EXHIBIT 10.3
AMENDED AND RESTATED SECURITY AGREEMENT
MAINLAND RESOURCES, INC.
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THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "AGREEMENT") is made
as of October 16, 2009, by MAINLAND RESOURCES, INC., a Nevada corporation
("DEBTOR"), in favor of GUGGENHEIM CORPORATE FUNDING, LLC, a Delaware limited
liability company, as Administrative Agent ("SECURED PARTY").
RECITALS
A. The Debtor, certain financial institutions as "Lenders" and Secured
Party, as administrative agent for the Lenders, are parties to that certain
Senior Secured Bridge Loan Agreement dated August 7, 2009 (as amended,
supplemented or otherwise modified from time to time, the "BRIDGE LOAN
AGREEMENT") pursuant to which Lenders provided certain loans to Debtor.
B. In connection with the Bridge Loan Agreement, the Debtor and Secured
Party entered into that certain Security Agreement dated as of August 7, 2009
(as heretofore amended, modified or supplemented, the "EXISTING SECURITY
AGREEMENT").
C. Of even date herewith, the Debtor, the Secured Party and the Lenders
have entered into that certain Senior Secured Advancing Line of Credit Agreement
(such agreement, as may be amended, modified, restated or supplemented from
time-to-time, the "CREDIT AGREEMENT"; capitalized terms used but not defined
herein shall have the meaning given such terms in the Credit Agreement) pursuant
to which, the Lenders have agreed to refinance Debtor's obligations under the
Bridge Loan Agreement.
D. It is a condition precedent to the effectiveness of the Credit
Agreement that the parties hereto amend and restate the Existing Security
Agreement subject to the terms and conditions of this Agreement.
E. Debtor has determined that valuable benefits will be derived by it
as a result of the Credit Agreement and the extension of credit to be made by
the Lenders thereunder.
F. NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of the loans, extensions of credit and
commitments hereinafter referred to, the parties hereto agree as follows:
ARTICLE I
SECURITY INTEREST
SECTION 1.01 GRANT OF SECURITY INTEREST. As security for the prompt
payment and performance of the Obligations in full when due, whether at
maturity, by acceleration or otherwise, Debtor hereby pledges, grants, transfers
and assigns to Secured Party a security interest in all of Debtor's right, title
and interest in and to the Collateral.
SECTION 1.02 COLLATERAL. The Collateral consists of the following
properties, assets and rights of Debtor, wherever located, whether now owned or
hereafter acquired or arising, and all Proceeds and products thereof (all of the
same being hereinafter called the "COLLATERAL"): all Fixtures and personal
property of every kind and nature including without limitation all Goods
(including Inventory, Equipment and any accessions thereto), Instruments
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(including promissory notes), Documents, Accounts, Chattel Paper (whether
Tangible or Electronic), Deposit Accounts, other than payroll, withholding tax
and other fiduciary Deposit Accounts, Letter-of-Credit Rights (whether or not
the letter of credit is evidenced by a writing), Commercial Tort Claims,
securities and all other Investment Property, Supporting Obligations, any other
contract rights, insurance claims and Proceeds, and all General Intangibles
(including all Payment Intangibles).
SECTION 1.03 CONTINUING SECURITY INTEREST. This Agreement shall create
a continuing security interest in the Collateral and shall (a) remain in full
force and effect until the indefeasible payment in full of all Obligations, (b)
be binding upon Debtor, its successors and assigns, and (c) inure to the benefit
of Secured Party, its successors and assigns, together with the rights and
remedies of Secured Party hereunder. Secured Party may assign or otherwise
transfer (in whole or in part) its interest in any of its liens in the
Collateral, to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the rights and benefits in respect thereof
under this Agreement. Debtor hereby acknowledges and agrees that Secured Party
and any other Person receiving a security interest in the Collateral pursuant to
the remainder of this sentence, may grant a security interest in the Collateral.
Upon the indefeasible payment in full of all Obligations, the security interest
granted herein shall terminate and all rights to the Collateral shall revert to
Debtor. Upon any such termination, Secured Party will upon request from Debtor,
at such Debtor's sole expense, execute and deliver to Debtor such documents as
Debtor shall reasonably request to evidence such termination.
ARTICLE II
DEFINITIONS
SECTION 2.01 DEFINITIONS.
(a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein have the meanings given to them in the
Credit Agreement, and the following terms which are defined in the Code
on the date hereof are used herein as so defined: Accounts, Chattel
Paper, Commercial Tort Claims, Deposit Accounts, Documents, Electronic
Chattel Paper, Equipment, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter-of-Credit Rights,
Payment Intangibles, Proceeds, Supporting Obligations, and Tangible
Chattel Paper.
(b) As used in this Agreement, the following terms shall have
the following meanings::
"CODE" means the Uniform Commercial Code as presently in effect in the
State of New York. Unless otherwise indicated by the context herein, all
uncapitalized terms used herein which are defined in the Code shall have their
respective meanings as used in CHAPTER 9 of the Code.
"OBLIGATIONS" means the "OBLIGATIONS" as defined in the Credit
Agreement.
"OBLIGOR" means any Person liable (whether directly or indirectly,
primarily or secondarily) for the payment or performance of any of the
Obligations whether as maker, co-maker, endorser, guarantor, accommodation
party, general partner or otherwise.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation of the Obligations until same are fully and finally
discharged) that:
SECTION 3.01 OWNERSHIP; NO ENCUMBRANCES. Except for the security
interest (and pledges and assignments as applicable) granted hereby, Debtor is,
and as to any property acquired after the date hereof which is included within
the Collateral, Debtor will be, the owner of all such Collateral subject to no
Liens except Permitted Liens.
SECTION 3.02 AUTHORITY; NO REQUIRED CONSENT. Debtor has the full right
and authority to execute and perform this Agreement and to create the security
interest and pledges and assignments created by this Agreement. The making and
performance by Debtor of this Agreement will not violate (a) any of its
Organizational Documents, (b) any Laws, (c) any order of any governmental
authority, (d) any indenture or other agreement to which Debtor is a party, or
by which Debtor or any of its property is bound, or be in conflict with, result
in a breach of or constitute (with due notice and/or lapse of time) a default
under any such indenture or other agreement, or (e) result in the creation or
imposition of any Lien upon the Collateral other than Permitted Liens. No
authorization, consent, approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body (other than the filing
of financing statements) is required for (a) the due execution, delivery and
performance by Debtor of this Agreement, (b) the grant by Debtor of the security
interest granted by this Agreement, (c) the perfection of such security interest
in all Collateral other than Fixtures) or (d) the exercise by Secured Party of
its rights and remedies under this Agreement.
SECTION 3.03 FIRST PRIORITY SECURITY INTEREST. The security interest in
the Collateral granted pursuant to this Agreement (upon filing of necessary
financing statements with the appropriate filing authority) creates a valid and
perfected security interest in the Collateral, enforceable against Debtor and
all third parties and secures payment of the Obligations, which security
interest is first and prior to all other security interests in the Collateral,
except for Permitted Liens.
SECTION 3.04 NO FILINGS BY THIRD PARTIES. With the exception of Liens
that will be discharged prior to the Effective Date and Permitted Liens, no
financing statement or other public notice or recording covering the Collateral
is on file in any public office and Debtor will not execute or authorize the
filing of any such financing statement or other public notice or recording so
long as any of the Obligations are outstanding.
SECTION 3.05 LOCATION OF DEBTOR; TAX I.D. NUMBER. Debtor's principal
place of business and chief executive office are located at the address set
forth on the signature page hereto. Debtor's Federal Income Tax Identification
Number and organization identification number are each set forth on the
signature page hereto.
SECTION 3.06 ACCURACY OF INFORMATION. All statements or other
information provided by Debtor to Secured Party describing or with respect to
the Collateral are, or (in the case of subsequently furnished information) will
be when provided, correct and complete in all material respects.
ARTICLE IV
COVENANTS AND AGREEMENTS
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Debtor will at all times comply with the covenants and agreements
contained in this ARTICLE IV, from the date hereof and for so long as any part
of the Obligations are outstanding.
SECTION 4.01 CHANGE IN LOCATION OF DEBTOR. Debtor will give Secured
Party TWENTY (20) DAYS prior written notice of any change in Debtor's address or
jurisdiction of organization.
SECTION 4.02 OPERATION OF THE COLLATERAL. Debtor agrees to maintain and
use the Collateral solely in the conduct of its own business, in a careful and
proper manner, and in conformity with all applicable permits or licenses. Debtor
shall comply in all material respects with all applicable statutes, laws,
ordinances and regulations.
SECTION 4.03 CONDITION. Debtor shall maintain, service and repair the
Collateral so as to keep it in good working order and condition, ordinary wear
and tear excepted. Debtor shall replace within a reasonable time all parts that
may be worn out, lost, destroyed or otherwise rendered unfit for use, with
appropriate replacement parts. Debtor shall obtain and maintain in good standing
at all times all material applicable permits, licenses, registrations and
certificates respecting the Collateral.
SECTION 4.04 ASSESSMENTS. Debtor shall promptly pay when due all Taxes
or Other Taxes levied or assessed against Debtor or with respect to the
Collateral or any part thereof.
SECTION 4.05 NO ENCUMBRANCES. Debtor agrees not to suffer or permit any
Lien against the Collateral or any part thereof, except for Permitted Liens.
SECTION 4.06 PROCEEDS OF COLLATERAL. At the request of Secured Party
and pursuant to the terms of the Credit Agreement, Debtor will deliver to
Secured Party as Collateral, promptly upon receipt, all Proceeds delivered to
Debtor from the sale or disposition of any Collateral. Nothing in this SECTION
4.06 shall be construed to permit sales or dispositions of Collateral not
otherwise permitted by the terms of this Agreement or the Credit Agreement.
SECTION 4.07 NO TRANSFER. Except as otherwise provided in this
Agreement or the other Loan Documents, Debtor shall not, without the prior
written consent of Secured Party, sell, assign, transfer, lease, charter,
encumber, hypothecate or dispose of the Collateral, or any part thereof, or
interest therein, or enter into any agreement to do any of the foregoing, except
for (a) sales, assignments, transfers, leases or other dispositions of inventory
in the ordinary course of business and (b) sales, exchanges and transfers of
Equipment and other property which is worn out or no longer used or useful to
the Debtor's business, all in the ordinary course.
SECTION 4.08 RECORDS AND INFORMATION. Debtor shall keep accurate and
complete records of the Collateral (including Proceeds). Upon reasonable written
notice, Secured Party may have access to, examine, audit, make extracts from and
inspect during normal business hours without hindrance or delay Debtor's records
and files related to the Collateral.
SECTION 4.09 REIMBURSEMENT OF EXPENSES. Debtor hereby agrees to
indemnify and hold Secured Party harmless in accordance with SECTION 9.3 of the
Credit Agreement.
SECTION 4.10 NOTICES AND REPORTS. Debtor shall promptly notify Secured
Party in writing of any change in the name, identity or structure of Debtor, any
material charge, Lien, security interest, claim or encumbrance asserted against
the Collateral other than Permitted Liens, any material litigation against
Debtor or the Collateral, any material theft, loss, injury or similar incident
involving the Collateral, and any other material matter adversely affecting
Debtor or the Collateral. Debtor shall furnish such other reports, information
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and data regarding Debtor's financial condition and operations, the Collateral
and such other matters as Secured Party may reasonably request from time to
time.
SECTION 4.11 AUTHORIZATION TO FILE FINANCING STATEMENTS. Debtor hereby
irrevocably authorizes Secured Party at any time and from time to time to file
in any filing office in any Uniform Commercial Code jurisdiction that is
necessary to perfect the security interest granted hereunder any initial
financing statements and amendments thereto that (a) indicate the Collateral (i)
as all assets of Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the Uniform Commercial Code of the state or such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) provide any
other information required by part 5 of Article 9 of the Uniform Commercial Code
of the state, or such other jurisdiction, for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether Debtor
is an organization, the type of organization and any organizational
identification number issued to Debtor and, (ii) in the case of a financing
statement filed as a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of real property to
which the Collateral relates. Debtor agrees to furnish any such information to
Secured Party promptly upon Secured Party's request.
SECTION 4.12 FURTHER ASSURANCES. Debtor shall do, make, procure,
execute and deliver all such additional and further acts, things, deeds,
interests and assurances as Secured Party may reasonably request from time to
time to protect, assure and enforce Secured Party's rights and remedies.
SECTION 4.13 OTHER ACTIONS. To further the attachment, perfection and
first priority of, and the ability of Secured Party to enforce, Secured Party's
security interest in the Collateral, and without limitation on Debtor's other
obligations in this Agreement, Debtor agrees, in each case at Debtor's expense,
to take the following actions with respect to the following Collateral:
(a) PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. If Debtor
shall at any time hold or acquire any promissory notes or Tangible
Chattel Paper, Debtor shall forthwith endorse, assign and deliver the
same to Secured Party, accompanied by such instruments of transfer or
assignment duly executed in blank as Secured Party may from time to
time specify.
(b) DEPOSIT ACCOUNTS. Without limiting the obligations of the
Debtor under Section 4.10: (i) upon the request of the Secured Party,
the Debtor shall take or cause to be taken all actions (other than any
actions required to be taken by the Secured Party or any Lender)
requested by the Secured Party to cause the Secured Party to have
"control" (within the meaning of Sections 9-104 of the Code) over any
Collateral constituting Deposit Accounts, including, without
limitation, executing and delivering the Deposit Account Control
Agreement of even date herewith and any other agreements, in form and
substance reasonably satisfactory to the Secured Party, with the bank
with which the Deposit Account is maintained in order to establish
"control", and Debtor shall promptly notify the Secured Party of
Debtor's establishment of any new Deposit Accounts. The provisions of
this paragraph shall not apply to Deposit Accounts specially and
exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of Debtor's salaried employees.
(c) INVESTMENT PROPERTY. If Debtor shall at any time hold or
acquire any certificated securities, Debtor shall forthwith assign and
deliver the same to Secured Party, accompanied by such instruments of
transfer or assignment duly executed in blank as Secured Party may from
time to time specify. If any securities now or hereafter acquired by
Debtor are uncertificated and are issued to Debtor or its nominee
directly by the issuer thereof, Debtor shall immediately notify Secured
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Party thereof and, at Secured Party's request and option, pursuant to
an agreement in form and substance satisfactory to Secured Party,
either (i) cause the issuer to agree to comply with instructions from
Secured Party as to such securities, without further consent of Debtor
or such nominee, or (ii) arrange for Secured Party to become the
registered owner of the securities. If any securities, whether
certificated or uncertificated, or other Investment Property now or
hereafter acquired by Debtor are held by Debtor or its nominee through
a securities intermediary or commodity intermediary, Debtor shall
immediately notify Secured Party thereof and, at Secured Party's
request and option, pursuant to an agreement in form and substance
reasonably satisfactory to Secured Party, either (A) cause such
securities intermediary or (as the case may be) commodity intermediary
to agree to comply with entitlement orders or other instructions from
Secured Party to such securities intermediary as to such securities or
other Investment Property, or (as the case may be) to apply any value
distributed on account of any commodity contract as directed by Secured
Party to such commodity intermediary, in each case without further
consent of Debtor or such nominee, or (B) in the case of financial
assets or other Investment Property held through a securities
intermediary, arrange for Secured Party to become the entitlement
holder with respect to such Investment Property, with Debtor being
permitted, only with the consent of Secured Party, to exercise rights
to withdraw or otherwise deal with such Investment Property. The
provisions of this paragraph shall not apply to any financial assets
credited to a securities account for which Secured Party is the
securities intermediary.
(d) COLLATERAL IN THE POSSESSION OF A BAILEE. If any
Collateral is at any time in the possession of a bailee, Debtor shall
promptly notify Secured Party thereof and, at Secured Party's request
and option, shall promptly obtain an acknowledgement from the bailee,
in form and substance reasonably satisfactory to Secured Party, that
the bailee holds such Collateral for the benefit of Secured Party, and
that such bailee agrees to comply, without further consent of Debtor,
with instructions from Secured Party as to such Collateral.
(e) LETTER-OF-CREDIT RIGHTS. If Debtor is at any time a
beneficiary under a letter of credit, Debtor shall promptly notify
Secured Party thereof and, at the request and option of Secured Party,
Debtor shall, pursuant to an agreement in form and substance
satisfactory to Secured Party, either (i) arrange for the issuer and
any confirmer or other nominated person of such letter of credit to
consent to an assignment to Secured Party of the Proceeds of the letter
of credit, or (ii) arrange for Secured Party to become the transferee
beneficiary of the letter of credit.
(f) COMMERCIAL TORT CLAIMS. If Debtor shall at any time hold
or acquire a commercial tort claim, Debtor shall immediately notify
Secured Party in a writing signed by Debtor of the particulars thereof
and grant to Secured Party in such writing a security interest therein
and in the Proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance satisfactory to Secured Party.
(g) OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Debtor
further agrees, at the request and option of Secured Party, to take any
and all other actions Secured Party may reasonably determine to be
necessary or useful for the attachment, perfection and first priority
of, and the ability of Secured Party to enforce, Secured Party's
security interest in any and all of the Collateral, including, without
limitation, (i) executing, delivering and, where appropriate, filing
financing statements and amendments relating thereto under the Code, to
the extent, if any, that Debtor's signature thereon is required
therefor, (ii) causing Secured Party's name to be noted as secured
party on any certificate of title for a titled good if such notation is
a condition to attachment, perfection or priority of, or ability of
Secured Party to enforce, Secured Party's security interest in such
Collateral, (iii) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if
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compliance with such provision is a condition to attachment, perfection
or priority of, or ability of Secured Party to enforce, Secured Party's
security interest in such Collateral, (iv) obtaining governmental and
other third party waivers, consents and approvals in form and substance
satisfactory to Secured Party, including, without limitation, any
consent of any licensor, lessor or other person obligated on
Collateral, (v) obtaining waivers from mortgagees and landlords in form
and substance satisfactory to Secured Party and (vi) taking all actions
under any earlier versions of the Code or under any other law, as
reasonably determined by Secured Party to be applicable in any relevant
Uniform Commercial Code or other jurisdiction, including any foreign
jurisdiction.
SECTION 4.14 ADDITIONAL PROVISIONS REGARDING ACCOUNTS. The following
provisions shall apply to all accounts included within the Collateral:
(a) DEFINITIONS. The term "ACCOUNT" as used in this Agreement,
shall have the same meaning as set forth in the Code in effect as of
the date of execution hereof, and as set forth in any amendment to the
Code which becomes effective after the date of execution hereof, and
also shall include all present and future notes, Instruments, Payment
Intangibles, drafts, acceptances and Chattel Paper of Debtor, and the
Proceeds thereof.
(b) ADDITIONAL WARRANTIES. As of the time any Account becomes
subject to the security interest granted hereby, Debtor shall be deemed
further to have warranted as to each and all such Accounts as follows:
(i) each Account and all papers and documents relating thereto are
genuine and in all respects what they purport to be; (ii) each Account
is valid and subsisting and arises out of a bona fide sale of Goods
sold and delivered to, or out of and is a loan made to or for services
theretofore actually rendered by Debtor to, the Account debtor named in
the Account; (iii) the amount of the Account represented as owing is,
to the best knowledge of Debtor, the correct amount actually and
unconditionally owing except for normal cash discounts and is not
subject to any setoffs, credits, defenses, deductions or
countercharges; and (iv) Debtor is the owner thereof free and clear of
any charges, liens, security interests, adverse claims and encumbrances
of any and every nature whatsoever, except for Permitted Liens.
(c) COLLECTION OF ACCOUNTS. Secured Party shall have the right
in its own name or in the name of Debtor, after and during the
continuance of an Event of Default, to require Debtor forthwith to
transmit all Proceeds of collection of Accounts to Secured Party, to
notify any and all Account debtors to make payments of the Accounts
directly to Secured Party, to demand, collect, receive, receipt for,
xxx for, compound and give acquittal for, any and all amounts due or to
become due on the Accounts and to endorse the name of Debtor on all
commercial paper given in payment or part payment hereof, and in
Secured Party's discretion to file any claim or take any other action
or proceeding that Secured Party may reasonably deem necessary or
appropriate to protect and preserve and realize upon the Accounts and
related Collateral. Unless and until an Event of Default has occurred
and Secured Party elects to collect Accounts and the privilege of
Debtor to collect Accounts is revoked by Secured Party in writing,
Debtor shall continue to collect Accounts. Secured Party shall have no
duty or obligation whatsoever to collect any Account, or to take any
other action to preserve or protect the Collateral; however, should
Secured Party elect to collect any Account or take possession of any
Collateral after an Event of Default has occurred, Debtor releases
Secured Party from any claim or claims for loss or damage arising from
any act or omission in connection therewith, except loss or damage
resulting from the gross negligence or willful misconduct of Secured
Party.
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(d) IDENTIFICATION AND ASSIGNMENT OF ACCOUNTS. Upon Secured
Party's request, after and during the continuance of an Event of
Default, Debtor shall take such action and execute and deliver such
documents as Secured Party may reasonably request in order to identify,
confirm, xxxx, segregate and assign Accounts and to evidence Secured
Party's interest in same. Without limitation of the foregoing, Debtor,
upon the occurrence and continuance of an Event of Default, agrees to
assign all of its Accounts to Secured Party, identify and xxxx Accounts
as being subject to the security interest granted hereby, xxxx Debtor's
books and records to reflect such assignments, and forthwith to
transmit to Secured Party in the form as received by Debtor any and all
Proceeds of collection of such Accounts.
ARTICLE V
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default has occurred and is continuing:
SECTION 5.01 DISCHARGE ENCUMBRANCES. If not timely discharged by
Debtor, Secured Party, at its option, whether before or after an Event of
Default, but without any obligation whatsoever to do so, may (a) discharge
taxes, claims, charges, liens, security interests, assessments or other
encumbrances of any and every nature whatsoever at any time levied, placed upon
or asserted against the Collateral, except for Permitted Liens, (b) in the event
Debtor fails to comply with SECTION 5.18 of the Credit Agreement, place and pay
for insurance on the Collateral, including insurance that only protects Secured
Party's interest, (c) pay for the repair, improvement, testing, maintenance and
preservation of the Collateral, (d) pay any filing, recording, registration,
licensing or certification fees or other fees and charges related to the
Collateral, or (e) take any other action to preserve and protect the Collateral
and Secured Party's rights and remedies under this Agreement as Secured Party
may deem necessary or appropriate. Debtor agrees that Secured Party shall have
no duty or obligation whatsoever to take any of the foregoing actions. Debtor
agrees to promptly reimburse Secured Party upon demand for any payment made or
any expense incurred by Secured Party pursuant to this SECTION 5.01. These
payments and expenditures, together with interest thereon from date incurred
until paid by Debtor at the Default Rate, which Debtor agrees to promptly pay
upon demand, shall constitute additional Obligations and shall be secured by and
entitled to the benefits of this Agreement.
SECTION 5.02 CUMULATIVE AND OTHER RIGHTS. The rights, powers and
remedies of Secured Party hereunder are in addition to all rights, powers and
remedies given by law or in equity. The exercise by Secured Party of any one or
more of the rights, powers and remedies herein shall not be construed as a
waiver of any other rights, powers and remedies, including, without limitation,
any other rights of set-off. If any of the Obligations are given in renewal,
extension for any period or rearrangement, or applied toward the payment of debt
secured by any lien, Secured Party shall be, and is hereby, subrogated to all
the rights, titles, interests and liens securing the debt so renewed, extended,
rearranged or paid.
SECTION 5.03 DISCLAIMER OF CERTAIN DUTIES.
(a) The powers conferred upon Secured Party by this Agreement are to
protect Secured Party's interest in the Collateral and shall not impose any duty
upon Secured Party to exercise any such powers. The Debtor hereby agrees that
Secured Party shall not be liable for, nor shall the Obligations be diminished
by, Secured Party's delay or failure to collect upon, foreclose, sell, take
possession of or otherwise obtain value for the Collateral, except for loss or
damage resulting from the gross negligence or willful misconduct of Secured
Party.
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(b) Secured Party shall not be under any duty whatsoever to make or
give any presentment, notice of dishonor, protest, demand for performance,
notice of non-performance, notice of intent to accelerate, notice of
acceleration, or other notice or demand in connection with any Collateral or the
Obligations, or to take any steps necessary to preserve any rights against any
Obligor or other Person and Debtor hereby waives all of the foregoing. Debtor
waives any right of marshaling in respect of any and all Collateral, any right
to require Secured Party to proceed against any Obligor or other Person, any
right to exhaust any Collateral or any right to enforce any other remedy which
Secured Party now has or may hereafter have against any Obligor or other Person.
SECTION 5.04 MODIFICATION OF OBLIGATIONS; OTHER SECURITY. Debtor waives
(a) any and all notice of acceptance, creation, modification, rearrangement,
renewal or extension for any period of any instrument executed by any Obligor in
connection with the Obligations and (b) the ability to avail itself of any
defense of any other Obligor by reason of disability, lack of authorization,
cessation of the liability of any Obligor or for any other reason. Debtor
authorizes Secured Party, without notice or demand and without any reservation
of rights against Debtor and without affecting Debtor's liability hereunder or
on the Obligations, from time to time to (a) apply the Collateral in the manner
permitted by this Agreement and the Credit Agreement and (b) renew, extend for
any period, accelerate, amend or modify, supplement, enforce, compromise,
settle, waive or release the obligations of any other Obligor or any instrument
or agreement of such other Person with respect to any or all of the Obligations
or Collateral.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01 EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist if
any of the following events occurs and is continuing:
(a) Debtor shall fail to perform any of its obligations under this
Agreement;
(b) An "Event of Default" as defined in the Credit Agreement.
SECTION 6.02 REMEDIES. Upon the occurrence and during the continuance
of any Event of Default, Secured Party, at its option, shall, subject to any
limitations set forth in the Credit Agreement, be entitled to exercise any one
or more of the following remedies (all of which are cumulative):
(a) Secured Party, at its option, may declare the Obligations or any
part thereof immediately due and payable, without demand, notice of intention to
accelerate, notice of acceleration, notice of nonpayment, presentment, protest,
notice of dishonor, or any other notice whatsoever, all of which are hereby
waived by Debtor and any maker, endorser, guarantor, surety or other party
liable in any capacity for any of the Obligations.
(b) Secured Party shall have all of the rights and remedies provided
for in this Agreement or any other Loan Document, the rights and remedies under
the Code, and any and all of the applicable rights and remedies at law and
equity, all of which shall be deemed cumulative. Without limiting the foregoing,
Debtor agrees that Secured Party shall have the right to (i) require Debtor to
assemble the Collateral and make it available to Secured Party at a place
designated by Secured Party that is reasonably convenient to both parties, which
Debtor agrees to do; (ii) take possession of the Collateral, with or without
process of law, and, in this connection, enter any premises where the Collateral
is located to remove same, or to dispose of same on such premises; (iii) sell,
lease or otherwise dispose of the Collateral, by public or private proceedings,
for cash or credit, without assumption of credit risk; and/or (iv) during the
existence of an Event of Default, collect and receipt for, compound, compromise,
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Amended and Restated Security Agreement - Mainland Resources, Inc. Page 9
and settle, and give releases, discharges and acquittances with respect to, any
and all amounts owed by any person or entity with respect to the Collateral.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, Secured Party will send
Debtor reasonable notice of the time and place of any public sale or of the time
after which any private sale or other disposition will be made. Any requirement
of reasonable notice to Debtor shall be met if such notice is mailed, postage
prepaid, to Debtor at the address of Debtor designated on the signature page
hereto, at least TWENTY (20) BUSINESS DAYS before the day of any public sale or
at least TWENTY (20) BUSINESS DAYS before the time after which any private sale
or other disposition will be made.
(c) Debtor shall be liable for and agrees to pay the reasonable
expenses incurred by Secured Party in enforcing its rights and remedies, in
retaking, holding, testing, repairing, selling, leasing or disposing of the
Collateral, or like expenses, including, without limitation, reasonable
attorneys' fees and legal expenses incurred by Secured Party. These expenses,
together with interest thereon on and from the date demanded to but excluding
the date paid by Debtor at the Default Rate, which Debtor agrees to pay, shall
constitute additional Obligations and shall be secured by and entitled to the
benefits of this Agreement.
(d) Proceeds received by Secured Party from disposition of the
Collateral shall be applied toward Secured Party's expenses and other
Obligations in such order or manner as Secured Party may elect. Debtor shall be
entitled to any surplus if one results after lawful application of the Proceeds.
Debtor shall remain liable for any deficiency.
(e) The rights and remedies of Secured Party are cumulative and the
exercise of any one or more of the rights or remedies shall not be deemed an
election of rights or remedies or a waiver of any other right or remedy. Secured
Party may waive any Event of Default and may remedy any Event of Default without
waiving the Event of Default remedied or without waiving any other prior or
subsequent Event of Default.
(f) Secured Party shall take reasonable care of Collateral in its
possession in accordance with Section 9.207 of the Code.
SECTION 6.03 ATTORNEY-IN-FACT. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, with full authority in the place and
stead of such Debtor and in the name of Debtor or otherwise, from time to time
in Secured Party's discretion upon the occurrence and during the continuance of
an Event of Default, such appointment will be deemed to be coupled with an
interest, but at Debtor's cost and expense, to take any action and to execute
any assignment, certificate, financing statement, notification, document or
instrument that Secured Party may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all Instruments made payable to Debtor representing
any payment or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same. Secured Party shall provide
Debtor written notice with respect to any such actions taken by Secured Party.
SECTION 6.04 REASONABLE NOTICE. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Debtor hereby agrees that TEN (10) DAYS prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
shall state the time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
SECTION 6.05 NON-JUDICIAL ENFORCEMENT. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by Law, Debtor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial process.
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Amended and Restated Security Agreement - Mainland Resources, Inc. Page 10
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 NOTICES. Any notice required or permitted to be given
under or in connection with this Agreement shall be given in accordance with the
notice provisions of the Credit Agreement.
SECTION 7.02 AMENDMENTS AND WAIVERS. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Debtor or any Obligor, or of any right, power or
remedy of Secured Party, and no partial exercise of any right, power or remedy
shall preclude any other or further exercise thereof. Secured Party may remedy
any Event of Default hereunder or in connection with the Obligations without
waiving the Event of Default so remedied. Debtor hereby agrees that if Secured
Party agrees to a waiver of any provision hereunder, or an exchange of or
release of the Collateral, or the addition or release of any Obligor or other
Person, any such action shall not constitute a waiver of any of Secured Party's
other rights or of Debtor's obligations hereunder. This Agreement may be amended
only by an instrument in writing executed jointly by Debtor and Secured Party
and may be supplemented only by documents delivered or to be delivered in
accordance with the express terms hereof.
SECTION 7.03 COPY AS FINANCING STATEMENT. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral without the requirement for Debtor's
signature thereon.
SECTION 7.04 POSSESSION OF COLLATERAL. Subject to applicable Law,
Secured Party shall be deemed to have possession of any Collateral in transit to
it or set apart for it (or, in either case, any of its agents, affiliates or
correspondents).
SECTION 7.05 REDELIVERY OF COLLATERAL. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of Proceeds,
Secured Party will deliver to Debtor such excess Proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not be liable for
any interest, cost or expense in connection with any reasonable delay in
delivering such Proceeds to Debtor.
SECTION 7.06 GOVERNING LAW. THIS AGREEMENT AND THE SECURITY INTEREST
GRANTED HEREBY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT FEDERAL LAWS OF THE UNITED
STATES OF AMERICA APPLY.
SECTION 7.07 ADDITIONAL RIGHTS OF SECURED PARTY. Secured Party is
expressly granted the following rights upon the occurrence and continuance of an
Event of Default: (a) to receive Debtor's share of all distributions and/or
distributions in kind following dissolution of any of its Subsidiaries and to
hold the same in trust for the benefit of Debtor as part of the Collateral and
(b) to exercise voting rights as to any of the Collateral. All of the foregoing
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Amended and Restated Security Agreement - Mainland Resources, Inc. Page 11
may be exercised by Secured Party without liability, except to account for
property actually received by it and except for liability arising from Secured
Party's gross negligence or willful misconduct.
SECTION 7.08 CONTINUING SECURITY AGREEMENT.
(a) Except as may be expressly applicable pursuant to Section 9.620 of
the Code as amended from time to time, no action taken or omission to act by
Secured Party hereunder, including, without limitation, any action taken or
inaction pursuant to SECTION 6.02, shall be deemed to constitute a retention of
the Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full force
and effect until Secured Party shall have applied payments (including, without
limitation, collections from Collateral) towards the Obligations in the full
amount then outstanding or until such subsequent time as is hereinafter provided
in SUBSECTION (B) below.
(b) To the extent that any performance of or payments on the
Obligations or Proceeds of the Collateral are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent the Obligations so
satisfied shall be revived and continue as if such performance had not occurred
or such payment or Proceeds had not been received by Secured Party, and Secured
Party's security interests, rights, powers and remedies hereunder shall continue
in full force and effect. In such event, this Agreement shall be automatically
reinstated if it shall theretofore have been terminated pursuant to SECTION
7.09.
SECTION 7.09 TERMINATION. The granting of a security interest hereunder
and all of Secured Party's rights, powers and remedies in connection therewith
shall remain in full force and effect until the Obligations are satisfied in
full. Upon the complete performance of the Obligations and the compliance by
Debtor with all covenants and agreements hereof, Secured Party, at the written
request and expense of Debtor, will release, reassign and transfer the
Collateral to Debtor and declare this Agreement to be of no further force or
effect. Notwithstanding the foregoing, the reimbursement and indemnification
provisions of SECTION 4.09 and the provisions of SECTION 7.08(B) shall survive
the termination of this Agreement.
SECTION 7.10 EFFECTIVENESS. This Agreement becomes effective upon the
execution hereof by Debtor and delivery of the same to Secured Party, and it is
not necessary for Secured Party to execute any acceptance hereof or otherwise
signify or express its acceptance hereof.
SECTION 7.11 NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the sole and exclusive benefit of Secured Party and its respective
successors and assigns, and shall not serve to confer any rights or benefits in
favor of any Person not a party hereto; and no other Person shall have any right
to rely on this Agreement, or to derive any benefit herefrom. Debtor shall not
assign or transfer its rights, duties or obligations hereunder without the
consent of Secured Party. There are no third party beneficiaries to this
Agreement and no other Person (other than the parties hereto, and their
respective successors and assigns) shall be entitled to rely on or enforce this
Agreement. Each and every right of Secured Party shall be cumulative and shall
be in addition to any other remedy given hereunder or under any other Loan
Document now or hereafter existing at law, in equity or by statute.
SECTION 7.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement. A
set of counterparts executed by all the parties hereto shall be lodged with
Debtor and Secured Party.
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Amended and Restated Security Agreement - Mainland Resources, Inc. Page 12
SECTION 7.13 AMENDMENT AND RESTATEMENT. CONFIRMATION OF LIENS. This
Agreement is an amendment and restatement of the Existing Security Agreement and
supersedes the Existing Security Agreement in its entirety; provided, however,
that (i) the execution and delivery of this Agreement shall not effect a
novation of the Existing Security Agreement but shall be, to the fullest extent
applicable, in modification, renewal, confirmation and extension of such
Existing Security Agreement, and (ii) the Liens in the Collateral (as such term
is defined in the Existing Security Agreement, hereinafter the "Original
Collateral") granted under the Existing Security Agreement are and shall remain
legal, valid, binding and enforceable with regard to such Original Collateral.
The Debtor hereby acknowledges and confirms the continuing existence and
effectiveness of such Liens in the Original Collateral granted under the
Existing Security Agreement, and further agrees that the execution and delivery
of this Agreement and the other Loan Documents shall not in any way release,
diminish, impair, reduce or otherwise affect such Liens in the Original
Collateral granted under the Existing Security Agreement.
[SIGNATURE PAGE FOLLOWS]
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Amended and Restated Security Agreement - Mainland Resources, Inc. Page 13
EXECUTED as of the date first written above.
DEBTOR:
MAINLAND RESOURCES, INC.
a Nevada corporation
By:
Xxxxxxx X. Newport
President
Debtor's Address:
MAINLAND RESOURCES, INC.
00000 XX 000, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Newport
Debtor's Organizational ID Number: E0358282006-3
Debtor's EIN: 00-0000000
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Signature Page to Amended and Restated Security Agreement - Mainland Resources,
Inc.
Acknowledged and Agreed to as
of the date hereof by:
SECURED PARTY:
GUGGENHEIM CORPORATE FUNDING, LLC.
a Delaware limited liability company
By: __________________________________________
Name: _______________________________________
Title: ________________________________________
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Signature Page to Amended and Restated Security Agreement - Mainland Resources,
Inc.
