y) “Pledged Interests Addendum” means a Pledged Interests Addendum substantially in
the form of Exhibit C to this Agreement.
(z) “Pledged Note Addendum” means a Pledged Note Addendum substantially in the form
of Exhibit E to this Agreement.
(aa) “Pledged Notes” has the meaning specified therefore in Section 5(h).
(bb) “Pledged Operating Agreements” means all of each Grantor’s rights, powers, and
remedies under the limited liability company operating agreements of each of the Pledged Companies
that are limited liability companies.
(cc) “Pledged Partnership Agreements” means all of each Grantor’s rights, powers, and
remedies under the partnership agreements of each of the Pledged Companies that are partnerships,
if any.
(dd) “Proceeds” has the meaning specified therefor in Section 2.
(ee) “Real Property” means any estates or interests in real property now owned or
hereafter acquired by any Grantor and the improvements thereto.
(ff) “Records” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.
(gg) “Security Interest” has the meaning specified therefor in Section 2.
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(hh) “Secured Obligations” means each and all of the following: (a) all of the
present and future Obligations of Grantors and (b) any obligations of any future Guarantor,
including, in each case, reasonable attorney’s fees and expenses and any interest, fees, or
expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed
or allowable in whole or in part as a claim in any Insolvency Proceeding.
(ii) “Securities Account” means a securities account (as that term is defined in the
Code).
(jj) “Supporting Obligations” means supporting obligations (as such term is defined
in the Code), ad includes letters of credit and guaranties issued in support of Accounts, Chattel
Paper, documents, General Intangibles, instruments, or Investment Related Property.
(kk) “Trademarks” means trademarks, trade names, registered trademarks, trademark
applications, service marks, registered service marks and service xxxx applications, brand names,
certification marks, collective marks, d/b/a’s, Internet domain names, logos, symbols, trade
dress, assumed names, fictitious names, and other indicia of origin, and also includes (i) the
trade names, registered trademarks, trademark applications, registered service marks, and service
xxxx applications listed on Schedule 6 attached hereto and made a part hereof, and (ii)
all extensions, modifications and renewals thereof, (iii) all income, royalties, damages and
payments now and hereafter due or payable under and with respect thereto, including payments under
all licenses entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to xxx for past, present and future
infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (v) all of each Grantor’s rights corresponding thereto
throughout the world.
(ll) “Trademark Security Agreement” means each Trademark Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit D attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product Provider,
a security interest in all their respective Trademarks.
(mm) “URL” means “uniform resource locator,” an internet web address.
2. Grant of Security.
(a) Each Grantor hereby unconditionally grants, assigns, and pledges to Agent, for the benefit
of the Revolving Loan Lenders and the Bank Product Providers, a continuing security interest
(herein referred to as the “Security Interest”) in all such Grantor’s right, title, and
interest in and to its personal property whether now owned or hereafter acquired or arising and
wherever located, including such Grantor’s right, title, and interest in and to the following,
whether now owned or hereafter acquired or arising and wherever located (the “Collateral”):
(i) all of such Grantor’s Accounts;
(ii) all of such Grantor’s Books;
(iii) all of such Grantor’s Chattel Paper;
(iv) all of such Grantor’s Deposit Accounts;
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(v) all of such Grantor’s Equipment and fixtures;
(vi) all of such Grantor’s General Intangibles;
(vii) all of such Grantor’s Inventory;
(viii) all of such Grantor’s Investment Related Property;
(ix) all of such Grantor’s Negotiable Collateral;
(x) all of such Grantor’s rights in respect of Supporting Obligations;
(xi) all of such Grantor’s Commercial Tort Claims;
(xii) all of such Grantor’s money, Cash Equivalents, or other assets of each such Grantor that
now or hereafter come into the possession, custody, or control of Agent (or its agent or designee)
or any other member of the Lender Group;
(xiii) all of such Grantor’s Hydrocarbons and Hydrocarbon Interests;
(xiv) all of such Grantor’s Oil and Gas Properties; and
(xv) all of the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance or Commercial Tort Claims covering or relating to any or
all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment,
General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting
Obligations, money, or other tangible or intangible property resulting from the sale, lease,
license, exchange, collection, or other disposition of any of the foregoing, the proceeds of any
award in condemnation with respect to any of the foregoing, any rebates or refunds, whether for
taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest
therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of
the above, whether insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect
to any of the foregoing (the “Proceeds”). Without limiting the generality of the
foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related
Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes proceeds of any indemnity or guaranty payable
to any Grantor or Agent from time to time with respect to any of the Investment Related Property.
(b) Each Grantor hereby unconditionally grants, assigns, and pledges to Agent, for the benefit
of the Term Loan Lenders, a continuing Security Interest in all such Grantor’s Right, title, and
interest in and to the Collateral.
(c) As set forth in separate granting clauses contained in subsections (a) and (b) above, it
is the intent of the Grantors, the Agent and the Lenders that this Agreement shall create two
separate and distinct Liens, a first senior Lien in favor of the Agent, for the benefit of the
Revolving Loan Lenders, the Bank Product Providers and the Administrative Agent and a second senior
Lien in favor of the Agent, for the benefit of the Term Loan Lenders and the Administrative Agent.
Notwithstanding anything herein to the contrary, the term “Collateral” shall not include, and
no Grantor is pledging, nor granting a security interest hereunder in, any of such Grantor’s right,
title or interest in (A) any license, contract or agreement to which such Grantor is a party as of
the date hereof or
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any of its right, title or interest thereunder to the extent, but only to the extent, that such a
grant would, under the express terms of such license, contract or agreement on the date hereof
result in a breach of the terms of, or constitute a default under, such license, contract, or
agreement (other than to the extent that any such term (i) has been waived or (ii) would be
rendered ineffective pursuant to Sections 9-406, 9-408 or 9-409 of the Code or other applicable
provisions of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that (x) immediately
upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include,
and such Grantor shall be deemed to have granted a security interest in, all such right, title and
interest as if such provision had never been in effect and (y) the foregoing exclusion shall in no
way be construed so as to limit, impair or otherwise affect Agent’s unconditional continuing
security interest in and liens upon any rights or interest of a Grantor in or to the proceeds of,
or any monies due or to become due under, any such license, contract or agreement or (B) all
intent-to-use Untied States trademark applications for which an amendment to allege use or
statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively,
or if filed, has not been deemed in conformance with 15 U.S.C. § 1051(a) or examined and accepted,
respectively, by the United States Patent and Trademark Office, provided that, upon such filing and
acceptance, such intent-to-use applications shall be included in the definition of Collateral.
Prior to an Event of Default, in the event of any conflict between the terms of the Mortgages
with respect to Collateral other than Deed of Trust Property described in clauses (a) through (g)
of Section 1.01 of the Mortgages (such Collateral other than such other Deed of Trust Property
being the “UCC Property”) on the one hand and the terms of this Agreement with respect to the UCC
Property on the other hand, the terms of this Agreement shall be controlling and, after the
occurrence of an Event of Default, in the event of any conflict between the remedies and
application of proceeds provisions in the Mortgages and those in this Agreement, in each case with
respect to the UCC Property, the terms of this Agreement shall be controlling.
3. Security for Obligations. This Agreement and the Security Interest created hereby
secures the payment and performance of the Secured Obligations (including the Advances and the Bank
Product Obligations), whether now existing or arising hereafter. Without limiting the generality
of the foregoing, this Agreement secures the payment of all amounts which constitute part of the
Secured Obligations that would be owed by Grantors, or any of them, to Agent, the Lender Group, the
Bank Product Provider or any of them, but for the fact that they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.
4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each
of the Grantors shall remain liable under the contracts and agreements included in the Collateral,
including any Pledged Operating Agreements and any Pledged Partnership Agreements, to perform all
of the duties and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Agent or any other member of the Lender Group of any of the rights
hereunder shall not release any Grantor from any of its duties or obligations under such contracts
and agreements included in the Collateral, and (c) none of the members of the Lender Group shall
have any obligation or liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall any of the members of the Lender Group be obligated to perform
any of the obligations or duties of any Grantors thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder. Until an Event of Default shall occur and be
continuing, except as otherwise provided in this Agreement, the Credit Agreement, or other Loan
Documents, Grantors shall have the right to possession and enjoyment of the Collateral for the
purpose of conducting the ordinary course of their respective businesses, subject to and upon the
terms hereof and of the Credit Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, it is the intention of the parties hereto that record and beneficial
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ownership of the Pledged Interests, including all voting, consensual, and dividend rights,
shall remain in the applicable Grantor until the occurrence and continuance of an Event of Default
and until Agent shall notify the applicable Grantor of Agent’s exercise of voting, consensual, or
dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof.
5. Representations and Warranties. Each Grantor hereby represents and warrants as
follows:
(a) The exact legal name of each of the Grantors is set forth on the signature pages of this
Agreement or on a written notice provided to Agent pursuant to Section 6.5 of the Credit
Agreement.
(b) As of the Closing Date, no Grantor has any interest in, or title to, any Copyrights,
Intellectual Property Licenses, Patents, or Trademarks except as set forth on Schedules 2, 3,
4, and 6, respectively, attached hereto. This Agreement is effective to create a valid and
continuing Lien on such Copyrights, Intellectual Property Licenses, Patents and Trademarks and,
upon filing of the Copyright Security Agreement with the United States Copyright Office and filing
of the Patent Security Agreement and the Trademark Security Agreement with the United State Patent
and Trademark Office, and the filing of appropriate financing statements in the jurisdictions
listed on Schedule 8 hereto, all action necessary or desirable to protect and perfect the
Security Interest in and to on each Grantor’s Patents, Trademarks, or Copyrights will have been
taken and such perfected Security Interest will be enforceable as such as against any and all
creditors of and purchasers from any Grantor, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium, or
similar laws relating to or limiting creditors’ rights generally. No Grantor has any interest in
any Copyright that is necessary in connection with the operation of such Grantor’s business,
except for those Copyrights identified on Schedule 2 attached hereto which have been
registered with the United States Copyright Office.
(c) This Agreement creates a valid security interest in the Collateral (other than
Intellectual Property and other similar Collateral referred to in Section 5(b)) of each
Grantor, to the extent a security interest therein can be created under the Code, securing the
payment of the Secured Obligations. Except to the extent a security interest in the Collateral
cannot be perfected by the filing of a financing statement under the Code, all filings and other
actions necessary or desirable to perfect and protect such security interest have been duly taken
or will have been taken upon the filing of financing statements listing each applicable Grantor,
as a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name
on Schedule 8 attached hereto. Upon the making of such filings, Agent shall have a first
priority perfected security interest in the Collateral of each Grantor to the extent such security
interest can be perfected by the filing of a financing statement. All action by any Grantor
necessary to protect and perfect such security interest on each item of Collateral has been duly
taken.
(d) (i) Except for the Security Interest created hereby, each Grantor is and will at all
times be the sole holder of record and the legal and beneficial owner, free and clear of all Liens
other than Permitted Liens, of the Pledged Interests indicated on Schedule 5 as being
owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the
Closing Date; (ii) all of the Pledged Interests are duly authorized, validly issued, fully paid
and nonassessable and the Pledged Interests constitute or will constitute the percentage of the
issued and outstanding Stock of the Pledged Companies of such Grantor identified on Schedule
5 hereto as supplemented or modified by any Pledged Interests Addendum or any Supplement to
this Agreement; (iii) such Grantor has the right and requisite authority to pledge the Investment
Related Property pledged by such Grantor to Agent as provided herein; (iv) all actions necessary
or desirable to perfect, establish the first priority of, or
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otherwise protect, Agent’s Liens in the Investment Related Property and the proceeds thereof,
have been duly taken, (A) upon the execution and delivery of this Agreement; (B) upon the taking
of possession by Agent (or its agent or designee) of any certificates constituting the Pledged
Interests, to the extent such Pledged Interests are represented by certificates, together with
undated powers endorsed in blank by the applicable Grantor; (C) upon the filing of financing
statements in the applicable jurisdiction set forth on Schedule 8 attached hereto for such
Grantor with respect to the Pledged Interests of such Grantor that are not represented by
certificates, and (D) with respect to any Securities Accounts, upon the delivery of Control
Agreements with respect thereto; and (v) each Grantor has delivered to and deposited with Agent
(or, with respect to any Pledged Interests created or obtained after the Closing Date, will
deliver and deposit in accordance with Sections 6(a) and 8 hereof) all
certificates representing the Pledged Interests owned by such Grantor to the extent such Pledged
Interests are represented by certificates, and undated powers endorsed in blank with respect to
such certificates. None of the Pledged Interests owned or held by such Grantor has been issued or
transferred in violation of any securities registration, securities disclosure, or similar laws of
any jurisdiction to which such issuance or transfer may be subject.
(e) No consent, approval, authorization, or other order or other action by, and no notice to
or filing with, any Governmental Authority or any other Person is required (i) for the grant of a
Security Interest by such Grantor in and to any Material Contract constituting the Collateral
pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by
such Grantor, or (ii) for the exercise by Agent of the voting or other rights provided for in this
Agreement with respect to the Investment Related Property or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in connection with such
disposition of Investment Related Property by laws affecting the offering and sale of securities
generally and except for consents or approvals that have been obtained and that are still in force
and effect.
(f) There is no default, breach, violation or event of acceleration existing under any
promissory note (as defined in the Code) constituting Collateral and pledged hereunder (the
“Pledged Notes”) and no event has occurred or circumstance exists which, with the passage
of time or the giving of notice, or both, would constitute a default, breach, violation or event
of acceleration under the Pledged Notes. Such Grantor, if it is an obligee under a Pledged Note,
has not waived any default, breach, violation or event of acceleration under such Pledged Notes.
The proceeds of the loans evidenced by the Pledged Notes have been fully disbursed and such
Grantor has no obligation to make any future advances or other disbursements under or in respect
of the Pledged Notes. A true, correct and complete list of the Pledged Notes is set forth on
Schedule 10.
6. Covenants. Each Grantor, jointly and severally, covenants and agrees with Agent and the
Lender Group that from and after the date of this Agreement and until the date of termination of
this Agreement in accordance with Section 22 hereof:
(a) Possession of Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel
Paper, and if and to the extent that perfection or priority of Agent’s Security Interest is
dependent on or enhanced by possession, the applicable Grantor, immediately upon the request of
Agent and in accordance with Section 8 hereof, shall execute such other documents and instruments
as shall be requested by Agent or, if applicable, endorse and deliver physical possession of such
Negotiable Collateral, Investment Related Property, or Chattel Paper to Agent, together with such
undated powers endorsed in blank as shall be requested by Agent;
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(b) Chattel Paper.
(i) Each Grantor shall take all steps reasonably necessary to grant Agent control of all
electronic Chattel Paper in accordance with the Code and all “transferable records” as that term is
defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal
Electronic Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction; and
(ii) If any Grantor retains possession of any Chattel Paper or instruments (which retention of
possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly
upon the request of Agent, such Chattel Paper and instruments shall be marked with the following
legend: “This writing and the obligations evidenced or secured hereby are subject to the Security
Interest of Xxxxx Fargo Foothill, LLC, as Agent for the benefit of the Lender Group and the Bank
Product Provider”;
(c) Control Agreements.
(i) Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall
obtain an authenticated Control Agreement, from each bank maintaining a Deposit Account for such
Grantor; and
(ii) Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall
obtain authenticated Control Agreements, from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial assets or commodities to
or for any Grantor;
(d) Letter-of-Credit Rights. Each Grantor that is or becomes the beneficiary of a
letter of credit shall promptly (and in any event within 2 Business Days after becoming a
beneficiary), notify Agent thereof and, upon the request by Agent, enter into a tri-party
agreement with Agent and the issuer or confirmation bank with respect to letter-of-credit rights
(as that term is defined in the Code) assigning such letter-of-credit rights to Agent and
directing all payments thereunder to Agent’s Account, all in form and substance satisfactory to
Agent;
(e) Commercial Tort Claims. Each Grantor shall promptly (and in any event within 2
Business Days of receipt thereof), notify Agent in writing upon incurring or otherwise obtaining a
Commercial Tort Claim after the date hereof and, upon request of Agent, promptly amend
Schedule 1 to this Agreement to describe such after-acquired Commercial Tort Claim in a
manner that reasonably identifies such Commercial Tort Claim, and hereby authorizes the filing of
additional financing statements or amendments to existing financing statements describing such
Commercial Tort Claims, and agrees to do such other acts or things deemed necessary or desirable
by Agent to give Agent a first priority, perfected security interest in any such Commercial Tort
Claim;
(f) Government Contracts. If any Account or Chattel Paper arises out of a contract
or contracts with the United States of America or any department, agency, or instrumentality
thereof, Grantors shall promptly (and in any event within 5 Business Days of the creation thereof)
notify Agent thereof in writing and execute any instruments or take any steps reasonably required
by Agent, to the extent permitted under, and in accordance with, applicable law, in order that all
moneys due or to become due under such contract or contracts shall be assigned to Agent, for the
benefit of the Lender Group and the Bank Product Provider, and shall provide written notice
thereof under the Assignment of Claims Act or other applicable law;
(g) Intellectual Property.
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(i) Upon reasonable request of Agent, in order to facilitate filings with the United States
Patent and Trademark Office and the United States Copyright Office, each Grantor shall execute and
deliver to Agent one or more Copyright Security Agreements, Trademark Security Agreements, or
Patent Security Agreements to further evidence Agent’s Lien on such Grantor’s Patents, Trademarks,
or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby;
(ii) Each Grantor shall have the duty, to the extent material or economically desirable in the
operation of such Grantor’s business, to take all reasonable and necessary action to preserve and
maintain all of such Grantor’s Trademarks, Patents, Copyrights, Intellectual Property Licenses, and
its rights therein, including the filing of applications for renewal, affidavits of use, affidavits
of noncontestability and opposition and interference and cancellation proceedings. Any expenses
incurred in connection with the foregoing shall be borne by the appropriate Grantor. Each Grantor
further agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property License
that is material or economically desirable to the operation of such Grantor’s business without the
prior written consent of Agent;
(iii) Grantors acknowledge and agree that the Lender Group shall have no duties with respect
to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without limiting the
generality of this Section 6(g), Grantors acknowledge and agree that no member of the
Lender Group shall be under any obligation to take any steps necessary to preserve rights in the
Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but
any member of the Lender Group may do so at its option from and after the occurrence and during the
continuance of an Event of Default, and all expenses incurred in connection therewith (including
reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of
Borrowers and shall be chargeable to the Loan Account;
(iv) In no event shall any Grantor, either itself or through any agent, employee, licensee, or
designee, file an application for the registration of any Patent, Trademark, or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or any similar office
or agency without giving Agent prior written notice thereof. Promptly upon any such filing, each
Grantor shall comply with Section 6(g)(i) hereof; and
(v) With regard to the Intellectual Property rights that are material to the conduct of
Grantors’ businesses, each Grantor agrees to take all necessary steps to protect each such
Intellectual Property right. Each Grantor hereby agrees to take corresponding steps with respect
to each new or acquired Intellectual Property right to which it or any of its Subsidiaries is now
or later becomes entitled that are material to the conduct of their businesses. Any expenses
incurred in connection with such activities shall be borne solely by such Grantors.
(h) Investment Related Property.
(i) If any Grantor shall receive or become entitled to receive any Pledged Interests after the
Closing Date, it shall promptly (and in any event within 10 days of receipt thereof) deliver to
Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests;
(ii) All sums of money and property paid or distributed in respect of the Investment Related
Property which are received by any Grantor shall be held by such Grantor in trust for the benefit
of Agent segregated from such Grantor’s other property, and such Grantor shall promptly deliver it
forthwith to Agent’s in the exact form received;
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(iii) Each Grantor shall promptly deliver to Agent a copy of each notice or other
communication received by it in respect of any Pledged Interests, including, without limitation,
any proposal to amend the organizational agreements affecting the Pledged Interests or to dissolve
or liquidate the Pledge Company;
(iv) No Grantor shall make or consent to any amendment or other modification or waiver with
respect to any Pledged Interests, Pledged Operating Agreement, or Pledged Partnership Agreement, or
enter into any agreement or permit to exist any restriction with respect to any Pledged Interests
other than pursuant to the Loan Documents;
(v) Each Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals
and making all necessary filings under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or transfer thereof;
(vi) As to all limited liability company or partnership interests, issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, each Grantor hereby represents, warrants and
covenants that the Pledged Interests issued pursuant to such agreement (A) are not now, and shall
not be, dealt in or traded on securities exchanges or in securities markets, (B) do not and will
not constitute investment company securities, and (C) are not and will not be held by such Grantor
in a securities account. In addition, none of the Pledged Operating Agreements, the Pledged
Partnership Agreements, or any other agreements governing any of the Pledged Interests issued under
any Pledged Operating Agreement or Pledged Partnership Agreement, provide or shall provide that
such Pledged Interests are securities governed by Article 8 of the Uniform Commercial Code as in
effect in any relevant jurisdiction;
(i) Real Property; Fixtures. Each Grantor covenants and agrees that upon the
acquisition of any fee interest in Real Property it will promptly (and in any event within 2
Business Days of acquisition) notify Agent of the acquisition of such Real Property and will grant
to Agent, for the benefit of the Lender Group and the Bank Product Provider, a first priority
Mortgage on each fee interest in Real Property now or hereafter owned by such Grantor, subject
only to the Permitted Liens, or with respect to the Oil and Gas Properties, a Mortgage on each fee
interest in such Oil and Gas Properties now or hereafter owned by such Grantor, subject only to
the Permitted Liens and the Limited Priority Exception for 20% of TRV, and shall deliver such
other documentation and opinions, in form and substance satisfactory to Agent, in connection with
the grant of such Mortgage as Agent shall request in its Permitted Discretion, including title
insurance policies on any owned (rather than leased) Real Property, financing statements, fixture
filings and copies of available environmental audits, if any, and such Grantor shall pay all
recording costs, intangible taxes and other fees and costs (including reasonable attorneys fees
and expenses) incurred in connection therewith. Each Grantor acknowledges and agrees that, to the
extent permitted by applicable law, all of the Collateral shall remain personal property
regardless of the manner of its attachment or affixation to real property;
(j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the
Collateral, except as expressly permitted by the Credit Agreement, or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral of any of Grantors, except for
Permitted Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute
Agent’s consent to any sale or other disposition of any of the Collateral except as expressly
permitted in this Agreement or the other Loan Documents;
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(k) Other Actions as to Any and All Collateral. Each Grantor shall promptly (and in
any event within 5 Business Days of acquiring or obtaining such Collateral) notify Agent in
writing upon (i) acquiring or otherwise obtaining any Collateral after the date hereof consisting
of Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment Related Property,
Chattel Paper (electronic, tangible or otherwise), documents (as defined in Article 9 of the
Code), promissory notes (as defined in the Code, or instruments (as defined in the Code) or (ii)
any amount payable under or in connection with any of the Collateral being or becoming evidenced
after the date hereof by any Chattel Paper, documents, promissory notes, or instruments and, in
each such case upon the request of Agent, promptly execute such other documents and instruments,
or if applicable, deliver such Chattel Paper, other documents, promissory notes, instruments or
certificates evidencing any Investment Related Property in accordance with Section 6 hereof and do
such other acts or things deemed necessary or desirable by Agent to protect Agent’s Security
Interest therein;
(l) Pledged Notes.
(i) If any Grantor shall receive or become entitled to receive any Pledged Note after the
Closing Date, it shall promptly (and in any event within 5 Business Days of receipt thereof)
deliver to Agent a duly executed Pledged Note Addendum identifying such Pledged Note;
(ii) No Grantor will waive or release any obligation of any party to the Pledged Notes without
the prior consent of Agent;
(iii) No Grantor will take or omit to take any action or suffer or permit any action to be
omitted or taken, the taking or omission of which would result in any right of offset against sums
payable under the Pledged Notes;
(iv) Each Grantor shall give Agent copies of all notices (including notices of default) given
or received with respect to the Pledged Notes promptly after giving or receiving such notice; and
(v) Without Agent’s prior written consent, each Grantor shall not, and shall not agree to,
assign or surrender its rights and interests under the Pledged Notes nor terminate, cancel, modify,
change, supplement or amend the Pledged Notes.
7. Relation to Other Security Documents. The provisions of this Agreement shall be
read and construed with the other Loan Documents referred to below in the manner so indicated.
(a) Credit Agreement. In the event of any conflict between any provision in this
Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall
control.
(b) Patent, Trademark, Copyright Security Agreements. The provisions of any executed
Copyright Security Agreements, Trademark Security Agreements, and Patent Security Agreements are
supplemental to the provisions of this Agreement, and nothing contained in such Copyright Security
Agreements, Trademark Security Agreements, or Patent Security Agreements shall limit any of the
rights or remedies of Agent hereunder.
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8. Further Assurances.
(a) Each Grantor agrees that from time to time, at its own expense, such Grantor will
promptly execute and deliver all further instruments and documents, and take all further action,
that may be necessary or that Agent may reasonably request, in order to perfect and protect the
Security Interest granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.
(b) Each Grantor authorizes the filing by Agent of financing or continuation statements, or
amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or
notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve
the Security Interest granted or purported to be granted hereby.
(c) Each Grantor authorizes Agent at any time and from time to time to file, transmit, or
communicate, as applicable, financing statements and amendments (i) describing the Collateral as
“all personal property of debtor” or “all assets of debtor” or words of similar effect, (ii)
describing the Collateral as being of equal or lesser scope or with greater detail, or (iii) that
contain any information required by part 5 of Article 9 of the Code for the sufficiency or filing
office acceptance. Each Grantor also hereby ratifies any and all financing statements or
amendments previously filed by Agent in any jurisdiction.
(d) Each Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement filed in connection
with this Agreement without the prior written consent of Agent, subject to such Grantor’s rights
under Section 9-509(d)(2) of the Code.
9. Agent’s Right to Perform Contracts, Exercise Rights, etc. Upon the occurrence and
during the continuance of an Event of Default, Agent (or its designee) (a) may proceed to perform
any and all of the obligations of any Grantor contained in any contract, lease, or other agreement
and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right to use any Grantor’s rights under Intellectual Property Licenses in
connection with the enforcement of the Agent’s rights hereunder, including the right to prepare for
sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses, and (c) shall have the right to request that any Stock that is
pledged hereunder be registered in the name of Agent or any of its nominees.
10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Agent
its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of
such Grantor or otherwise, effective upon and during the continuance of an Event of Default under
the Credit Agreement, to take any action and to execute any instrument which Agent may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, xxx for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in connection with the Accounts or any other
Collateral of such Grantor;
(b) to receive and open all mail addressed to such Grantor and to notify postal authorities
to change the address for the delivery of mail to such Grantor to that of Agent;
(c) to receive, indorse, and collect any drafts or other instruments, documents, Negotiable
Collateral or Chattel Paper;
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(d) to file any claims or take any action or institute any proceedings which Agent may deem
necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to
enforce the rights of Agent with respect to any of the Collateral;
(e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;
(f) to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, advertising matter or other industrial or intellectual property rights, in
advertising for sale and selling Inventory and other Collateral and to collect any amounts due
under Accounts, contracts or Negotiable Collateral of such Grantor; and
(g) Agent on behalf of the Lender Group shall have the right, but shall not be obligated, to
bring suit in its own name to enforce the Trademarks, Patents, Copyrights and Intellectual
Property Licenses and, if Agent shall commence any such suit, the appropriate Grantor shall, at
the request of Agent, do any and all lawful acts and execute any and all proper documents
reasonably required by Agent in aid of such enforcement.
To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.
11. Agent May Perform. If any Grantor fails to perform any agreement contained
herein, Agent may itself perform, or cause performance of, such agreement, and the reasonable
expenses of Agent incurred in connection therewith shall be payable, jointly and severally, by
Grantors.
12. Agent’s Duties. The powers conferred on Agent hereunder are solely to protect
Agent’s interest in the Collateral, for the benefit of the Lender Group and the Bank Product
Provider, and shall not impose any duty upon Agent to exercise any such powers. Except for the
safe custody of any Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights pertaining to any
Collateral. Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral is accorded treatment
substantially equal to that which Agent accords its own property.
13. Collection of Accounts, General Intangibles and Negotiable Collateral. At any
time upon the occurrence and during the continuation of an Event of Default, Agent or Agent’s
designee may (a) notify Account Debtors of any Grantor that the Accounts, General Intangibles,
Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of the Lender
Group and the Bank Product Provider, or that Agent has a security interest therein, and (b) collect
the Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and
expenses shall constitute part of such Grantor’s Secured Obligations under the Loan Documents.
14. Disposition of Pledged Interests by Agent. None of the Pledged Interests existing
as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the
date of acquisition thereof will be, registered or qualified under the various federal or state
securities laws of the United States, and Disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack of such
registration. Each Grantor understands that in connection with such disposition, Agent may
approach only a restricted number of potential purchasers and further understands that a sale under
such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests
were registered and qualified pursuant to federal and state securities
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laws and sold on the open market. Each Grantor, therefore, agrees that: (a) if Agent shall,
pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof
to be sold at a private sale, Agent shall have the right to rely upon the advice and opinion of any
nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice
and the failure to do so shall not be considered in determining the commercial reasonableness of
such action) as to the best manner in which to offer the Pledged Interest or any portion thereof
for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such
reliance shall be conclusive evidence that Agent has handled the disposition in a commercially
reasonable manner.
15. Voting Rights.
(a) Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at
its option, and in addition to all rights and remedies available to Agent under any other
agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or
consensual rights in respect of the Pledged Interests owned by such Grantor in respect of the
Pledged Interests issued by a Loan Party and otherwise to the extent permitted by the governing
instruments for such Pledged Instruments but under no circumstances is Agent obligated by the
terms of this Agreement to exercise such rights, and (ii) if Agent duly exercises its right to
vote any of such Pledged Interests, each Grantor hereby appoints Agent, such Grantor’s true and
lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent
deems advisable for or against all matters submitted or which may be submitted to a vote of
shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is
coupled with an interest and shall be irrevocable.
(b) For so long as any Grantor shall have the right to vote the Pledged Interests owned by
it, such Grantor covenants and agrees that it will not, without the prior written consent of
Agent, vote or take any consensual action with respect to such Pledged Interests which would
adversely affect in any material respect the rights of Agent and the other members of the Lender
Group or the value of the Pledged Interests.
16. Remedies. Upon the occurrence and during the continuance of an Event of Default:
(a) Agent may exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and
remedies of a secured party on default under the Code or any other applicable law. Without
limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event,
Agent, without demand of performance or other demand, advertisement or notice of any kind (except
a notice specified below of time and place of public or private sale) to or upon any of Grantors
or any other Person (all and each of which demands, advertisements and notices are hereby
expressly waived to the maximum extent permitted by the Code or any other applicable law), may
take immediate possession of all or any portion of the Collateral and (i) require Grantors to, and
each Grantor hereby agrees that it will at its own expense and upon request of Agent forthwith,
assemble all or part of the Collateral as directed by Agent and make it available to Agent at one
or more locations where such Grantor regularly maintains Inventory, and (ii) without notice except
as specified below, sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of Agent’s offices or elsewhere, for cash, on credit, and upon such other
terms as Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten (10) days notice to such Grantor 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 to such Grantor and specifically such notice shall constitute a reasonable
“authenticated notification of disposition” to such Grantor within the meaning of Section 9-
16
611 of the Code. Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Agent 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.
(b) Agent, for the benefit of the Lender Group and the Bank Product Providers, is hereby
granted a license or other right to use, without liability for royalties or any other charge, each
Grantor’s labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names,
Trademarks, service marks and advertising matter, URLs, domain names, industrial designs, other
industrial or intellectual property or any property of a similar nature, whether owned or
licensable by any of Grantors or with respect to which any of Grantors have sublicensable rights
under license, sublicense, or other agreements as it pertains to the Collateral (the “Licensed
Property”), in preparing for sale, advertising for sale and selling any Collateral and each
Grantor’s rights under all of its licenses and all franchise agreements shall inure to the benefit
of Agent at such time and in such context.
(c) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect
of any sale of, collection from, or other realization upon all or any part of the Collateral shall
be applied against the Secured Obligations in the order set forth in the Credit Agreement. In
the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in
full, each Grantor shall remain jointly and severally liable for any such deficiency.
(d) Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial
transaction, and agrees that if an Event of Default shall occur and be continuing Agent shall have
the right to enter onto the property where any Collateral is located and take possession thereof
with or without judicial process. Agent shall have the right to the appointment of a receiver for
the properties and assets of each of Grantor, and each Grantor hereby consents to such rights and
such appointment and hereby waives any objection such Grantor may have thereto or the right to
have a bond or other security posted by Agent.
17. Remedies Cumulative. Each right, power, and remedy of Agent as provided for in
this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or
by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other
right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude
the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies.
18. Marshaling. Agent shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To the extent that it
lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.
19. Indemnity and Expenses.
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(a) Each Grantor agrees to indemnify Agent and the other members of the Lender Group from and
against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of
or resulting from this Agreement (including enforcement of this Agreement) or any other Loan
Document to which such Grantor is a party, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as determined by a
final non-appealable order of a court of competent jurisdiction. This provision shall survive the
termination of this Agreement and the Credit Agreement and the repayment of the Secured
Obligations. If Agent or other member of the Lender Group makes any payment to the Agent or any
other member of the Lender Group with respect to any claims, lawsuits or liabilities as to which
Grantors were required to indemnify such Person receiving such payment, the Agent or other member
of the Lender Group, as applicable, making such payment is entitled to be indemnified and
reimbursed by the Grantors with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS, LAWSUITS OR LIABILITIES WHICH
IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF THE AGENT OR
OTHER MEMBER OF THE LENDER GROUP, AS APPLICABLE, OR OF ANY OTHER PERSON.
(b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge
to the Loan Account) all the Lender Group Expenses which Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody, preservation, use or operation of, or,
upon an Event of Default, the sale of, collection from, or other realization upon, any of the
Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or
enforcement of any of the rights of Agent hereunder or (iv) the failure by any of the Grantors to
perform or observe any of the provisions hereof.
20. Merger, Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to
any departure by any of Grantors herefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment of any provision of
this Agreement shall be effective unless the same shall be in writing and signed by Agent and each
of Grantors to which such amendment applies.
21. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Agent at its address specified in
the Credit Agreement, and to any of the Grantors at their respective addresses specified in the
Credit Agreement or guaranty, as applicable, or, as to any party, at such other address as shall be
designated by such party in a written notice to the other party.
22. Continuing Security Interest: Assignments under Credit Agreement. This Agreement
shall create a continuing security interest in the Collateral and shall (a) remain in full force
and effect until the Obligations have been paid in full in accordance with the provisions of the
Credit Agreement and the Commitments have expired or have been terminated, (b) be binding upon each
of Grantor, and their respective successors and assigns, and (c) inure to the benefit of, and be
enforceable by, Agent, and its successors and permitted transferees and assigns, except as
enforcement may be limited by equitable principles or bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium, or similar laws relating to or limiting creditors’ rights
generally. Without limiting the generality of the foregoing clause (c), any Lender may, in
accordance with the provisions of the Credit Agreement, assign or otherwise
18
transfer all or any portion of its rights and obligations under the Credit Agreement to any
other Person permitted under the Credit Agreement, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender herein or otherwise. Upon
payment in full in cash of the Obligations in accordance with the provisions of the Credit
Agreement and the expiration or termination of the Commitments, the Security Interest granted
hereby shall terminate and all rights to the Collateral shall revert to Grantors or any other
Person entitled thereto. At such time, Agent will file or authorize the filing of appropriate
termination statements to terminate such Security Interest. No transfer or renewal, extension,
assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document,
or any other instrument or document executed and delivered by any Grantor to Agent nor any
additional Advances or other loans made by any Lender to Borrowers, nor the taking of further
security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent,
nor any other act of the Lender Group or the Bank Product Provider, or any of them, shall release
any of the Grantors from any obligation, except a termination, release or discharge executed in
writing by Agent in accordance with the provisions of the Credit Agreement. Agent shall not by any
act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies
hereunder, unless such waiver is in writing and signed by Agent and then only to the extent therein
set forth. A waiver by Agent of any right or remedy on any occasion shall not be construed as a
bar to the exercise of any such right or remedy which Agent would otherwise have had on any other
occasion.
23. Governing Law.
(a) THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT
ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. AGENT AND
EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).
(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AGENT AND EACH GRANTOR HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH
GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION
19
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
24. New Subsidiaries. Pursuant to Section 5.16 of the Credit Agreement, any
new direct or indirect Subsidiary (whether by acquisition or creation) of Grantor is required to
enter into this Agreement by executing and delivering in favor of Agent a supplement to this
Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of
Annex 1 by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the
same force and effect as if originally named as a Grantor herein. The execution and delivery of
any instrument adding an additional Grantor as a party to this Agreement shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor hereunder.
25. Agent. Each reference herein to any right granted to, benefit conferred upon or
power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender Group
and the Bank Product Provider.
26. Miscellaneous.
(a) This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method
of transmission shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile
or other electronic method of transmission also shall deliver an original executed counterpart of
this Agreement but the failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each
other Loan Document mutatis mutandis.
(b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining
provisions hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
(c) Headings used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.
(d) The pronouns used herein shall include, when appropriate, either gender and both singular
and plural, and the grammatical construction of sentences shall conform thereto.
(e) Unless the context of this Agreement or any other Loan Document clearly requires
otherwise, references to the plural include the singular, references to the singular include the
plural, and the terms “includes” and “including” are not limiting and the terms “or” has, except
where otherwise indicated, the inclusive meaning represented by the phrase “and/or”. The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and
not to any particular provision of this Agreement or such other Loan Document, as the case may be.
Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan Document to any
agreement, instrument, or document shall include all alterations, amendments, changes, extensions,
modifications,
20
renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).
Any reference herein or in any other Loan Document to the satisfaction or repayment in full of
the Obligations shall mean the repayment in full (or cash collateralization in accordance with the
terms hereof) of all Obligations other than unasserted contingent indemnification Obligations and
other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank
Product Provider to remain outstanding and that are not required by the provisions of the Credit
Agreement to be repaid or cash collateralized. Any reference herein to any Person shall be
construed to include such Person’s successors and permitted assigns. Any requirement of a writing
contained herein or in any other Loan Document shall be satisfied by the transmission of a Record
and any Record so transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
21
IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through
their duly authorized officers, as of the day and year first above written.
| GRANTORS: | FOOTHILLS RESOURCES, INC. | |||
| By: | /s/ Xxxxxx X. Tower | |||
| Name: | Xxxxxx X. Tower | |||
| Title: | Chief Executive Officer | |||
| FOOTHILLS CALIFORNIA, INC. | ||||
| By: | /s/ Xxxxxx X. Tower | |||
| Name: | Xxxxxx X. Tower | |||
| Title: | Chief Executive Officer | |||
| FOOTHILLS TEXAS, INC. | ||||
| By: | /s/ Xxxxxx X. Tower | |||
| Name: | Xxxxxx X. Tower | |||
| Title: | Chief Executive Officer | |||
| FOOTHILLS OKLAHOMA, INC. | ||||
| By: | /s/ Xxxxxx X. Tower | |||
| Name: | Xxxxxx X. Tower | |||
| Title: | Chief Executive Officer | |||
| AGENT: | XXXXX FARGO FOOTHILL, LLC | |||
| By: | /s/ XX Xxxxxx | |||
| Name: | XX Xxxxxx | |||
| Title: | Vice President | |||
SECURITY AGREEMENT SIGNATURE PAGE
SCHEDULE 1
COMMERCIAL TORT CLAIMS
To the extent constituting “commercial tort claims” as defined in the Code, all tort claims
arising out of any action or proceeding against Xxxxx X. Xxxxx, Strong Branch Ventures IV LP or any
affiliate, or McGuireWoods LLP, in connection with the matters described in the civil action
entitled Securities and Exchange Commission against Xxxxx X. Xxxxx, Strong Branch Ventures IV LP,
and Chestnut Capital Partners II, LLC (Case No. 07-CV-01439-LAP), and in the criminal complaint
entitled United States of America v. Xxxxx X. Xxxxx (Case No. 07-MJ-00305-UA), and in the
Information entitled United States of America v. Xxxxx X. Xxxxx (Case No. 07-CR-00659-DAB).
SCHEDULE 2
COPYRIGHTS
None.
SCHEDULE 3
INTELLECTUAL PROPERTY LICENSES
| 1. | Seismic License Agreement dated as of December 1, 1996 by and among King Ranch Energy, Inc. (successor to King Ranch Oil and Gas, Inc.), TeTra Exploration, Inc., Texaco Exploration and Production Inc. and Devon Energy Corporation (Nevada). |
| 2. | Master Geophysical Data-Use License dated as of March 2, 2007 by and between Seismic Exchange, Inc. and Foothills California, Inc. |
| 3. | Data License and Confidentiality Agreement dated as of August 1, 2007 by and between Foothills California, Inc. and PacSeis, Inc. |
SCHEDULE 4
PATENTS
Patent Registrations/Applications
Patent Registrations/Applications
PATENTS
None.
PATENT APPLICATIONS
None.
SCHEDULE 5
PLEDGED COMPANIES
| Number of | Percentage of | Certificate | ||||||||||||||
| Name of Pledgor | Name of Pledged Company | Shares/Units | Class of Interests | Class Owned | Nos. | |||||||||||
Foothills Resources, Inc. |
Foothills California, Inc. | 100 | Common | 100 | % | 9 | ||||||||||
Foothills Resources, Inc. |
Foothills Oklahoma, Inc. | 100 | Common | 100 | % | 1 | ||||||||||
Foothills Resources, Inc. |
Foothills Texas, Inc. | 000 | Xxxxxx | 000 | % | 1 | ||||||||||
SCHEDULE 6
TRADEMARKS
Trademark Registrations/Applications
None.
Trade Names
None.
Common Law Trademarks
None.
Trademarks Not Currently In Use
None.
Trademark Licenses
None.
SCHEDULE 7
RESERVED
SCHEDULE 8
LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS
Foothills Resources, Inc. |
Nevada | |
Foothills California, Inc. |
Delaware | |
Foothills Oklahoma, Inc. |
Delaware | |
Foothills Texas, Inc. |
Delaware |
SCHEDULE 9
RESERVED
SCHEDULE 10
PLEDGED NOTES
Intercompany Note dated as of December 13, 2007, by and among the Borrowers.
ANNEX 1 TO SECURITY AGREEMENT
FORM OF SUPPLEMENT
FORM OF SUPPLEMENT
Supplement No. (this “Supplement”) dated as of ___, 20___, to the Security
Agreement dated as of December ___, 2007 (as amended, restated, supplemented or otherwise modified
from time to time, the “Security Agreement”) by each of the parties listed on the signature
pages thereto and those additional entities that thereafter become parties thereto (collectively,
jointly and severally, “Grantors” and each individually “Grantor”) and XXXXX FARGO
FOOTHILL, LLC in its capacity as Agent for the Lender Group and the Bank Product Provider (together
with the successors, “Agent”).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of December ___, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada corporation (“Foothills or
Parent”) each of its Subsidiaries that are signatories thereto (each Subsidiary together
with Parent, are referred to hereinafter each individually as “Borrower”, and individually and
collectively, jointly and severally as the “Borrowers”), the lenders from time to time
party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time pursuant to the terms and
conditions thereof, and
WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Security Agreement or the Credit Agreement; and
WHEREAS, Grantors have entered into the Security Agreement in order to induce the Lender Group
to make certain financial accommodations to Borrowers; and
WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or indirect
Subsidiaries of Borrowers must execute and deliver certain Loan Documents, including the Security
Agreement, and the execution of the Security Agreement by the undersigned new Grantor or Grantors
(collectively, the “New Grantors”) may be accomplished by the execution of this Supplement
in favor of Agent, for the benefit of the Lender Group and the Bank Product Provider;
NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor
hereby agrees as follows:
1. In accordance with Section 24 of the Security Agreement, each New Grantor, by its
signature below, becomes a “Grantor” under the Security Agreement with the same force and effect as
if originally named therein as a “Grantor” and each New Grantor hereby (a) agrees to all of the
terms and provisions of the Security Agreement applicable to it as a “Grantor” thereunder and (b)
represents and warrants that the representations and warranties made by it as a “Grantor”
thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing,
each New Grantor, as security for the payment and performance in full of the Secured Obligations,
does hereby grant, assign, and pledge to Agent, for the benefit of the Lender Group and the Bank
Product Provider, a continuing security interest in all of such New Grantor’s right, title, and
interest in its assets and personal property, including, all property of the type described in
Section 2 of the Security Agreement to secure the full and prompt payment of the Secured
Obligations. Schedule 1, “Commercial Tort Claims”, Schedule 2, “Copyrights”,
Schedule 3, “Intellectual Property Licenses”, Schedule 4, “Patents”, Schedule
5, “Pledged Companies”, Schedule 6, “Trademarks”and Schedule 8, “List of
Uniform Commercial Code Filing Jurisdictions” attached hereto supplement Schedule 1,
Schedule 2, Schedule 3, Schedule 4, Schedule 5, Schedule 6,
and Schedule 8, respectively, to the Security Agreement and shall be deemed a part thereof
for all purposes of the Security Agreement. Each
reference to a “Grantor” in the Security Agreement shall be deemed to include each New
Grantor. The Security Agreement is incorporated herein by reference.
2. Each New Grantor represents and warrants to Agent, the Lender Group and the Bank Product
Provider that this Supplement has been duly executed and delivered by such New Grantor and
constitutes its legal, valid and binding obligation, enforceable against it in accordance with its
terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws affecting creditors’ rights generally and
general principles of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
3. This Supplement may be executed in multiple counterparts, each of which shall be deemed to
be an original, but all such separate counterparts shall together constitute but one and the same
instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission
shall be as effective as delivery of a manually executed counterpart hereof.
4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force
and effect.
5. This Supplement shall be construed in accordance with and governed by the laws of the State
of New York, without regard to the conflict of laws principles thereof.
[Remainder of Page Intentionally Left Blank – Signature Page Follows]
IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement to the
Security Agreement as of the day and year first above written.
| NEW GRANTORS: | [Name of New Grantor] | |||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| [Name of New Grantor] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| AGENT: | XXXXX FARGO FOOTHILL, LLC | |||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
SUPPLEMENT TO SECURITY AGREEMENT SIGNATURE PAGE
EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made this
___day of , 20___, among Grantors listed on the signature pages hereof ( collectively,
jointly and severally, “Grantors” and each individually “Grantor”), and XXXXX FARGO
FOOTHILL, LLC, in its capacity as Agent for the Lender Group and the Bank Product Provider
(together with its successors, the “Agent”).
W I T N E S S E T H
WHEREAS, pursuant to that certain Credit Agreement, dated as of December ___, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada corporation (“Foothills or
Parent”) each of its Subsidiaries that are signatories thereto (each Subsidiary together
with Parent, are referred to hereinafter each individually as “Borrower”, and individually and
collectively, jointly and severally as the “Borrowers”), the lenders from time to time
party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time pursuant to the terms and
conditions thereof; and
WHEREAS, the members of the Lender Group are willing to make the financial accommodations to
Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that
Grantors shall have executed and delivered to Agent, for the benefit of the Lender Group and the
Bank Product Provider, that certain Security Agreement, dated as of December ___, 2007 (including
all annexes, exhibits or schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Security Agreement”);
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to
Agent, for the benefit of the Lender Group and the Bank Product Provider, this Copyright Security
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby agrees as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have
the meanings given to them in the Security Agreement or the Credit Agreement.
2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor hereby grants to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a continuing first
priority security interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired (collectively, the
“Copyright Collateral”):
(a) all of such Grantor’s Copyrights and Copyright Intellectual Property Licenses to which it
is a party including those referred to on Schedule I hereto;
(b) all reissues, restorations, reversions, continuations or extensions of the foregoing; and
(c) all products and proceeds of the foregoing, including any claim by such Grantor against
third parties for past, present or future infringement or dilution of any Copyright or any
Copyright licensed under any Intellectual Property License.
3. SECURITY FOR OBLIGATIONS. This Copyright Security Agreement and the Security
Interest created hereby secures the payment and performance of all the Secured Obligations, whether
now existing or arising hereafter. Without limiting the generality of the foregoing, this
Copyright Security Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank
Product Provider or any of them, whether or not they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving any Grantor.
4. SECURITY AGREEMENT. The security interests granted pursuant to this Copyright
Security Agreement are granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Provider, pursuant to the Security Agreement.
Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Copyright Collateral made and granted hereby are more fully set forth
in the Security Agreement, the terms and provisions of which are incorporated by reference herein
as if fully set forth herein.
5. AUTHORIZATION TO SUPPLEMENT. Grantors shall give Agent prompt notice in writing of
any additional United States copyright registrations or applications therefor after the date
hereof. Grantors hereby authorize Agent unilaterally to modify this Agreement by amending
Schedule I to include any future United States registered copyrights or applications
therefor of Grantors. Notwithstanding the foregoing, no failure to so modify this Copyright
Security Agreement or amend Schedule I shall in any way affect, invalidate or detract from
Agent’s continuing security interest in all Collateral, whether or not listed on Schedule
I.
6. COUNTERPARTS. This Copyright Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this Copyright Security
Agreement or any other Loan Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.
7. CONSTRUCTION. Unless the context of this Copyright Security Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the singular, references
to the singular include the plural, the terms “includes” and “including” are not limiting. The
words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Copyright Security
Agreement or any other Loan Document refer to this Copyright Security Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of this Copyright
Security Agreement or such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Copyright Security Agreement unless otherwise
specified. Any reference in this Copyright Security Agreement or in any other Loan Document to any
agreement, instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set
forth herein). Any reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full (or
3
cash collateralization in accordance with the terms hereof) of all Obligations other than
unasserted contingent indemnification Obligations and other than any Bank Product Obligations that,
at such time, are allowed by the applicable Bank Product Provider to remain outstanding and that
are not required by the provisions of the Credit Agreement to be repaid or cash collateralized.
Any reference herein to any Person shall be construed to include such Person’s successors and
permitted assigns. Any requirement of a writing contained herein or in any other Loan Document
shall be satisfied by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the information contained
therein.
[signature page follows]
4
IN WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement to be executed
and delivered by its duly authorized officer as of the date first set forth above.
| GRANTORS: | ||||||
| [ | ] | |||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| [ | ] | |||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| ACCEPTED AND ACKNOWLEDGED BY: | ||||||
| XXXXX FARGO FOOTHILL, LLC, as Agent | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
COPYRIGHT SECURITY AGREEMENT
SCHEDULE I
to
COPYRIGHT SECURITY AGREEMENT
to
COPYRIGHT SECURITY AGREEMENT
Copyright Registrations
| Grantor | Country | Copyright | Registration No. | Registration Date | ||||
Copyright Licenses
COPYRIGHT SECURITY AGREEMENT
EXHIBIT B
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this ___day
of , 20___, among the Grantors listed on the signature pages hereof (collectively,
jointly and severally, “Grantors” and each individually “Grantor”), and XXXXX FARGO
FOOTHILL, LLC, in its capacity as Agent for the Lender Group and the Bank Product Provider
(together with its successors, “Agent”).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of December ___, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada corporation (“Foothills or
Parent”) each of its Subsidiaries that are signatories thereto (each Subsidiary together
with Parent, are referred to hereinafter each individually as “Borrower”, and individually and
collectively, jointly and severally as the “Borrowers”), the lenders from time to time
party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time pursuant to the terms and
conditions thereof; and
WHEREAS, the members of Lender Group are willing to make the financial accommodations to
Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that
the Grantors shall have executed and delivered to Agent, for the benefit of the Lender Group and
the Bank Product Provider, that certain Security Agreement, dated as of February 15, 2007
(including all annexes, exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”);
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to
Agent, for the benefit of the Lender Group and the Bank Product Provider, this Patent Security
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby agrees as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have
the meanings given to them in the Security Agreement or the Credit Agreement.
2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby grants to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a continuing first
priority security interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired (collectively, the
“Patent Collateral”):
(a) all of its Patents and Patent Intellectual Property Licenses to which it is a party
including those referred to on Schedule I hereto;
(b) all reissues, continuations, continuations in part, substitutions, extensions or renewals
of, and improvements on, the foregoing; and
(c) all products and proceeds of the foregoing, including any claim by such Grantor against
third parties for past, present or future infringement or dilution of any Patent or any Patent
licensed under any Intellectual Property License.
3. SECURITY FOR OBLIGATIONS. This Patent Security Agreement and the Security Interest
created hereby secures the payment and performance of all the Secured Obligations, whether now
existing or hereafter arising. Without limiting the generality of the foregoing, this Patent
Security Agreement secures the payment of all amounts which constitute part of the Obligations and
would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product Provider or
any of them, whether or not they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.
4. SECURITY AGREEMENT. The security interests granted pursuant to this Patent
Security Agreement are granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Provider, pursuant to the Security Agreement.
Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Patent Collateral made and granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated by reference herein as
if fully set forth herein.
5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent application or patent for any
reissue, division, or continuation, of any patent, the provisions of this Patent Security Agreement
shall automatically apply thereto. Grantors shall give prompt notice in writing to Agent with
respect to any such new patent rights. Without limiting Grantors’ obligations under this
Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement by
amending Schedule I to include any such new patent rights of Grantors. Notwithstanding the
foregoing, no failure to so modify this Patent Security Agreement or amend Schedule I shall
in any way affect, invalidate or detract from Agent’s continuing security interest in all
Collateral, whether or not listed on Schedule I.
6. COUNTERPARTS. This Patent Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this Patent Security
Agreement or any other Loan Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.
7. CONSTRUCTION. Unless the context of this Patent Security Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the singular, references
to the singular include the plural, and the terms “includes” and “including” are not limiting.
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Patent Security
Agreement or any other Loan Document refer to this Patent Security Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of this Patent
Security Agreement or such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Patent Security Agreement unless otherwise
specified. Any reference in this Patent Security Agreement or in any other Loan Document to any
agreement, instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions,
3
joinders, and supplements set forth herein). Any reference herein or in any other Loan
Document to the satisfaction or repayment in full of the Obligations shall mean the repayment in
full (or cash collateralization in accordance with the terms hereof) of all Obligations other than
unasserted contingent indemnification Obligations and other than any Bank Product Obligations that,
at such time, are allowed by the applicable Bank Product Provider to remain outstanding and that
are not required by the provisions of the Credit Agreement to be repaid or cash collateralized.
Any reference herein to any Person shall be construed to include such Person’s successors and
permitted assigns. Any requirement of a writing contained herein or in any other Loan Document
shall be satisfied by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the information contained
therein.
[signature page follows]
4
IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be executed and
delivered by its duly authorized officer as of the date first set forth above.
GRANTOR:
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| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| ACCEPTED AND ACKNOWLEDGED BY: | ||||||
| XXXXX FARGO FOOTHILL, LLC, as Agent | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
PATENT SECURITY AGREEMENT
SCHEDULE 1
to
PATENT SECURITY AGREEMENT
to
PATENT SECURITY AGREEMENT
Patent Registrations/Applications
PATENTS
| U.S Patent No. | Issue Date | Title | ||
| International Patent No. | Issue Date | Title | ||
PATENT APPLICATIONS
| U.S Patent Appl. No. | Filing Date | Title | ||
| International Patent Appl. No. | Filing Date | Title | ||
PATENT SECURITY AGREEMENT
EXHIBIT C
PLEDGED INTERESTS ADDENDUM
This Pledged Interests Addendum, dated as of ___, 20___, is delivered pursuant to
Section 6 of the Security Agreement referred to below. The undersigned hereby agrees that
this Pledged Interests Addendum may be attached to that certain Security Agreement, dated as of
, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), made by the undersigned, together with the other Grantors named
therein, to Xxxxx Fargo Foothill, LLC, as Agent. Initially capitalized terms used but not defined
herein shall have the meaning ascribed to such terms in the Security Agreement or the Credit
Agreement. The undersigned hereby agrees that the additional interests listed on this Pledged
Interests Addendum as set forth below shall be and become part of the Pledged Interests pledged by
the undersigned to the Agent in the Security Agreement and any pledged company set forth on this
Pledged Interests Addendum as set forth below shall be and become a “Pledged Company” under the
Security Agreement, each with the same force and effect as if originally named therein.
The undersigned hereby certifies that the representations and warranties set forth in
Section 5 of the Security Agreement of the undersigned are true and correct as to the
Pledged Interests listed herein on and as of the date hereof.
| [ ] | ||||||
| By: | ||||||
| Title | ||||||
| Percentage | ||||||||||
| Name of Pledged | Number of | Class of | of Class | Certificate | ||||||
| Name of Pledgor | Company | Shares/Units | Interests | Owned | Nos. | |||||
PLEDGED INTERESTS ADDENDUM
EXHIBIT D
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made this
___day of , 20___, among Grantors listed on the signature pages hereof (collectively,
jointly and severally, “Grantors” and each individually “Grantor”), and XXXXX FARGO
FOOTHILL, LLC, in its capacity as Agent for the Lender Group and the Bank Product Provider
(together with its successors, “Agent”).
WITNESSETH:
WHEREAS, pursuant to that certain Credit Agreement, dated as of December ___, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada corporation (“Foothills or
Parent”) each of its Subsidiaries that are signatories thereto (each Subsidiary together
with Parent, are referred to hereinafter each individually as “Borrower”, and individually and
collectively, jointly and severally as the “Borrowers”), the lenders from time to time
party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time pursuant to the terms and
conditions thereof; and
WHEREAS, the members of the Lender Group are willing to make the financial accommodations to
Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that
Grantors shall have executed and delivered to Agent, for the benefit of Lender Group and the Bank
Product Provider, that certain Security Agreement, dated as of , 2007 (including all
annexes, exhibits or schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Security Agreement”);
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to
Agent, for the benefit of Lender Group and the Bank Product Provider, this Trademark Security
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby agrees as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have
the meanings given to them in the Security Agreement or the Credit Agreement.
2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby grants to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a continuing first
priority security interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired (collectively, the
“Trademark Collateral”):
(a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to
which it is a party including those referred to on Schedule I hereto;
(b) all goodwill, trade secrets, proprietary or confidential information, technical
information, procedures, formulae, quality control standards, designs, operating and training
manuals, customer lists and other General Intangibles with respect to the foregoing;
(c) all reissues, continuations, extensions, modifications or renewals of the foregoing;
(d) all post-grant rights, oppositions, cancellation proceedings related to the foregoing;
(e) all goodwill of the business connected with the use of, and symbolized by, each Trademark
and each Trademark Intellectual Property License; and
(f) all products and proceeds of the foregoing, including any claim by such Grantor against
third parties for past, present or future (i) infringement or dilution of any Trademark or any
Trademark licensed under any Intellectual Property License or any common law unfair competition
rights or (ii) injury to the goodwill associated with any Trademark or any Trademark licensed
under any Intellectual Property License or any applicable law.
3. SECURITY FOR OBLIGATIONS. This Trademark Security Agreement and the Security
Interest created hereby secures the payment and performance of all the Secured Obligations, whether
now existing or arising hereafter. Without limiting the generality of the foregoing, this
Trademark Security Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank
Product Provider or any of them, whether or not they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving any Grantor.
4. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark
Security Agreement are granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Provider, pursuant to the Security Agreement.
Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Trademark Collateral made and granted hereby are more fully set forth
in the Security Agreement, the terms and provisions of which are incorporated by reference herein
as if fully set forth herein.
5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any new
trademarks, the provisions of this Trademark Security Agreement shall automatically apply thereto.
Grantors shall give prompt notice in writing to Agent with respect to any such new trademarks or
renewal or extension of any trademark registration. Without limiting Grantors’ obligations under
this Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement by
amending Schedule I to include any such new trademark rights of Grantors. Notwithstanding
the foregoing, no failure to so modify this Trademark Security Agreement or amend Schedule
I shall in any way affect, invalidate or detract from Agent’s continuing security interest in
all Collateral, whether or not listed on Schedule I.
6. COUNTERPARTS. This Trademark Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this Trademark Security
Agreement or any other Loan Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.
7. CONSTRUCTION. Unless the context of this Trademark Security Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the singular, references
to the singular include the plural, and the terms “includes” and “including” are not limiting.
The words
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“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Trademark Security
Agreement or any other Loan Document refer to this Trademark Security Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of this Trademark
Security Agreement or such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any
reference in this Trademark Security Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set
forth herein). Any reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and that are not required by
the provisions of the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person’s successors and permitted assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be satisfied by the
transmission of a Record and any Record so transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained therein.
[signature page follows]
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IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to be executed
and delivered by its duly authorized officer as of the date first set forth above.
GRANTORS: |
||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| ACCEPTED AND ACKNOWLEDGED BY: | ||||||
| XXXXX FARGO FOOTHILL, LLC, as Agent | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
TRADEMARK SECURITY AGREEMENT
SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT
to
TRADEMARK SECURITY AGREEMENT
Trademark Registrations/Applications
| Application/ | ||||||||
| Grantor | Country | Xxxx | Registration No. | App/Reg Date | ||||
Trade Names
Common Law Trademarks
Trademarks Not Currently In Use
Trademark Licenses
TRADEMARK SECURITY AGREEMENT
EXHIBIT E
PLEDGED NOTE ADDENDUM
This Pledged Note Addendum, dated as of ___, ___, is delivered pursuant to
Section 6 of the Security Agreement referred to below. The undersigned hereby agrees that
this Pledged Note Addendum may be attached to that certain Security Agreement, dated as of
[ ] (as amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), made by the undersigned, together with the other Grantors named
therein, to Xxxxx Fargo Foothill, LLC, as Agent. Initially capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Security Agreement and/or the Credit
Agreement. The undersigned hereby agrees that the additional promissory notes listed on this
Pledged Note Addendum as set forth below shall be and become part of the Pledged Notes pledged by
the undersigned to the Agent in the Security Agreement, with the same force and effect as if
originally named therein.
The undersigned hereby certifies that the representations and warranties set forth in
Section 5 of the Security Agreement of the undersigned are true and correct as to the
Pledged Notes listed herein on and as of the date hereof.
| [ ] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| Original Principal | ||||||
| Name of Pledgor | Name of Maker | Description | Amount | |||
