Exhibit 10.5
AMENDED AND RESTATED MASTER
SECURITY AGREEMENT
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To:
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LV
Administrative Services, Inc., as Agent
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c/o Valens
Capital Management, LLC
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335 Madison Avenue, 10
th Floor
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Original Date: August 21,
2008
Amended and Restated Date:
July 24, 2009
To Whom It May Concern:
1. PA LLC (f/k/a PetroAlgae, LLC), a
Delaware limited liability company (“PA LLC”) and
PetroAlgae Inc. (“ PA Inc ” and together with PA
LLC, each an “ Assignor ” and collectively, the
“ Assignors ” entered into a Master Security
Agreement, dated August 21, 2008 in favor of LV Administrative
Services, Inc., (in its capacity as administrative and collateral
agent, the “ Agent ”) for the benefit of
PetroTech Holdings, Corp. (“ PetroTech ” and
together with the Agent, individually each a “ Creditor
Party ” and collectively, the “ Creditor
Parties ”) (the “ Original Master Security
Agreement ”). As of the date of this Agreement, the
terms, conditions, covenants, agreements, representations and
warranties contained in the Original Master Security Agreement
shall be deemed amended and restated in their entirety as set forth
in this Agreement and the Original Master Security Agreement shall
be consolidated with an into and superseded by this Agreement;
provided however, that nothing contained in this Agreement shall
impair, limit or affect the liens or security interests heretofore
granted, pledged and/or assigned to Agent as security for the
Obligations under the Original Master Security
Agreement.
2. To secure the payment of all
Obligations (as hereafter defined), each Assignor, hereby
acknowledges, confirms and agrees that Agent has and shall continue
to have a security interest in all of the Collateral granted by
such Assignor to Agent pursuant to the Original Master Security
Agreement and hereby further assigns and grants to Agent, for the
ratable benefit of PetroTech and its assigns a continuing security
interest in all of the following property now owned or at any time
hereafter acquired by such Assignor, or in which such Assignor now
has or at any time in the future may acquire any right, title or
interest (the “ Collateral ”): all cash, cash
equivalents, accounts, accounts receivable, deposit accounts,
inventory, equipment, goods, fixtures, documents, instruments
(including, without limitation, promissory notes), contract rights,
commercial tort claims set forth on Schedule B attached
hereto, general intangibles (including, without limitation, payment
intangibles and an absolute right to license on terms no less
favorable than those current in effect among such Assignor’s
affiliates), chattel paper, supporting obligations, investment
property (including, without limitation, all partnership interests,
limited liability company membership interests and all other equity
interests owned by any Assignor), letter-of-credit rights,
trademarks, trademark applications, tradestyles, patents, patent
applications, copyrights, copyright applications and other
intellectual property in which such Assignor now has or hereafter
may acquire any right, title or interest, all proceeds and products
thereof (including, without limitation, proceeds of insurance) and
all additions, accessions and substitutions thereto or therefor.
Except as otherwise defined herein, all
capitalized terms used herein shall have the
meanings provided such terms in the Documents (as defined below).
All items of Collateral which are defined in the UCC shall have the
meanings set forth in the UCC. For purposes hereof, the term
“ UCC ” means the Uniform Commercial Code as the
same may, from time to time, be in effect in the State of New York;
provided, that in the event that, by reason of mandatory provisions
of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, the Agent’s security interest in
any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term
“ UCC ” shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the
provisions of this Agreement relating to such attachment,
perfection, priority or remedies and for purposes of definitions
related to such provisions; provided further, that to the extent
that the UCC is used to define any term herein and such term is
defined differently in different Articles or Divisions of the UCC,
the definition of such term contained in Article or Division 9
shall govern.
3. The term “
Obligations ” as used herein shall mean and include
all debts, liabilities and obligations owing by each Assignor to
any Creditor Party arising under, out of, or in connection with any
documents, instruments or agreements relating to or executed in
connection with that certain (i) Second Amended and Restated
Secured Term Note dated as of the date hereof, issued by PA LLC to
PetroTech (as further amended, restated, modified and/or
supplemented from time to time, the “ PetroTech Term
Note ”) which combines and amends and restates each of
(a) that certain Amended and Restated Demand Note issued as of
August 25, 2008 (and dated as of August 21, 2008) by PA
LLC to PetroTech which further amended and restated that Demand
Note dated August 21, 2008 made by PA LLC in favor of
PetroTech (as amended, restated, modified and/or supplemented from
time to time) (b) that certain Demand Note dated as of
September 3, 2008 issued by PA LLC to PetroTech (as amended,
restated, modified and/or supplemented from time to time),
(c) that certain Demand Note dated as of September 18,
2008 issued by PA LLC to PetroTech (as amended, restated, modified
and/or supplemented from time to time), (d) that certain
Demand Note dated as of September 25, 2008 issued by PA LLC to
PetroTech (as amended, restated, modified and/or supplemented from
time to time), (ii) Amended and Restated Secured Convertible
Note dated as of the date hereof issued by PA LLC to Petrotech (as
further amended, restated, modified and/or supplemented from time
to time, the “ PetroTech Convertible Note ” and
together with the PetroTech Term Note, the “ PetroTech
Notes ”) which combines and amends and restates each of
(a) that certain Convertible Demand Note dated as of
April 24, 2009 issued by PA LLC to PetroTech (as amended,
restated, modified and/or supplemented from time to time) and
(b) that certain Secured Convertible Demand Note dated as of
May 11, 2009 issued by PA LLC to PetroTech (as amended,
restated, modified and/or supplemented from time to time) and
(iii) that certain Promissory Note dated June 12, 2008
and effective as of September 22, 2006 issued by PA LLC in
favor of XL Techgroup, Inc., a Delaware corporation (“
XLT ”) and assigned in full by XLT to PetroTech (as
amended, restated, modified and/or supplemented from time to time,
the “ Promissory Note ”) and together with all
other guarantees, security agreements, other agreements,
instruments and documents executed and/or delivered in connection
therewith, collectively and as the same may be amended or otherwise
modified from time to time, the “ Documents ”),
and (iv) in connection with any documents, instruments or
agreements relating to or executed in connection with the Documents
or any documents, instruments or agreements referred to therein or
otherwise, and in connection with any other indebtedness,
obligations or liabilities of each such Assignor to any Creditor
Party, whether now existing or hereafter arising, direct or
indirect, liquidated or unliquidated,
absolute or contingent, due or not due and
whether under, pursuant to or evidenced by a note, agreement,
guaranty, instrument or otherwise, including, without limitation,
obligations and liabilities of each Assignor for post-petition
interest, fees, costs and charges that accrue after the
commencement of any case by or against such Assignor under any
bankruptcy, insolvency, reorganization or like proceeding
(collectively, the “ Debtor Relief Laws ”) in
each case, irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing
any of the Obligations or of any collateral therefor or of the
existence or extent of such collateral, and irrespective of the
allowability, allowance or disallowance of any or all of the
Obligations in any case commenced by or against any Assignor under
any Debtor Relief Law.
4. Each Assignor hereby represents,
warrants and covenants to Agent, for the benefit of the Creditor
Party, that:
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(a)
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it is a
corporation, partnership or limited liability company, as the case
may be, validly existing, in good standing and formed under the
respective laws of its jurisdiction of formation set forth on
Schedule A , and each Assignor will provide the Agent thirty
(30) days’ prior written notice of any change in any of
its respective jurisdiction of formation;
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(b)
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its legal name
is as set forth in its Certificate of Incorporation or other
organizational document (as applicable) as amended through the date
hereof and as set forth on Schedule A attached hereto, and
it will provide the Agent thirty (30) days’ prior
written notice of any change in its legal name;
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(c)
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its
organizational identification number (if applicable) is as set
forth on Schedule A hereto, and it will provide the Agent
thirty (30) days’ prior written notice of any change in
its organizational identification number;
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(d)
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it is the
lawful owner of its Collateral and it has the sole right to grant a
security interest therein and will defend the Collateral against
all claims and demands of all persons and entities;
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(e)
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it will keep
its Collateral free and clear of all attachments, levies, taxes,
liens, security interests and encumbrances of every kind and nature
(“ Encumbrances ”), except (i) Encumbrances
securing the Obligations, (ii) Encumbrances securing
indebtedness of the Assignor not to exceed $50,000 in the aggregate
for each Assignor so long as all such Encumbrances are removed or
otherwise released to the Agent’s satisfaction within ten
(10) days of the creation thereof and (iii) Encumbrances
securing indebtedness of that certain Amended and Restated Secured
Term Note dated as of the date hereof in favor of Valens U.S. SPV
I, LLC.;
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(f)
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it will, at its
and the other Assignors’ joint and several cost and expense,
keep the Collateral in good state of repair (ordinary wear and tear
excepted) and will not waste or destroy the same or any part
thereof other than ordinary course discarding of items no longer
used or useful in its or such other Assignors’
business;
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(g)
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it will not,
without the Agent’s prior written consent, sell, exchange,
lease or otherwise dispose of any Collateral, whether by sale,
lease or otherwise, except for the sale of inventory in the
ordinary course of business and for the disposition or transfer in
the ordinary course of business during any fiscal year of obsolete
and worn-out equipment or equipment no longer necessary for its
ongoing needs, having an aggregate fair market value of not more
than $25,000 and only to the extent that:
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(i)
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the proceeds of
each such disposition are used to acquire replacement Collateral
which is subject to the Agent’s first priority perfected
security interest, or are used to repay the Obligations or to pay
general corporate expenses; or
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(ii)
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following the
occurrence of an Event of Default which continues to exist the
proceeds of which are remitted to the Agent to be held as cash
collateral for the Obligations;
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(h)
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it will insure
or cause the Collateral to be insured in the Agent’s name (as
an additional insured and lender loss payee) against loss or damage
by fire, theft, burglary, pilferage, loss in transit and such other
hazards as the Agent shall specify in amounts and under policies by
insurers acceptable to the Agent and all premiums thereon shall be
paid by such Assignor and the policies delivered to the Agent. If
any such Assignor fails to do so, the Agent may procure such
insurance and the cost thereof shall be promptly reimbursed by the
Assignors, jointly and severally, and shall constitute
Obligations;
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(i)
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it will
expressly agree that if additional loss payees and/or lender loss
payees, other than the Agent, are named to the Collateral, the
Agent will always be assigned to first lien position until all
Obligations have been satisfied;
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(i)
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it will at all
reasonable times allow the Creditor Parties or their respective
representatives free access to and the right of inspection of the
Collateral;
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(j)
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such Assignor (jointly and
severally with each other Assignor) hereby indemnifies and saves
the Agent and each other Creditor Party harmless from all loss,
costs, damage, liability and/or expense, including reasonable
attorneys’ fees, that the Agent and each other Creditor Party
may sustain or incur to enforce payment, performance or fulfillment
of any of the Obligations and/or in the enforcement of this Master
Security Agreement or in the prosecution or defense of any action
or proceeding either against the Agent, any other Creditor Party or
any Assignor concerning any matter
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growing out of or in connection
with this Master Security Agreement, and/or any of the Obligations
and/or any of the Collateral except to the extent caused by the
Agent’s or any Creditor Party’s own gross negligence or
willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision);
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(k)
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all commercial
tort claims (as defined in the Uniform Commercial Code as in effect
in the State of New York) held by any Assignor are set forth on
Schedule B to this Master Security Agreement; each Assignor
hereby agrees that it shall promptly, and in any event within five
(5) Business Days after the same is acquired by it, notify the
Agent of any commercial tort claim acquired by it and u
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