SECURITY AGREEMENT
This Security Agreement (as amended,
supplemented or restated from time to time, this "Security
Agreement") dated as of October 14, 2009, is by and between GLOBAL
RESOURCE CORPORATION, a Nevada corporation ("Debtor" or the
"Company"), whose address is 1000 Atrium Way, Suite 100, Mount
Laurel, New Jersey 08054 Attn: Mr. Peter A. Worthington, and
UNIVERSAL ALTERNATIVE FUELS, 1NC. ("Secured Party"), a Nevada
corporation, whose address is 1400 Old Country Road, Suite 206,
Westbury, NY 11590 Attention: Greg Goldberg.
RECITALS:
A. The Debtor has received Seven Hundred
Fifty Thousand Dollars ($750,000) as a License Fee from Secured
Party pursuant to a certain License Agreement dated as of October
14, 2009 (the "License Agreement") between Debtor as Licensor and
Secured Party as Licensee where, for a one hundred eighty (180) day
"wait and see" period, the Secured Party is entitled to a security
interest in the Collateral (as defined below.) Under the License
Agreement the Secured Party has the right to terminate its Purchase
Order, in which event the Secured Party may have a claim with
respect to the Continuation Application and the Existing Prototype
Machine if certain terms and conditions described in the License
Agreement are not fulfilled.
B. As a condition to the consummation of
the License Agreement, the Debtor has agreed to secure its
Obligations (as defined below) that become due and owing to the
Secured Party under the License Agreement.
C. The Debtor has filed a continuation
application (the "Application") with the United States Patent and
Trademark Office (the "PTO") covering (i) oil shale and (ii) coal,
i.e. the Licensed Field of Use (as defined in the License
Agreement). A true and correct copy of the Application is attached
to the License Agreement and to this Security Agreement as Schedule
A.
D. To secure the Obligations (as defined
below), the Debtor has agreed to grant the Secured Party a first
priority security interest in, and lien upon, the Collateral (as
defined below).
E. All capitalized terms not otherwise defined
in this Security Agreement shall have the same meanings as are
ascribed to them in the License Agreement.
NOW, THEREFORE, in consideration of the
Recitals, and for other good and valuable consideration, receipt
and sufficiency of which is hereby acknowledged, and intending to
be legally bound, the parties hereto agree as follows:
1. SECURITY INTEREST. The Debtor hereby
unconditionally and irrevocably pledges, and grants to the Secured
Party a first priority security interest in and to, and a
continuing lien upon, and collaterally assigns to Secured Party,
all of its right, title and interest in and to its property and
assets set forth below (the "Collateral") as security for the
Obligations (hereinafter defined):
(a) the Existing Prototype Machine in Rockford,
Illinois, as more specifically defined in Schedule B both as
attached to the License Agreement and to this Security Agreement
and all of Company's equipment, now owned or hereafter acquired,
together with the products and proceeds there from, and all
substitutes and replacements therefore; used in or related to the
Existing Prototype Machine including all equipment, machinery,
tools, office equipment, supplies, furnishings, furniture, or other
items used or useful, directly or indirectly, in the manufacture,
service and maintenance of the Existing Prototype Machine, all
accessions, attachments, and other additions thereto, all parts
used in connection therewith, all packaging, manuals, and
instructions related thereto, and all software and object code
related thereto.
(b) GENERAL INTANGIBLES. All of Company's (i)
"Patent Rights" which shall mean the patents and/or patent
applications identified in the Continuation Application, together
with any divisional, continuation, or continuation-in-part
applications based thereon, any patents resulting from any of said
applications and any reissues or extensions that may be based on
any of said patents, and shall also include all improvements,
modifications, enlargements and extensions made to any of the
Patent Rights during the term of this Agreement; (ii) "Technology"
which shall mean the microwave technology of the Debtor in the
applications forming a part of the Continuation Application, and
shall include for this purpose not only the content of the patents
pending, and the content of any patents issued thereon, but all
improvements, modifications, enlargements and extensions thereto,
now or hereafter existing, whether or not the Debtor seeks
additional patent protection thereon, together with all software
programs used to design, install and operate the machines, all
proprietary data and trade secrets, all know-how, inventions and
discoveries (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know-how,
technology, technical data, supplier lists and customer lists and
all documentation relating to any of the foregoing; databases, data
collections and content and all rights therein, throughout the
world (collectively "Data Collections"); all computer software,
including all source code, object code, firmware, development
tools, files, records data, and documentation (including design
documents, flowcharts and specifications therefore), and all media
on which any of the foregoing is recorded (collectively
"Software"); and (iii) "Trademarks" which shall mean all
trademarks, trade names, service marks, corporate names, brand
names, trade dress, designs and logos and other source indicators,
and all registrations and applications for registration thereof and
all other rights corresponding thereto throughout the world,
together with the goodwill of any business symbolized thereby of
the Debtor, but only such as relate to the Patent Rights forming a
part of the Continuation Application.
2. OBLIGATIONS. A. This Agreement is made to
secure One Million Seven Hundred Thousand Dollars ($1,700,000) the
"Obligations") including but not limited to the following: (a) The
amount of $843,000 as described in the License Agreement; (b) The
$750,000 License Fee Debtor received from Secured Party pursuant to
the License Agreement between Debtor as Licensor and Secured Party
as Licensee; (c) Licensee's right to immediate exclusive ownership
and possession of the Existing Prototype Machine as provided in the
License Agreement; (d) Al I other obligations, if any, undertaken
by Debtor in any other place in the License Agreement and this
Security Agreement; (e) Any and all sums which Debtor may owe
Secured Party pursuant to this Security Agreement on account of
Debtor's failure to keep, observe or perform any of the covenants
of Debtor under this Security Agreement or the License Agreement;
(f) all reasonable attorneys' fees and any other reasonable
expenses incurred by Secured Party in enforcing this Security
Agreement; and (g) all other obligations accruing or arising after
commencement of any case under any bankruptcy or similar laws by or
against Debtor. This security interest is given as security for all
obligations owed by Company to Secured Party, whether now existing
or hereafter incurred, under this Security Agreement or the License
Agreement, together with all extensions, modifications, or renewals
thereof (hereinafter referred to, collectively, as the
"Obligations").
B. (a) In the event that Debtor is entitled to
do so, and in fact pays, the sum of $1,700,000 as provided in the
License Agreement, this Security Agreement and the security
interests granted herein shall terminate forthwith and Secured
Party will release any and all interest in the Debtor's Secured
Property and withdraw the UCC (1) filings filed by Secured Party.
This will be done within ten (10) days after Secured Party's
receiving payment of cleared funds from Debtor.
(b) In the event that Licensee does not
terminate its Purchase Order, then upon delivery to, and acceptance
by, Secured Party of the initial machine in the Purchase Order,
this Security Agreement and the security interests granted herein
shall terminate forthwith.
3. PROCEEDS. As used in this Security
Agreement, the term "proceeds" means all products of the Company's
business and all additions and accessions to, replacements of,
insurance or condemnation proceeds of, and documents covering any
of the Company's Collateral, all property received wholly or partly
in trade or exchange for any of the Company's Collateral, all
leases of any of the Company's Collateral, and all rents, revenues,
issues, profits, and proceeds arising from the sale, lease,
license, encumbrance, collection, or any other temporary or
permanent disposition, of any of the Company's Collateral or any
interest therein.
4. TITLE; FILING. Company warrants that,
except as previously disclosed in writing to Secured Party, it is
the owner of the Collateral free and clear of all liens, claims,
and encumbrances of whatever kind or nature. Company covenants that
so long as any portion of the Obligation remains unpaid, Company
will not execute or file a financing statement or security
agreement covering the Collateral to anyone other than Secured
Party. Company agrees to sign and deliver, or that on its behalf
Secured Party may sign and file one or more financing statements or
supplements thereto or other instruments as Secured Party may from
time to time require to comply with the Uniform Commercial Code or
other applicable law including without limitation all filings as
may be required in the United States Patent and Trademark Office
("USPTO"), or any foreign country office performing a similar
function, to preserve, protect and enforce the security interest of
Secured Party and to pay all costs of filing such statements or
instruments. In addition, Company or Secured Party shall promptly
file a financing statement to perfect Secured Party's interest in
the Collateral. In furtherance thereof, Debtor hereby irrevocably
appoints Secured Party as the Debtor's attorney-in-fact, with full
authority in the place and stead of Debtor and in the name of
Debtor or otherwise, from time to time in Secured Party's
discretion, upon the Licensor's failure or inability to do so, to
take any action and to execute any instrument and make any filing
with any regulatory authority or otherwise which Secured Party may
deem necessary or advisable to accomplish the purposes of this
Agreement, including: (i) To modify, in its sole discretion, this
Security Agreement without first obtaining Debtor's approval of or
signature to such modification by amending the definitions of
Patents, Patent Rights, Technology and Trademarks hereof, as
appropriate, to include reference to any right, title or interest
in any Patents, Patent Rights, Technology and Trademarks acquired
by Debtor after the execution hereof or to delete any reference to
any right, title or interest in any Patents, Patent Rights,
Technology and Trademarks in which Debtor no longer has or claims
any right, title or interest.
5. CARE OF COLLATERAL. Company will keep in
effect all licenses, permits and franchises required by law or
contract relating to Company's Collateral (if applicable); maintain
insurance on the Collateral; keep the Collateral in good repair and
be responsible for any loss or damage to it; at all times warrant
and defend Company's ownership and possession of the Collateral;
keep the Collateral free from all liens, claims, encumbrances and
security interests; pay when due all taxes, license fees, and other
charges upon the Collateral or upon Company's property or the
income therefrom; and not misuse, conceal or in any way use or
dispose of the Collateral unlawfully or contrary to the provisions
of this Security Agreement or of any insurance coverage. Loss of,
damage to, or uncollectability of the Collateral or any part
thereof will not release Company from any of its obligations
hereunder.
6. DEFAULT. A default hereunder will
occur if any of the following events occur: (1) Company fails to
pay any portion of the Obligations when due; (2) Company fails to
perform any undertaking or materially breaches any warranty or
covenant in this Security Agreement or the License Agreement; (3)
any statement, representation or warranty of Company under this
Security Agreement or the License Agreement are untrue in any
material respect when made; (4) Company makes an assignment for the
benefit of creditors or any proceeding is instituted by or against
it alleging that it is insolvent or unable to pay its debts as they
mature; (5) dissolution of Company; (6) an attachment, garnishment,
execution or other process is issued or a lien filed against any
property of Company, which is not removed or bonded within 30 days
from the date of imposition; and (7) Company transfers an interest
in any of the Collateral contrary to the provisions of this
Security Agreement without the prior written consent of Secured
Party. Waiver of any default will not constitute a waiver of any
other or subsequent default.
7. REMEDIES. Upon the occurrence of
any default hereunder at any time thereafter, all of the
Obligations will, at the election of Secured Party and (i) without
notice of such election, or demand for payment under the License
Agreement and (ii) notwithstanding anything to the contrary in the
License Agreement, become immediately due and payable and Secured
Party will have the remedies of a secured party under the New York
Uniform Commercial Code or other applicable law.
8. GENERAL. The waiver by Secured Party of
any breach of any provision of this Security Agreement or warranty
or representation herein set forth will not be construed as a
waiver of any subsequent breach. The failure to exercise any right
hereunder by Secured Party will not operate as a waiver of such
night. All rights and remedies herein provided are cumulative.
Company may not assign its rights or delegate its duties hereunder
without Secured Party's written consent. This Security Agreement
may not be altered or amended except by a writing signed by all the
parties hereto. Any provision hereof found to be invalid will not
invalidate the remainder. All words used herein will be construed
to be of such gender and number as the circumstances require. This
Security Agreement binds Company, its successors and assigns, and
inures to the benefit of Secured Party, its successors and
assigns.
9. NOTICES. All notices, requests,
consents, and other communications under this Note shall be in
writing and shall be delivered personally or by facsimile
transmission with electronic confirmation of transmission or by
overnight delivery service or by certified or registered mail,
return receipt requested, postage prepaid:
If to the
Company, at 1000 Atrium Way, Suite 100, Mount Laurel, New Jersey
08054 Fax: NEED NUMBER , Attention: Peter A. Worthington, CEO, or
at such other address or addresses as may have been furnished by
giving five days advance written notice to all other parties, with
a copy (which shall not constitute notice) to Westerman, Ball,
Ederer, Miller & Scharfstein, LLP, 170 Old Country Road, Suite
400, Mineola, New York 11501 Fax: (516) 622-9212 Attention: Alan
Ederer, Esq.
If to Secured
Party, at Universal Alternative Fuels, Inc. 1400 Old Country Road,
Suite 206, Westbury, NY 11590, Attention: Fax: (516) 228-8083 or at
such other address or addresses as may have been furnished by
giving five days advance written notice to all other parties, with
a copy (which shall not constitute notice) to Sol Slotnik, P.C., 11
East 44 U Street-19th Floor, New York, New York 10017,
Fax: (212) 986-2399, Attention: Sol Slotnik, Esq.
Notices provided in accordance with this Section
shall be deemed delivered upon personal delivery (including
confirmed facsimile), the next business day if sent by overnight
delivery service, or three business days after deposit in the
mail.
10. JURISDICTION AND VENUE.
Each party hereto hereby irrevocably submits to the jurisdiction of
any federal or state court sitting in the City, County and State of
New York in any action or proceeding arising out of or relating to
this Agreement, and each hereby irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined
in any such federal or state court. The Company accepts for itself
and in respect of its property, generally and unconditionally the
jurisdiction and venue of the aforesaid courts. The Company
irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to the Company at its address set forth in the first
paragraph provided that the Secured Party may serve process in any
other manner permitted by law. Each party hereto hereby irrevocably
waives any venue objection it may have to any such action or
proceeding arising out of or relating to this Agreement in any such
venue and any objection on the grounds that any such action or
proceeding in any such court has been brought in any inconvenient
forum. Nothing herein shall affect the right or any party hereto to
bring any action or proceeding against another party in the courts
of other jurisdictions.
11. WAIVER OF JURY TRIAL
RIGHT.
EACH PARTY HEREBY WAIVES IRREVOCABLY ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF,
RELATED TO OR IN CONNECTION WITH THIS SECURITY AGREEMENT, AND THE
ENFORCEMENT THEREOF, WHETHER ALLEGED IN TORT, CONTRACT OR OTHERWISE
AND WHETHER ASSERTED AS A CLAIM, COUNTERCLAIM, THIRD- PARTY CLAIM
OR IN ANY OTTIFIR FORM.
12. GOVERNING LAW. This Agreement
shall be interpreted in accordance with and construed under the
laws of the State of New York without giving effect to any
conflicts of laws principles. This Agreement shall be deemed for
all such purposes to have been executed and delivered in the State
of New York.
THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
IN WITNESS
WHEREOF, the parties have executed this Security Agreement as of
the dote first written above.
GLOBAL RESOURCE
CORPORATION
By: /s/
Peter A. Worthington
Name: Peter A.
Worthington
Title: Chief
Executive Officer
UNIVERSAL
ALTERNATIVE FUELS, INC.
SCHEDULE A
—TO BE ATTACHED
