SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (the "Agreement") is made effective as of the 16th
day of February, 2005, by and between XXXXXX PARTNERS, LP (the "Secured Party")
and XRG, INC., a Delaware corporation ("Debtor").
W I T N E S S E T H:
WHEREAS, Debtor wishes to grant Secured Party a security interest in all of
its assets, including without limitation, all contracts, equipment, inventory,
accounts receivable and general intangibles (collectively, "Collateral") to
secure payment of all loans, debts, liabilities and other obligations owed by
Debtor to Secured Party, including without limitation the loans evidenced by the
following Promissory Notes (the "Notes"):
(i) a Promissory Note in the face amount of $225,809.96, dated September
10, 2004;
(ii) a Promissory Note in the face amount of $166,275, dated October 1,
2004;
(iii)a Promissory Note in the face amount of $1,180,000, dated February
__, 2005.
All such loans, debts, notes, liabilities and indebtedness, including without
limitation the Notes, are referred to collectively herein as the "Obligations";
and
WHEREAS, Secured Party wishes to receive a security interest in the
Collateral to secure payment of the Note.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, the parties agree as follows:
1. Recitals. The above recitals are true and correct and are incorporated
herein.
2. Security Interest. Debtor hereby grants Secured Party a security
interest in the Collateral to secure payment of the Obligations. The Secured
Party shall have a continuing security interest in the Collateral including all
additions, replacements and proceeds thereof. Debtor hereby grants Secured Party
the right and authority to file a Form UCC-1 Financing Statement evidencing the
security interest granted herein without notice to or signature of Debtor. In
addition, Debtor covenants and agrees that to the extent Secured Party
facilitates a refinancing or takeout of any of the Debtor's existing equipment
financing obligations or the equipment financing obligations of the Debtor's
subsidiaries, then the Debtor shall take all necessary actions to perfect the
security interest of the Secured Party in such tractor/trailers or equipment
through the filing of appropriate Form UCC-1 Financing Statements, appropriate
notation on the titles of such equipment and shall grant Secured Party
possession of such titles to evidence Secured Party's security interest and lien
upon such motor vehicle tractors and trailers.
3. Inspection of Records. Debtor shall permit Secured Party and its agents
to inspect, examine, make extracts or copies of Debtor's financial records at
all reasonable times without prior advance notice. Debtor shall furnish to
Secured Party and its agents any additional information Secured Party may
reasonably request. Debtor shall cooperate with Secured Party and its agents and
honor all reasonable requests of Secured Party and its agents in effecting the
inspection described above.
4. Cooperation. Debtor shall, at its expense, execute all documents and do
all such other acts as Secured Party may reasonably request in order to perfect
Secured Party's security interest hereunder, including executing and paying
filing fees for any UCC-1 Financing Statements.
5. Representations and Warranties. Debtor represents and warrants that (i)
it is the sole owner of the Collateral; (ii) it has full power and authority to
execute this Agreement; (iii) it shall keep the Collateral fully insured; (iv)
it shall not transfer or otherwise dispose of the Collateral except in the
ordinary course of Debtor's business; and (v) it shall not do anything to impair
the value of the Collateral or the security interest granted hereunder.
6. Events of Default. Any of the following shall constitute an event of
default:
(1) Default by Debtor under the Obligations or any of the Notes;
(2) Failure of Debtor to pay when due, any tax or insurance premium in
respect of the Collateral;
(3) Any breach by Debtor hereof;
(4) The dissolution of Debtor;
(5) The filing of any insolvency proceeding in which Debtor is named as
the insolvent party.
7. Remedies. Upon an event of default, Secured Party may, declare any
outstanding indebtedness under the Obligations, including any of the Notes, to
be immediately due and payable. Secured Party may take immediate possession of
the Collateral, and Debtor hereby grants Secured Party an irrevocable license to
enter upon the premises of Debtor to take possession of any of the Collateral.
Additionally, Secured Party shall have available to it all other rights and
remedies at law including the Uniform Commercial Code as adopted in New York, or
in equity.
8. Waivers. Debtor expressly; (i) waives notice of default; (ii) consents
that the time for all payments under the Obligations, including the Notes, may
be extended by Secured Party and further consent that any Collateral or any part
thereof may be released by Secured Party without in any way modifying, altering,
releasing, effecting or limiting the liability of Debtor.
9. Attorneys' Fees. Debtor hereby agrees to pay all costs of Secured Party
in enforcing Secured Party's rights hereunder, including without limitation, all
attorneys' fees and costs of appeal.
10. Miscellaneous.
a. This Agreement shall be construed in accordance with the laws of the
State of New York.
b. This Agreement contains the entire understanding between the parties and
no modification hereof shall be valid unless in writing and signed by the
parties.
c. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed as of the day and year first above written.
SECURED PARTY:
WITNESSES: XXXXXX PARTNERS, LP
By:
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Name:
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Title:
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DEBTOR:
WITNESSES: XRG, INC., a Delaware corporation
By:
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Name:
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Title:
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MTC/cam/336773v2
