ASSET PLEDGE AGREEMENT
THIS ASSET PLEDGE AGREEMENT dated this 6th day of June, 2002, between U.S.
Crude, Ltd., a corporation organized under the laws of the State of Nevada ("US
Crude"); United States Crude International, Inc., a corporation organized under
the laws of the State of Nevada and a wholly-owned Subsidiary of US Crude
("USCU"); Equity Planners, LLC, Sea Lion Investors, LLC, and Myrtle Holdings,
LLC (collectively, the "Accredited Investors").
W I T N E S S E T H :
WHEREAS, an entity known as USCR Acquisition Corp. ("Acquisition Corp.")
and the Accredited Investors entered into that certain Subscription Agreement
dated August 1, 2001 (the "Subscription Agreement") pursuant to which
Acquisition Corp. issued to the Accredited Investors its $1,000,000.00 Senior
Subordinated Convertible Redeemable Debentures (the "Convertible Debentures"),
convertible, from time to time, into authorized but unissued shares of
Acquisition Corp. Common Stock;
WHEREAS, as a result of a Merger between US Crude and Acquisition Corp.,
the rights and obligations of Acquisition Corp. with respect to, and under the
Subscription Agreement and the Convertible Debentures enured to the benefit of
and became binding upon US Crude and the Accredited Investors;
WHEREAS, in order to avoid a default under the Subscription Agreement and
the Convertible Debentures, US Crude wished to provide the Accredited Investors
with enhanced security with respect to their investment in US Crude by
transferring its assets and liabilities to its wholly-owned Subsidiary, USCU,
pursuant to the Laws of the State of Nevada, in pledge to secure its
indebtedness to the Accredited Investors;
WHEREAS, US Crude has transferred its assets to USCU in pledge to secure
its indebtedness to the Accredited Investors; and
WHEREAS, USCU now wishes to pledge its assets (those formerly belonging to
US Crude) to the Accredited Investors to further secure the debt evidenced by
the Convertible Debentures.
N O W T H E R E F O R E ,
For good and valuable consideration, including a desire of all the Parties
to avoid a default under the Subscription Agreement and the Convertible
Debentures, US Crude and USCU agree as follows:
1. PLEDGE OF COLLATERAL.
USCU hereby pledges to the Accredited Investors and grants to the
Accredited Investors a security interest in all the assets ("the Pledged
Collateral") set forth in the USCU's Balance Sheet dated June __________, 2002
(the "Balance Sheet"), as security for the prompt performance of all of USCU's
obligations under the Subscription Agreement and the Convertible Debentures.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS.
USCU represents and warrants to and covenants with the Accredited Investors
that:
(a) Except as set forth in the Balance Sheet, the Pledged Collateral
is owned by USCU free and clear of any security interests, liens,
encumbrances, options or other restrictions created by USCU, except for the
security interest in favor of the Accredited Investors created hereby;
(b) USCU will not assign, create or permit to exist any other claim
to, lien or encumbrance upon, or security interest in any of the Pledged
Collateral; and
(c) The Pledged Collateral is not the subject of any present or
threatened suit, action, arbitration, administrative or other proceeding,
and USCU knows of no reasonable grounds for the institution of any such
proceedings.
3. EVENTS OF DEFAULT.
Each of the following shall constitute an event of default ("Event of
Default") hereunder:
(a) The occurrence of an Event of Default under the Subscription
Agreement or the Convertible Debentures; or
(b) The breach of any provision of this Agreement by USCU or the
failure by USCU to observe or perform any of the provisions of this
Agreement.
4. THE ACCREDITED INVESTORS'S REMEDIES UPON DEFAULT.
Upon the occurrence of an Event of Default, the Accredited Investors shall
have the right to exercise all such rights as a secured party under the Nevada
Uniform Commercial Code as they, in their sole judgment, shall deem necessary or
appropriate, including the right to liquidate the Pledged Collateral and apply
the proceeds thereof to reduce the principal amount outstanding under the
Subscription Agreement or the Convertible Debentures. After the disposal of any
of the Pledged Collateral, the Accredited Investors may deduct all reasonable
legal and other expenses and attorney's fees for protecting their interest and
enforcing their remedies under the Subscription Agreement or the Convertible
Debentures and this Agreement and shall apply the residue of the proceeds to, or
hold as a reserve against, the obligations of USCU under the Subscription
Agreement or the Convertible Debentures in such manner as the Accredited
Investors in their reasonable discretion shall determine, and shall pay the
balance, if any to USCU.
5. NOTICES.
(a) Any notice, request, instruction or other document required by the
terms of this Agreement to be given to any other Party hereto shall be in
writing and shall be given either
(i) by telephonic facsimile, in which case notice shall be
presumptively deemed to have been given at the date and time displayed on
the sender's transmission confirmation receipt showing the successful
receipt thereof by the recipient;
(ii) by hand delivery or Federal Express or other method in which the
date of delivery is recorded by the delivery service, in which case notice
shall be presumptively deemed to have been given at the time that records of
the delivery service indicate the writing was delivered to the addressee;
(iii) by prepaid telegram, in which case notice shall be
presumptively deemed to have been given at the time that the records of the
telegraphic agency indicate that the telegram was telephoned or delivered to
the recipient or addressee, as the case may be; or
(iv) by U.S. mail to be sent by registered or certified mail, postage
prepaid, with return receipt requested, in which case notice shall be
presumptively deemed to have been given forty-eight (48) hours after the letter
was deposited with the United States Postal Service.
(b) Notice shall be sent:
(i) If to the USCU, to:
Xxxx Xxxxxx, President
United States Crude International, Inc.
00000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx X
Xxxxxxx, Xx 00000
Telephone Number: (888) 872 - 7833
Facsimile Telephone Number: (909) 796 - 4048
with a copy (which shall not constitute notice) to:
Xxx X. Xxxxxxx, Xx., Esq.
0000 Xxxxx Xxxxxxx Xxxxx
Number 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (561) 659 - 1810
Facsimile Telephone Number: (561) 659 - 3888
(ii) If to the Accredited Investors, to:
Equity Planners LLC
Quadrant Center, 5445 DTC Parkway,
Penthouse Four
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Sea Lion Investors LLC
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
Myrtle Holdings LLC
000 Xxxxxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
(iii) or to such other address as a Party may have specified in
writing to the other Parties using the procedures specified above in this
Section.
6. APPLICABLE LAW; RESOLUTION OF DISPUTES; VENUE.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Colorado, without giving
effect to the, principles of conflicts of Law thereof.
(b) The Parties hereto irrevocably agree and consent that all disputes
concerning this Agreement or any claim or issue of any nature (whether brought
by the Parties hereto or by any other person whatsoever) arising from or
relating to this Agreement or to the corporate steps taken to enter into it
(including, without limitation, claims for alleged fraud, breach of fiduciary
duty, breach of contract, tort, etc.) which cannot be resolved within reasonable
time through discussions between the opposing entities, shall be resolved solely
and exclusively by means of arbitration to be conducted in the City of Denver,
Colorado, which arbitration will proceed in accordance with the rules of the
American Arbitration Association (or any successor organization thereto) then in
force for resolution of commercial disputes.
(c) The Arbitrators themselves shall have the right to determine and to
arbitrate the threshold issue of arbitrability itself, the decision of the
Arbitrators shall be final, conclusive, and binding upon the opposing entities,
and a judgment upon the award may be obtained and entered in any federal or
state court of competent jurisdiction.
(d) Each entity or Party involved in litigation or arbitration shall be
responsible for its own costs and expenses of any litigation or arbitration
proceeding, including its own attorney's fees (for any litigation, arbitration,
and any appeals).
7. JURISDICTION OF DISPUTES; WAIVER OF JURY TRIAL.
In the event any party to this Agreement commences any litigation,
proceeding or other legal action in connection with or relating to this
Agreement or any matters described or contemplated herein or therein, with
respect to any of the matters described or contemplated herein or therein, the
Parties to this Agreement hereby:
(a) agree as an alternative method of service to service of process in any
legal proceeding by mailing of copies thereof to such party at its address set
forth here in for communications to such party;
(b) agree that any service made as provided herein shall be effective and
binding service in every respect; and
(c) agree that nothing herein shall affect the rights of any party to
effect service of process in any other manner permitted by Law; and
EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN
CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY
MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE TO TAKE ANY AND
ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
8. WAIVERS.
(a) The failure of a Party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same.
(b) No waiver by a Party of any condition or of any breach of any term,
covenant, representation or warranty contained in this Agreement shall be
effective unless in writing, and no waiver in any one or more instances shall be
deemed to be a further or continuing waiver of any such condition or breach in
other instances or a waiver of any other condition or breach of any other term,
covenant, representation or warranty.
9. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and by
different Parties hereto in separate counterparts, each of which when so
executed shall be deemed an original, but all of which together shall constitute
one and the same instrument.
10. INTERPRETATION.
(a) The headings preceding the text of Articles and Sections included in
this Agreement and the headings to Exhibits attached to this Agreement are for
convenience only and shall not be deemed part of this Agreement or be given any
effect in interpreting this Agreement.
(b) The use of the masculine, feminine or neuter gender herein shall not
limit any provision of this Agreement. The use of the terms "including" or
"include" shall in all cases herein mean "including, without limitation" or
"include, without limitation", respectively.
(c) Underscored references to Articles, Sections, Subsections or Exhibits
shall refer to those portions of this Agreement.
(d) Consummation of the transactions contemplated herein shall not be
deemed a waiver of a breach of or inaccuracy in any representation, warranty or
covenant or of any party's rights and remedies with regard thereto.
(e) No specific representation, warranty or covenant contained herein
shall limit the generality or applicability of a more general representation,
warranty or covenant contained herein.
(f) A breach of or inaccuracy in any representation, warranty or covenant
shall not be affected by the fact that any more general or less general
representation, warranty or covenant was not also breached or inaccurate.
11. ASSIGNMENT.
(a) This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective estates, heirs, legal representatives,
successors and assigns.
(b) No assignment of any rights or obligations hereunder may be made by
the Plegor without the prior written consent of the Buyer.
(c) The Buyer may freely assign its rights and obligations hereunder
without the consent of the Seller or of the Accredited Investors, and upon such
assignment, the rights and obligations of the Buyer under this Agreement shall
be binding upon and inure to the benefit of the Buyer's Assignee or its
Successor in interest, as the case may be be.
12. SEVERABILITY.
If any provision of this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality or enforce ability of the other provisions
hereof shall not be affected thereby, and there shall be deemed substituted for
the provision at issue a valid, legal and enforceable provision as similar as
possible to the provision at issue.
13. REMEDIES CUMULATIVE.
Unless otherwise specified, the remedies provided in this, Agreement shall
be cumulative and shall not preclude the assertion or exercise of any other
rights or remedies available by law, in equity or otherwise.
14. ENTIRE UNDERSTANDING.
This Agreement and the Related Agreements set forth the entire agreement
and understanding of the Parties hereto and supersede any and all prior
agreements, arrangements and understandings among the Parties.
15. TIME OF ESSENCE.
Time is of the essence for the performance of all obligations set forth in
this Agreement.
16. SURVIVAL.
All covenants, representations and warranties made in this Agreement shall
continue in full force and effect so long as any Obligations remain outstanding.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
THE ACCREDITED INVESTORS:
Equity Planners, LLC
By: /s/ Xxxx Xxxxxxxxx
________________________
Principle
Sea Lion Investors, LLC
By: /s/ Xxxxx Xxxxx
________________________
Principle
Myrtle Holdings, LLC
By: /s/ Xxxxxx Xxxxxxx
________________________
Principle
US CRUDE:
U.S. Crude, Ltd.
By: /s/ Xxxxxxx Xxxxxx
___________________________
Xxxxxxx Xxxxxx, President
USCU:
United States Crude International, Inc.
By: /s/ Xxxxxxx Xxxxxx
___________________________
Xxxxxxx Xxxxxx, President
