Exhibit 4.2
Security Agreement for Sausalito
Capital Partners I, LLC
SECURITY AGREEMENT
This SECURITY AGREEMENT (“
Security Agreement ”) is dated as of July 5, 2006 (the
“ Effective Date ”), by and between Domestic
Energy Partners, LLC., a Utah limited liability company (the
“ Company ”), and Sausalito Capital Partners I,
LLC, a Nevada limited liability company (the “ Lender
”).
WHEREAS, on the Effective Date, the
Company issued a 10% Convertible Promissory Note
(“Note”) to the Lender, attached hereto as Exhibit
A , to evidence a loan made to the Company in the amount of
$500,000.00 (the “ Loan ”); and
WHEREAS, in order to induce Lender
to make the Loan to the Company, the Company has agreed to grant to
the Lender a security interest in all of the Company’s assets
to secure the amounts currently owing, and any additional amounts
which may be owing, by the Company pursuant to the Loan Agreement
and the terms hereof.
NOW, THEREFORE, for good and
valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as
follows:
1.
Defined Terms . The following terms shall have the
following meanings, unless the context otherwise
requires:
“ Code ” shall
mean the Uniform Commercial Code as in effect in the State of
Washington on the Closing Date.
“ Collateral ”
shall have the meaning given such term in Section 2.
“ Event of Default
” shall have the meaning given such term in the
Note(s).
“ Obligations ”
shall mean the unpaid Loan and all Interest thereon (as such terms
are defined in the Loan Agreement) pursuant to the Loan Agreement
and the Note(s), including all costs of collection.
All of other capitalized terms used
but not defined herein shall have the meanings assigned to such
terms in the Loan Agreement.
2.
Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due of all
the Obligations, the Company hereby grants to the Lender a security
interest in all of the Company’s right, title and interest
in, to and under the following, whether now existing or hereafter
acquired (all of which collateral being hereinafter collectively
called the “ Collateral ”):
ACCOUNTS
All present and future accounts
owned by the Company, including and together with any and all
contract rights, accounts receivable, security deposits (where not
otherwise prohibited by law or agreement), and other rights of any
kind to receive payments for services rendered and goods supplied
by the Company, together with agreements, customer lists, client
lists, and accounts, invoices, agings, verification reports and
other records relating in any way to such accounts.
CONTRACTS
All contracts, contract rights,
royalties, license rights, leases, instruments, undertakings,
documents or other agreements in or under which the Company may now
or hereafter have any right, title or interest whether now existing
or hereinafter created and all forms of obligations owing to the
Company arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by the Company, whether or
not earned by
performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by the Company.
EQUIPMENT, FURNISHINGS AND
MISCELLANEOUS PERSONAL PROPERTY
All presently owned and hereafter
acquired furniture, furnishings, equipment, machinery, vehicles
(including motor vehicles and trailers) computer hardware and
software, accounting or bookkeeping systems, client or customer
lists and information, data sheets and other records of any kind,
wherever located, stored or inventoried, which are used or which
may be used in the Company’s business;
FIXTURES
All materials used by the Company in
connection with its business operations, including, but not limited
to, supplies, trade equipment, appliances, apparatus and any other
items, now owned or hereafter acquired by the Company, and now or
hereafter attached to, or installed in (temporarily or permanently)
any real property now or in the future owned or leased by the
Company;
GENERAL
INTANGIBLES
All general intangibles and other
personal property of the Company, now owned or hereinafter
acquired, including, without limitation, the following: (a)
permits, authorizations and approvals presently and hereafter
issued by any federal, state, municipal or local governmental or
regulatory authority in favor of the Company; (b) all plans,
specifications, renderings and other similar materials presently
owned or hereafter acquired by the Company; (c) all presently
existing and hereafter created contracts, leases, licenses and
agreements to which the Company is a party; (d) all presently and
hereafter existing policies and agreements of insurance in favor of
the Company; (e) all presently and hereafter existing equity
contribution agreements and other equity financing arrangements in
favor of the Company; (f) all copyrights, chattel paper, electronic
chattel paper, licenses, money, insurance proceeds, contract
rights, subscription lists, mailing lists, licensing agreements,
patents, trademarks, service marks, trade styles, patents, patent
applications, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims,
computer programs, computer discs, computer tapes, literature,
reports, catalogs, design rights, income tax refunds, payments of
insurance and rights to payment of any kinds, trade names,
refundable, returnable or reimbursable fees, deposits or other
funds or evidences of credit or indebtedness deposited by or on
behalf of the Company with any governmental agencies, boards,
corporations, providers of utility services, public or private; (g)
all presently existing and hereafter acquired computer programs,
computer software and other electronic systems and materials of any
kind of the Company; (h) goodwill; and (i) all other presently
existing and hereafter acquired documents, accounts, general
intangibles and intangible personal property of any
kind.
DOCUMENTS
All documents, cash, deposit
accounts, securities, securities entitlements, securities accounts,
investment property, financial assets, letters of credit,
certificates of deposit, instruments, chattel paper, and electronic
chattel paper now owned or hereafter acquired and the
Company’s books relating to the foregoing.
COPYRIGHTS
All copyright rights, copyright
applications, copyright registrations and like protections in each
work of authorship and derivative work thereof, whether published
or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or
similar rights available for the protection of semiconductor chips,
now owned or hereafter acquired; all claims for damages by way of
any past, present and future infringement of any of the
foregoing.
PROCEEDS
All of the Company’s books and
records relating to the foregoing and any and all present and
future accounts, general intangibles, chattel paper, electronic
chattel paper, products, accessions, replacements, betterments and
substitutions for any of the foregoing described property, and all
proceeds arising from or by virtue of, or from the sale or
disposition of, or collections with respect to, or insurance
proceeds payable with respect to, or claims against any other
persons, corporations or other entities with respect to, all or any
part of the foregoing described property and interests.
3.
Rights of Lender; Limitations on Lender’s Obligations.
It is expressly agreed by the Company that, anything herein
to the contrary notwithstanding, the Company shall remain liable
under each of its contracts and documents to observe and perform
all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with and pursuant to the terms and
provisions of its contracts and documents. Lender shall have
no obligation or liability under any of the Company’s
contracts and documents by reason of or arising out of this
Security Agreement or the granting to Len
