EXHIBIT 10.18
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of May 1, 1998 by
the undersigned ("Debtor"), in favor of Energy Capital Investment Company PLC,
an English investment company, EnCap Equity 1994 Limited Partnership, a Texas
limited partnership, and Gecko Booty 1994 I Limited Partnership, a Texas
Limited Partnership (collectively, "Secured Party").
RECITALS:
1. Future Petroleum Corporation, a Utah corporation ("Buyer") has executed
those certain Renewal Promissory Notes of even date herewith, payable to
the order of Secured Party in the aggregate principal amount of
$7,260,000 (such promissory notes, as from time to time amended, and all
promissory notes given in substitution, renewal or extension therefor or
thereof, in whole or in part, collectively, the "Notes").
2. The Notes were executed pursuant to (i) a Purchase and Sale Agreement
dated November 25, 1997 (as amended, supplemented, or restated, the
"November 1997 Purchase Agreement"), by and between Buyer and Secured
Party, and (ii) a Purchase and Sale Agreement datedMay 1, 1998 (as
amended, supplemented or restated, the "May 1998 Purchase Agreement"),
by and between Buyer, Energy Capital Investment Company PLC, EnCap
Equity 1994 Limited Partnership and NCI Enterprises, Inc. The November
1997 Agreement and the May 1998 Agreement are herein sometimes
collectively called the "Purchase Agreement".
3. Pursuant to the Purchase Agreement, Debtor is concurrently giving or has
given to Secured Party a Guaranty (as from time to time amended,
supplemented or restated, the "Guaranty") of all of the indebtedness of
Buyer under the Purchase Agreement and the Notes.
4. It is a condition precedent to Secured Party's obligation to extend
credit to Buyer pursuant to the Purchase Agreement that Debtor shall
execute and deliver to Secured Party a satisfactory security agreement
granting liens on and security interests in all of its assets to secure
Debtor's obligations under the Purchase Agreement, the Notes and the
Guaranty.
5. Buyer owns directly (i) all of the issued and outstanding shares of
capital stock of Future Energy Corporation, a Nevada corporation, which
in turn owns a 99% limited partnership interest in Debtor, and (ii) all
of the issued and outstanding shares of capital stock of Future
Petroleum Corporation, a Texas corporation, which in turn owns a 1%
general partnership interest in Debtor.
6. Buyer, Debtor and the other direct and indirect subsidiaries of Buyer
are mutually dependent on each other in the conduct of their respective
businesses under a holding company structure, with the credit needed
from time to time by each often being provided by another or by means of
financing obtained by one such affiliate with the support of the others
for their mutual benefit and the ability of each to obtain such
financing being dependent on the successful operations of the others.
7. The board of directors of the general partner of Debtor has determined
that Debtor's execution, delivery and performance of this Agreement may
reasonably be expected to benefit Debtor, directly or indirectly, and is
in the best interests of Debtor.
NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Debtor from Secured Party's extension of credit under the Notes,
and of Ten Dollars and other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, and in order to induce
Secured Party to extend credit under the Purchase Agreement, Debtor hereby
agrees with Secured Party as follows:
ARTICLE I - Definitions and References
Section 1.1. General Definitions. As used herein, the terms
"Agreement", "Debtor", "Secured Party", "Buyer", "Notes", "Purchase Agreement"
and "Guaranty" shall have the meanings indicated above, and the following
terms shall have the following meanings:
"Collateral" means all property, of whatever type, which is described in
Section 2.1 as being at any time subject to a security interest granted
hereunder to Secured Party.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing Inventory, Equipment, or other
goods.
"Equipment" means all equipment (as defined in the UCC) in whatever
form, 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
UCC) of any kind (including choses in action, 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.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (as each is defined in" the UCC).
"Inventory" means all inventory (as defined in the UCC) in all of its
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.
"Obligation Documents" means the Purchase Agreement, the Notes, the
Guaranty, the Note Documents, and all other documents and instruments under,
by reason of which, or pursuant to which any or all of the Secured Obligations
are evidenced, governed, secured, guaranteed, or otherwise dealt with, and all
other agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.
"Other Liable Party" means any Person, other than Debtor, who may now or
may at any time hereafter be primarily or secondarily liable for any of the
Secured Obligations or who may now or may at any time hereafter have granted
to Secured Party a Lien upon any property as security for the Secured
Obligations.
"Proceeds" means, with respect to any property of any kind, all proceeds
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
Secured Party 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.
"Receivables" means (a) all accounts (as defined in the UCC) and all
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.
"Secured Obligations" has the meaning given such term in Section 2.2.
"UCC" means the Uniform Commercial Code in effect in the State of Texas
on the date hereof.
Section 1.2. Incorporation of Other Definitions. Reference is hereby
made to the Purchase Agreement for a statement of the terms thereof. All
capitalized terms used in this Agreement which are defined in the Purchase
Agreement and not otherwise defined herein shall have the same meanings herein
as set forth therein. All terms used in this Agreement which are defined in
the UCC and not otherwise defined herein or in the Purchase Agreement shall
have the same meanings herein as set forth therein, except where the context
otherwise requires.
Section 1.3. Attachments. All exhibits or schedules which may be
attached to this Agreement are a part hereof for all purposes.
Section 1.4. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including, but
not limited to, references in Section 2.1) also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements
of any such agreement, instrument or document, provided that nothing contained
in this Section shall be construed to authorize any Person to execute or enter
into any such renewal, extension, amendment, modification, supplement or
restatement.
Section 1.5. References and Titles. All references in this Agreement
to Exhibits, Articles, Sections, subsections, and other subdivisions refer to
the Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any subdivision are for convenience only and do not constitute
any part of any such subdivision and shall be disregarded in construing the
language contained in this Agreement. The words "this Agreement", "herein",
"hereof", "hereby", "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited. The phrases "this Section" and "this subsection" and similar phrases
refer only to the Sections or subsections hereof in which the phrase occurs.
The word "or" is not exclusive, and the word "including" (in all of its forms)
means "including without limitation". Pronouns in masculine, feminine and
neuter gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless
the context otherwise requires.
ARTICLE II - Security Interest
Section 2.1. Grant of Security Interest. As collateral security for
all of the Secured Obligations, Debtor hereby pledges and assigns to Secured
Party, and grants to Secured Party a continuing security interest, in and to
all right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:
(a) all Receivables.
(b) all General Intangibles.
(c) all Documents.
(d) all Instruments.
(e) all Inventory.
(f) all Equipment.
(g) All books and records (including 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 Debtor pertaining to any of the Collateral.
(h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.
(i) All Proceeds of any and all of the foregoing Collateral.
In each case, the foregoing shall be covered by this Agreement, whether
Debtor's ownership or other rights therein are presently held or hereafter
acquired and howsoever Debtor's interests therein may arise or appear (whether
by ownership, security interest, claim or otherwise).
Debtor and Secured Party, by its acceptance hereof, hereby confirm that
it is their intention that the security interests granted by Debtor hereunder
not constitute a fraudulent transfer or fraudulent conveyance for purposes of
any federal or state law. To effectuate the foregoing intention, Debtor and
Secured Party (by its acceptance hereof) hereby irrevocably agree and
understand that, notwithstanding any other provision of this Agreement, the
Collateral granted by Debtor hereunder shall be limited to the maximum amount
of Collateral that can be pledged without rendering this Agreement, as it
relates to Debtor, voidable under applicable law relating to fraudulent
conveyances or fraudulent transfers, and not for any greater amount.
Section 2.2. Secured Obligations. The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred or arising:
(a) Purchase Agreement Indebtedness. The payment by Buyer as and when
due and payable, of the "Obligations", as defined in the Purchase Agreement,
and of all amounts from time to time owing by Buyer under or in respect of the
Purchase Agreement, the Notes or any of the other Obligation Documents.
(b) Guaranty Indebtedness. The payment by Debtor as and when due and
payable, of all amounts from time to time owing by Debtor under or in respect
of the Guaranty, or any of the other Obligation Documents to which Debtor is a
party, and the due performance by Debtor of all of its other respective
obligations under or in respect of the Guaranty and such other Obligation
Documents.
(c) Renewals. All renewals, extensions, amendments, modifications,
supplements, or restatements of or substitutions for any of the foregoing.
(d) Performance. The due performance and observance by Debtor of all
of its other obligations from time to time existing under or in respect of any
of the Obligation Documents.
As used herein, the term "Secured Obligations" refers to all present and
future indebtedness, obligations and liabilities of whatever type which are
described above in this section, including any interest which accrues after
the commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of Debtor. Debtor hereby
acknowledges that the Secured Obligations are owed to each Secured Party and
that each Secured Party is entitled to the benefits of the Liens given under
this Agreement.
ARTICLE III - Representations, Warranties and Covenants
Section 3.1. Representations and Warranties. Debtor hereby represents
and warrants to Secured Party as follows:
(a) Ownership Free of Liens. Debtor has good and marketable title to
the Collateral, free and clear of all Liens, encumbrances or adverse claims
except for the security interest created by this Agreement and the security
interests and other encumbrances expressly permitted by the Purchase
Agreement. No dispute, right of setoff, counterclaim or defense exists with
respect to all or any part of the Collateral. No effective financing
statement or other registration or instrument similar in effect covering all
or any part of the Collateral is on file in any recording office except any
which have been filed in favor of or assigned to Secured Party. None of the
Collateral is in the possession of any Person other than Debtor or Secured
Party, except for Collateral being transported in the ordinary course of
business.
(b) No Conflicts or Consents. Neither the ownership or the intended
use of the Collateral by Debtor, nor the grant of the security interest by
Debtor to Secured Party herein, nor the exercise by Secured Party of its
rights or remedies hereunder, will (i) conflict with any provision of (a) any
Law, (b) the organizational documents of Debtor, or (c) any agreement,
judgment, license, order or permit applicable to or binding upon Debtor, or
(ii) result in or require the creation of any Lien, charge or encumbrance upon
any assets or properties of Debtor or any Restricted Person except as
expressly contemplated in the Obligation Documents. Except as expressly
contemplated in the Obligation Documents, no consent, approval, authorization
or order of, and no notice to or filing with any Tribunal or third party is
required in connection with the grant by Debtor of the security interest
herein, or the exercise by Secured Party of its rights and remedies hereunder.
(c) Security Interest. Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Secured Party as provided herein, free and clear of any Lien, adverse claim,
or encumbrance, except for the security interests and other encumbrances
expressly permitted by the Purchase Agreement. This Agreement creates a valid
and binding first priority security interest in favor of Secured Party in the
Collateral, which security interest secures all of the Secured Obligations.
(d) Perfection. The taking possession by Secured Party of all
Instruments and money constituting Collateral from time to time will perfect,
and establish the first priority of, Secured Party's security interest
hereunder in such Collateral. The filing of the financing statements
delivered concurrently herewith by Debtor to Secured Party will perfect, and
establish the first priority (subject only to the security interests and other
encumbrances expressly permitted by the Purchase Agreement) of, Secured
Party's security interest hereunder in all other Collateral. No further or
subsequent filing, recording, registration, other public notice or other
action is necessary or desirable to perfect or otherwise continue, preserve or
protect such security interest except for continuation statements or filings
described in Section 3.2(b).
(e) Receivables. Each Receivable represents the valid and legally
binding indebtedness of a bona fide account debtor arising from the sale or
lease by Debtor of goods or the rendition by Debtor of services and is not
subject to contra-accounts, setoffs, defenses or counterclaims by or available
to account debtors obligated on the Receivables except as disclosed to Secured
Party. Subject to adjustments made (or to be made) in the ordinary course of
business, Goods which have been delivered to, and services which have been
rendered by Debtor to the account debtor on each such Receivable have been
accepted by such account debtor, and the amount shown as to each Receivable on
Debtor's books is the true and undisputed amount owing and unpaid thereon,
subject only to discounts, allowances, rebates, Purchases and adjustments to
which such account debtor has a right.
(f) General Intangibles. Each General Intangible included within the
Collateral which is material to Debtor's business constituting a right to
collect amounts due or to become due thereunder represents the valid and
legally binding obligation of each other Person who is a party thereto or who
is otherwise stated to be obligated thereunder, subject to no contra-accounts,
setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to account debtors obligated thereon, except for
those which do not materially impair the value to Debtor or the enforcement by
Debtor of such General Intangibles.
(g) Documents and Instruments. All Documents and Instruments included
within the Collateral are valid and genuine. Any such Document or Instrument
has only one original counterpart which constitutes collateral within the
meaning of the UCC or the Law of any applicable jurisdiction, and, if
requested by Secured Party, all such original counterparts (other than checks
delivered in payment of Receivables in the ordinary course of business) have
been delivered into the possession of Secured Party.
(h) Goods. None of the Collateral which constitutes goods (i) is
covered by any Document (other than Documents which are subject hereto and
have been delivered to Secured Party), (ii) is subject to any landlord's lien
or similar Lien (other than the security interests and other encumbrances
expressly permitted by the Purchase Agreement), (iii) has been related to,
attached to, or used in connection with any real property so as to constitute
a fixture upon such real property (except for real property which is subject
to a Lien in favor of Secured Party), (iv) is now kept or is intended to be
kept at any location other than as disclosed to Secured Party in writing
(except for goods in transit in the ordinary course of Debtor's business), (v)
is installed in or affixed to other goods so as to be an accession to such
other goods (unless such other goods are included in the Collateral), or (vi)
has been produced in violation of the Fair Labor Standards Act, as amended.
All such goods are insured to the extent required under the Purchase
Agreement.
Section 3.2. General Covenants Applicable to All Collateral. Unless
Secured Party shall otherwise consent in writing, Debtor will at all times
comply with the covenants contained in this Section 3.2 from the date hereof
and so long as any part of the Secured Obligations is outstanding.
(a) Change of Name, Location, or Structure; Additional Filings. Debtor
recognizes that financing statements pertaining to the Collateral have been or
may be filed where Debtor maintains any Collateral, has its records concerning
any Collateral or has its chief executive office or chief place of business.
Without limitation of any other covenant herein, Debtor will not cause or
permit any change to be made in its name, identity or organizational
structure, or any change to be made to a jurisdiction other than as
represented in Section 3.1 hereof in (i) the location of any Collateral
(except with respect to Equipment which may be relocated within the original
filing jurisdiction applicable thereto), (ii) the location of any records
concerning any Collateral or (iii) in the location of its chief executive
office or principal place of business, unless Debtor shall have first (1)
notified Secured Party of such change at least thirty (30) days prior to the
effective date of such change, (2) taken all action requested by Secured Party
(under the following subsection (b) or otherwise) for the purpose of further
confirming and protecting Secured Party's security interests and rights under
this Agreement and the perfection and priority thereof, and (3) if requested
by Secured Party, provide to Secured Party a legal opinion to its satisfaction
confirming that such change will not adversely affect in any way Secured
Party's security interests and rights under this Agreement or the perfection
or priority thereof. In any notice furnished pursuant to this subsection,
Debtor will expressly state that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements or
other notices for the purposes of continuing perfection of Secured Party's
security interest in the Collateral.
(b) Further Assurances. Debtor will, at its expense as from time to
time reasonably requested by Secured Party, promptly execute and deliver all
further instruments, agreements, filings and registrations, and take all
further action that may be necessary or that Secured Party may in good faith
request in order: (i) to confirm and validate this Agreement and Secured
Party's rights and remedies hereunder, (ii) to correct any errors or omissions
in the descriptions herein of the Secured Obligations or the Collateral or in
any other provisions hereof, (iii) to perfect, register and protect the
security interests and rights created or purported to be created hereby and
the first priority of such security interests and rights, (iv) to enable
Secured Party to exercise and enforce its rights and remedies hereunder in
respect of the Collateral, or (v) to otherwise give Secured Party the full
benefits of the rights and remedies described in or granted under this
Agreement. As part of the foregoing Debtor will, whenever reasonably
requested by Secured Party (1) execute and file any financing statements,
continuation statements, and other filings or registrations relating to
Secured Party's security interests and rights hereunder, and any amendments
thereto, (2) xxxx its books and records relating to any Collateral to reflect
that such Collateral is subject to this Agreement and the security interests
hereunder and (3) deliver to Secured Party (upon request, to the extent not
otherwise required hereunder to be delivered without request) all originals of
chattel paper, Documents or Instruments which are from time to time included
in the Collateral. Upon the occurrence and during the continuation of a
Default, to the extent requested by Secured Party from time to time, Debtor
will obtain from any material account debtor or other obligor on the
Collateral the acknowledgment of such account debtor or obligor that such
Collateral is subject to this Agreement.
(c) Inspection and Information. Debtor will keep adequate records
concerning the Collateral and will permit Secured Party and all
representatives appointed by Secured Party, including independent accountants,
agents, attorneys, appraisers and any other persons, to inspect any of the
Collateral and the books and records of or relating to the Collateral at any
time during normal business hours, and to make photocopies and photographs
thereof, and to write down and record any information as such representatives
shall obtain. Upon request from time to time by Secured Party, Debtor will
furnish to Secured Party (i) any information concerning any covenant,
provision or representation contained herein or any other matter in connection
with the Collateral or Debtor's business, properties, or financial condition,
and (i) statements and schedules identifying and describing the Collateral and
other reports and information requested in connection with the Collateral, all
in reasonable detail.
(d) Ownership, Liens, Possession and Transfers. Debtor will maintain
good and marketable title to all Collateral, free and clear of all Liens,
encumbrances or adverse claims except for the security interest created by
this Agreement and Liens permitted under the Purchase Agreement, and Debtor
will not grant or allow any such Liens, encumbrances or adverse claims to
exist. Debtor will not grant or allow to remain in effect, and Debtor will
cause to be terminated, any financing statement or other registration or
instrument similar in effect covering all or any part of the Collateral,
except any which have been filed in favor of (or assigned to) Secured Party.
Debtor will defend Secured Party's right, title and special property and
security interest in and to the Collateral against the claims of any Person.
Debtor (i) will insure that all of the Collateral -- whether goods, Documents,
Instruments, or otherwise -- is and remains in the possession of Debtor or
Secured Party (or a bailee selected by Secured Party who is holding such
Collateral for the benefit of Secured Party), except for goods being
transported in the ordinary course of business, and (ii) will not sell, assign
(by operation of Law or otherwise), transfer, exchange, lease or otherwise
dispose of any of the Collateral except in the ordinary course of business.
(e) Impairment of Security Interest. Debtor will not take or fail to
take any action which would in any manner impair the value or enforceability
of Secured Party's first priority security interest in any Collateral.
(f) Insurance.
(i) Debtor will, at its own expense, maintain insurance with
respect to all Collateral which constitutes goods in such amounts,
against such risks, in such form and with such insurers, as shall be
required under the Purchase Agreement. Each policy for liability
insurance shall provide for all losses to be paid on behalf of Secured
Party and the Debtor that owns the Collateral as their respective
interests may appear, and each policy for property damage insurance
shall provide for all losses to be paid directly to Secured Party. Each
such policy shall in addition (A) name the Debtor who owns the
Collateral and Secured Party as insured parties thereunder (without any
representation or warranty by or obligation upon Secured Party) as their
interests may appear, (B) contain the agreement by the insurer that any
loss thereunder shall be payable to Secured Party notwithstanding any
action, inaction or breach of representation or warranty by Debtor, (C)
do not provide any recourse against Secured Party for payment of
premiums or other amounts with respect thereto and (D) provide that at
least thirty (30) days' prior written notice of cancellation or of lapse
shall be given to Secured Party by the insurer. Debtor will, if so
requested by Secured Party, deliver to Secured Party original or
duplicate policies of such insurance and, as often as Secured Party may
reasonably request, a report of a reputable insurance broker with
respect to such insurance. Debtor will also, at the request of Secured
Party, duly execute and deliver instruments of assignment of such
insurance policies and cause the respective insurers to acknowledge
notice of such assignment.
(ii) Reimbursement under any liability insurance maintained by
Debtor pursuant to this Section 3.2(f) may be paid directly to the
Person who has incurred the loss or damage covered by such insurance.
With respect to any loss involving damage to Collateral which
constitutes goods as to which subsection (iii) of this Section 3.2(f) is
not applicable, Debtor will make or cause to be made the necessary
repairs to or replacements of such Collateral owned by it, and any
proceeds of insurance maintained by Debtor pursuant to this Section
3.2(f) shall be paid to Debtor by Secured Party as reimbursement for the
costs of such repairs or replacements as such repairs or replacements
are made or acquired.
(iii) Upon the occurrence and during the continuance of an Event
of Default or upon the occurrence of a loss in excess of $50,000 per
occurrence of any Collateral which constitutes goods, all insurance
payments in respect of such Collateral shall be paid to Secured Party
and applied as specified in Section 4.3 hereof.
Section 3.3. Covenants for Specified Types of Collateral. Unless
Secured Party shall otherwise consent in writing, Debtor will at all times
comply with the covenants contained in this Section 3.3 from the date hereof
and so long as any part of the Secured Obligations is outstanding.
(a) Receivables. Debtor will, except as otherwise provided in
Sections 4.1(e) or 4.2(a), collect at its own expense all amounts due or to
become due under each Receivable which is included within the Collateral. In
connection with such collections, Debtor may (and, upon the occurrence and
during the continuance of a Default, at Secured Party's direction, will) take
such action (not otherwise forbidden hereunder) as Debtor (or, upon the
occurrence and during the continuance of a Default, Secured Party) may deem
necessary or advisable to enforce collection or performance of each such
Receivable. Except for actions and omissions in the ordinary course of
business which do not in the aggregate cause losses or reductions in excess of
five percent (5%) of the aggregate face amount of all such Receivables
outstanding at any time, Debtor (i) will duly perform and cause to be
performed all of its obligations with respect to the goods or services, the
sale or lease or rendering of which gave rise or will give rise to each such
Receivable, and (ii) will not (whether through failure to duly perform its
obligations under any contracts, instruments, and agreements which are related
to any such Receivable, or by any written instrument, or otherwise) take or
allow any action or omission which causes any such Receivable to become
subject to any contra-accounts, setoffs, defenses, counterclaims, discounts,
allowances, rebates, credits or adjustments by or available to account debtors
obligated on such Receivable.
(b) General Intangibles. Debtor will, except as otherwise provided
in Sections 4.1(e) or 4.2(a), collect at its own expense all amounts due or to
become due under each General Intangible included within the Collateral. In
connection with such collections, Debtor may (and, upon the occurrence and
during the continuance of a Default, at Secured Party's direction, will) take
such action (not otherwise forbidden hereunder) as Debtor (or, upon the
occurrence and during the continuance of a Default, Secured Party) may deem
necessary or advisable to enforce collection or performance of each such
General Intangible. Debtor will duly perform and cause to be performed all of
its obligations under any contracts, instruments, and agreements which are, or
which are related to, any General Intangibles of Debtor. Debtor will not
(whether through failure to duly perform its obligations under any contracts,
instruments, and agreements which are related to any such General Intangibles,
or by any written instrument, or otherwise) take or allow any action or
omission which causes any such General Intangibles to become subject to any
contra-accounts, setoffs, defenses, counterclaims, discounts, allowances,
rebates, credits or adjustments by or available to account debtors obligated
on such General Intangibles, except for those which (i) in the case of such
General Intangibles under which money is owing to Debtor, do not in the
aggregate exceed five percent (5%) of the aggregate face amount of all such
General Intangibles owing to Debtor, and (ii) in the case of other General
Intangibles included within the Collateral, do not materially impair the value
or enforcement of such General Intangibles.
(c) Documents and Instruments. Debtor will at all times cause any
Documents or Instruments which are included within the Collateral to be valid
and genuine. Debtor will cause all Instruments included within the Collateral
to have only one original counterpart. If requested by Secured Party, Debtor
will promptly deliver to Secured Party all originals of Documents or
Instruments which are included within the Collateral. Debtor will not
(whether through failure to duly perform its obligations under any contracts,
instruments, and agreements which are related to any Documents or Instruments
which are included within the Collateral, or by any written instrument, or
otherwise) take or allow any action or omission which causes any Documents or
Instruments which are included within the Collateral to become subject to any
contra-accounts, setoffs, defenses, counterclaims, discounts, allowances,
rebates, credits or adjustments by or available to the Persons obligated
thereon. Upon request by Secured Party, Debtor will xxxx each chattel paper
which is included within the Collateral with a legend indicating that such
chattel paper is subject to the security interest granted by this Agreement.
(d) Inventory. Debtor will maintain, preserve, protect and store all
Inventory included within the Collateral in good condition, repair and working
order and in a manner which will not make void or cancelable any insurance
with respect to such Collateral. Debtor will promptly furnish to Secured
Party a statement respecting any loss or damage to any such Inventory with an
aggregate value in excess of $50,000. Except for transportation of Inventory
in the ordinary course of business, Debtor will not allow any such Inventory
to be located in any jurisdiction other than those in which is filed an
effective financing statement which perfects Secured Party's security interest
hereunder in such Inventory. Except for Documents delivered into the
possession of Secured Party, Debtor will not allow any Inventory included
within the Collateral to be covered by any Document. Except for
transportation and storage of Inventory in the ordinary course of business,
Debtor will not cause or permit the removal of any item of Inventory from
Debtor's possession, control and risk of loss, and Debtor will not sell,
assign (by operation of Law or otherwise), transfer, exchange, lease or
otherwise dispose of any Inventory, other than in connection with the
following:
(i) Sales or leases, other than during the continuance of an
Event of Default, of Inventory in the ordinary course of business, and
(ii) Possession of Inventory by Secured Party or by a bailee
selected by Secured Party who is holding such Inventory for the benefit
of Secured Party.
(e) Equipment. Debtor will maintain, preserve, protect and keep all
Equipment included within the Collateral in good condition, repair and working
order, ordinary wear and tear excepted, and will cause such Equipment to be
used and operated in a good and workmanlike manner, in accordance with
applicable Law and in a manner which will not make void or cancelable any
insurance with respect to such Equipment. Debtor will promptly make or cause
to be made all repairs, replacements and other improvements to or in
connection with such Equipment which are necessary or desirable or that
Secured Party may request to such end. Debtor will promptly furnish to
Secured Party a statement respecting any loss or damage to any of such
Equipment with an aggregate value in excess of $50,000. Except for
transportation of Equipment in the ordinary course of business, Debtor will
not allow any Equipment included within the Collateral to be located in any
jurisdiction other than those in which is filed an effective financing
statement which perfects Secured Party's security interest hereunder in such
Equipment. Debtor will not cause or permit the removal of any item of
Equipment from Debtor's possession, control and risk of loss, and Debtor will
not sell, assign (by operation of Law or otherwise), transfer, exchange, lease
or otherwise dispose of any Equipment, other than in connection with the
following:
(i) Sale or other disposal, other than during the continuance of
an Event of Default, of any item of Equipment which is worn out or
obsolete or which has been replaced by an item of equal suitability and
value, owned by Debtor and made subject to the security interest under
this Agreement, but which is otherwise free and clear of any Liens,
encumbrances or adverse claims, and
(ii) Possession of Equipment by Secured Party or by a bailee
selected by Secured Party who is holding such Equipment for the benefit
of Secured Party.
Debtor will not permit any of the Collateral which constitutes Equipment to at
any time become so related to attached to, or used in connection with any
particular real property so as to become a fixture upon such real property, or
to be installed in or affixed to other goods so as to become an accession to
such other goods unless such other goods are also included in the Collateral.
(f) Certificates of Title. To the extent that there is at any time any
Collateral in which a security interest may be perfected by a notation on the
certificate of title or similar evidence of ownership of such Collateral,
Debtor will:
(i) concurrently with the execution hereof, with respect to any
items of such Collateral with a book value in excess of $50,000 in which
Debtor presently has any interest,
(ii) promptly after the acquisition thereof, with respect to any
items of such Collateral with a book value in excess of $50,000 in which
Debtor hereafter acquires any interest, and
(iii) promptly upon request by Secured Party, with respect to any
other items of such Collateral,
deliver to Secured Party all such certificates of title and similar evidences
of ownership, all applications therefor, and all other documents needed or
helpful in registering Secured Party's security interest in such Collateral on
such certificates of title, other evidences of ownership, and applications and
in otherwise perfecting Secured Party's security interest in such Collateral.
ARTICLE IV. - Remedies, Powers and Authorizations
Section 4.1. Normal Provisions Concerning the Collateral.
(a) Additional Financing Statement Filings. Debtor hereby authorizes
Secured Party to file, without the signature of Debtor where permitted by Law,
one or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Debtor further agrees that a carbon, photographic
or other reproduction of this Agreement or any financing statement describing
any Collateral is sufficient as a financing statement and may be filed in any
jurisdiction by Secured Party may deem appropriate.
(b) Power of Attorney. Debtor hereby irrevocably appoints Secured
Party as Debtor's attorney-in-fact and proxy, with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise, from time to time
in Secured Party's discretion, upon the occurrence and during the continuance
of a Default, to take any action, and to execute or indorse any instrument,
certificate or notice, which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement including any action or instrument:
(i) to obtain and adjust any insurance required to be paid to Secured Party
pursuant hereto; (ii) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral; (iii) to receive, indorse and
collect any drafts or other Instruments or Documents; (iv) to enforce any
obligations included among the Collateral; and (v) to file any claims or take
any action or institute any proceedings which Secured Party may deem necessary
or desirable for the collection of any of the Collateral or otherwise to
enforce, perfect, or establish the priority of the rights of Debtor or Secured
Party with respect to any of the Collateral. Debtor hereby acknowledges that
such power of attorney and proxy are coupled with an interest, are
irrevocable, and are to be used by Secured Party.
(c) Performance by Secured Party. If Debtor fails to perform any
agreement or obligation contained herein, Secured Party may itself perform, or
cause performance of, such agreement or obligation, and the expenses of
Secured Party incurred in connection therewith shall be payable by Debtor
under Section 4.5.
(d) Bailees. If at any time Debtor surrenders possession or control of
any Collateral to any warehouseman, bailee or any of Debtor's agents or
processors, Debtor shall, upon the request of Secured Party, notify such
warehouseman, bailee, agent or processor of Secured Party's rights hereunder
and instruct such Person to hold all such Collateral for Secured Party's
account subject to Secured Party's instructions. (No such request by Secured
Party shall be deemed a waiver of any provision hereof which was otherwise
violated by such Collateral being held by such Person prior to such
instructions by Debtor.)
(e) Collection Rights. Secured Party shall have the right at any time,
upon the occurrence and during the continuance of a Default or an Event of
Default, to notify (or to require Debtor to notify) any and all obligors under
any Receivables, General Intangibles, Instruments or other rights to payment
included among the Collateral of the assignment thereof to Secured Party under
this Agreement and to direct such obligors to make payment of all amounts due
or to become due to Debtor thereunder directly to Secured Party and, upon such
notification and at the expense of Debtor and to the extent permitted by Law,
to enforce collection of any such Receivables, General Intangibles,
Instruments or other rights to payment and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Debtor
could have done. After Debtor receives notice that Secured Party has given
(and after Secured Party has required Debtor to give) any notice referred to
above in this subsection:
(i) all amounts and proceeds (including instruments and writings)
received by Debtor in respect of such Receivables, General Intangibles,
Instruments or other rights to payment shall be received in trust for
the benefit of Secured Party hereunder, shall be segregated from other
funds of Debtor and shall be forthwith paid over to Secured Party in the
same form as so received (with any necessary indorsement) to be, at
Secured Party's discretion, either (A) held as cash collateral
and released to Debtor upon the remedy of all Defaults and Events of
Default, or (B) if any Event of Default shall have occurred and be
continuing, applied as specified in Section 4.3, and
(ii) Debtor will not adjust, settle or compromise the amount or
payment of any such Receivable, General Intangible, Instrument or other
right to payment or release wholly or partly any account debtor or
obligor thereof or allow any credit or discount thereon.
Section 4.2. Event of Default Remedies. If an Event of Default shall
have occurred and be continuing, Secured Party may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:
(a) exercise in respect of the Collateral, in addition to any other
rights and remedies provided for herein, under the other Obligation Documents,
or otherwise available to it, all the rights and remedies of a secured party
on default under the UCC (whether or not the UCC applies to the affected
Collateral);
(b) require Debtor to, and Debtor hereby agrees that it will at its
expense and upon request of Secured Party promptly, assemble all or part of
the Collateral as directed by Secured Party and make it (together with all
books, records and information of Debtor relating thereto) available to
Secured Party at a place to be designated by Secured Party which is reasonably
convenient to both parties;
(c) prior to the disposition of any Collateral, (i) to the extent
permitted by applicable Law, enter, with or without process of Law and without
breach of the peace, any premises where any of the Collateral is or may be
located, and without charge or liability to Secured Party seize and remove
such Collateral from such premises, (ii) have access to and use the Company's
books, records, and information relating to the Collateral, and (iii) store or
transfer any of the Collateral without charge in or by means of any storage or
transportation facility owned or leased by Debtor, process, repair or
recondition any of the Collateral or otherwise prepare it for disposition in
any manner and to the extent Secured Party deems appropriate and, in
connection with such preparation and disposition, use without charge any
copyright, trademark, trade name, patent or technical process used by Debtor;
(d) reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest created hereby by any available
judicial procedure;
(e) dispose of, at its office, on the premises of Debtor or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or
private proceedings, and by way of one or more contracts (it being agreed that
the sale of any part of the Collateral shall not exhaust Secured Party's power
of sale, but sales may be made from time to time, and at any time, until all
of the Collateral has been sold or until the Secured Obligations have been
paid and performed in full), and at any such sale it shall not be necessary to
exhibit any of the Collateral;
(f) buy (or allow one or more Secured Party to buy) the Collateral, or
any part thereof, at any public sale;
(g) buy (or allow one or more Secured Party to buy) the Collateral, or
any part thereof, at any private sale if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject
of widely distributed standard price quotations; and
(h) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Debtor hereby consents
to any such appointment.
Debtor agrees that, to the extent notice of sale shall be required by Law, at
least five (5) days' notice to Debtor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Section 4.3. Application of Proceeds. If any Event of Default shall
have occurred and be continuing, Secured Party may in its discretion apply any
cash held by Secured Party as Collateral, and any cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, to any or all of the following in such
order as Secured Party may elect:
(a) To the repayment of all costs and expenses, including reasonable
attorneys' fees and legal expenses, incurred by Secured Party in connection
with (i) the administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization
upon, any Collateral, (iii) the exercise or enforcement of any of the rights
of Secured Party hereunder, or (iv) the failure of Debtor to perform or
observe any of the provisions hereof;
(b) To the payment or other satisfaction of any Liens, encumbrances, or
adverse claims upon or against any of the Collateral;
(c) To the reimbursement of Secured Party for the amount of any
obligations of Debtor or any Other Liable Party paid or discharged by Secured
Party pursuant to the provisions of this Agreement or the other Obligation
Documents, and of any expenses of Secured Party payable by Debtor hereunder or
under the other Obligation Documents;
(d) To the satisfaction of any other Secured Obligations;
(e) By holding the same as Collateral;
(f) To the payment of any other amounts required by applicable Law
(including any provision of the UCC); and
(g) By delivery to Debtor or to whoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.
Section 4.4. Deficiency. In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, Debtor shall be liable for the deficiency,
together with interest thereon as provided in the governing Obligation
Documents or (if no interest is so provided) at such other rate as shall be
fixed by applicable Law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party to collect such
deficiency.
Section 4.5. Indemnity and Expenses. In addition to, but not in
qualification or limitation of, any similar obligations under other Obligation
Documents:
(a) Debtor will indemnify Secured Party from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including enforcement of this Agreement),
WHETHER OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY
EXTENT OWED, IN
WHOLE OR PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED BY
OR ARISING OUT OF
SUCH INDEMNIFIED PARTY'S OWN NEGLIGENCE,
except to the extent such claims, losses or liabilities are proximately caused
by such indemnified party's gross negligence or willful misconduct.
(b) Debtor will upon demand pay to Secured Party the amount of any and
all costs and expenses, including the fees and disbursements of Secured
Party's counsel and of any experts and agents, which Secured Party may incur
in connection with (i) the perfection and preservation of this security
interest created under this Agreement, (ii) the administration of this
Agreement; (iii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any Collateral; (iv) the
exercise or enforcement of any of the rights of Secured Party hereunder; or
(v) the failure by Debtor to perform or observe any of the provisions hereof,
except expenses resulting from Secured Party's individual gross negligence or
willful misconduct.
Section 4.6. Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial process or
judicial hearing, Debtor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured Party to
enforce its rights by judicial process. In so providing for non-judicial
remedies, Debtor recognizes and concedes that such remedies are consistent
with the usage of trade, are responsive to commercial necessity, and are the
result of a bargain at arm's length. Nothing herein is intended, however, to
prevent Secured Party or Debtor from resorting to judicial process at its
option.
Section 4.7. Other Recourse. Debtor waives any right to require
Secured Party to proceed against any other Person, to exhaust any Collateral
or other security for the Secured Obligations, to have any Other Liable Party
joined with Debtor in any suit arising out of the Secured Obligations or this
Agreement, or to pursue any other remedy in Secured Party's power. Debtor
further waives any and all notice of acceptance of this Agreement and of the
creation, modification, rearrangement, renewal or extension for any period of
any of the Secured Obligations of any Other Liable Party from time to time.
Debtor further waives any defense arising by reason of any disability or other
defense of any Other Liable Party or by reason of the cessation from any cause
whatsoever of the liability of any Other Liable Party. Until all of the
Secured Obligations shall have been paid in full, no Debtor shall have any
right to subrogation and Debtor waives the right to enforce any remedy which
Secured Party has or may hereafter have against any Other Liable Party, and
waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Secured Party. Debtor authorizes Secured
Party, without notice or demand, without any reservation of rights against
Debtor, and without in any way affecting Debtor's liability hereunder or on
the Secured Obligations, from time to time to (a) take or hold any other
property of any type from any other Person as security for the Secured
Obligations, and exchange, enforce, waive and release any or all of such other
property, (b) apply the Collateral or such other property and direct the order
or manner of sale thereof as Secured Party may in its discretion determine,
(c) renew, extend for any period, accelerate, modify, compromise, settle or
release any of the obligations of any Other Liable Party in respect to any or
all of the Secured Obligations or other security for the Secured Obligations,
(d) waive, enforce, modify, amend or supplement any of the provisions of any
Obligation Document with any Person other than Debtor, and (e) release or
substitute any Other Liable Party.
Section 4.8. Limitation on Duty of Secured Party in Respect of
Collateral. Beyond the exercise of reasonable care in the custody thereof,
Secured Party shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. Secured Party shall be deemed to have exercised reasonable care in
the custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property, and
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act
or omission of any warehouseman, carrier, forwarding agency, consignee or
other agent or bailee selected by Secured Party in good faith.
Section 4.9. Appointment of Collateral Agents. At any time or times,
in order to comply with any legal requirement in any jurisdiction, Secured
Party may appoint any bank or trust company or one or more other Persons,
either to act as co-agent or co-agents, jointly with Secured Party, or to act
as separate agent or agents on behalf of Secured Parties, with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment. In so doing
Secured Party may, in the name and on behalf of Debtor, give to such co-agent
or separate agent indemnities and other protections similar to those provided
in Section 4.5.
ARTICLE V. - Miscellaneous
Section 5.1. Notices. Any notice or communication required or
permitted hereunder shall be given as provided in the Purchase Agreement.
Section 5.2. Amendments. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Debtor and
Secured Party, and no waiver of any provision of this Agreement, and no
consent to any departure by Debtor therefrom, shall be effective unless it is
in writing and signed by Secured Party, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given and to the extent specified in such writing.
Section 5.3. Preservation of Rights. No failure on the part of Secured
Party to exercise, and no delay in exercising, any right hereunder or under
any other Obligation Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution
nor the delivery of this Agreement shall in any manner impair or affect any
other security for the Secured Obligations. The rights and remedies of
Secured Party provided herein and in the other Obligation Documents are
cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by Law or otherwise. The rights of Secured Party under any
Obligation Document against any party thereto are not conditional or
contingent on any attempt by Secured Party to exercise any of its rights under
any other Obligation Document against such party or against any other Person.
Section 5.4. Unenforceability. 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 invalidity
without invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 5.5. Survival of Agreements. All representations and
warranties of all Debtor herein, and all covenants and agreements herein shall
survive the execution and delivery of this Agreement, the execution and
delivery of any other Obligation Documents and the creation of the Secured
Obligations.
Section 5.6. Other Liable Parties. Neither this Agreement nor the
exercise by Secured Party or the failure of Secured Party to exercise any
right, power or remedy conferred herein or by Law shall be construed as
relieving any Other Liable Party from liability on the Secured Obligations or
any deficiency thereon. This Agreement shall continue irrespective of the
fact that the liability of any Other Liable Party may have ceased or
irrespective of the validity or enforceability of any other Obligation
Document to which Debtor or any Other Liable Party may be a party, and
notwithstanding the reorganization, death, incapacity or bankruptcy of any
Other Liable Party, and notwithstanding the reorganization or bankruptcy or
other event or proceeding affecting any Other Liable Party.
Section 5.7. Binding Effect and Assignment. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on
Debtor and its successors and permitted assigns and (b) shall inure, together
with all rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and their respective successors, transferees and assigns, as
permitted by the Purchase Agreement. Without limiting the generality of the
foregoing, Secured Party may (except as otherwise provided in the Purchase
Agreement) pledge, assign or otherwise transfer any or all of their respective
rights under any or all of the Obligation Documents to any other Person, and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to Secured Party, herein or otherwise. None of the
rights or duties of Debtor hereunder may be assigned or otherwise transferred
without the prior written consent of Secured Party.
Section 5.8. Termination. It is contemplated by the parties hereto
that there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall
be in full force and effect as to subsequent outstanding Secured Obligations.
Upon the satisfaction in full of the Secured Obligations, upon the
termination or expiration of the Purchase Agreement and any other commitment
of Secured Party to extend credit to Borrower, and upon written request for
the termination hereof delivered by Borrower to Secured Party, this Agreement
and the security interest created hereby shall terminate and all rights to the
Collateral shall revert to Debtor. Secured Party will thereafter, upon
Debtor's request and at Debtor's expense, (a) return to Debtor such of the
Collateral in Secured Party's possession as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof; and (b) execute
and deliver to Debtor such documents as Debtor shall reasonably request to
evidence such termination.
Section 5.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE PRIORITY, PERFECTION AND
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
Section 5.10. "Note Document". This Agreement is a "Note Document", as
defined in the Purchase Agreement, and, except as expressly provided herein to
the contrary, this Agreement is subject to all provisions of the Purchase
Agreement governing such Note Documents.
IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered this Agreement by its officer thereunto duly authorized, as of the
date first above written.
NCI-SHAWNEE LIMITED PARTNERSHIP,
a Texas limited partnership
By: Future Petroleum Corporation,
a Texas corporation, General Partner
By: /s/ B. Xxxx Xxxxx
B. Xxxx Xxxxx, President
Address of Debtor:
0000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: 000-000-0000
FINANCING STATEMENT
This instrument is prepared and is intended to be a Financing Statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.
1a The name and address of the Debtor ("Debtor") is:
NCI-Shawnee Limited Partnership
0000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
2a The name and address of the secured parties ("Secured Party") are:
Energy Capital Investment Company PLC
c/o EnCap Investments L.C.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
EnCap Equity 1994 Limited Partnership
c/o EnCap Investments L.C.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
Gecko Booty 1994 I Limited Partnership
c/o EnCap Investments L.C.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
3a This Financing Statement covers the following types or items of
property (collectively, the "Collateral"):
All right, title and interest of Debtor in and to any and all of the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located:
(a) all Receivables.
(b) all General Intangibles.
(c) all Documents.
(d) all Instruments.
(e) all Inventory.
(f) all Equipment.
(g) All books and records (including 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 Debtor pertaining to any of the Collateral.
(h) All moneys and property of any kind of Debtor in the possession or
under the control of Secured Party.
(i) All Proceeds of any and all of the foregoing Collateral.
In each case, the foregoing shall be covered by this Agreement, whether
Debtor's ownership or other rights therein are presently held or hereafter
acquired and however Debtor's interests therein may arise or appear (whether
by ownership, security interest, claim or otherwise).
4a This Financing Statement is presented for filing to the Secretary of
State of Texas.
NCI-SHAWNEE LIMITED PARTNERSHIP,
a Texas limited partnership
By: Future Petroleum Corporation,
a Texas corporation, General Partner
By: /s/ B. Xxxx Xxxxx
B. Xxxx Xxxxx, President
