SECURITY AGREEMENT
EXHIBIT
99.6
THIS
SECURITY AGREEMENT
(the
“Agreement”), is
entered into and made effective as of March 31, 2006, by and between
BARNABUS
ENERGY, INC., a
Nevada
corporation with its principal place of business located at 000 Xxx xx xx Xxxxx
- Xxxxx 000 Xxxxxx Xxxxx, XX 00000 (the “Company”),
and
the BUYER
listed
on Schedule I attached to the Securities Purchase Agreement dated March 30,
2006 (the
“Secured
Party”).
WHEREAS,
the
Company shall issue and sell to the Secured Party, as provided in the Securities
Purchase Agreement dated March 30, 2006 between the Company and the Secured
Party (the “Securities
Purchase Agreement”),
and
the Secured Party shall purchase up to Fifteen Million Dollars ($15,000,000)
of
secured convertible debentures (the “Convertible
Debentures”),
which
shall be convertible into shares of the Company’s common stock, par value $0.001
(the “Common
Stock”)
(as
converted, the “Conversion
Shares”)
in the
respective amounts set forth opposite each Buyer(s) name on Schedule I
attached to the Securities Purchase Agreement;
WHEREAS,
to
induce
the Secured Party to enter into the transaction contemplated by the Securities
Purchase Agreement, the Convertible Debentures, the Investor Registration Rights
Agreement of even date herewith between the Company and the Secured Party (the
“Investor
Registration Rights Agreement”),
the
Pledge and Escrow Agreement of even date herewith among the Company, the Secured
Party and Xxxxx Xxxxxxxx, Esq. (the “Pledge
Agreement”),
and
the Irrevocable Transfer Agent Instructions among the Company, the Secured
Party, Madison Stock Transfer, Inc., and Xxxxx Xxxxxxxx, Esq. (the “Transfer
Agent Instructions”)
(collectively referred to as the “Transaction
Documents”),
the
Company hereby grants to the Secured Party a security interest in and to the
pledged property identified on Exhibit
A
hereto
(collectively referred to as the “Pledged
Property”)
until
the satisfaction of the Obligations, as defined herein below.
NOW,
THEREFORE, in
consideration of the promises and the mutual covenants herein contained, and
for
other good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE
1.
DEFINITIONS
AND INTERPRETATIONS
Section
1.1. Recitals.
The
above
recitals are true and correct and are incorporated herein, in their entirety,
by
this reference.
Section
1.2. Interpretations.
Nothing
herein expressed or implied is intended or shall be construed to confer upon
any
person other than the Secured Party any right, remedy or claim under or by
reason hereof.
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Section
1.3. Obligations
Secured.
The
obligations secured hereby are any and all obligations of the Company now
existing or hereinafter incurred to the Secured Party, whether oral or written
and whether arising before, on or after the date hereof including, without
limitation, those obligations of the Company to the Secured Party under this
Agreement, the Transaction Documents, and any other amounts now or hereafter
owed to the Secured Party by the Company thereunder or hereunder (collectively,
the “Obligations”).
ARTICLE
2.
PLEDGED
PROPERTY, ADMINISTRATION OF COLLATERAL
AND
TERMINATION OF SECURITY INTEREST
Section
2.1. Pledged
Property.
(a) Company
hereby pledges to the Secured Party, and creates in the Secured Party for its
benefit, subject to security interests to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings, commercial property lease transactions
or
similar transactions,
a
security interest until such time as the Obligations are paid in full, in and
to
all of the property of the Company as set forth in Exhibit “A”
attached
hereto and the products thereof and the proceeds of all such items
(collectively, the “Pledged
Property”):
(b) Simultaneously
with the execution and delivery of this Agreement, the Company shall make,
execute, acknowledge, file, record and deliver to the Secured Party any
documents reasonably requested by the Secured Party to perfect its security
interest in the Pledged Property. Simultaneously with the execution and delivery
of this Agreement, the Company shall make, execute, acknowledge and deliver
to
the Secured Party such documents and instruments, including, without limitation,
financing statements, certificates, affidavits and forms as may, in the Secured
Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or
to continue and preserve, the security interest of the Secured Party in the
Pledged Property, and the Secured Party shall hold such documents and
instruments as secured party, subject to the terms and conditions contained
herein.
Section
2.2. Rights;
Interests; Etc.
(a) So
long
as no Event of Default (as hereinafter defined) shall have occurred and be
continuing:
(i) the
Company shall be entitled to exercise any and all rights pertaining to the
Pledged Property or any part thereof for any purpose not inconsistent with
the
terms hereof; and
(ii) the
Company shall be entitled to receive and retain any and all payments paid or
made in respect of the Pledged Property.
(b) Upon
the
occurrence and during the continuance of an Event of Default:
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(i) All
rights of the Company to exercise the rights which it would otherwise be
entitled to exercise pursuant to Section 2.2(a)(i) hereof and to
receive payments which it would otherwise be authorized to receive and retain
pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such
rights shall thereupon become vested in the Secured Party who shall thereupon
have the sole right to exercise such rights and to receive and hold as Pledged
Property such payments; provided,
however,
that if
the Secured Party shall become entitled and shall elect to exercise its right
to
realize on the Pledged Property pursuant to Article 5 hereof, then all cash
sums received by the Secured Party, or held by Company for the benefit of the
Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof,
shall be applied against any outstanding Obligations; and
(ii) All
interest, dividends, income and other payments and distributions which are
received by the Company contrary to the provisions of
Section 2.2(b)(i) hereof shall be received in trust for the benefit of
the Secured Party, shall be segregated from other property of the Company and
shall be forthwith paid over to the Secured Party; or
(iii) The
Secured Party in its sole discretion shall be authorized to sell
any
or all of the Pledged Property at public or private sale in order to recoup
all
of the outstanding principal plus accrued interest owed pursuant to the
Convertible Debenture as described herein
(c) An
“Event
of Default”
shall
be deemed to have occurred under this Agreement upon an Event of Default under
the Convertible Debentures provided
that the Company shall not have cured such Event of Default within the time
prescribed in the Convertible Debentures.
.
ARTICLE
3.
ATTORNEY-IN-FACT;
PERFORMANCE
Section
3.1. Secured
Party Appointed Attorney-In-Fact.
Upon
the
occurrence of and during the continuance of an Event of Default, the Company
hereby appoints the Secured Party as its attorney-in-fact, with full authority
in the place and stead of the Company and in the name of the Company or
otherwise, from time to time in the Secured Party’s discretion to take any
action and to execute any instrument which the Secured Party may reasonably
deem
necessary to accomplish the purposes of this Agreement, including, without
limitation, to receive and collect all instruments made payable to the Company
representing any payments in respect of the Pledged Property or any part thereof
and to give full discharge for the same. The Secured Party may demand, collect,
receipt for, settle, compromise, adjust, xxx for, foreclose, or realize on
the
Pledged Property as and when the Secured Party may determine. To facilitate
collection, the Secured Party may notify account debtors and obligors on any
Pledged Property to make payments directly to the Secured Party.
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Section
3.2. Secured
Party May Perform.
If
the
Company fails to perform any agreement contained herein, the Secured Party,
at
its option, may itself perform, or cause performance of, such agreement, and
the
expenses of the Secured Party incurred in connection therewith shall be included
in the Obligations secured hereby and payable by the Company under
Section 8.3.
ARTICLE
4.
REPRESENTATIONS
AND WARRANTIES
Section
4.1. Authorization;
Enforceability.
Each
of
the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery,
this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.
Section
4.2. Ownership
of Pledged Property.
The
Company warrants and represents that it is the legal and beneficial owner of
the
Pledged Property free and clear of any lien, security interest, option or other
charge or encumbrance except for the security interest created by this Agreement
other than existing liens incurred in the ordinary course of business and
purchase money security interest.
ARTICLE
5.
DEFAULT;
REMEDIES; SUBSTITUTE COLLATERAL
Section
5.1. Default
and Remedies.
(a) If
an
Event of Default occurs and is continuing , then in each such case the Secured
Party may declare the Obligations to be due and payable immediately, by a notice
in writing to the Company, and upon any such declaration, the Obligations shall
become immediately due and payable.
(b) Upon
the
occurrence and during the continuance of an Event of Default, the Secured Party
shall: (i) be entitled to receive all distributions with respect to the
Pledged Property, (ii) to cause the Pledged Property to be transferred into
the name of the Secured Party or its nominee, (iii) to dispose of the
Pledged Property, and (iv) to realize upon any and all rights in the
Pledged Property then held by the Secured Party.
Section
5.2. Method
of Realizing Upon the Pledged Property: Other Remedies.
Upon
the
occurrence and during the continuance of an Event of Default that is not cured
within the time prescribed, in addition to any rights and remedies available
at
law or in equity, the following provisions shall govern the Secured Party’s
right to realize upon the Pledged Property:
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(a) Any
item
of the Pledged Property may be sold for cash or other value in any number of
lots at brokers board, public auction or private sale and may be sold without
demand, advertisement or notice (except that the Secured Party shall give the
Company ten (10) days’ prior written notice of the time and place or
of the time after which a private sale may be made (the “Sale
Notice”)),
which notice period is hereby agreed to be commercially reasonable. At any
sale
or sales of the Pledged Property, the Company may bid for and purchase the
whole
or any part of the Pledged Property and, upon compliance with the terms of
such
sale, may hold, exploit and dispose of the same without further accountability
to the Secured Party. The Company will execute and deliver, or cause to be
executed and delivered, such instruments, documents, assignments, waivers,
certificates, and affidavits and supply or cause to be supplied such further
information and take such further action as the Secured Party reasonably shall
require in connection with any such sale.
(b) Any
cash
being held by the Secured Party as Pledged Property and all cash proceeds
received by the Secured Party in respect of, sale of, collection from, or other
realization upon all or any part of the Pledged Property shall be applied as
follows:
(i) to
the
payment of all amounts due the Secured Party for the expenses reimbursable
to it
hereunder or owed to it pursuant to Section 8.3 hereof;
(ii) to
the
payment of the Obligations then due and unpaid.
(iii) the
balance, if any, to the person or persons entitled thereto, including, without
limitation, the Company.
(c) In
addition to all of the rights and remedies which the Secured Party may have
pursuant to this Agreement, the Secured Party shall have all of the rights
and
remedies provided by law, including, without limitation, those under the Uniform
Commercial Code.
(i) If
the
Company fails to pay such amounts due upon the occurrence of an Event of Default
which is continuing, then the Secured Party may institute a judicial proceeding
for the collection of the sums so due and unpaid, may prosecute such proceeding
to judgment or final decree and may enforce the same against the Company and
collect the monies adjudged or decreed to be payable in the manner provided
by
law out of the property of Company, wherever situated.
(ii) The
Company agrees that it shall be liable for any reasonable fees, expenses and
costs incurred by the Secured Party in connection with enforcement, collection
and preservation of the Transaction Documents, including, without limitation,
reasonable legal fees and expenses, and such amounts shall be deemed included
as
Obligations secured hereby and payable as set forth in Section 8.3
hereof.
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Section
5.3. Proofs
of Claim.
In
case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or the property of the Company, the Secured
Party (irrespective of whether the Obligations shall then be due and payable
as
therein expressed or by declaration or otherwise and irrespective of whether
the
Secured Party shall have made any demand on the Company for the payment of
the
Obligations), shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(i) to
file
and prove a claim for the whole amount of the Obligations and to file such
other
papers or documents as may be necessary or advisable in order to have the claims
of the Secured Party (including any claim for the reasonable legal fees and
expenses and other expenses paid or incurred by the Secured Party permitted
hereunder and of the Secured Party allowed in such judicial proceeding),
and
(ii) to
collect and receive any monies or other property payable or deliverable on
any
such claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by the Company to make such payments to the
Secured Party and, in the event that the Secured Party shall consent to the
making of such payments directed to the Secured Party, to pay to the Secured
Party any amounts for expenses due it hereunder.
Section
5.4. Duties
Regarding Pledged Property.
The
Secured Party shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Pledged Property actually in the Secured Party’s possession.
ARTICLE
6.
AFFIRMATIVE
COVENANTS
The
Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied, unless the Secured Party shall
consent otherwise in writing (as provided in Section 8.4
hereof):
Section
6.1. Existence,
Properties, Etc.
(a) The
Company shall do, or cause to be done, all things, or proceed with due diligence
with any actions or courses of action, that may be reasonably necessary
(i) to maintain Company’s due organization, valid existence and good
standing under the laws of its present state of incorporation or any state
into
which the Company may reincorporate, and (ii) to preserve and keep in full
force and effect all qualifications, licenses and registrations in those
jurisdictions in which the failure to do so could have a Material Adverse Effect
(as defined below); and (b) the Company shall not do, or cause to be done,
any act impairing the Company’s corporate power or authority (i) to carry
on the Company’s business as now conducted, and (ii) to execute or deliver
this Agreement or any other document delivered in connection herewith,
including, without limitation, any UCC-1 Financing Statements required by the
Secured Party to which it is or will be a party, or perform any of its
obligations hereunder or thereunder. For purpose of this Agreement, the term
“Material
Adverse Effect”
shall
mean any material and adverse affect as determined by Secured Party in its
sole
discretion, whether individually or in the aggregate, upon (a) the
Company’s assets, business, operations, properties or condition, financial or
otherwise; (b) the Company’s ability to make payment as and when due of all
or any part of the Obligations; or (c) the Pledged Property. The
Secured Party acknowledges that such information is confidential and shall
be
held as such solely for purposes of the administration of this
Agreement.
-6-
Section
6.2. Accounts
and Reports.
The
Company shall maintain a standard system of accounting in accordance with
generally accepted accounting principles consistently applied and provide,
at
its sole expense, to the Secured Party the following:
(b) as
soon
as available, a copy of any notice or other communication alleging any
nonpayment or other material breach or default, or any foreclosure or other
action respecting any material portion of its assets and properties, received
respecting any of the indebtedness of the Company in excess of $100,000 (other
than the Obligations), or any demand or other request for payment under any
guaranty, assumption, purchase agreement or similar agreement or arrangement
respecting the indebtedness or obligations of others in excess of $100,000,
including any received from any person acting on behalf of the Secured Party
or
beneficiary thereof; and
(c) within
fifteen (15) days after the making of each submission or filing, a copy of
any report, financial statement, notice or other document, whether periodic
or
otherwise, submitted to the shareholders of the Company, or submitted to or
filed by the Company with any governmental authority involving or affecting
in a
material manner (i) the Company that could have a Material Adverse Effect;
(ii) the Obligations; (iii) any part of the Pledged Property; or
(iv) any of the transactions contemplated in this Agreement or the Loan
Instruments.
Section
6.3. Maintenance
of Books and Records; Inspection.
The
Company shall maintain its books, accounts and records in accordance with
generally accepted accounting principles consistently applied, and permit the
Secured Party, its officers and employees and any professionals designated
by
the Secured Party in writing, at reasonable times mutually agreed upon by the
parties to visit and inspect any of its properties (including but not limited
to
the collateral security described in the Transaction Documents and/or the Loan
Instruments), corporate books and financial records, and to discuss its
accounts, affairs and finances with any employee, officer or director
thereof.
-7-
Section
6.4. Maintenance
and Insurance.
(d) The
Company shall maintain or cause to be maintained, at its own expense, all of
its
assets and properties in good working order and condition, making all necessary
repairs thereto and renewals and replacements thereof.
(e) The
Company shall maintain or cause to be maintained, at its own expense, insurance
in form, substance and amounts (including deductibles), which the Company deems
reasonably necessary to the Company’s business, (i) adequate to insure all
assets and properties of the Company, which assets and properties are of a
character usually insured by persons engaged in the same or similar business
against loss or damage resulting from fire or other risks included in an
extended coverage policy; (ii) against public liability and other tort
claims that may be incurred by the Company; (iii) as may be required by the
Transaction Documents and/or applicable law and (iv) as may be reasonably
requested by Secured Party, all with adequate, financially sound and reputable
insurers.
Section
6.5. Contracts
and Other Collateral.
The
Company shall perform in all material all of its obligations under or with
respect to each instrument, receivable, contract and other intangible property
included in the Pledged Property to which the Company is now or hereafter a
party on a timely basis and in the manner therein required, except where such
failure to perform any obligation would not result in a Material Adverse
Effect.
Section
6.6. Defense
of Collateral, Etc.
The
Company shall defend and enforce its right, title and interest in and to any
part of: (a) the Pledged Property; and (b) if not included within the
Pledged Property, those assets and properties whose loss could have a Material
Adverse Effect, the Company shall defend the Secured Party’s right, title and
interest in and to each and every part of the Pledged Property, each against
all
manner of claims and demands on a timely basis to the full extent permitted
by
applicable law except where such failure to defend or enforce would not result
in a Material Adverse Effect.
Section
6.7. Payment
of Debts, Taxes, Etc.
The
Company shall pay, or cause to be paid, all of its indebtedness and other
liabilities and perform, or cause to be performed, all of its obligations in
accordance with the respective terms thereof, and pay and discharge, or cause
to
be paid or discharged, all taxes, assessments and other governmental charges
and
levies imposed upon it, upon any of its assets and properties on or before
the
last day on which the same may be paid without penalty, as well as pay all
other
lawful claims (whether for services, labor, materials, supplies or
otherwise) as and when due except for such taxes, claims or other charges
being contested in good faith or where such failure to pay, perform or discharge
would not result in a Material Adverse Effect.
-8-
Section
6.8. Taxes
and Assessments; Tax Indemnity.
The
Company shall (a) file all tax returns and appropriate schedules thereto
that are required to be filed under applicable law, prior to the date of
delinquency, (b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon the Company, upon its income and profits or
upon
any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or
levies that, if unpaid, might become a lien or charge upon any of its
properties; provided,
however,
that
the Company in good faith may contest any such tax, assessment, governmental
charge or levy described in the foregoing clauses (b) and (c) so long as
appropriate reserves are maintained with respect thereto.
Section
6.9. Compliance
with Law and Other Agreements.
The
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (a) all applicable federal, state
and local laws, regulations and ordinances governing such business operations
and the use and ownership of such property, and (b) all agreements,
licenses, franchises, indentures and mortgages to which the Company is a party
or by which the Company or any of its properties is bound. Without limiting
the
foregoing, the Company shall pay all of its indebtedness promptly in accordance
with the terms thereof except where such failure to comply would not result
in a
Material Adverse Effect.
Section
6.10. Notice
of Default.
The
Company shall give written notice to the Secured Party of the occurrence of
any
default or Event of Default under this Agreement, the Transaction Documents
or
any other Loan Instrument or any other agreement of Company for the payment
of
money, promptly upon the occurrence thereof.
Section
6.11. Notice
of Litigation.
The
Company shall give notice, in writing, to the Secured Party of (a) any
actions, suits or proceedings wherein the amount at issue is in excess of
$100,000, instituted by any persons against the Company, or affecting any of
the
assets of the Company, and (b) any dispute, not resolved within fifteen
(15) days of the commencement thereof, between the Company on the one hand
and
any governmental or regulatory body on the other hand, which might reasonably
be
expected to have a Material Adverse Effect on the business operations or
financial condition of the Company.
ARTICLE
7.
NEGATIVE
COVENANTS
The
Company covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, the Company shall not, unless the Secured
Party shall consent otherwise in writing:
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Section
7.1. Indebtedness.
Other
than Permitted Indebtedness, the Company shall not directly or indirectly
permit, create, incur, assume, permit to exist, increase, renew or extend on
or
after the date hereof any indebtedness on its part, including commitments,
contingencies and credit availabilities, or apply for or offer or agree to
do
any of the foregoing. “Permitted Indebtedness” shall mean: (1) indebtedness of
the Company and its subsidiaries existing on the date hereof; (2) intercompany
indebtedness; (3) indebtedness incurred in the ordinary course of business
by
the Company or its subsidiaries including trade payables, revolving credit
card
accounts and similar credit arrangements; (4) indebtedness of the Company or
any
subsidiary to financial institutions or lessors in connection with commercial
credit arrangements, equipment financings, commercial property lease
transactions or similar transactions (including without limitation, Designated
Senior Indebtedness); (5) indebtedness of any entity existing at the time such
entity becomes a subsidiary of the Company, including by way of merger or
consolidation into or with the Company or any subsidiary; and (6) indebtedness
to finance an acquisition, with the prior written consent of the Secured Party,
which consent shall not be unreasonably be withheld, provided such acquisition
is of assets or a business which is synergistic with the business of the
Company, and if secured, is only secured by the assets acquired.
Section
7.2. Liens
and Encumbrances.
Other
than Permitted Liens , the Company shall not directly or indirectly make,
create, incur, assume or permit to exist any assignment, transfer, pledge,
mortgage, security interest or other lien or encumbrance of any nature in,
to or
against any part of the Pledged Property or of the Company’s capital stock, or
offer or agree to do so, or own or acquire or agree to acquire any asset or
property of any character subject to any of the foregoing encumbrances
(including any conditional sale contract or other title retention agreement),
or
assign, pledge or in any way transfer or encumber its right to receive any
income or other distribution or proceeds from any part of the Pledged Property
or the Company’s capital stock; or enter into any sale-leaseback financing
respecting any part of the Pledged Property as lessee, or cause or assist the
inception or continuation of any of the foregoing. “Permitted Liens” shall mean:
(1) liens for taxes, assessments and other government charges or levies not
yet
due or being contested in good faith; (2) liens imposed by law which were
incurred in the ordinary course of business, such as carriers', warehousemen's
and mechanic's liens, statutory landlord's liens, and other similar liens
arising in the ordinary course of business; (3) liens that are junior to that
of
the Secured Party; and (4) liens securing Permitted
Indebtedness.
Section
7.3. Certificate
of Incorporation, By-Laws, Mergers, Consolidations, Acquisitions and
Sales.
Without
the prior express written consent of the Secured Party, which consent shall
not
be unreasonably withheld or delayed the Company shall not: (a) Amend its
Certificate of Incorporation or By-Laws in a manner that is adverse to the
Secured Party; (b) be a party to any merger, consolidation or corporate
reorganization that is a Change of Control Transaction under the Convertible
Debentures, (c) sell, transfer, convey, grant a security interest in or
lease all or any substantial part of its assets, in each case except for liens
junior to that of the Secured Party and permitted Liens nor (d) create any
subsidiaries nor convey any of its assets to any subsidiary unless
the stock or membership interests of such subsidiary are pledged to the Secured
Party.
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Section
7.4. Management.
The
Company shall not materially change its executive staff or management (other
than changes resulting from resignations) without the prior written consent
of
the Secured Party which consent shall be unreasonably withheld or delayed.
The
ownership, executive staff and management of the Company are material factors
in
the Secured Party's willingness to institute and maintain a lending relationship
with the Company.
Section
7.5. Dividends,
Etc.
The
Company shall not declare or pay any dividend of any kind, in cash or in
property, on any class of its capital stock, nor purchase, redeem, retire or
otherwise acquire for value any shares of such stock, nor make any distribution
of any kind in respect thereof, nor make any return of capital to shareholders,
without the prior written consent of the Secured Party. This Section 7.5 shall
not apply to the transactions pursuant to or contemplated by the Solar Purchase
Agreement and the CRE Merger Agreement or related documents and
agreements.
Section
7.6. Guaranties;
Loans.
Other
than as permitted herein and in the Transaction Documents ,the Company shall
not
guarantee nor be liable in any manner, whether directly or indirectly, or become
contingently liable after the date of this Agreement in connection with the
obligations or indebtedness of any person or persons, except for (i) the
indebtedness currently secured by the liens identified on the Pledged Property
identified on Exhibit A hereto, (ii) the endorsement of negotiable instruments
payable to the Company for deposit or collection in the ordinary course of
business and (iii) guaranties of Permitted Indebtedness. The Company shall
not
make any loan, advance or extension of credit to any person .(other
than any subsidiary) other than in the normal course of its business. This
Section 7.6 shall not apply to the transactions pursuant to or contemplated
by
the Solar Purchase Agreement and the CRE Merger Agreement or related documents
and agreements
.
Section
7.7. Conduct
of Business.
The
Company will continue to engage, in an efficient and economical manner, in
a
business of the same general type as conducted by it on the date of this
Agreement
including the businesses proposed to be acquired by the Company pursuant to
the
Solar Purchase Agreement and CRE Merger
Agreement.
Section
7.8. Places
of Business.
The
location of the Company’s chief place of business is 514 Xxx xx xx Xxxxx - Xxxxx
000 Xxxxxx Xxxxx, XX 00000. The Company shall not change the location of its
chief place of business, chief executive office or any place of business
disclosed to the Secured Party or move any of the Pledged Property from its
current location without thirty (30) days' prior written notice to the Secured
Party in each instance.
-11-
ARTICLE
8.
MISCELLANEOUS
Section
8.1. Notices.
All
notices or other communications required or permitted to be given pursuant
to
this Agreement shall be in writing and shall be considered as duly given on:
(a) the date of delivery, if delivered in person, by nationally recognized
overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same:
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If
to the Secured Party:
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Cornell
Capital Partners, LP
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000
Xxxxxx Xxxxxx-Xxxxx 0000
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Xxxxxx
Xxxx, Xxx Xxxxxx 00000
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Attention: Xxxx
Xxxxxx
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Portfolio
Manager
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Telephone: (000)
000-0000
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Facsimile: (000)
000-0000
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With
a copy to:
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Xxxxx
Xxxxxxxx, Esq.
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000
Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxx
Xxxx, XX 00000
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Telephone: (000)
000-0000
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Facsimile: (000)
000-0000
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And
if to the Company:
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Barnabus
Energy Inc.
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000
Xxx xx xx Xxxxx - Xxxxx 000
|
|
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Xxxxxx
Xxxxx, Xx 00000
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Attention:
Xxxxx Xxxxxxx
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Telephone: (000)
000-0000
|
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Facsimile: (000)
000-0000
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With
a copy to:
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Sheppard,
Mullin, Xxxxxxx & Xxxxxxx LLP
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00000
Xxxx Xxxxx Xxxxx, Xxxxx 000
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Xxx
Xxxxx, XX 00000
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Attention:
Xxxx X. Xxxxxxx, Esq.
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Telephone:
000-000-0000
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Facsimile:
000-000-0000
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Any
party
may change its address by giving notice to the other party stating its new
address. Commencing on the tenth (10th) day
after the giving of such notice, such newly designated address shall be such
party’s address for the purpose of all notices or other communications required
or permitted to be given pursuant to this Agreement.
-12-
Section
8.2. Severability.
If
any
provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall
not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if
any
such invalid or unenforceable provision were not contained herein.
Section
8.3. Expenses.
In
the
event of an Event of Default, the Company will pay to the Secured Party the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel, which the Secured Party may incur in connection with:
(i) the custody or preservation of, or the sale, collection from, or other
realization upon, any of the Pledged Property; (ii) the exercise or
enforcement of any of the rights of the Secured Party hereunder or
(iii) the failure by the Company to perform or observe any of the
provisions hereof.
Section
8.4. Waivers,
Amendments, Etc.
The
Secured Party’s delay or failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants
shall
not waiver, affect, or diminish any right of the Secured Party under this
Agreement to demand strict compliance and performance herewith. Any waiver
by
the Secured Party of any Event of Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto
and whether of the same or a different type. None of the undertakings,
agreements and covenants of the Company contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the Secured Party,
nor
may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing
specifying such waiver, amendment, change or modification and signed by the
Secured Party.
Section
8.5. Continuing
Security Interest.
This
Agreement shall create a continuing security interest in the Pledged Property
and shall: (i) remain in full force and effect until payment in full of the
Obligations; and (ii) be binding upon the Company and its successors and
heirs and (iii) inure to the benefit of the Secured Party and its
successors and assigns. Upon the payment or satisfaction in full of the
Obligations, the Company shall be entitled to the return, at its expense, of
such of the Pledged Property as shall not have been sold in accordance with
Section 5.2 hereof or otherwise applied pursuant to the terms
hereof.
Section
8.6. Independent
Representation.
Each
party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that
it
has been sufficiently apprised of its rights and responsibilities with regard
to
the substance of this Agreement.
-13-
Section
8.7. Applicable
Law: Jurisdiction.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in Xxxxxx
County, New Jersey, and expressly consent to the jurisdiction and venue of
the
Superior Court of New Jersey, sitting in Xxxxxx County and the United States
District Court for the District of New Jersey sitting in Newark, New Jersey
for
the adjudication of any civil action asserted pursuant to this
Paragraph.
Section
8.8. Waiver
of Jury Trial.
AS
A
FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.
Section
8.9. Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties and supersedes
any
prior agreement or understanding among them with respect to the subject matter
hereof.
Section
8.10 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute the same
instrument.
Section
8.11 Subordination.
Notwithstanding
anything to the contrary herein, the liens established by this Agreement shall
be subordinate to the liens securing Designated Senior Indebtedness. Upon the
reasonable request of the Company, the Secured Party agrees to execute and
deliver subordination agreements and/or intercreditor agreements in the forms
requested from time to time by the holders of Designated Senior Indebtedness.
“Designated Senior Indebtedness” shall
mean one (1) or more senior loans (revolving or otherwise), for purposes other
than to raise equity capital, from one (1) or more financial institutions to
the
Obligor and/or its subsidiaries in connection with commercial credit
arrangements, equipment financings, commercial property lease transactions
or
similar transactions, the principal amount of which does not exceed $5,000,000
in the aggregate.
-14-
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-15-
IN
WITNESS WHEREOF, the
parties hereto have executed this Security Agreement as of the date first above
written.
|
COMPANY:
|
|
|
By:
/s/
Xxxxx
Xxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
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SECURED
PARTY:
|
|
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CORNELL
CAPITAL PARTNERS, LP
|
|
|
By: Yorkville
Advisors, LLC
|
|
|
Its: General
Partner
|
|
|
By:
/s/
Xxxx
Xxxxxx
|
|
|
Name: Xxxx
Xxxxxx
|
|
|
Title: Portfolio
Manager
|
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-16-
EXHIBIT
A
DEFINITION
OF PLEDGED PROPERTY
For
the
purpose of securing prompt and complete payment and performance by the Company
of all of the Obligations, the Company unconditionally and irrevocably hereby
grants to the Secured Party a continuing security interest in and to, and lien
upon, the following Pledged Property of the Company:
(a) all
goods
of the Company, including, without limitation, machinery, equipment, furniture,
furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles
of every kind and description, now or hereafter owned by the Company or in
which
the Company may have or may hereafter acquire any interest, and all
replacements, additions, accessions, substitutions and proceeds thereof, arising
from the sale or disposition thereof, and where applicable, the proceeds of
insurance and of any commercial tort claims involving any of the
foregoing;
(b) all
inventory of the Company, including, but not limited to, all goods, wares,
merchandise, parts, supplies, finished products, other tangible personal
property, including such inventory as is temporarily out of Company’s custody or
possession and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any
of
the foregoing;
(c) all
contract rights and general intangibles of the Company, including, without
limitation, goodwill, trademarks, trade styles, trade names, leasehold
interests, partnership or joint venture interests, patents and patent
applications, copyrights, deposit accounts whether now owned or hereafter
created;
(d) all
documents, warehouse receipts, instruments and chattel paper of the Company
whether now owned or hereafter created;
(e) all
accounts and other receivables, instruments or other forms of obligations and
rights to payment of the Company (herein collectively referred to as
“Accounts”),
together with the proceeds thereof, the Company’s interest in all goods
represented by such Accounts and all such goods that may be returned by the
Company’s customers, and all proceeds of any insurance thereon, and all
guarantees, securities and liens which the Company may hold for the payment
of
any such Accounts including, without limitation, all rights of stoppage in
transit, replevin and reclamation and as an unpaid vendor and/or lienor, all
of
which the Company represents and warrants will be bona fide and existing
obligations of its respective customers, arising out of the sale of goods by
the
Company in the ordinary course of business;
(f) to
the
extent assignable, all of the Company’s rights under all present and future
authorizations, permits, licenses and franchises issued or granted in connection
with the operations of any of its facilities;
(g) all
products and proceeds (including, without limitation, insurance proceeds) from
the above-described Pledged Property.
-1-
