MASTER SECURITY AGREEMENT
Exhibit
10.5
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To:
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LV
Administrative Services Inc., as
Agent
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c/o
Valens Capital Management, LL
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000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Date:
November 30, 2007
To
Whom
It May Concern:
1. To
secure the payment of all Obligations (as hereafter defined), New Century Energy
Corp., a Colorado corporation (the “Company”), each of the other
undersigned parties (other than the Agent (as defined below)) 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 the Agent, for the ratable benefit of the Creditor Parties (as defined
in the Securities Purchase Agreement referred to below), 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, interest or estate (the
“Collateral”):
(a) all
cash, cash equivalents, accounts, accounts receivable, deposit accounts
(including, without limitation, (x) the Restricted Account (the “Restricted
Account”) maintained at North Fork Bank (Account Name: New
Century Energy Corp., Account Number: xxx-xxx-xxxx) referred to in
the Restricted Account Agreement) and (y) the Lockbox Deposit Account maintained
at North Fork Bank (Account Name: New Century Energy Corp., Account
Number: xxx-xxx-xxxx)), inventory, equipment, goods, fixtures,
documents, instruments (including, without limitation, promissory notes),
contract rights, commercial tort claims set forth on Schedule A
attached hereto, general intangibles (including, without limitation, payment
intangibles and an absolute right to license on terms no less favorable than
those currently in effect among such Assignor’s affiliates), chattel paper,
supporting obligations, investment property (including, without limitation,
all
partnership interests, limited liability company membership interests and all
other equity interests owned by any Assignor), letter-of-credit rights,
trademarks, trademark applications, tradestyles, patents, patent applications,
copyrights, copyright applications and other intellectual property in which
such
Assignor now has or hereafter may acquire any right, title, interest or estate,
all proceeds and products thereof (including, without limitation, proceeds
of
insurance) and all additions, accessions and substitutions thereto or
therefor.
(b) all
of those certain Oil and Gas Leases and Lands (each as hereinafter defined)
which are described in Schedule B and/or to which reference may be
made in Schedule B and/or which are covered by any of the leases
described on Schedule B hereto (all such Oil and Gas Leases and
Lands being herein called the “Subject Interests”);
(c) all
rights, titles, interests and estates now owned or hereafter acquired by such
Assignor in and to (i) any and all properties now or hereafter pooled or
unitized with any of the Subject Interests, and (ii) all presently existing
or
future operating agreements and unitization, communitization and pooling
agreements and the units operated thereby to the extent the same relate to
all
or any part of the Subject Interests, including, without limitation, all units
formed under or pursuant to any applicable laws (the rights, titles, interests
and estates described in this clause (c) also being included within the term
“Subject Interests” as used herein);
(d) all
presently existing and future agreements entered into between such Assignor
and
any third party that provide for the acquisition by such Assignor of any
interest in any of the properties or interests specifically described in
Schedule B or which relate to any of the properties and interests
specifically described in Schedule B;
(e) the
Hydrocarbons (including inventory) which are in, under, upon, produced or to
be
produced from or attributable to the Lands;
(f) the
Accounts and Contract Rights;
(g) the
Operating Equipment;
(h) the
Well Data;
(i) the
rights and security interests of such Assignor held by such Assignor to secure
the obligation of the first purchaser to pay the purchase price of the
Hydrocarbons;
(j) all
surface leases, rights-of-way, franchises, easements, servitudes, licenses,
privileges, tenements, hereditaments and appurtenances now existing or in the
future obtained in connection with any of the aforesaid, and all other items
of
value and incident thereto which such Assignor may, at any time, have or be
entitled; and
(k) all
and any different and additional rights of any nature, value or convenience
in
the enjoyment, development, operation or production, in any way, of any property
or interest included in any of the foregoing clauses, and in all revenues,
income, rents, issues, profits and other benefits arising therefrom or from
any
contract now in existence or hereafter entered into pertaining thereto, and
in
all rights and claims accrued or to accrue for the removal by anyone of
Hydrocarbons from, or other act causing damage to, any of such properties or
interests.
All
the
aforesaid properties, rights and interests, together with all proceeds and
products thereof (including, without limitation, proceeds of insurance) and
any
and all accessions, substitutions, replacements, corrections or amendments
thereto or therefor, or renewals, extensions or ratifications thereof, or of
any
instrument relating thereto, and together with any additions thereto which
may
be subject to the Agent’s Lien (as defined below), being hereinafter called the
“Collateral”.
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As
used
herein, the following terms shall have the following meanings:
“Accounts
and Contract Rights” shall mean all accounts (including accounts in the form
of joint interest xxxxxxxx under applicable operating agreements), contract
rights and general intangibles of any Assignor now or hereafter existing, or
hereafter acquired by, or on behalf of, any Assignor, or any Assignor’s
successors in interest, relating to or arising from the ownership, operation
and
development of the Collateral and to the production, processing, treating,
sale,
purchase, exchange or transportation of Hydrocarbons (defined below) produced
or
to be produced from or attributable to the Collateral or any units or pooled
interest units in which all or a portion of the Collateral forms a part,
together with all accounts and proceeds accruing to any Assignor attributable
to
the sale of Hydrocarbons produced from the Collateral or any units or pooled
interest units in which all or a portion of the Collateral forms a
part.
“Hydrocarbons”
shall mean oil, gas, coalbed methane gas, casinghead gas, drip gasolines,
natural gasoline, condensate, distillate, as-extracted collateral and all other
liquid or gaseous hydrocarbons produced or to be produced in conjunction
therewith, and all products, byproducts and all other substances derived
therefrom or the processing thereof, and all other minerals and substances,
including, but not limited to, sulphur, lignite, coal, uranium, thorium, iron,
geothermal steam, water, carbon dioxide, helium and any and all other minerals,
ores, or substances of value and the products and proceeds therefrom, including,
without limitation, all gas resulting from the in-situ combustion of coal or
lignite.
“Lands”
shall mean the lands described in Schedule B and shall include any
lands, the description of which is contained in Schedule B or
incorporated in Schedule B by reference to another instrument or
document, including, without limitation, all lands described in the Oil and
Gas
Leases listed on Schedule B hereto, and shall also include any lands
now or hereafter unitized, pooled, spaced or otherwise combined, whether by
statute, order, agreement, declaration or otherwise, with lands the description
of which is contained in Schedule B or is incorporated in
Schedule B by reference.
“Lien”
shall mean any mortgage, deed of trust, collateral assignment, lien, pledge,
charge, security interest or other encumbrance.
“Oil
and Gas Leases” shall mean oil, gas and mineral leases, oil and gas leases,
oil leases, gas leases, other mineral leases, subleases, top leases, any rights
resulting in an ownership interest in Hydrocarbons and all operating rights
relating to any of the foregoing (whether operated by virtue of such leases,
or
assignments or applicable operating agreements), and all other interests
pertaining to any of the foregoing, including, without limitation, all royalty
and overriding royalty interests, production payments and net profit interests,
mineral fee interests, and all reversionary, remainder, carried and contingent
interests relating to any of the foregoing and all other rights therein which
are described and/or to which reference may be made on
Schedule B.
“Operating
Equipment” shall mean all Personal Property and fixtures affixed or situated
upon all or any part of the Collateral, including, without limitation, all
surface or subsurface machinery, equipment, facilities or other property of
whatsoever kind or nature now or hereafter located on any of the Lands which
are
useful for the production, treatment, storage or transportation of oil or gas,
including, but not by way of limitation, all oil xxxxx, gas xxxxx, water
xxxxx,
injection xxxxx, casing, tubing, rods, pumping units and engines, Christmas
trees, derricks, separators, gun barrels, flow lines, tanks, gas systems (for
gathering, treating and compression), water systems (for treating, disposal
and
injection), power plants, poles, lines, transformers, starters and controllers,
machine shops, tools, storage yards and equipment stored therein, buildings
and
camps, telegraph, telephone and other communication systems, roads, loading
racks and shipping facilities.
-3-
“Personal
Property” shall mean that portion of the Collateral that is personal
property.
“Well
Data” shall mean all logs, drilling reports, division orders, transfer
orders, operating agreements, contracts and other agreements, abstracts, title
opinions, files, records, seismic data, memoranda and other information in
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possession or control of any Assignor or to which any Assignor has access
relating to the Lands 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, the Agent’s 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.
3. The
term “Obligations” as used herein shall mean and include all debts,
liabilities and obligations owing by each Assignor to any Creditor Party arising
under, out of, or in connection with: (i) that certain Securities
Purchase Agreement dated as of the date hereof by and among the Company, the
Purchasers (as therein defined) and the Agent (as amended, restated, modified
and/or supplemented from time to time, the “Securities Purchase
Agreement”) and (ii) the Related Agreements referred to in the Securities
Purchase Agreement (the Securities Purchase Agreement and the Related
Agreements, as each may be amended, restated, modified and/or supplemented
from
time to time, collectively, the “Documents”), and 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 any Creditor Party, 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 liabilities 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 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.
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4. Each
Assignor hereby jointly and severally represents, warrants and covenants to
the
Agent, for the benefit of the Creditor Parties, that:
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(a)
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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 C,
and each Assignor will provide the Agent thirty (30) days’ prior written
notice of any change in any of its respective jurisdiction of
formation;
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(b)
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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 C attached hereto, and it will
provide the Agent thirty (30) days’ prior written notice of any change in
its legal name;
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(c)
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its
organizational identification number (if applicable) is as set forth
on
Schedule C hereto, and it will provide the Agent thirty (30)
days’ prior written notice of any change in its organizational
identification number;
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(d)
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it
is the lawful owner of its 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;
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(e)
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it
will keep its Collateral free and clear of all attachments, levies,
taxes,
liens, security interests and encumbrances of every kind and nature
(“Encumbrances”), except the Permitted
Encumbrances;
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(f)
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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)
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it
will not, without the Agent’s 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 $25,000 and only to the extent
that:
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(i)
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the
proceeds of each such disposition are used to acquire replacement
Collateral which is subject to the Agent’s perfected security interest
(subject only to Permitted Encumbrances), or are used to repay the
Obligations or to pay general corporate expenses;
or
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(ii)
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following
the occurrence of an Event of Default which continues to exist the
proceeds of each such disposition shall be remitted to the Agent
to be
held as cash collateral for the
Obligations;
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(h)
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(i)
it will insure or cause the Collateral to be insured in the Agent’s name
(as an additional insured and lender loss payee) against loss or
damage by
fire, theft, burglary, pilferage, loss in transit and such other
hazards
as the Agent shall specify in amounts and under policies by insurers
acceptable to the Agent and all premiums thereon shall be paid by
such
Assignor and the policies delivered to the Agent. If any such
Assignor fails to do so, the Agent may procure such insurance and
the cost
thereof shall be promptly reimbursed by the Assignors, jointly and
severally, and shall constitute
Obligations;
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(ii)
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it
will expressly agree that if additional loss payees and/or lender
loss
payees, other than the Agent or Laurus Master Fund, Ltd.
(“Laurus”), are named to the Collateral, the Agent will always be
assigned to first lien position (or, if Laurus is so named, a second
lien
position subject only to Laurus’ priority lien position) until all
Obligations have been satisfied;
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(i)
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it
will at all reasonable times allow the Creditor Parties or their
respective representatives free access to and the right of inspection
of
the Collateral;
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(j) such
Assignor (jointly and severally with each other Assignor) hereby indemnifies
and
saves the Agent and each other Creditor Party harmless from any and all loss,
costs, liability, expense, claim, obligation, and/or damage, including
reasonable attorneys’ fees and other legal expenses, that the Agent and each
other Creditor Party 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 the Agent, any other Creditor Party 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 the Agent’s or any other Creditor Party’s own gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision). In addition, each Assignor hereby
indemnifies and saves the Agent and each other Creditor Party harmless from
any
and all loss, costs, liability, expense, claim, obligation, and/or damage,
including reasonable attorneys’ fees and other legal expenses, of any nature,
incurred by or imposed upon the Agent or any other Creditor Party 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 Master
Security Agreement or any Document or any agreement between any Assignor and
the
Agent and/or any other Creditor Party 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 Assignor and the Agent and/or any other Creditor
Party 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 cleanup (collectively, “Environmental Laws”),
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 X.X.X. §0000 et seq. and 40 CFR
§302.1 et seq.), the Resource Conservation and Recovery Act of 1976 (42 X.X.X.
§0000 et seq.), the Federal Water Pollution Control Act (33 X.X.X. §0000 et
seq., and 40 CFR §116.1 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. §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 any Creditor
Party
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 any Creditor Party;
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(k) it
will promptly, and in any event within five (5) business days after the same
is
acquired by it, notify the Agent of any commercial tort claim acquired by it
and
unless otherwise consented to in writing by the Agent, it shall enter into
a
supplement to this Master Security Agreement granting to the Agent a security
interest for the ratable benefit of the Creditor Parties in such commercial
tort
claim; and
(l) at
the request of the Agent, 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 lockbox maintained by such Assignor (the
“Lockbox”) with North Fork Bank or such other financial institution
accepted by the Agent in writing as may be selected by the Company (the
“Lockbox Bank”) (each such direction pursuant to this clause (x), a
“Direction Notice”) and (y) provide the Agent with copies of each
Direction Notice, each of which shall be agreed to and acknowledged by the
respective Account Debtor. The Lockbox Bank shall agree to deposit
the proceeds of such payments immediately upon receipt thereof in such deposit
account acceptable to the Agent in writing (the “Lockbox Deposit
Account”). At the request of the Agent, each Assignor shall and
shall cause the Lockbox Bank to enter into all such documentation acceptable
to
the Agent pursuant to which, among other things, the Lockbox Bank agrees to,
following notification by the Agent (which notification the Agent shall only
give following the occurrence and during the continuance of an Event of Default
and only after Laurus has released, in writing, its interest in the applicable
Lockbox and/or Lockbox Deposit Account), comply only with the instructions
or
other directions of the Agent concerning such Lockbox and the related
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 Lockbox or such other address as the Agent 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 the Agent (subject only
to
any interest of Laurus therein) 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, 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.
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5. The
occurrence of any of the following events or conditions shall constitute an
“Event of Default” under this Master Security Agreement:
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(a)
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any
covenant or any other term or condition of this Master Security Agreement
is breached in any material respect and such breach, to the extent
subject
to cure, shall continue for a period of fifteen (15) days after the
occurrence thereof;
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(b)
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any
representation or warranty, or statement made or furnished to the
Agent or
any other Creditor Party under this Master Security Agreement by
any
Assignor or on any Assignor’s behalf should prove to any time be false or
misleading in any material respect on the date as of which made or
deemed
made;
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(c)
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the
loss, theft, substantial damage, destruction, sale or encumbrance
to or of
any of the Collateral or the making of any levy, seizure or attachment
thereof or thereon except to the
extent:
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(i)
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such
loss is covered by insurance proceeds which are used to replace the
item
or repay the Agent; or
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(ii)
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said
levy, seizure or attachment does not secure indebtedness in excess
of
$100,000 in the aggregate for all Assignors and such levy, seizure
or
attachment has been removed or otherwise released within ten (10)
days of
the creation or the assertion
thereof;
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(d)
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any
Assignor shall become insolvent, cease operations, dissolve, terminate
its
business existence, 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;
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(e)
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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;
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(f)
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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
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(g)
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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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-8-
6. Upon
the occurrence of any Event of Default and at any time thereafter, the Agent
may
declare all Obligations immediately due and payable and the Agent shall have
the
remedies of a secured party provided in the UCC, this Master Security Agreement
and other applicable law. Upon the occurrence of any Event of Default
and at any time thereafter, the Agent will have the right to receive one hundred
percent (100%) of all accounts receivable of each Company, 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 the Agent
may desire. Upon the Agent’s request, each Assignor shall assemble or
cause the Collateral to be assembled and make it available to the Agent at
a
place designated by the Agent. 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
the Agent’s records for such Assignor. Any proceeds of any
disposition of any of the Collateral shall be applied by the Agent to the
payment of all expenses in connection with the sale of the Collateral, including
reasonable attorneys’ fees and other legal expenses and disbursements and the
reasonable expenses of retaking, holding, preparing for sale, selling, and
the
like, and any balance of such proceeds may be applied by the Agent toward the
payment of the Obligations in such order of application as the Agent 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, the Agent shall have the immediate right to withdraw any
and
all monies contained in the Restricted Account and/or any other deposit accounts
in the name of any Assignor and controlled by the Agent and apply same to the
repayment of the Obligations (in such order of application as the Agent 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), in each
case, hereunder or under any of the other Documents 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, the Agent 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
reasonable attorneys’ fees and other legal expenses, shall be added to the
Obligations and shall be payable on demand with interest thereon at the highest
rate permitted by law, or, at the Agent’s option, debited by the Agent from the
Restricted Account or any other deposit accounts in the name of any Assignor
and
controlled by the Agent.
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8. Each
Assignor hereby appoints the Agent, or any other Person whom the Agent may
designate as such Assignor’s attorney, with power to: (a)(i) execute
any security related documentation on such Assignor’s behalf and to supply any
omitted information and correct patent errors in any documents executed by
such
Assignor or on such Assignor’s behalf; (ii) 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 property, whether now owned and/or hereafter acquired” (or any
substantially similar variation thereof)); (iii) sign such Assignor’s name on
any invoice or xxxx of lading relating to any accounts receivable, drafts
against account debtors, schedules and assignments of accounts receivable,
notices of assignment, financing statements and other public records,
verifications of accounts receivable and notices to or from account debtors;
and
(iv) to do all other things the Agent deems necessary to carry out the terms
of
Section 1 of this Master Security Agreement and (b) upon the occurrence and
during the continuance of an Event of Default; (v) endorse such Assignor’s name
on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into the Agent’s possession;
(vi) sign such Assignor’s name on any invoice or xxxx of lading
relating to any accounts receivable, drafts against account debtors, schedules
and assignments of accounts receivable, notices of assignment, financing
statements and other public records, verifications of accounts receivable and
notices to or from account debtors; (vii) verify the validity, amount or any
other matter relating to any accounts receivable by mail, telephone, telegraph
or otherwise with account debtors; (viii) do all other things necessary to
carry
out this Agreement, any other Document and all other related documents; and
(ix)
notify the post office authorities to change the address for delivery of such
Assignor’s mail to an address designated by the Agent, and to receive, open and
dispose of all mail addressed to such Assignor. Each Assignor hereby
ratifies and approves all acts of the attorney and neither the Agent 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 Obligation remains unpaid.
9. No
delay or failure on the Agent’s part in exercising any right, remedy, option,
privilege or election hereunder shall operate as a waiver of such or of any
other right, remedy, option, privilege or election, and no waiver whatever
shall
be valid unless in writing, signed by the Agent and then only to the extent
therein set forth, and no waiver by the Agent of any default shall operate
as a
waiver of any other default or of the same default on a future
occasion. The Creditor Parties’ books and records containing entries
with respect to the Obligations shall be admissible in evidence in any action
or
proceeding, shall be binding upon each Assignor for the purpose of establishing
the items therein set forth and shall constitute prima facie proof
thereof.
The
Agent
shall have the right to enforce any one or more of the remedies available to
the
Agent, successively, alternately or concurrently. Each Assignor
agrees to join with the Agent in executing such documents or other instruments
to the extent required by the UCC in form satisfactory to the Agent and in
executing such other documents or instruments as may be required or deemed
necessary by the Agent for purposes of affecting or continuing the Agent’s
security interest in the Collateral.
-10-
10. The
Assignors shall jointly and severally pay all of the Agent’s and each other
Creditor Party’s out-of-pocket costs and expenses, including reasonable 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 the Agent’s and each other Creditor Party’s reasonable fees, charges,
out-of-pocket costs and expenses, including reasonable fees and disbursements
of
in-house and outside 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) the Agent’s obtaining performance of the Obligations under
the Documents, including, but not limited to the enforcement or defense of
the
Agent’s security interests, assignments of rights and liens hereunder as valid
perfected security interests, (c) any attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of any Collateral, (d) any
appraisals or re appraisals of any property (real or personal) pledged to the
Agent by any Assignor as Collateral for, or any other Person as security for,
the Obligations hereunder and (e) any consultations in connection with any
of
the foregoing. The Assignors shall also jointly and severally pay the
Agent’s and each other Creditor Party’s customary bank charges for all bank
services (including wire transfers) performed or caused to be performed by
the
Agent or any other Creditor Party for any Assignor at any Assignor’s request or
in connection with any Assignor’s loan account (if any) with the Agent or any
other Creditor Party. All such costs and expenses together with all
filing, recording and search fees, taxes and interest payable by the Assignors
to the Agent 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 pertaining to government (each, a “Governmental
Authority”) is or may be imposed on or as a result of any transaction
between any Assignor, on the one hand, and the Agent and/or any other Creditor
Party on the other hand, which the Agent and/or any other Creditor Party is
or
may be required to withhold or pay (including, without limitation, as a result
of a breach by any Assignor of Section 6.12 of the Securities Purchase
Agreement), the Assignors hereby jointly and severally indemnify and hold the
Agent and each other Creditor Party harmless in respect of such taxes, and
the
Assignors will repay to the Agent or such other Creditor Party the amount of
any
such taxes which shall be charged to the Assignors’ account; and until the
Assignors shall furnish the Agent and such other Creditor Party with indemnity
therefor (or supply the Agent and such other Creditor Party with evidence
satisfactory to it that due provision for the payment thereof has been made),
the Creditor Parties may hold without interest any balance standing to each
Assignor’s credit (if any) and the Agent 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 the Agent hereunder shall inure to the benefit of the Agent’s
successors and assigns. The term “Agent” as herein used shall
include the Agent, any parent of the Agent’s, any of the Agent’s subsidiaries
and any co-subsidiaries of the Agent’s parent, whether now existing or hereafter
created or acquired, and all of the terms, conditions, promises, covenants,
provisions and warranties of this Master Security Agreement shall inure to
the
benefit of each of the foregoing, and shall bind the representatives, successors
and assigns of each Assignor.
-11-
12. Each
Assignor hereby consents and agrees that the state and 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
the Agent and/or any other Creditor Party, 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 the Agent, each other Creditor Party
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 the Agent 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 the Agent. 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
forumnonconveniens. 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, suite, or proceeding brought to resolve
any dispute, whether arising in contract, tort, or otherwise between the Agent
and/or any other Creditor Party, 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. This
Master Security Agreement may be executed in any number of counterparts, each
of
which shall be an original, but all of which shall constitute one
instrument. Any signature delivered by a party by facsimile or
electronic transmission shall be deemed to be an original signature
hereto.
-12-
14. 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 the Agent, (y) delivering
supplements to such exhibits and annexes to such Documents as the Agent 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 the Agent and with all documents
and
actions required above to be taken to the reasonable satisfaction of the
Agent.
15. All
notices from the Agent to any Assignor shall be sufficiently given if mailed
or
delivered to such Assignor’s address set forth below.
16. 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.
[Remainder
of page intentionally left blank]
-13-
Very
truly yours,
By:
/s/ Xxxxxx X.
XxXxxxxxx
Name:
Xxxxxx X. XxXxxxxxx
Title:
President and Chief Executive Officer
Address:
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
GULF
COAST OIL CORPORATION
By:
/s/ Xxxxxx X.
XxXxxxxxx
Name:
Xxxxxx X. XxXxxxxxx
Title:
President
Address:
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
CENTURY
RESOURCES, INC.
By:
/s/ Xxxxxx X.
XxXxxxxxx
Name:
Xxxxxx X. XxXxxxxxx
Title:
President
Address:
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
AGREED
AND ACKNOWLEDGED:
LV
ADMINISTRATIVE SERVICES INC.,
as
Agent
By:
/s/ Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
Authorized Signatory
-14-
Schedule
A
Commercial
Tort Claims
None.
A-1
Schedule
B
[CONFIDENTIAL
INFORMATION
REMOVED]
Schedule
C
|
Entity
|
Jurisdiction
of
Formation
|
Organization
Identification
Number
|
|
Gulf
Coast Oil Corporation
|
Delaware
|
4143411
|
|
Colorado
|
20031402340
|
|
|
Century
Resources, Inc.
|
Delaware
|
2029277
|
C-1
