AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT , dated
as of June 26, 2008 (this " Agreement "), made by
Earth Biofuels,
Inc. , a Delaware corporation (" EBOF "), and each of
the undersigned existing Subsidiaries (collectively, the "
Existing
Subsidiaries ") and each other Subsidiary of EBOF hereafter
becoming party hereto (together with EBOF and the Existing
Subsidiaries, each a " Grantor " and,
collectively, the " Grantors "), in favor
of Castlerigg
Master Investments, Ltd. , a company organized under the
laws of the British Virgin Islands, in its capacity as collateral
agent (in such capacity, the " Collateral Agent ") for
certain of the holders (each a " Holder " and
collectively, the " Holders ") of the 2008
Amendment Notes (as defined below).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS,
each Holder purchased 8% Senior Convertible Notes
(collectively, the " Existing Notes ")
pursuant to a Securities Purchase Agreement with EBOF, dated
as of July 24, 2006 (as amended, restated, supplemented or
otherwise modified from time to time, the " Securities Purchase
Agreement ");
WHEREAS,
pursuant to a Guaranty Agreement, dated as of November 13,
2007 (the " Existing Guaranty
"), the Existing Subsidiaries jointly and severally guaranteed
the payment of the Total Debt (as defined in the Existing
Guaranty) to the Holders;
WHEREAS,
pursuant to a Pledge and Security Agreement, dated as of
December 20, 2007 (the " Existing Security
Agreement "), EBOF granted to each Holder a perfected
security interest in certain assets of EBOF and the stock,
equity interests and assets of certain of EBOF's
subsidiaries;
WHEREAS,
in order to pay for expenses due under the Securities Purchase
Agreement, EBOF has authorized a new series of senior
subordinated secured convertible exchangeable notes of EBOF,
in the form attached as Exhibit A to the Exchange Agreement
(as defined below) (the " Series B Notes
");
WHEREAS,
the Collateral Agent desires to enter into an Amendment and
Exchange Agreement (the " Exchange Agreement
"), with EBOF, pursuant to which, among other things, EBOF and
the Collateral Agent shall amend and restate all of the
Collateral Agent's Existing Notes for a senior secured
convertible exchangeable note in the form attached as Exhibit
B to the Exchange Agreement (the " Amended and Restated
Notes ", and together with the Series B Notes, the "
2008
Amendment Notes ");
WHEREAS,
each of the Lenders have agreed to release certain of the
Company's subsidiaries from their respective obligations under
the Existing Guaranty and the Existing Security Agreement,
pursuant to separate Release, Consent and Waivers (each a "
Release
Agreement ", and collectively, the " Release Agreements
") by and among each Lender, the Company, Earth LNG, Inc.,
Arizona LNG, L.L.C., Fleet Star, Inc., Earth Leasing, Inc.
f/k/a Alternative Dual Fuels, Inc. and Applied LNG
Technologies USA, L.L.C, effective upon the closing of the
transactions contemplated by the Exchange
Agreement;
WHEREAS,
pursuant to the Exchange Agreement, the Existing Subsidiaries
will amend and restate the Existing Guaranty in the form
attached as Exhibit E to the Exchange Agreement (as amended or
modified from time to time in accordance with their terms, the
" Amended and
Restated Guaranty "), and the Grantors will amend and
restate the Existing Security Agreement in this Agreement (as
amended or modified from time to time in accordance with their
terms) to reaffirm the granting of a security interest in the
Existing Security Agreement;
WHEREAS,
each of the Grantors has determined that the execution,
delivery and performance of this Agreement and the Amended and
Restated Guaranty directly benefit, and are in the best
interest of the Grantors; and
NOW,
THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Holders to enter into the
Exchange Agreement, each Grantor agrees with the Collateral
Agent, for the benefit of the Holders, as
follows:
SECTION
1.
Definitions.
(a) Reference
is hereby made to the Exchange Agreement for a statement of
the terms thereof. All terms used in this Agreement
and the recitals hereto which are defined in the Exchange
Agreement or in Articles 8 or 9 of the Uniform Commercial Code
(the " UCC ") as in
effect from time to time in the State of New York, and which
are not otherwise defined herein shall have the same meanings
herein as set forth therein; provided
that terms used herein which are defined in the UCC as in
effect in the State of New York on the date hereof shall
continue to have the same meaning notwithstanding any
replacement or amendment of such statute, except as the
Collateral Agent may otherwise determine.
(b) The
following terms shall have the respective meanings provided
for in the UCC: "Accounts", "Cash Proceeds",
"Chattel Paper", "Commercial Tort Claim", "Commodity Account",
"Commodity Contracts", "Deposit Account", "Documents",
"Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments", "Inventory", "Investment Property",
"Letter-of-Credit Rights", "Noncash Proceeds", "Payment
Intangibles", "Proceeds", "Promissory Notes", "Security",
"Record", "Security Account", "Software", and "Supporting
Obligations".
(c) As
used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of
such terms:
"
2008
Amendment Notes " has the meaning set forth in the
recitals hereto.
"
Amended and
Restated Guaranty " has the meaning set forth in the
recitals hereto.
"
Business
Day " means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required
to close.
"
Copyright
Licenses " means all licenses, contracts or other
agreements, whether written or oral, naming any Grantor as
licensee or licensor and providing for the grant of any right
to use or sell any works covered by any copyright (including,
without limitation, all Copyright Licenses set forth in
Schedule
II hereto).
"
Copyrights " means
all domestic and foreign copyrights, whether registered or
not, including, without limitation, all copyright rights
throughout the universe (whether now or hereafter arising) in
any and all media (whether now or hereafter developed), in and
to all original works of authorship fixed in any tangible
medium of expression, acquired or used by any Grantor
(including, without limitation, all copyrights described in
Schedule
II hereto), all applications, registrations and
recordings thereof (including, without limitation,
applications, registrations and recordings in the United
States Copyright Office or in any similar office or agency of
the United States or any other country or any political
subdivision thereof), and all reissues, divisions,
continuations, continuations in part and extensions or
renewals thereof.
"
Event
of Default " means
any defined event of default under any one or more of the
Transaction Documents, in each instance, after giving effect
to any notice, grace, or cure periods provided for in the
applicable Transaction Documents.
"
Exchange
Agreement " has the meaning set forth in the recitals
hereto.
"
Existing
Guaranty " has the meaning set forth in the recitals
hereto.
"
Existing
Liens " means any of the Liens described in Schedule
VII annexed hereto, but only to the extent such Liens
are valid and in existence as of the date of this Agreement
and such Liens shall not include any PACA Liens.
"
Existing
Notes " has the meaning set forth in the recitals
hereto.
"
Existing
Security Agreement " has the meaning set forth in the
recitals hereto.
"
Farm
Products " means all of the Grantors' now owned or
hereafter existing or acquired farm products of every kind and
nature, including, without limitation, crops and supplies used
or produced in farming operations, and products of crops
wherever located.
"
Farm Products
Sellers " means, individually and collectively, sellers
or suppliers to the Grantors of any farm product (as such term
is defined in both the Food Security Act and the Code),
including any perishable agricultural commodity (as defined in
PACA).
"
Food Security
Act " means the Food Security Act of 1984, 7 USC §
1631 et seq., as the same now exists or may hereafter from
time to time be amended, modified, recodified or supplemented,
together with all rules and regulations
thereunder.
"
Food Security
Act Notices " has the meaning set forth in Section
4(m)(i) .
"
Governmental
Authority " means any federal, state, local, or other
governmental or administrative body, instrumentality,
department, or agency or any court,
tribunal,
administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.
"
Guaranteed
Obligations " has the meaning set forth in the Amended
and Restated Guaranty.
"
Insolvency
Proceeding " means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code
(Chapter 11 of Title 11 of the United States Code) or
under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria,
compositions, or extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other
similar relief.
"
Intellectual
Property " means the Copyrights, Trademarks and
Patents.
"
Licenses " means
the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.
"
Lien "
means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or
security or preferential arrangement of any nature, including,
without limitation, any conditional sale or title retention
arrangement, any capitalized lease and any assignment, deposit
arrangement or financing lease intended as, or having the
effect of, security, and any PACA Lien.
"
PACA "
shall mean the Perishable Agricultural Commodities Act of
1930, as amended, 7 USC § 499a et seq., as the same now
exists or may from time to time hereafter be amended,
modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related
thereto.
"
PACA
Lien " means any statutory trust arising under the
Perishable Agricultural Commodities Act, 7 U.S.C. § 499a
et
seq.
"
Patent
Licenses " means all licenses, contracts or other
agreements, whether written or oral, naming any Grantor as
licensee or licensor and providing for the grant of any right
to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set
forth in Schedule
II hereto).
"
Patents " means
all domestic and foreign letters patent, design patents,
utility patents, industrial designs, inventions, trade
secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how, formulae,
rights of publicity and other general intangibles of like
nature, now existing or hereafter acquired (including, without
limitation, all domestic and foreign letters patent, design
patents, utility patents, industrial designs, inventions,
trade secrets, ideas, concepts, methods, techniques,
processes, proprietary information, technology, know-how and
formulae described in Schedule
II hereto), all applications, registrations and
recordings thereof (including, without limitation,
applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office
or agency of the United States or any other country or any
political subdivision thereof), and all reissues, divisions,
continuations, continuations in part and extensions or
renewals thereof.
"
Permitted
Liens " means (i) any Existing Liens, (ii) any Lien for
taxes not yet due or delinquent or being contested in good
faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP, (iii) any Lien
(other than a PACA Lien) created by operation of law, such as
materialmen's liens, mechanics' liens and other similar liens,
arising in the ordinary course of business with respect to a
liability that is not yet due or delinquent or that are being
contested in good faith by appropriate proceedings, (iv) Liens
incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by Liens of the type
described in clauses (i) and (iii) above, provided
that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and
the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase, (v) Liens granted
hereunder securing the Obligations; (vi) leases or subleases
and licenses and sublicenses granted to others in the ordinary
course of the Grantor's business, not interfering in any
material respect with the business of a Grantor, (vii) Liens
arising from judgments, decrees or attachments in
circumstances not constituting an 'event of default" under any
of the Transaction Documents, and (viii) Liens that are contractual rights of set-off
(a) relating to the establishment of depository relations with
banks not given in connection with the issuance of
indebtedness, (b) relating to pooled deposit or sweep accounts
of a Grantor to permit satisfaction of overdraft or similar
obligations incurred in the ordinary course of business or (c)
relating to purchase orders and other agreements entered into
with customers of a Grantor in the ordinary course of
business .
"
Person
" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts,
business trusts, or other organizations, irrespective of
whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"
Series B
Notes " has the meaning set forth in the recitals
hereto.
"
Subsidiary " means
a corporation, partnership, limited liability company, or
other entity in which that Person directly or indirectly owns
or controls the shares of stock having ordinary voting power
to elect a majority of the board of directors (or appoint
other comparable managers) of such corporation, partnership,
limited liability company, or other entity.
"
Trademark
Licenses " means all licenses, contracts or other
agreements, whether written or oral, naming any Grantor as
licensor or licensee and providing for the grant of any right
concerning any Trademark, together with any goodwill connected
with and symbolized by any such trademark licenses, contracts
or agreements and the right to prepare for sale or lease and
sell or lease any and all Inventory now or hereafter owned by
any Grantor and now or hereafter covered by such licenses
(including, without limitation, all Trademark Licenses
described in Schedule
II hereto).
"
Trademarks " means
all domestic and foreign trademarks, service marks, collective
marks, certification marks, trade names, business names,
d/b/a's, Internet domain names, trade styles, designs, logos
and other source or business identifiers and all general
intangibles of like nature, now or hereafter owned, adopted,
acquired or used by any Grantor (including, without
limitation, all domestic and foreign trademarks, service
marks, collective
marks,
certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other
source or business identifiers described in Schedule
II hereto), all applications, registrations and
recordings thereof (including, without limitation,
applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or
agency of the United States, any state thereof or any other
country or any political subdivision thereof), and all
reissues, extensions or renewals thereof, together with all
goodwill of the business symbolized by such marks and all
customer lists, formulae and other Records of any Grantor
relating to the distribution of products and services in
connection with which any of such marks are used.
"
Transaction
Documents " means (i) the "Documents" (as defined in
the Amended and Restated Guaranty), (ii) the Amended and
Restated Guaranty, (iii) this Agreement and (iv) any other
agreement, instrument, and other document executed and
delivered pursuant thereto or otherwise evidencing or securing
any of the Obligations.
SECTION
2.
Confirmation and
Grant of Security Interest.
(a) Each
Grantor hereby confirms, ratifies and reaffirms that the
Existing Liens granted pursuant to the Existing Security
Agreement are continuing and are and shall remain unimpaired
and continue to constitute fully perfected, first priority
liens (subject to Permitted Liens) in favor of the Collateral
Agent for the benefit of the Holders, with the same force,
effect and priority in effect both immediately prior to and
after entering into this Agreement and the Transaction
Documents. Each Grantor affirms and agrees that
such Liens granted pursuant to the Existing Security Agreement
will continue to secure all of the Obligations (as defined in
Section 3 hereof).
(b) As
collateral security for all of the "Obligations" (as defined
in Section 3
hereof), each Grantor hereby pledges and assigns to the
Collateral Agent for the benefit of the Holders, and grants to
the Collateral Agent for the benefit of the Holders a
continuing security interest in, all personal property of such
Grantor, wherever located and whether now or hereafter
existing and whether now owned or hereafter acquired, of every
kind and description, tangible or intangible (collectively,
the " Collateral "),
including, without limitation, the following:
(i) all
Accounts;
(ii) all
Chattel Paper (whether tangible or electronic);
(iii) the
Commercial Tort Claims specified on Schedule
VI hereto;
(iv) all
Deposit Accounts (including, without limitation, all cash, and
all other property from time to time deposited therein and the
monies and property in the possession or under the control of
the Collateral Agent or Holder or any affiliate,
representative, agent or correspondent of the Collateral Agent
or Holder);
(v) all
Documents;
(vi) all
Equipment;
(vii) all
Fixtures;
(viii) all
General Intangibles (including, without limitation, all
Payment Intangibles);
(ix) all
Goods;
(x) all
Instruments (including, without limitation, Promissory Notes
and each certificated Security);
(xi) all
Inventory;
(xii) all
Investment Property;
(xiii) all
Copyrights, Patents and Trademarks, and all
Licenses;
(xiv) all
Letter-of-Credit Rights;
(xv) all
Supporting Obligations;
(xvi) all
other tangible and intangible personal property of such
Grantor (whether or not subject to the UCC), including,
without limitation, all bank and other accounts and all cash
and all investments therein, all proceeds, products,
offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the property
of such Grantor described in the preceding clauses of this
Section 2
(including, without limitation, any proceeds of insurance
thereon and all causes of action, claims and warranties now or
hereafter held by such Grantor in respect of any of the items
listed above), and all books, correspondence, files and other
Records, including, without limitation, all tapes, desks,
cards, Software, data and computer programs in the possession
or under the control of such Grantor or any other Person from
time to time acting for such Grantor that at any time evidence
or contain information relating to any of the property
described in the preceding clauses of this Section 2
or are otherwise necessary or helpful in the collection or
realization thereof; and
(xvii) all
Proceeds, including all Cash Proceeds and Noncash Proceeds,
and products of any and all of the foregoing
Collateral;
in
each case howsoever such Grantor's interest therein may arise
or appear (whether by ownership, security interest, claim or
otherwise).
SECTION
3.
Security for
Obligations . The security interest
confirmed and created hereby in the Collateral constitutes
continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred
(collectively, the " Obligations
"):
(a) (i)
the payment by EBOF, as and when due and payable (by scheduled
maturity, required prepayment, acceleration, demand or
otherwise), of all amounts from time to time owing by it in
respect of the Securities Purchase Agreement, the 2008
Amendment Notes and the other Transaction Documents, and (ii)
the payment by each of the Existing Subsidiaries
and
each other Grantor other than EBOF as and when due and payable
of all Guaranteed Obligations under the Amended and Restated
Guaranty; and
(b) the
due performance and observance by each Grantor of all of its
other obligations from time to time existing in respect of any
of the Transaction Documents.
SECTION
4.
Representations
and Warranties. Each Grantor represents and
warrants as follows:
(a)
Schedule
I hereto sets forth (i) the exact legal name of such
Grantor, and (ii) the organizational identification number of
such Grantor or states that no such organizational
identification number exists.
(b) To
its best knowledge, there is no pending or written notice
threatening any action, suit, proceeding or claim affecting
such Grantor before any governmental authority or any
arbitrator, or any order, judgment or award by any
governmental authority or arbitrator, that would reasonably be
expected to adversely affect the grant by such Grantor, or the
perfection, of the security interest purported to be created
hereby in the Collateral, or the exercise by the Collateral
Agent of any of its rights or remedies hereunder.
(c) Except
as set forth in Schedule 4(c), all Federal, state and local
tax returns and other reports required by applicable law to be
filed by such Grantor have been filed, or extensions have been
obtained, and all taxes, assessments and other governmental
charges imposed upon such Grantor or any property of such
Grantor (including, without limitation, all federal income and
social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have
been paid, except to the extent contested in good faith by
proper proceedings which stay the imposition of any penalty,
fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves have been set aside for the
payment thereof in accordance with generally accepted
accounting principles consistently applied (" GAAP
").
(d) All
Equipment, Fixtures, Goods and Inventory of such Grantor now
existing are, and all Equipment, Fixtures, Goods and Inventory
of such Grantor hereafter existing will be, located and/or
based at the addresses specified therefor in Schedule
III hereto, except that such Grantor will give the
Collateral Agent not less than 5 days' prior written notice of
any change of the location of any such Collateral, other than
to locations set forth on Schedule
III and with respect to which the Collateral Agent has
filed financing statements and otherwise fully perfected its
Liens thereon. Such Grantor's chief place of
business and chief executive office, the place where such
Grantor keeps its Records concerning Accounts and all
originals of all Chattel Paper are located at the addresses
specified therefor in Schedule
III hereto. None of the Accounts is
evidenced by Promissory Notes or other
Instruments. Set forth in Schedule
IV hereto is a complete and accurate list, as of the
date of this Agreement, of (i) each Promissory Note, Security
and other Instrument owned by each Grantor and (ii) each
Deposit Account, Securities Account and Commodities Account of
each Grantor, together with the name and address of each
institution at which each such Account is maintained, the
account number for each such Account and a description of the
purpose of each such Account. Set forth in
Schedule
I hereto is a complete and correct list of each trade
name used by each Grantor and the name of,
and
each trade name used by, each person from which such Grantor
has acquired any substantial part of the
Collateral.
(e) Such
Grantor has delivered to the Collateral Agent complete and
correct copies of each License described in Schedule
II hereto, including all schedules and exhibits
thereto, which represents all of the Licenses existing on the
date of this Agreement. Each such License sets
forth the entire agreement and understanding of the parties
thereto relating to the subject matter thereof, and there are
no other agreements, arrangements or understandings, written
or oral, relating to the matters covered thereby or the rights
of such Grantor or any of its affiliates in respect
thereof. Each material License now existing is, and
any material License entered into in the future will be, the
legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms,
except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of a party’s rights
generally and by general equitable principles. No
default under any material License by any such party has
occurred, nor does any defense, offset, deduction or
counterclaim exist thereunder in favor of any such
party.
(f) Such
Grantor owns and controls, or otherwise possesses adequate
rights to use, all Trademarks, Patents and Copyrights, which
are the only trademarks, patents, copyrights, inventions,
trade secrets, proprietary information and technology,
know-how, formulae, rights of publicity necessary to conduct
its business in substantially the same manner as conducted as
of the date hereof. Schedule
II hereto sets forth a true and complete list of all
registered copyrights, issued patents, Trademarks, and
Licenses annually owned or used by such Grantor as of the date
hereof. To the best knowledge of each Grantor, all
such Intellectual Property of such Guarantor is subsisting and
in full force and effect, has not been adjudged invalid or
unenforceable, is valid and enforceable and has not been
abandoned in whole or in part. Except as set forth
in Schedule II, no such Intellectual Property is the subject
of any licensing or franchising agreement. Such
Grantor has no knowledge of any material conflict with the
rights of others to any Intellectual Property and, to the best
knowledge of such Grantor, such Grantor is not now infringing
or in conflict with any such rights of others in any material
respect, and to the best knowledge of such Grantor, no other
Person is now infringing or in conflict in any material
respect with any such properties, assets and rights owned or
used by such Grantor. Such Grantor has not received
any notice that it is violating or has violated the
trademarks, patents, copyrights, inventions, trade secrets,
proprietary information and technology, know-how, formulae,
rights of publicity or other intellectual property rights of
any third party.
(g) Such
Grantor is and will be at all times the sole and exclusive
owner of, or otherwise has and will have adequate rights in,
the Collateral free and clear of any Liens, except for
Permitted Liens. To such Grantor’s best
knowledge, no effective financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording or filing office except
(A) such as may have been filed in favor of the
Collateral Agent relating to this Agreement, and (B) such
as may have been filed to perfect any of the Existing
Liens.
(h) The
exercise by the Collateral Agent of any of its rights and
remedies hereunder will not contravene any law or any
contractual restriction binding on or otherwise
affecting
such Grantor or any of its properties and will not result in
or require the creation of any Lien, upon or with respect to
any of its properties.
(i) No
authorization or approval or other action by, and no notice to
or filing with, any governmental authority or other regulatory
body, or any other Person, is required for (i) the grant
by such Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or
(ii) the exercise by the Collateral Agent of any of its
rights and remedies hereunder, except (A) for the filing
under the UCC as in effect in the applicable jurisdiction of
the financing statements, all of which financing statements,
have been duly filed and are in full force and effect,
(B) with respect to the perfection of the security
interest created hereby in the Intellectual Property, for the
recording of the appropriate Assignment for Security,
substantially in the form of Exhibit A
hereto, as applicable, in the United States Patent and
Trademark Office or the United States Copyright Office, as
applicable, and (C) with respect to the perfection of the
security interest created hereby in foreign Intellectual
Property and Licenses, for registrations and filings in
jurisdictions located outside of the United States and
covering rights in such jurisdictions relating to the
Intellectual Property and Licenses.
(j) This
Agreement creates in favor of the Collateral Agent a legal,
valid and enforceable security interest in the Collateral, as
security for the Obligations. The Collateral
Agent's having possession of all Instruments and cash
constituting Collateral from time to time, the recording of
the appropriate Assignment for Security executed pursuant
hereto in the United States Patent and Trademark Office and
the United States Copyright Office, as applicable, and the
filing of the financing statements and the other filings and
recordings, as applicable, described in Schedule
V hereto and, with respect to the Intellectual Property
hereafter existing and not covered by an appropriate
Assignment for Security, the recording in the United States
Patent and Trademark Office or the United States Copyright
Office, as applicable, of appropriate instruments of
assignment, result in the perfection of such security
interests; provided
, however ,
that each Holder may keep possession of certificates
representing its pro rata portion of shares of capital stock
of PNG Ventures, Inc. constituting Collateral hereunder,
subject to the terms of this Agreement, which possession shall
result in perfection of such Holder's security interests in
such shares under this Agreement. Such security
interests are, or in the case of Collateral in which such
Grantor obtains rights after the date hereof, will be,
perfected, first priority security interests, subject only to
Permitted Liens and the recording of such instruments of
assignment. Such recordings and filings and all
other action necessary or desirable to perfect and protect
such security interest have been duly taken, except for the
Collateral Agent's having possession of Instruments and cash
constituting Collateral after the date hereof and the other
filings and recordations described in Section
4(l) hereof.
(k) As
of the date hereof, such Grantor does not hold any Commercial
Tort Claims nor is aware of any such pending claims, except
for such claims described in Schedule
VI .
(l) Each
of the Existing Subsidiaries is a Subsidiary of EBOF and are
the only Subsidiaries of EBOF, as of the date hereof, owned in
the respective percentages shown on Schedule VIII annexed
hereto.
(m)
Notices from
Farm Products Sellers, etc .
(i) Except
as set forth in Schedule
4(m) hereto, no Grantor has, within the one (1) year
period prior to the date hereof, received any written notice
pursuant to the applicable provisions of the Food Security
Act, or pursuant to the UCC or any state agricultural or
producers' lien laws or any other applicable local laws from
(i) any Farm Products Seller or (ii) any lender to any Farm
Products Seller or any other Person with a security interest
in the assets of any Farm Products Seller or (iii) the
Secretary of State (or equivalent official) or other
Governmental Authority of any State, Commonwealth or political
subdivision thereof in which any Farm Products purchased by
any Grantor are produced, in any case advising or notifying
any Grantor of the intention of such Farm Products Seller or
other Person to preserve the benefits of any trust, lien or
other interest applicable to any assets of such Grantor
established in favor of such Farm Products Seller or other
Person under any other law or claiming a Lien or security
interest in and to any perishable agricultural commodity or
any other Farm Products which may be or have been purchased by
such Grantor or any related or other assets of such Grantor
(all of the foregoing, together with any such notices as the
Grantors may at any time hereafter receive, collectively, the
" Food
Security Act Notices ").
(ii) No
Grantor is engaged in farming operations.
(iii) Each
Grantor's contract with each of its corn growers provides that
not more than 33-1/3% of the aggregate payments to each such
grower are due within 30 days after receipt and acceptance by
such Grantor of the last shipment of corn from each such corn
grower.
SECTION
5.
Covenants as to
the Collateral . So long as any of the
Obligations shall remain outstanding, unless the Collateral
Agent shall otherwise consent in writing:
(a)
Further
Assurances . Each Grantor will at its
expense, at any time and from time to time, promptly execute
and deliver all further instruments and documents and take all
further action that the Collateral Agent may reasonably
request in order to: (i) perfect and protect
the security interest purported to be created hereby;
(ii) enable the Collateral Agent to exercise and enforce
its rights and remedies hereunder in respect of the
Collateral; or (iii) otherwise effect the purposes of
this Agreement, including, without
limitation: (A) marking conspicuously all
Chattel Paper with a principal balance in excess of $5,000 and
each License and, at the request of the Collateral Agent, each
of its Records pertaining to the Collateral with a legend, in
form and substance reasonably satisfactory to the Collateral
Agent, indicating that such Chattel Paper, License or
Collateral is subject to the security interest created hereby,
(B) delivering possession of (or granting control over)
and pledging to the Collateral Agent hereunder each Promissory
Note, Security, Chattel Paper or other Instrument, in each
case with a principal balance in excess of $5,000, now or
hereafter owned by such Grantor, duly endorsed and accompanied
by executed instruments of transfer or assignment, all in form
and substance satisfactory to the Collateral Agent,
(C) executing and filing (to the extent, if any, that
such Grantor's signature is required thereon) or
authenticating the filing of, such financing or continuation
statements, or amendments thereto, as may be necessary or
desirable or that the Collateral Agent may reasonably request
in order to perfect and preserve the security interest
purported to be created hereby, (D) furnishing to the
Collateral Agent from time to time statements and schedules
further identifying and describing the Collateral and such
other reports in connection with the Collateral in each case
as the Collateral Agent may reasonably request,
all
in
reasonable detail, (E) if any Collateral shall be in the
possession of a third party, notifying such Person of the
Collateral Agent's security interest created hereby and
obtaining a written acknowledgment from such Person that such
Person holds possession of the Collateral for the benefit of
the Collateral Agent, which such written acknowledgement shall
be in form and substance satisfactory to the Collateral Agent,
(F) if at any time after the date hereof, such Grantor
acquires or holds any Commercial Tort Claim, promptly
notifying the Collateral Agent in a writing signed by such
Grantor setting forth a brief description of such Commercial
Tort Claim and granting to the Collateral Agent a security
interest therein and in the proceeds thereof, which writing
shall incorporate the provisions hereof and shall be in form
and substance satisfactory to the Collateral Agent;
(G) upon the acquisition after the date hereof by such
Grantor of any motor vehicle or other Equipment subject to a
certificate of title or ownership (other than a Motor Vehicle
or Equipment that is subject to a purchase money security
interest), at the Collateral Agent's written request, causing
the Collateral Agent to be listed as a lienholder on such
certificate of title or ownership and delivering evidence of
the same to the Collateral Agent in accordance with the
Securities Purchase Agreement; and (H) taking all actions
required by any earlier versions of the UCC or by other law,
as applicable, in any relevant UCC jurisdiction, or by other
law as applicable in any foreign jurisdiction.
(b)
Location of
Equipment and Inventory . Each Grantor will
keep the Equipment and Inventory at the locations specified
therefor in Section 4(g)
hereof or, upon not less than five (5) days' prior written
notice to the Collateral Agent accompanied by a new
Schedule
V hereto indicating each new location of the Equipment
and Inventory, at such other locations in the United
States.
(c)
Condition of
Equipment . Each Grantor will maintain or
cause the Equipment (necessary or useful to its business) to
be maintained and preserved in good condition, repair and
working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any
Equipment of such Guarantor within a commercially reasonable
time after the occurrence thereof, make or cause to be made
all repairs, replacements and other improvements in connection
therewith which are necessary or desirable, consistent with
past practice, or which the Collateral Agent may request to
such end. Such Grantor will promptly furnish to the
Collateral Agent a statement describing in reasonable detail
any such loss or damage in excess of $100,000 to any
Equipment.
(d)
Taxes,
Etc. Each Grantor agrees to pay promptly
when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against,
Equipment that is necessary or useful for its business and
Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the
non-payment thereof and with respect to which adequate
reserves in accordance with GAAP have been set aside for the
payment thereof.
(e)
Insurance
.
(i) Each
Grantor will, at its own expense, maintain insurance
(including, without limitation, commercial general liability
and property insurance) with respect to the Equipment and
Inventory in such amounts, against such risks, in such form
and with
responsible
and reputable insurance companies or associations as is
required by any governmental authority having jurisdiction
with respect thereto or as is carried generally in accordance
with sound business practice by companies in similar
businesses similarly situated and in any event, in amount,
adequacy and scope reasonably satisfactory to the Collateral
Agent. Each such policy for liability insurance
shall provide for all losses to be paid on behalf of the
Collateral Agent and such Grantor as their respective
interests may appear, and each policy for property damage
insurance shall provide for all losses to be adjusted with,
and paid directly to, the Collateral Agent during the
continuance of an Event of Default. Each such
policy shall in addition (A) name the Collateral Agent as an
additional insured party thereunder (without any
representation or warranty by or obligation upon the
Collateral Agent) as their interests may appear, (B) contain
an agreement by the insurer that any loss thereunder shall be
payable to the Collateral Agent on its own account
notwithstanding any action, inaction or breach of
representation or warranty by such Grantor, (C) provide that
there shall be no recourse against the Collateral Agent for
payment of premiums or other amounts with respect thereto, and
(D) provide that at least 30 days' prior written notice of
cancellation, lapse, expiration or other adverse change shall
be given to the Collateral Agent by the
insurer. Such Grantor will, if so requested by the
Collateral Agent, deliver to the Collateral Agent original or
duplicate policies of such insurance and, as often as the
Collateral Agent may reasonably request, a report of a
reputable insurance broker with respect to such
insurance. Such Grantor will also, at the request
of the Collateral Agent, 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 a Grantor pursuant
to this Section
5(e) may be paid directly to the Person who shall have
incurred liability covered by such insurance. In
the case of any loss involving damage to Equipment or
Inventory, any proceeds of insurance maintained by a Grantor
pursuant to this Section
5(e) shall be paid to the Collateral Agent, such
Grantor will make or cause to be made the necessary repairs to
or replacements of such Equipment or Inventory, and any
proceeds of insurance maintained by such Grantor pursuant to
this Section
5(e) shall be paid by the Collateral Agent to such
Grantor as reimbursement for the costs of such repairs or
replacements.
(iii) All
insurance payments in respect of such Equipment or Inventory
shall be paid to the Collateral Agent and applied as specified
in Section
7(b) hereof during the continuance of an Event of
Default.
(f)
Provisions
Concerning the Accounts and the Licenses .
(i) Each
Grantor will (A) give the Collateral Agent at least 30 days'
prior written notice of any change in such Grantor's name,
identity or organizational structure, (B) maintain its
jurisdiction of incorporation as set forth in Section
4(b) hereto, (C) promptly notify the Collateral Agent
upon obtaining an organizational identification
number
|
