Exhibit 5
AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
(Floating Lien)
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of February 11, 2002
(this "Agreement"), between Emex Corporation, a Nevada corporation with its
principal executive office at 000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx 00000 (the "Debtor"), and Thorn Tree Resources LLC, a Delaware limited
liability company (the "Secured Party"), with a principal office at 000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000;
W I T N E S S E T H:
WHEREAS, the parties hereto wish to amend and restate that certain General
Security Agreement (Floating Lien), dated as of October 17, 2001 (the "Original
Agreement"), between Debtor and the Secured Party, as amended by that certain
Amendment to the General Security Agreement (Floating Lien), dated as of January
23, 2002 (the "Amendment"), between the Debtor and the Secured Party;
WHEREAS, the Debtor has issued to the Secured Party (i) a secured grid note
in favor of the Secured Party in the principal sum of Six Million Dollars
($6,000,000) or so much thereof as shall be advanced by the Secured Party to the
Debtor (as it may be at any time amended, extended, restated, renewed or
modified, the "First Note") and (ii) a secured note in favor of the Secured
Party in the principal sum of Six Hundred Twenty Eight Thousand Dollars
($628,000) (as it may be at any time amended, extended, restated, renewed or
modified, the "Second Note");
WHEREAS, concurrently herewith, the Debtor will issue to the Secured Party
a grid note in favor of the Secured Party in the principal sum of Two Million
Thirty Four Hundred Thousand One Hundred Dollars ($2,034,100) or so much thereof
as shall be advanced by the Secured Party to the Debtor (as it may be at any
time amended, extended, restated, renewed or modified, the "Third Note, and
together with the First Note, the Second Note and any and all other future
advances granted by the Secured Party to the Debtor, the "Secured Notes");
WHEREAS, it is a condition precedent to the obligation of the Secured Party
to provide the advances to the Debtor as evidenced by the Secured Notes that the
Debtor shall have granted the security interest contemplated by this Agreement;
NOW, THEREFORE, for value received and in order to induce the Secured Party
to provide the advances evidenced by the Secured Notes to the Debtor, the Debtor
hereby agrees as follows:
Section 1. Terms. Unless otherwise defined herein, capitalized terms used in
this Agreement shall have the meaning specified therefor in the Secured Notes.
As used herein the following terms
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shall have the meanings specified and shall include in the singular number the
plural and in the plural number the singular:
"Assigned Agreements" shall mean all contracts and agreements of the
Debtor.
"Collateral" means all of the Debtor's and its subsidiaries'
(hereinafter the term "Debtor" refers to the Debtor and all of its subsidiaries)
right, title and interest in and under or arising out of each and all of the
following:
All personal property and fixtures of the Debtor of any type or
description, wherever located and now existing or hereafter arising or acquired,
including but not limited to the following:
(i) all of the Debtor's goods including, without limitation:
(a) all inventory (the "Inventory"), including, without
limitation, equipment held for lease, whether raw materials, in process or
finished, all material or equipment usable in processing the same and all
documents of title covering any inventory;
(b) all equipment (the "Equipment") employed in connection with
the Debtor's business, together with all present and future additions,
attachments and accessions thereto and all substitutions therefor and
replacements thereof;
(ii) all of the Debtor's present and future accounts, accounts
receivable, general intangibles, contracts and contract rights (the
"Receivables"), including, but not limited to, the Debtor's rights (including
rights to payment) under all Assigned Agreements, together with
(a) all claims, rights, powers or privileges and remedies of the
Debtor relating thereto or arising in connection therewith including, without
limitation, all rights of the Debtor to make determinations, to exercise any
election (including, but not limited to, election of remedies) or option or to
give or receive any notice, consent, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt for any of
the foregoing or any property which is the subject of the Assigned Agreements,
to enforce or execute any checks, or other instruments or orders, to file any
claims and to take any action which, in the opinion of the Secured Party, may be
necessary or advisable in connection with any of the foregoing,
(b) all liens, security, guaranties, endorsements, warranties and
indemnities and all insurance and claims for insurance relating thereto or
arising in connection therewith,
(c) all rights to property forming the subject matter of the
Receivables including, without limitation, rights to stoppage in transit and
rights to returned or repossessed property,
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(d) all writings relating thereto or arising in connection
therewith including without limitation, all notes, contracts, security
agreements, guaranties, chattel paper and other evidence of indebtedness or
security, all powers-of-attorney, all books, records, ledger cards and invoices,
all credit information, reports or memoranda and all evidence of filings or
registrations relating thereto,
(e) all catalogs, computer and automatic machinery software and
programs, and the like pertaining to operations by the Debtor in, on or about
any of its offices, all sales data and other information relating to sales or
service of products now or hereafter manufactured on or about any of its
offices, and all accounting information pertaining to operations in, on or about
any of its offices, and all media in which or on which any of the information or
knowledge or data is stored or contained, and all computer programs used for the
compilation or printout of such information, knowledge, records or data, and
(f) all accounts, contract rights, general intangibles and other
property rights of any nature whatsoever arising out of or in connection with
the foregoing, including, without limitation, payments due and to become due,
whether as repayments, reimbursements, contractual obligations, indemnities,
damages or otherwise;
(iii) all of the Debtor's right, title, and market in and to any
shares of capital stock of any of its subsidiaries (collectively, the
"Subsidiaries") and the certificates representing any such shares, together with
all goods, Inventory, Equipment, Receivables, and all other personal property of
the Subsidiaries;
(iv) all other personal property of the Debtor of any nature
whatsoever, including, without limitation, all accounts, bank accounts,
deposits, credit balances, contract rights, inventory, general intangibles,
goods, equipment, instruments, chattel paper, machinery, furniture, furnishings,
fixtures, tools, supplies, appliances, plans and drawings, together with all
customer and supplier lists and records of the business, and all property from
time to time described in any financing statement including any UCC-1 signed by
the Debtor naming the Secured Party as secured party;
(v) all trademarks, trade names, trade styles, service marks, prints
and labels on which said trademarks, trade names, trade styles and service marks
have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted, all right, title and interest therein and
thereto, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof, or any other country or any political subdivision
thereof, together with the goodwill associated therewith, and all reissues,
amendments, extensions or renewals thereof and all licenses thereof (the
"Trademarks");
(vi) all copyrights, copyrighted works or any item which embodies such
copyrighted work of the United States or any other country, all applications
therefor, all right, title and interest therein and thereto, and all
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Copyright Office
or in any
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similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, and all derivative works,
extensions or renewals thereof (the "Copyrights");
(vii) all letters patent of the United States or any other country,
and all applications therefor, all right, title and interest therein and
thereto, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, and all reissues, continuations, divisionals, continuations-in-part or
extensions thereof and all licenses thereof (the "Patents");
(viii) all general intangibles, including but not limited to good will
and tax refunds (the "General Intangibles"); and
(ix) all items of collateral hereafter acquired, credited or arising
and all additions, accessions, replacements, substitutions or improvements and
all products and proceeds including, without limitation, proceeds of insurance,
of any and all of the Collateral described in clauses (i) through (viii) above.
"Instrument" shall have the meaning specified in Article 3 of the
Uniform Commercial Code, as in effect from time to time in the State of New
York, and shall also include any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease and is of a
type which is in the ordinary course of business transferred by delivery with
any necessary endorsement or assignment.
"Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance (including any easement, right of
way, zoning restriction and the like), lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Permitted Liens" means Liens permitted under Section 3B(v) of the
Secured Notes, if applicable.
"Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint-stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Secured Obligations" means all obligations of the Debtor, whether for
borrowed money, fees, expenses or otherwise, now existing or hereafter arising,
including, without limitation, all obligations under this Agreement and the
Secured Notes.
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Section 2. Security Interests. As security for the payment and performance of
all Secured Obligations, the Debtor does hereby grant and assign to the Secured
Party a continuing security interest in all of the Collateral, whether now
existing or hereafter arising or acquired and wherever located, subject to the
priority, if any, of Permitted Liens.
Section 3. General Representations, Warranties and Covenants. The Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:
(a) This Agreement is made with full recourse to the Debtor and
pursuant to and upon all the warranties, representations, covenants, and
agreements on the part of the Debtor contained herein, in the applicable Secured
Notes and otherwise made in writing in connection herewith or therewith.
(b) Except for the security interest of the Secured Party therein, the
Debtor is, and as to Collateral acquired from time to time after the date hereof
the Debtor will be, the owner of all the Collateral free from any lien, security
interest, encumbrance or other right, title or interest of any Person (other
than Permitted Liens), and the Debtor shall defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to the Secured Party.
(c) Except for financing statements filed or registered by the Secured
Party, there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) now on file or registered in any
public office covering any interest of any kind in the Collateral, or intended
to cover any such interest, which has not been terminated or released by the
secured party named therein and so long as any Secured Notes remain outstanding
or any of the Secured Obligations of the Debtor remain unpaid, the Debtor will
not execute and there will not be on file in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except (i) financing
statements filed or to be filed in respect of and covering the security interest
of the Secured Party hereby granted and provided for, and (ii) with respect to
Permitted Liens.
(d) The Debtor's state of incorporation is Nevada. The chief executive
office and chief place of business of the Debtor is located at the address of
the Debtor listed on the signature page hereof, and the Debtor will not move its
chief executive office and chief place of business until (i) it shall have given
to the Secured Party not less than 30 days' prior written notice of its
intention to do so, clearly describing such new location and providing such
other information in connection therewith as the Secured Party may reasonably
request, and (ii) with respect to such new location, it shall have taken such
action, satisfactory to the Secured Party (including, without limitation, all
action required by Section 7 hereof), to maintain the security interest of the
Secured Party in the Receivables intended to be granted at all times fully
perfected and in full force and effect. The originals of all Assigned Agreements
and all documents (as well as all duplicates thereof) evidencing all the
Collateral and the only original books of account and records of the Debtor
relating thereto
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are, and will continue to be, kept at such chief executive office or at such new
location as the Debtor may establish in accordance with this Section 3(d).
(e) The name of the Debtor is as set forth in the recitals hereto and
the Debtor shall not change such name, conduct its business in any other name or
take title to the Collateral in any other name while this Agreement remains in
effect. The Debtor has never had any name, or conducted business under any name
in any jurisdiction, other than its name set forth in the recitals hereto and
"Hawks Industries, Inc."
(f) At the Debtor's own expense, the Debtor will: (i) without limiting
the provisions of the Secured Notes, keep the Collateral fully insured at all
times with financially sound and responsible insurance carriers against loss or
damage by fire and other risks, casualties and contingencies and in such manner
and to the same extent that like properties are customarily so insured by other
entities engaged in the same or similar businesses similarly situated and keep
adequate insurance at all times against liability on account of damage to
persons and properties and under all applicable workers' compensation laws, by
insurers and in amounts approved by the Secured Party, for the benefit of the
Debtor, (ii) upon request by the Secured Party, promptly deliver the insurance
policies or certificates thereof to the Secured Party, and (iii) keep the
Collateral in good condition at all times (normal wear and tear excepted) and
maintain same in accordance with all manufacturer's specifications and
requirements. Upon any failure of the Debtor to comply with its obligations
pursuant to this Section 3(f), the Secured Party may at its option, and without
affecting any of its other rights or remedies provided herein or as a secured
party under the Uniform Commercial Code, procure the insurance protection it
deems necessary and/or cause repairs or modifications to be made to the
Collateral, the cost of either or both of which shall be a lien against the
Collateral added to the amount of the indebtedness secured hereby and payable on
demand with interest at a rate per annum equal to 18%.
(g) Subject to the terms of the Permitted Liens, the Debtor hereby
assigns to the Secured Party all of the Debtor's right, title and interest in
and to any and all moneys which may become due and payable with respect to the
Collateral under any policy insuring the Collateral (except proceeds relating to
tangible personal property which are applied to restoration or replacement),
including return of unearned premium, and shall cause any such insurance company
to make payment directly to the Secured Party for application to amounts
outstanding under the Secured Notes in accordance with the terms of the Secured
Notes and, to the extent not provided therein, in such order as the Secured
Party shall determine.
(h) The Debtor will not use the Collateral in violation of any statute
or ordinance or applicable insurance policy and will promptly pay all taxes and
assessments levied against the Collateral.
(i) The Debtor will not sell, transfer, change the registration, if
any, dispose of, attempt to dispose of, substantially modify or abandon the
Collateral or any part thereof other than sales of Inventory in the ordinary
course of business and the disposition of obsolete or worn-out Equipment in the
ordinary course of business.
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(j) The Debtor will not assert against the Secured Party any claim or
defense which the Debtor may have against any seller of the Collateral, or any
part thereof, or against any other Person with respect to the Collateral, or any
part thereof.
(k) The Debtor will indemnify, and hold the Secured Party harmless
from and against, any and all loss, liability, damage, costs and expenses
whatsoever arising from the Debtor's use, operation, ownership or possession of
the Collateral, or any part thereof.
(l) The Debtor will maintain the confidentiality of all customer lists
and not sell or otherwise dispose of such lists, except that the Debtor shall
deliver copies thereof to the Secured Party upon its request, which may be made
at any time and from time to time after an Event of Default.
(m) The Debtor will not enter into any agreement that is materially
inconsistent with the Debtor's obligations under this Agreement, without the
prior written consent of the Secured Party.
Section 4. Special Provisions Concerning Assigned Agreements. The Debtor
represents, warrants and agrees as follows:
(a) The Assigned Agreements constitute the legal, valid and binding
obligations of the Debtor and, to the best of its knowledge, the other parties
thereto, enforceable in accordance with their respective terms.
(b) The Debtor will use its best efforts to faithfully abide by,
perform and discharge each and every material obligation, covenant and agreement
to be performed by the Debtor under the Assigned Agreements.
(c) At the request of the Secured Party, and at the sole cost and
expense of the Debtor, the Debtor will enforce or secure the performance of each
and every material obligation, covenant, condition and agreement contained in
the Assigned Agreements to be performed by the other parties thereto.
(d) The Debtor will not modify, amend or agree to vary any of the
Assigned Agreements in any material respect other than in the ordinary course of
business, or otherwise act or fail to act in a manner likely (directly or
indirectly) to entitle any party thereto to claim that the Debtor is in default
under the terms hereof.
(e) The Debtor will not act or fail to act in a manner likely
(directly or indirectly) to entitle any party thereto to claim that the Debtor
is in default under the terms thereof. Notwithstanding the foregoing, the
default(s) under the terms of the Option Agreement between Xxxxx Limited and
North Star Exploration, Inc., effective as of May 27, 1997 (the "Xxxxx
Agreement"), existing as of the date hereof shall not be considered a default
under this Section 4(e).
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The Secured Party acknowledges that the security interest in the Xxxxx Agreement
created hereby is subject to all terms and provisions of the Xxxxx Agreement
including, without limitation, Doyon's Royalty and Working Interest election
rights under Section 13.2 of the Xxxxx Agreement and the contracting and hiring
preferences set forth in Section 7 of the Xxxxx Agreement.
(f) The Debtor will not terminate or permit the termination of any
Assigned Agreement, except in accordance with its terms, other than in the
ordinary course of business or as it deems necessary or desirable in the normal
course of its business.
(g) Without the prior written consent of the Secured Party, the Debtor
will not, other than in the ordinary course of business, waive or in any manner
release or discharge any party to any Assigned Agreement from any of the
material obligations, covenants, conditions and agreements to be performed by it
under such Assigned Agreement including, without limitation, the obligation to
make all payments in the manner and at the time and places specified.
(h) Subject to the terms of the Permitted Liens, if the Secured Party
so requests after the occurrence of an Event of Default, the Debtor will hold
any payments received by it which are assigned and set over to the Secured Party
by this Agreement for and on behalf of the Secured Party and turn them promptly
over to the Secured Party forthwith in the same form in which they are received
(together with any necessary endorsement) for application to amounts outstanding
under the Secured Notes in accordance with the terms of the Secured Notes and,
to the extent not provided therein, in such order as the Secured Party shall
determine.
(i) The Debtor will appear in and defend every action or proceeding
arising under, growing out of or in any manner connected with the Assigned
Agreements or the obligations, duties or liabilities of the Debtor and any
assignee thereunder.
(j) Subject to the terms of the Permitted Liens, should the Debtor
fail to make any payment or to do any act as herein provided after 15 days'
notice by the Secured Party, the Secured Party may (but without obligation on
the Secured Party's part to do so and without notice to or demand on the Debtor
and without releasing the Debtor from any obligation hereunder) make or do the
same in such manner and to such extent as the Secured Party may deem necessary
to protect the security interests provided hereby, including specifically,
without limiting the general powers, the right to appear in and defend any
action or proceeding purporting to affect the security interests provided
hereby, and the Debtor, and the Secured Party may also perform and discharge
each and every obligation, covenant and agreement of the Debtor contained in any
Assigned Agreement and, in exercising any such powers, pay necessary costs and
expenses, employ counsel and incur and pay reasonable attorneys' fees.
(k) Upon the request of the Secured Party, the Debtor will send to the
Secured Party copies of all notices, documents and other papers furnished or
received by it with respect to any of the Assigned Agreements.
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Section 5. Special Provisions Concerning Receivables.
(a) As of the time when each Receivable arises, the Debtor shall be
deemed to have warranted as to each such Receivable that such Receivable and all
papers and documents relating thereto are genuine and in all respects what they
purport to be, and that all papers and documents relating thereto:
(i) will be signed by the account debtor named therein (or such
account debtor's duly authorized agent) or otherwise be binding on the account
debtor;
(ii) will represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and owed by such
account debtor arising out of the performance of labor or services or the sale
and delivery of merchandise or both;
(iii) to the extent evidenced by writings, will be the only
original writings evidencing and embodying such obligation of the account debtor
named therein; and
(iv) will be in compliance and will conform with all applicable
federal, state and local laws (including applicable usury laws) and applicable
laws of any relevant foreign jurisdiction.
(b) The Debtor will keep and maintain, at the Debtor's own cost and
expense, satisfactory and complete records of the Receivables, including, but
not limited to, records of all payments received, all credits granted thereon,
and all other dealings therewith, and the Debtor will make the same available to
the Secured Party, at the Debtor's own cost and expense, at any and all
reasonable times, upon demand of the Secured Party. Subject to the terms of the
Permitted Liens, the Debtor shall, at the Debtor's own cost and expense, deliver
the Receivables (including, without limitation, all documents evidencing the
Receivables) and such books and records to the Secured Party or to its
representatives upon its demand at any time after the occurrence of an Event of
Default. Subject to the terms of the Permitted Liens, if the Secured Party shall
so request, the Debtor shall legend, in form and manner satisfactory to the
Secured Party, the Receivables and other books, records and documents of the
Debtor evidencing or pertaining to the Receivables with an appropriate reference
to the fact that the Receivables have been assigned to the Secured Party and
that the Secured Party has a security interest therein.
(c) Except in the ordinary course of business prior to an Event of
Default, the Debtor will not rescind or cancel any indebtedness evidenced by any
Receivable or modify any term thereof or make any adjustment with respect
thereto, or extend or renew the same, or compromise or settle any dispute,
claim, suit or legal proceeding relating thereto, or sell any Receivable or
interest therein, without the prior written consent of the Secured Party, except
that the Debtor may grant discounts in connection with the prepayment of any
Receivable in an amount which is customary in the line of business in which the
Debtor is engaged and consistent with the Debtor's past practices.
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(d) The Debtor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Receivables and will do nothing
intentionally to impair the rights of the Secured Party in the Receivables.
(e) The Debtor shall endeavor to collect or cause to be collected from
the account debtor named in each Receivable, as and when due (including, without
limitation, the Receivables which are delinquent, such Receivables to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable, and credit
forthwith (on a daily basis) upon receipt thereof all such amounts as are so
collected to the outstanding balance of such Receivable. The costs and expenses
(including attorneys' fees) of collection, whether incurred by the Debtor or the
Secured Party, shall be borne by the Debtor.
(f) Subject to the terms of the Permitted Liens, upon request of the
Secured Party, at any time when an Event of Default shall exist, the Debtor
shall promptly notify (in manner, form and substance satisfactory to the Secured
Party) all Persons who are at any time obligated under any Receivable that the
Secured Party possesses a security interest in such Receivable and that all
payments in respect thereof are to be made to such account as the Secured Party
directs.
Section 6. Special Provisions Concerning Equipment. The Debtor will do nothing
to impair the rights of the Secured Party in the Equipment. The Debtor shall
cause the Equipment to at all times constitute and remain personal property. The
Debtor will at all times keep all Equipment insured with financially responsible
insurance companies, at the expense of the Debtor, against such perils and in
such amounts as are customary for Persons in the same general line of business
as the Debtor and operating in similar geographic locations and markets. If the
Debtor shall fail to insure the Equipment to the Secured Party's reasonable
satisfaction, the Secured Party shall have the right (but shall be under no
obligation) to procure such insurance and the Debtor agrees to reimburse the
Secured Party for all costs and expenses of procuring such insurance, together
with interest at a rate per annum equal to 18%. The Debtor retains all liability
and responsibility in connection with the Equipment and the liability of the
Debtor to pay the Secured Obligations shall in no way be affected or diminished
by reason of the fact that such Equipment may be lost, destroyed, stolen,
damaged or for any reason whatsoever unavailable to the Debtor.
Section 7. Special Provisions Regarding Patents, Trademarks and Copyrights.
(a) The Debtor shall provide within five (5) days of the creation or
obtaining thereof, written notice to the Secured Party of all Trademarks,
Patents and Copyrights or applications for or registration of the same, created
or obtained by the Debtor on or after the date of this Security Agreement; and
(b) The Debtor shall take all reasonable steps to maintain and enforce
the Trademarks, Patents and Copyrights material to the conduct of its business,
including but not limited to (1) payment of all fees, (2) prosecuting known
infringers if failure to do so would materially and adversely affect the
business of the Debtor, and (3) diligently pursuing any application or
registration material to the business of the Debtor.
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Section 8. Financing Statements; Documentary Stamp Taxes.
(a) The Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Secured Party, from time to time, such
lists, descriptions and designations of Inventory, warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Secured Party deems
appropriate or advisable to perfect, preserve or protect its security interest
in the Collateral. The Debtor hereby constitutes the Secured Party its
attorney-in-fact to execute and file in the name and on behalf of the Debtor
such additional financing statements as the Secured Party may reasonably
request, such acts of such attorney being hereby ratified and confirmed; such
power, being coupled with an interest, is irrevocable until the Secured
Obligations are paid in full. Further, to the extent permitted by applicable
law, the Debtor authorizes the Secured Party to file any such financing
statements without the signature of the Debtor, provided, that the Secured Party
notify the Debtor prior to filing. The Debtor will pay all applicable filing
fees and related expenses in connection with any such financing statements.
(b) The Debtor agrees to procure, pay for, affix to any and all
documents and cancel any documentary tax stamps required by and in accordance
with, applicable law and the Debtor will indemnify and hold the Secured Party
harmless against any liability (including interest and penalties) in respect of
such documentary stamp taxes.
Section 9. Special Provisions Concerning Remedies and Sale. In addition to any
rights and remedies now or hereafter granted under applicable law and not by way
of limitation of any such rights and remedies, upon the occurrence of an Event
of Default, the Secured Party shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any applicable
jurisdiction in addition to the rights and remedies provided herein, in the
Secured Notes and in any other agreement executed in connection with the Secured
Notes whereby the Debtor has granted any Lien to the Secured Party. Without in
any way limiting the foregoing, upon the giving of notice to the Debtor of
Secured Party's intent to pursue any one or all of the following or any other
remedies:
(a) Subject to the terms of the Permitted Liens, the Secured Party
shall have the right, without further notice to, or assent by, the Debtor, in
the name of the Debtor or in the name of the Secured Party or otherwise:
(i) to ask for, demand, collect, receive, compound and give
acquittance for the Receivables or any part thereof;
(ii) to extend the time of payment of, compromise or settle for
cash, credit or otherwise, and upon any terms and conditions, any of the
Receivables;
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(iii) to endorse the name of the Debtor on any checks, drafts or
other orders or instruments for the payment of moneys payable to the Debtor
which shall be issued in respect of any Receivable;
(iv) to file any claims, commence, maintain or discontinue any
actions, suits or other proceedings deemed by the Secured Party necessary or
advisable for the purpose of collecting or enforcing payment of any Receivable;
(v) to make test verifications of the Receivables or any portion
thereof;
(vi) to notify any or all account debtors under any or all of the
Receivables to make payment thereof directly to the Secured Party for the
account of the Secured Party and to require the Debtor to forthwith give similar
notice to the account debtors;
(vii) to require the Debtor forthwith to account for and transmit
to the Secured Party in the same form as received all proceeds (other than
physical property) of collection of Receivables received by the Debtor and,
until so transmitted, to hold the same in trust for the Secured Party and not
commingle such proceeds with any other funds of the Debtor;
(viii) to take possession of any or all of the Collateral and,
for that purpose, to enter, with the aid and assistance of any Person or Persons
and with or without legal process, any premises where the Collateral, or any
part thereof, are, or may be, placed or assembled, and to remove any of such
Collateral;
(ix) to execute any instrument and do all other things necessary
and proper to protect and preserve and realize upon the Collateral and the other
rights contemplated hereby;
(x) upon notice to such effect, to require the Debtor to deliver,
at the Debtor's expense, any or all Collateral to the Secured Party at a place
designated by the Secured Party; and
(xi) without obligation to resort to other security, at any time
and from time to time, to sell, re-sell, assign and deliver all or any of the
Collateral, in one or more parcels at the same or different times, and all
right, title and interest, claim and demand therein and right of redemption
thereof, at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices and on such terms as the Secured Party may
determine, with the amounts realized from any such sale to be applied to the
Secured Obligations in the manner determined by the Secured Party.
The Debtor hereby agrees that all of the foregoing may be effected without
demand, advertisement or notice (except as otherwise provided herein or as may
be required by law), all of which (except as otherwise provided) are hereby
expressly waived, to the extent permitted by law. The Secured Party shall not be
obligated to do any of the acts hereinabove authorized, but in the
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event that the Secured Party elects to do any such act, the Secured Party shall
not be responsible to the Debtor except for its gross negligence or willful
misconduct.
(b) Subject to the terms of the Permitted Liens, the Secured Party may
take legal proceedings for the appointment of a receiver or receivers (to which
the Secured Party shall be entitled as a matter of right) to take possession of
the Collateral pending the sale thereof pursuant either to the powers of sale
granted by this Agreement or to a judgment, order or decree made in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement.
If, after the exercise of any or all of such rights and remedies, any of the
Secured Obligations shall remain unpaid, the Debtor shall remain liable for any
deficiency. After the indefeasible payment in full of the Secured Obligations,
any proceeds of the Collateral received or held by the Secured Party shall be
turned over to the Debtor and the Collateral shall be reassigned to the Debtor
by the Secured Party without recourse to the Secured Party and without any
representations, warranties or agreements of any kind.
(c) Upon any sale of any of the Collateral, whether made under the
power of sale hereby given or under judgment, order or decree in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement:
(i) the Secured Party may, to the extent permitted by law, bid
for and purchase the property being sold, and upon compliance with the terms of
sale may hold, retain and possess and dispose of such property in its own
absolute right without further accountability, and may, in paying the purchase
money therefor, deliver any Secured Notes or claims for interest thereon and any
other instruments evidencing the Secured Obligations or agree to the
satisfaction of all or a portion of the Secured Obligations in lieu of cash in
payment of the amount which shall be payable thereon, and the Secured Notes and
such instruments, in case the amounts so payable thereon shall be less than the
amount due thereon, shall be returned to the Secured Party after being
appropriately stamped to show partial payment;
(ii) the Secured Party may make and deliver to the purchaser or
purchasers a good and sufficient deed, xxxx of sale and instrument of assignment
and transfer of the property sold;
(iii) the Secured Party is hereby irrevocably appointed the true
and lawful attorney-in-fact of the Debtor in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer of the
property thus sold and for such other purposes as are necessary or desirable to
effectuate the provisions (including, without limitation, this Section 8) of
this Agreement subject to the Permitted Liens, and for that purpose it may
execute and deliver all necessary deeds, bills of sale and instruments of
assignment and transfer, and may substitute one or more Persons with like power,
the Debtor hereby ratifying and confirming all that its said attorney, or such
substitute or substitutes, shall lawfully do by virtue hereof; but if so
requested by the Secured Party or by any purchaser, the Debtor shall ratify and
confirm any such sale or transfer by executing and delivering to the Secured
Party or to such purchaser all property, deeds, bills of sale, instruments or
assignment and transfer and releases as may be designated in any such request;
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(iv) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Debtor of, in and to the
property so sold shall be divested; such sale shall be a perpetual bar both at
law and in equity against the Debtor, its successors and assigns, and against
any and all Persons claiming or who may claim the property sold or any part
thereof from, through or under the Debtor, its successors or assigns;
(v) the receipt of the Secured Party making such sale shall be a
sufficient discharge to the purchaser or purchasers at such sale for his or
their purchase money, and such purchaser or purchasers, and his or their assigns
or personal representatives, shall not, after paying such purchase money and
receiving such receipt of the Secured Party, be obliged to see to the
application of such purchase money or be in any way answerable for any loss,
misapplication or non-application thereof; and
(vi) to the extent that it may lawfully do so, and subject to any
legal requirement that the Secured Party act in a commercially reasonable
manner, the Debtor agrees that it will not at any time insist upon, or plead, or
in any manner whatsoever claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption laws, or any law
permitting it to direct the order in which the Collateral or any part thereof
shall be sold, now or at any time hereafter in force, which may delay, prevent
or otherwise affect the performance or enforcement of this Agreement, the
Secured Notes or any other agreement executed in connection with the Secured
Notes whereby the Debtor has granted any Lien to the Secured Party, and the
Debtor hereby expressly waives all benefit or advantage of any such laws and
covenants that it will not hinder, delay or impede the execution of any power
granted or delegated to the Secured Party in this Agreement, but will suffer and
permit the execution of every such power as though no such laws were in force.
In the event of any sale of Collateral pursuant to this Section, the Secured
Party shall, at least 10 days before such sale, give the Debtor written,
telecopied or telex notice of its intention to sell.
Section 10. Application of Moneys.
(a) Except as otherwise provided herein or in the Secured Notes, all
moneys which the Secured Party shall receive, in accordance with the provisions
hereof, shall be applied (to the extent thereof) in the following manner: First,
to the payment of all costs and expenses reasonably incurred in connection with
the administration and enforcement of, or the preservation of any rights under,
this Agreement or any of the reasonable expenses and disbursements of the
Secured Party (including, without limitation, the fees and disbursements of its
counsel and agents); and Second, to the payment of all Secured Obligations
arising out of the Secured Notes in accordance with the terms of the Secured
Notes and, if not therein provided, in such order as the Secured Party may
determine.
(b) If after applying any amounts which the Secured Party has received
in respect of the Collateral any of the Secured Obligations remain unpaid, the
Debtor shall continue to be liable for any deficiency, together with interest.
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Section 11. Fees and Expenses, etc. Any and all fees, costs and expenses of
whatever kind or nature, including, but not limited to, the reasonable
attorneys' fees and legal expenses incurred by the Secured Party in connection
with this Agreement and the Secured Notes, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, fees and
other costs relating to the encumbrances or otherwise protecting, maintaining,
preserving the Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to the Collateral, shall be borne and paid
by the Debtor on written demand by the Secured Party setting forth in reasonable
detail the nature of such expenses and until so paid shall be added to the
principal amount of the Secured Obligations and shall bear interest at a rate
per annum equal to 18%. In addition, the Debtor will pay, and indemnify and hold
the Secured Party harmless from and against, any and all liabilities,
obligations, losses, damages penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
Collateral, including, without limitation, claims of patent or trademark
infringement and any claim of unfair competition or anti-trust violation.
Section 12. Miscellaneous.
(a) All notices, communications and distributions hereunder shall be
in writing (including telecopied communication) and mailed by certified mail,
telecopied, personally delivered or delivered by Federal Express or other
reputable overnight courier service, if to the Debtor addressed to it at its
address set forth in the recitals, if to the Secured Party, addressed to it at
its address set forth in the recitals, or as to either party at such other
address as shall be designated by such party in a written notice to such other
party complying as to delivery with the terms of this Section 12. All such
notices and other communications shall be effective (i) if mailed by certified
mail, three days after the date of deposit thereof with the U.S. Postal Service,
properly addressed with postage prepaid, (ii) if telecopied, upon receipt by the
addressee, (iii) if personally delivered, upon such delivery, and (iv) if
delivered by overnight courier service, on the business day following delivery
thereof to such courier service in time for next-business-day delivery.
(b) No delay on the part of the Secured Party in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Debtor and the Secured Party. No
notice to or demand on the Debtor in any case shall entitle the Debtor to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Secured Party to any other or
further action in any circumstances without notice or demand.
(c) The obligations of the Debtor hereunder shall remain in full force
and effect without regard to, and shall not be impaired by, (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of the Debtor; (ii) any exercise or non-exercise, or any waiver of,
any right, remedy, power or privilege under or in respect of the Secured Notes,
this Agreement or any other agreement executed in connection with the Secured
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Notes whereby the Debtor has granted any Lien to the Secured Party or any other
agreement executed in connection with any of the foregoing, the Secured
Obligations or any security for any of the Secured Obligations; or (iii) any
amendment to or modification of any of the foregoing; whether or not the Debtor
shall have notice or knowledge of any of the foregoing. The rights and remedies
of the Secured Party herein provided are cumulative and not exclusive of any
rights or remedies which the Secured Party would otherwise have.
(d) This Agreement shall be binding upon the Debtor and its successors
and assigns and shall inure to the benefit of the Secured Party and its
successors and assigns, except that the Debtor may not transfer or assign any of
its obligations, rights or interest hereunder without the prior written consent
of the Secured Party and any such purported assignment by the Debtor shall be
void. All agreements, representations and warranties made herein shall survive
the execution and delivery of this Agreement.
(e) The descriptive headings of the several sections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
(f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(g) All rights, remedies and powers provided by this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and the provisions hereof are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
(h) This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the laws of
the State of New York except to the extent that matters of title, or creation,
perfection and priority of the security interests created hereby, or procedural
issues of foreclosure are required to be governed by the laws of the state in
which the Collateral, or part thereof, is located. EACH PARTY HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION BASED ON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE SECURED NOTES
OR ANY FINANCING DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY SUCH PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTY'S ENTERING INTO THIS
AGREEMENT.
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(i) It is expressly agreed, anything herein, in the Secured Notes or
in any other agreement or instrument executed in connection with the Secured
Notes to the contrary notwithstanding, that the Debtor shall remain liable to
perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Secured Party shall not have any obligations or liabilities
with respect to any Collateral by reason of or arising out of this Agreement,
nor shall the Secured Party be required or obligated in any manner to perform or
fulfill any of the obligations of the Debtor under or pursuant to any or in
respect of any Collateral.
(j) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts taken
together shall be deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
EMEX CORPORATION
as Debtor
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
THORN TREE RESOURCES LLC
as Secured Party
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Manager
