MASTER SECURITY AGREEMENT
To: Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
X.X. Xxx 000 XX
Xxxxxx House
South Church Street
Xxxxxx Town
Grand Cayman, Cayman Islands
Date: November 1, 2006
To Whom It May Concern:
1. To secure the payment of all Obligations (as hereafter defined),
Xxxxxxx Petrosearch, Inc., a Texas corporation ("Xxxxxxx"), and each other
entity that is required to enter into this Master Security Agreement (each an
"Assignor" and, collectively, the "Assignors") hereby assigns and grants to
Laurus Master Fund, Ltd. ("Laurus") a continuing security interest in all of the
following property now owned or at any time hereafter acquired by such Assignor,
or in which such Assignor now has or at any time in the future may acquire any
right, title or interest:
(a) all Receivables;
(b) all General Intangibles;
(c) all Documents;
(d) all Instruments;
(e) all Inventory;
(f) all Equipment;
(g) all Deposit Accounts;
(h) all Investment Property;
(i) All books and records (including, without limitation, customer
lists, marketing information, credit files, price lists, operating
records, vendor and supplier price lists, sales literature, computer
software, computer hardware, computer disks and tapes and other storage
media, printouts and other materials and records) of such Assignor
pertaining to any of the Collateral.
(j) All moneys and property of any kind of such Assignor in the
possession or under the control of Laurus.
(k) all Well Data; and
(l) all Proceeds of any and all of the foregoing.
In each case, the foregoing shall be covered by this Master Security
Agreement, whether such Assignor's ownership or other rights therein are
presently held or hereafter acquired and howsoever such Assignor's interests
therein may arise or appear (whether by ownership, security interest, claim or
otherwise).
All the aforesaid properties, rights and interests, together with any and
all substitutions, replacements, corrections or amendments thereto, or renewals,
extensions or ratifications thereof, or of any instrument relating thereto, and
together with any additions thereto which may be subjected to Laurus' Lien,
being hereinafter called the "Collateral".
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As used herein, the following terms shall have the following meanings:
"Commercial Tort Claims" means a claim arising in tort with respect to
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which the claimant is an Assignor, including but not limited to those identified
on Schedule A.
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"Deposit Accounts" means all "deposit accounts" (as defined in the UCC) or
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other demand, time, savings, passbook, or similar accounts maintained with a
bank, including nonnegotiable certificates of deposit.
"Documents" means all "documents" (as defined in the UCC) or other receipts
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covering, evidencing or representing inventory, equipment, or other goods.
"Equipment" means all "equipment" (as defined in the UCC) in whatever form,
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wherever located, and whether now or hereafter existing, and all parts thereof,
all accessions thereto, and all replacements therefor.
"General Intangibles" means all "general intangibles" (as defined in the
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UCC) of any kind (including choses in action, Commercial Tort Claims, Software,
Payment Intangibles, tax refunds, insurance proceeds, and contract rights), and
all instruments, security agreements, leases, contracts, and other rights
(except those constituting Receivables, Documents, or Instruments) to receive
payments of money or the ownership or possession of property, including all
general intangibles under which an account debtor's principal obligation is a
monetary obligation.
"Instruments" means all "instruments", "chattel paper" or "letters of
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credit" (as each is defined in the UCC) and all Letter-of-Credit Rights.
"Inventory" means all "inventory" (as defined in the UCC) in all of its
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forms, wherever located and whether now or hereafter existing, including (a) all
movable property and other goods held for sale or lease, all movable property
and other goods furnished or to be furnished under contracts of service, all raw
materials and work in process, and all materials and supplies used or consumed
in a business, (b) all movable property and other goods which are part of a
product or mass, (c) all movable property and other goods which are returned to
or repossessed by the seller, lessor, or supplier thereof, (d) all goods and
substances in which any of the foregoing is commingled or to which any of the
foregoing is added, and (e) all accessions to, products of, and documents for
any of the foregoing.
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"Investment Property" means all "investment property" (as defined in the
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UCC) and all other securities, whether certificated or uncertificated,
securities entitlements, securities accounts, commodity contracts, or commodity
accounts.
"Letter-of-Credit Rights" means all rights to payment or performance under
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a "letter of credit" (as defined in the UCC) whether or not the beneficiary has
demanded or is at the time entitled to demand payment or performance.
"Lien" shall mean any mortgage, deed of trust, collateral assignment, lien,
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pledge, charge, security interest or other encumbrance.
"Payment Intangibles" means all "payment intangibles" (as defined in the
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UCC).
"Proceeds" means, with respect to any property of any kind, all proceeds
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of, and all other profits, products, rentals or receipts, in whatever form,
arising from any sale, exchange, collection, lease, licensing or other
disposition of, distribution in respect of, or other realization upon, such
property, including all claims against third parties for loss of, damage to or
destruction of, or for proceeds payable under (or unearned premiums with respect
to) insurance in respect of, such property (regardless of whether Laurus is
named a loss payee thereunder), and any payments paid or owing by any third
party under any indemnity, warranty, or guaranty with respect to such property,
and any condemnation or requisition payments with respect to such property, in
each case whether now existing or hereafter arising.
"Restricted Accounts" means any and all restricted accounts over which any
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Assignor has granted Laurus control.
"Receivables" means (a) all "accounts" (as defined in the UCC) and all
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other rights to payment for goods or other personal property which have been (or
are to be) sold, leased, or exchanged or for services which have been (or are to
be) rendered, regardless of whether such accounts or other rights to payment
have been earned by performance and regardless of whether such accounts or other
rights to payment are evidenced by or characterized as accounts receivable,
contract rights, book debts, notes, drafts or other obligations of indebtedness,
(b) all Documents and Instruments of any kind relating to such accounts or other
rights to payment or otherwise arising out of or in connection with the sale,
lease or exchange of goods or other personal property or the rendering of
services, (c) all rights in, to, or under all security agreements, leases and
other contracts securing or otherwise relating to any such accounts, rights to
payment, Documents, or Instruments, (d) all rights in, to and under any purchase
orders, service contracts, or other contracts out of which such accounts and
other rights to payment arose (or will arise on performance), and (e) all rights
in or pertaining to any goods arising out of or in connection with any such
purchase orders, service contracts, or other contracts, including rights in
returned or repossessed goods and rights of replevin, repossession, and
reclamation.
"Software" means all "software" (as defined in the UCC), including all
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computer programs, any supporting information provided in connection with a
transaction relating to a computer program, all licenses or other rights to use
any of such computer programs, and all license fees and royalties arising from
such use to the extent permitted by such license or rights.
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"Well Data" shall mean all logs, drilling reports, division orders,
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transfer orders, operating agreements, contracts and other agreements,
abstracts, title opinions, files, records, seismic data, memoranda and other
information in the possession or control of any Assignor or to which any
Assignor has access relating to any of Assignors' oil and gas properties and/or
any xxxxx located thereon.
2. Except as otherwise defined herein, all capitalized terms used
herein shall have the meanings provided such terms in the Securities Purchase
Agreement referred to below. All items of Collateral which are defined in the
UCC shall have the meanings set forth in the UCC. For purposes hereof, the term
"UCC" means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of New York; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Laurus' security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Master Security Agreement relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions; provided further, that to the extent that the UCC is used to define
any term herein and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term contained in Article or
Division 9 shall govern. The parties intend that the terms used herein which
are defined in the UCC have, at all times, the broadest and most inclusive
meanings possible. Accordingly, if the UCC shall in the future be amended or
held by a court to define any term used herein more broadly or inclusively than
the UCC in effect on the date hereof, then such term, as used herein, shall be
given such broadened meaning. If the UCC shall in the future be amended or held
by a court to define any term used herein more narrowly, or less inclusively,
than the UCC in effect on the date hereof, such amendment or holding shall be
disregarded in defining terms used herein.
3. The term "Obligations" as used herein shall mean and include all
debts, liabilities and obligations owing by each Assignor to Laurus arising
under, out of, or in connection with: (i) that certain Securities Purchase
Agreement dated as of the date hereof by and between Xxxxxxx and Laurus (the
"Securities Purchase Agreement"), (ii) the Related Agreements referred to in the
Securities Purchase Agreement, (iii) that Secured Term Note in the amount of
$8,300,000 executed as of the date hereof by Xxxxxxx in favor of Laurus (iv)
each guaranty agreement made from time to time by each Assignor in favor of
Laurus (each of the foregoing documents, instruments and agreements, as each may
be amended, modified, restated or supplemented from time to time, collectively,
the "Documents"), and (v) in connection with any documents, instruments or
agreements relating to or executed in connection with the Documents or any
documents, instruments or agreements referred to therein or otherwise, and in
connection with any other indebtedness, obligations or liabilities of each such
Assignor to Laurus, whether now existing or hereafter arising, direct or
indirect, liquidated or unliquidated, absolute or contingent, due or not due and
whether under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise, including, without limitation, obligations and
indebtedness of each Assignor for post-petition interest, fees, costs and
charges that accrue after the commencement of any case by or against such
Assignor under any bankruptcy, insolvency, reorganization or like proceeding
(collectively, the "Debtor Relief Laws") in each case, irrespective of the
genuineness, validity, regularity or enforceability of such Obligations, or of
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any instrument evidencing any of the Obligations or of any collateral therefor
or of the existence or extent of such collateral, and irrespective of the
allowability, allowance or disallowance of any or all of the Obligations in any
case commenced by or against any Assignor under any Debtor Relief Law.
4. Each Assignor hereby warrants and covenants to Laurus that:
(a) it is a corporation, partnership or limited liability company,
as the case may be, validly existing, in good standing and formed
under the respective laws of its jurisdiction of formation set forth on
Schedule B, and each Assignor will provide Laurus thirty (30) days' prior
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written notice of any change in any of its respective jurisdiction of
formation;
(b) its legal name is as set forth in its Certificate of
Incorporation or other organizational document (as applicable) as
amended through the date hereof and as set forth on Schedule B, and it will
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provide Laurus thirty (30) days' prior written notice of any change in its
legal name;
(c) its organizational identification number (if applicable) is as
set forth on Schedule B hereto, and it will provide Laurus thirty (30)
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days' prior written notice of any change in its organizational
identification number;
(d) it is the lawful owner of the Collateral and it has the sole
right to grant a security interest therein and will defend the
Collateral against all claims and demands of all persons and entities;
(e) it will keep the Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every
kind and nature ("Encumbrances"), except (i) Encumbrances securing the
Obligations, (ii) Encumbrances that arise by operation of law in the
ordinary course of business and not created in connection with the
borrowing of money or the obtaining of credit, which do not detract from
the value or reduce the ability to use the property on which there is an
Encumbrance, so long as the obligations supported by the Encumbrance (x)
are not overdue by more than ten (10) days or (y) if overdue, are being
contested continuously and in good faith by appropriate proceedings and
with respect to which adequate reserves are maintained by such Assignor in
accordance with GAAP, (iii) Encumbrances relating to final judgments or
awards or attachments remaining undischarged or unstayed for not longer
than ten (10) days from incurrence so long as they and/or the judgment they
are securing do not constitute or result in an Event of Default, and (v)
Permitted Encumbrances (as defined in each Deed of Trust, Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement
dated the date hereof made by Xxxxxxx in favor of Laurus);
(f) it will, at its and the other Assignors' joint and several
cost and expense keep the Collateral in good state of repair (ordinary
wear and tear excepted) and will not waste or destroy the same or any part
thereof other than ordinary course discarding of items no longer used or
useful in its or such other Assignors' business;
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(g) it will not, without Laurus' prior written consent, sell,
exchange, lease or otherwise dispose of any Collateral, whether by
sale, lease or otherwise, except for the sale of inventory in the ordinary
course of business and for the disposition or transfer in the ordinary
course of business during any fiscal year of obsolete and worn-out
equipment or equipment no longer necessary for its ongoing needs, having an
aggregate fair market value of not more than $10,000 and only to the extent
that:
(i) the proceeds of each such disposition are used to acquire
replacement Collateral which is subject to Laurus' first priority
perfected security interest, or are used to repay the Obligations; or
(ii) following the occurrence of an Event of Default which
continues to exist, the proceeds of each such disposition are
remitted to Laurus to be held as cash collateral for the Obligations;
(h) it will insure or cause the Collateral to be insured in
Laurus' name (as additional insured and loss payee) against loss or
damage by fire, theft, burglary, pilferage, loss in transit and such other
hazards as Laurus shall specify in amounts and under policies by insurers
acceptable to Laurus and all premiums thereon shall be paid by such
Assignor and the policies delivered to Laurus. If any such Assignor fails
to do so, Laurus may procure such insurance and the cost thereof shall be
promptly reimbursed by the Assignors, jointly and severally, and shall
constitute Obligations;
(i) it will at all reasonable times during normal business hours
and with advance notice to Assignor in accordance with Section 14
allow Laurus or Laurus' representatives free access to and the right of
inspection of the Collateral, provided that no such notice shall be
required to be given in the event Laurus believes such access is necessary
to preserve or protect the Collateral or following the occurrence and
during the continuance of an Event of Default;
(j) such Assignor (jointly and severally with each other Assignor)
hereby indemnifies and saves Laurus harmless from all loss, costs,
damage, liability and/or expense, including attorneys' fees, that Laurus
may sustain or incur to enforce payment, performance or fulfillment of any
of the Obligations and/or in the enforcement of this Master Security
Agreement or in the prosecution or defense of any action or proceeding
either against Laurus or any Assignor concerning any matter growing out of
or in connection with this Master Security Agreement, and/or any of the
Obligations and/or any of the Collateral except to the extent caused by
Laurus' own gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and nonappealable decision). In
addition, each Assignor hereby indemnifies and saves Laurus harmless from
any claim, cost, expense, liability, obligation, loss or damage (including
legal fees) of any nature, incurred by or imposed upon Laurus which
results, arises out of or is based upon: (i) any misrepresentation by any
Assignor or breach of any warranty by any Assignor in this Agreement or any
Document or any agreement between any Assignor and Laurus relating hereto
or thereto; or (ii) any breach or default in performance by the Assignors
of any covenant or undertaking to be performed by the Assignors hereunder
or under any Document, or any other agreement entered into by any
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Assignor and Laurus relating hereto or thereto or (iii) (a) the
violation of any local, state or federal law, rule or regulation pertaining
to environmental regulation, contamination or clean-up (collectively,
"Environmental Laws"), including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Sec.9601 et seq. and 40 CFR Sec.302.1 et seq.), the Resource Conservation
and Recovery Act of 1976 (42 U.S.C. Sec.6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. Sec.1251 et seq., and 40 CFR Sec.116.1 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. Sec.1801 et
seq.) and the regulations promulgated pursuant to said laws, all as amended
and relating to or affecting any Assignor and/or any Assignor's properties,
whether or not caused by or within the control of Laurus and/or (b) the
presence, release or threat of release of any hazardous, toxic or harmful
substances, wastes, materials, pollutants or contaminants (including,
without limitation, asbestos, polychlorinated biphenyls, petroleum
products, flammable explosives, radioactive materials, infectious
substances or raw materials which include hazardous constituents) or any
other substances or raw materials which are included under or regulated by
Environmental Laws on, in, under or affecting all or any portion of any
property of any Assignor or any surrounding areas, regardless of whether or
not caused by or within the control of Laurus;
(k) it will promptly, and in any event within five (5) business
days after the same is acquired by it, notify Laurus of any commercial
tort claim acquired by it and unless otherwise consented to in writing by
Laurus, it shall enter into a supplement to this Master Security Agreement
granting to Laurus a security interest in such commercial tort claim; and
(l) Not later than 30 days after the date hereof, each Assignor
will (x) irrevocably direct all of its present and future Account
Debtors (as defined below) and other persons or entities obligated to make
payments constituting Collateral to make such payments directly to the
lockboxes maintained by such Assignor (the "Lockboxes") with North Fork
Bank or such other financial institution accepted by Laurus in writing as
may be selected by the applicable Assignor (the "Lockbox Bank") (each such
direction pursuant to this clause (x), a "Direction Notice") and (y)
provide Laurus with copies of each Direction Notice, each of which shall be
agreed to and acknowledged by the respective Account Debtor. Upon receipt
of such payments, the Lockbox Bank shall agree to deposit the proceeds of
such payments in a deposit account (under which Laurus has been granted
control) maintained at the Lockbox Bank and evidenced by the account name
of Xxxxxxx Petrosearch, Inc., or such other deposit account accepted by
Laurus in writing (the "Lockbox Deposit Account"). Not later than 30 days
after the date hereof, the applicable Assignor shall and shall cause the
Lockbox Bank to enter into all such documentation acceptable to Laurus
pursuant to which, among other things, the Lockbox Bank agrees to,
following notification by Laurus (which notification Laurus shall only give
following the occurrence and during the continuance of an Event of
Default), comply only with the instructions or other directions of Laurus
concerning the Lockbox and the Lockbox Deposit Account. All of each
Assignor's invoices, account statements and other written or oral
communications directing, instructing, demanding or requesting payment of
any Account (as hereinafter defined) of any such Assignor or any other
amount constituting Collateral shall conspicuously direct that all payments
be made to the
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Lockbox or such other address as Laurus may direct in writing. If,
notwithstanding the instructions to Account Debtors, any Assignor receives
any payments, such Assignor shall immediately remit such payments to the
Lockbox Deposit Account in their original form with all necessary
endorsements. Until so remitted, the Assignors shall hold all such payments
in trust for and as the property of Laurus and shall not commingle such
payments with any of its other funds or property. For the purpose of this
Master Security Agreement, (x) "Accounts" shall mean all "accounts", as
such term is defined in the UCC as in effect in the State of New York on
the date hereof, now owned or hereafter acquired by any Assignor and (y)
"Account Debtor" shall mean any person or entity who is or may be obligated
with respect to, or on account of, an Account.
5. The occurrence of any of the following events or conditions shall
constitute an "Event of Default" under this Master Security Agreement:
(a) any covenant or any other term or condition of this Master
Security Agreement is breached and such breach, if subject to cure,
shall continue for a period of ten (10) days after the occurrence thereof;
(b) any representation or warranty, or statement made or furnished
to Laurus under this Master Security Agreement by any Assignor or on
any Assignor's behalf should prove at any time to be false or misleading;
(c) the loss, theft, substantial damage, destruction, sale (other
than the sale by any Assignor of oil, gas and other hydrocarbons and
minerals in the ordinary course of its business consistent with past
practice) or encumbrance (other than in favor of Laurus) to or of any of
the Collateral or the making of any levy, seizure or attachment thereof or
thereon except to the extent such loss is covered by insurance proceeds
which are used to replace the item or repay Laurus;
(d) any Assignor shall become insolvent, cease operations,
dissolve, terminate its business existence (except as to any of the
foregoing, in connection with a business combination between or among
Assignors so long as at least one Assignor remains the surviving entity of
such business combination), make an assignment for the benefit of
creditors, suffer the appointment of a receiver, trustee, liquidator or
custodian of all or any part of any Assignor's property;
(e) any proceedings under any bankruptcy or insolvency law shall
be commenced by or against any Assignor and if commenced against any
Assignor shall not be dismissed within thirty (30) days;
(f) any Assignor shall repudiate, purport to revoke or fail to
perform any of its obligations under any Note (after passage of
applicable cure period, if any) or any document, instrument or agreement
executed in connection therewith; or
(g) an Event of Default (or similar term) shall have occurred
under and as defined in any Document or any document, instrument or
agreement entered into in connection therewith.
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6. Upon the occurrence of any Event of Default and at any time
thereafter, Laurus may declare all Obligations immediately due and payable and
Laurus shall have the remedies of a secured party provided in the UCC as in
effect in the State of New York, this Agreement and other applicable law. Upon
the occurrence of any Event of Default and at any time thereafter, Laurus will
have the right to receive one-hundred percent of all accounts receivable of each
Assignor, whether attributable to oil, gas, other hydrocarbon production or
otherwise, take possession of the Collateral and to maintain such possession on
any Assignor's premises or to remove the Collateral or any part thereof to such
other premises as Laurus may desire. Upon Laurus' request, each Assignor shall
assemble or cause the Collateral to be assembled and make it available to Laurus
at a place designated by Laurus. If any notification of intended disposition of
any Collateral is required by law, such notification, if mailed, shall be deemed
properly and reasonably given if mailed at least ten (10) days before such
disposition, postage prepaid, addressed to the applicable Assignor either at
such Assignor's address shown herein or at any address appearing on Laurus'
records for such Assignor. Any proceeds of any disposition of any of the
Collateral shall be applied by Laurus to the payment of all expenses in
connection with the sale of the Collateral, including attorneys' fees and other
legal expenses and disbursements and the expenses of retaking, holding,
preparing for sale, selling, and the like, and any balance of such proceeds may
be applied by Laurus toward the payment of the Obligations in such order of
application as Laurus may elect, and each Assignor shall be liable for any
deficiency. For the avoidance of doubt, following the occurrence and during the
continuance of an Event of Default, Laurus shall have the immediate right to
withdraw any and all monies contained in the Restricted Accounts or any other
deposit accounts in the name of any Assignor and controlled by Laurus and apply
same to the repayment of the Obligations (in such order of application as Laurus
may elect). The parties hereto each hereby agree that the exercise by any party
hereto of any right granted to it or the exercise by any party hereto of any
remedy available to it (including, without limitation, the issuance of a notice
of redemption, a borrowing request and/or a notice of default) shall not
constitute confidential information and no party shall have any duty to the
other party to maintain such information as confidential.
7. If any Assignor defaults in the performance or fulfillment of any of
the terms, conditions, promises, covenants, provisions or warranties on such
Assignor's part to be performed or fulfilled under or pursuant to this Master
Security Agreement, Laurus may, at its option without waiving its right to
enforce this Master Security Agreement according to its terms, immediately or at
any time thereafter and without notice to any Assignor, perform or fulfill the
same or cause the performance or fulfillment of the same for each Assignor's
joint and several account and at each Assignor's joint and several cost and
expense, and the cost and expense thereof (including attorneys' fees) shall be
added to the Obligations and shall be payable on demand with interest thereon at
the highest rate permitted by law, or, at Laurus' option, debited by Laurus from
the Restricted Accounts or any other deposit accounts in the name of any
Assignor and controlled by Laurus.
8. Each Assignor appoints Laurus, any of Laurus' officers, employees or
any other person or entity whom Laurus may designate as such Assignor's
attorney, with power to execute such documents in each such Assignor's behalf
and to supply any omitted information and correct patent errors in any documents
executed by any Assignor or on any Assignor's behalf; to file financing
statements against such Assignor covering the Collateral (and, in connection
with the filing of any such financing statements, describe the Collateral as
"all assets and all personal
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property, whether now owned and/or hereafter acquired" (or any substantially
similar variation thereof)); to sign such Assignor's name on public records
related to perfecting its security interest in, or foreclosing upon the
Collateral; and to do all other things Laurus deem necessary to carry out this
Master Security Agreement. Each Assignor hereby ratifies and approves all acts
of the attorney and neither Laurus nor the attorney will be liable for any acts
of commission or omission, nor for any error of judgment or mistake of fact or
law other than gross negligence or willful misconduct (as determined by a court
of competent jurisdiction in a final and non-appealable decision). This power
being coupled with an interest, is irrevocable so long as any of the Obligations
remain unpaid.
9. No delay or failure on Laurus' part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatsoever shall be valid
unless in writing, signed by Laurus and then only to the extent therein set
forth, and no waiver by Laurus of any default shall operate as a waiver of any
other default or of the same default on a future occasion. Laurus' books and
records containing entries with respect to the Obligations shall be admissible
in evidence in any action or proceeding, shall, absent manifest error, be
binding upon each Assignor for the purpose of establishing the items therein set
forth and shall constitute prima facie proof thereof. Laurus shall have the
right to enforce any one or more of the remedies available to Laurus,
successively, alternately or concurrently. Each Assignor agrees to join with
Laurus in executing such documents or other instruments to the extent required
by the UCC in form satisfactory to Laurus and in executing such other documents
or instruments as may be required or deemed necessary by Laurus for purposes of
affecting or continuing Laurus' security interest in the Collateral.
10. The Assignors shall jointly and severally pay all of Laurus'
out-of-pocket costs and expenses, including fees and disbursements of in-house
or outside counsel and appraisers, in connection with the preparation, execution
and delivery of the Documents, and in connection with the prosecution or defense
of any action, contest, dispute, suit or proceeding concerning any matter in any
way arising out of, related to or connected with any Document. The Assignors
shall also jointly and severally pay all of Laurus' fees, charges, out-of-pocket
costs and expenses, including fees and disbursements of counsel and appraisers,
in connection with (a) the preparation, execution and delivery of any waiver,
any amendment thereto or consent proposed or executed in connection with the
transactions contemplated by the Documents, (b) Laurus' obtaining performance of
the Obligations under the Documents, including, but not limited to the
enforcement or defense of Laurus' security interests, assignments of rights and
liens hereunder as valid perfected security interests, (c) any attempt to
inspect or verify Collateral, (d) any attempt to protect, collect, sell,
liquidate or otherwise dispose of any Collateral, (e) any appraisals or
re-appraisals of any property (real or personal) pledged to Laurus by any
Assignor as Collateral for, or any other Person as security for, the Obligations
hereunder and (f) any consultations in connection with any of the foregoing.
The Assignors shall also jointly and severally pay Laurus' customary bank
charges for all bank services (including wire transfers) performed or caused to
be performed by Laurus for any Assignor at any Assignor's request or in
connection with any Assignor's loan account (if any) with Laurus. All such
costs and expenses together with all filing, recording and search fees, taxes
and interest payable by the Assignors to Laurus shall be payable on demand and
shall be secured by the Collateral. If any tax by any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or
10
pertaining to government (each, a "Governmental Authority"), other than any tax
based on or measured by Laurus' net income, is or may be imposed on or as a
result of any transaction between any Assignor, on the one hand, and Laurus on
the other hand, which Laurus is or may be required to withhold or pay, the
Assignors hereby jointly and severally indemnify and hold Laurus harmless in
respect of such taxes, and the Assignors will repay to Laurus the amount of any
such taxes which shall be charged to the Assignors' account; and until the
Assignors shall furnish Laurus with indemnity therefor (or supply Laurus with
evidence satisfactory to it that due provision for the payment thereof has been
made), Laurus may hold without interest any balance standing to each Assignor's
credit (if any) and Laurus shall retain its liens in any and all Collateral.
11. THIS MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. All of the rights, remedies, options, privileges and
elections given to Laurus hereunder shall inure to the benefit of Laurus'
successors and assigns. The term "Laurus" as herein used shall include Laurus,
any parent of Laurus', any of Laurus' subsidiaries and any co-subsidiaries of
Laurus' parent, whether now existing or hereafter created or acquired, and all
of the terms, conditions, promises, covenants, provisions and warranties of this
Agreement shall inure to the benefit of each of the foregoing, and shall bind
the representatives, successors and assigns of each Assignor.
12. Each Assignor hereby consents and agrees that the state or federal
courts located in the County of New York, State of New York shall have exclusive
jurisdiction to hear and determine any claims or disputes between Assignor, on
the one hand, and Laurus, on the other hand, pertaining to this Master Security
Agreement or to any matter arising out of or related to this Master Security
Agreement, provided, that Laurus and each Assignor acknowledges that any appeals
from those courts may have to be heard by a court located outside of the County
of New York, State of New York, and further provided, that nothing in this
Master Security Agreement shall be deemed or operate to preclude Laurus from
bringing suit or taking other legal action in any other jurisdiction to collect,
the Obligations, to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of Laurus.
Each Assignor expressly submits and consents in advance to such jurisdiction in
any action or suit commenced in any such court, and each Assignor hereby waives
any objection which it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens. Each Assignor hereby waives personal
----- --- ----------
service of the summons, complaint and other process issues in any such action or
suit and agrees that service of such summons, complaint and other process may be
made by registered or certified mail addressed to such assignor at the address
set forth on the signature lines hereto and that service so made shall be deemed
completed upon the earlier of such Assignor's actual receipt thereof or three
(3) days after deposit in the U.S. mails, proper postage prepaid.
The parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the parties hereto waive all rights to
trial by jury in any action, suit, or proceeding brought to resolve any dispute,
whether arising in contract, tort, or otherwise between Laurus,
11
and/or any Assignor arising out of, connected with, related or incidental to the
relationship established between them in connection with this Master Security
Agreement or the transactions related hereto.
13. It is understood and agreed that any person or entity that desires
to become an Assignor hereunder, or is required to execute a counterpart of this
Master Security Agreement after the date hereof pursuant to the requirements of
any Document, shall become an Assignor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall
reasonably request and (z) taking all actions as specified in this Master
Security Agreement as would have been taken by such Assignor had it been an
original party to this Master Security Agreement, in each case with all
documents required above to be delivered to Laurus and with all documents and
actions required above to be taken to the reasonable satisfaction of Laurus.
14. Whenever this Master Security Agreement requires or permits any
consent, approval, notice, request or demand from one party to another, such
consent, approval, notice or demand shall, unless otherwise required under
applicable law, be given in accordance with the provisions of the Securities
Purchase Agreement, addressed to the party to be notified at the address stated
below (or such other address as may have been designated in accordance with the
provisions of the Securities Purchase Agreement):
ASSIGNORS LAURUS
Xxxxxxx Petrosearch, Inc. Laurus Master Fund, Ltd.
000 Xxxxxx Xxxxx, Xxxxx 000 c/o M&C Corporate Services Limited
Xxxxxxx, XX 00000 XX Xxx 000 G.T.
Attention: Xxxxx Xxxxxxx Xxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx
Telephone: 000.000.0000 Xxxxxx Town
Facsimile: 713.961.9338 Grand Cayman, Cayman Islands
Attention:
-----------------------
Facsimile: 000-000-0000
with a copy to: with copies to:
Xxxxx X. Xxxxxx Xxxx X. Xxxxxx, Esq.
0000 X.X. Xxxx 000, Xxxxx 0000 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000 Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000 X000 Facsimile: 000-000-0000
Xxxxxxxx & Xxxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile: 000-000-0000
12
15. This Master Security Agreement may be executed by facsimile
signatures and in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one agreement.
Very truly yours,
XXXXXXX PETROSEARCH, INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Manager
Address: 000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By: /s/ illegible
-----------------------------------------
Name: illegible
Title: illegible
Address: c/o Laurus Capital Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
13
SCHEDULE A
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COMMERCIAL TORT CLAIMS
----------------------
None.
SCHEDULE B
----------
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Jurisdiction of Organization Identification
Entity Formation Number
------------------------- --------------- ---------------------------
Xxxxxxx Petrosearch, Inc. Texas
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