Exhibit 10.4
SECURITY AGREEMENT
This Security Agreement (this "Agreement") is executed as of February 24,
2005, by and among Consolidated Energy, Inc., a Wyoming corporation (the
"Company"), Eastern Consolidated Energy, Inc., a Kentucky corporation and
wholly-owned subsidiary of the Company ("Eastern Consolidated"), Eastern
Consolidated Oil and Gas, Inc., a Kentucky corporation and wholly-owned
subsidiary of the Company ("Oil & Gas"), CEI Holdings, Inc., a Nevada
corporation and wholly-owned subsidiary of the Company ("CEI" and together
with the Company, Eastern Consolidated and Oil & Gas, the "Debtors" and
individually, a "Debtor"), and Gryphon Master Fund, L.P., a Bermuda limited
partnership, as collateral agent for the Secured Parties (the "Collateral
Agent").
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby
acknowledged, each Debtor hereby covenants and agrees with the Collateral
Agent, for the benefit of the Secured Parties, as follows:
1. Reference to Purchase Agreement and Notes. This Agreement is being
executed and delivered in connection with that certain Securities Purchase
Agreement (the "Purchase Agreement"), of even date herewith, by and among the
Company and the Purchasers named therein (each, together with their successors
and permitted assigns, a "Secured Party" and collectively, the "Secured
Parties"), and in connection with the issuance by the Company of the Notes
pursuant to the Purchase Agreement. Capitalized terms used in this Agreement
but not otherwise defined herein shall have the meanings ascribed to such
terms in the Purchase Agreement.
2. Incorporation of Purchase Agreement and Notes. The terms, conditions, and
provisions of the Purchase Agreement and the Notes are incorporated herein by
reference, the same as if set forth herein verbatim, which terms, conditions,
and provisions shall continue to be in full force and effect hereunder until
each Note is paid and performed in full.
3. Certain Definitions. As used herein, the following terms have the meanings
indicated:
Collateral means any and all assets and properties (real, personal or mixed)
of Debtors (or any of them), whether now owned or hereafter acquired,
including, without limitation, (i) all replacements, substitutions and
additions thereto, (ii) all books and records pertaining thereto, (iii) all
the accounts, notes and any other proceeds and products therefrom, and (iv)
the Company's entire equity interest in Eastern Consolidated, Oil & Gas and
CEI and all dividends and distributions in respect thereof.
Default means the occurrence of any one or more of the following events,
which in the case of clause (ii) below continues for a period of 5 days after
the Collateral Agent gives written notice thereof: (i) an Event of Default
(as defined in the Notes); (ii) except as otherwise provided in this
definition, the failure of any Debtor to perform any material covenant,
agreement, or condition contained herein; (iii) the levy against the
Collateral, or any part thereof, or any execution, attachment, sequestration,
or other writ; (iv) the appointment of a receiver with respect to the
Collateral, or any part thereof; (v) the filing by any Debtor, by way of
petition or answer, of any petition or other pleading seeking relief as a
debtor, or an adjustment of any Debtor's debts, or any other relief under any
bankruptcy, reorganization, or insolvency laws now or hereafter existing; or
(vi) the receipt by the Collateral Agent of information establishing that any
representation or warranty made by any Debtor herein is false, misleading, or
erroneous in any material respect.
Leasehold Mortgage means that certain Fee and Leasehold Mortgage, Assignment
of Leases and Subleases, Security Agreement, Fixture Filing and As-Extracted
Collateral Filing by Eastern Consolidated, as Mortgagor, to the Collateral
Agent, as Mortgagee.
Obligations means each Debtor's payment and performance under this Agreement,
the Purchase Agreement and the Notes, together with any and all renewals,
extensions, and modifications of the same, whether on account of principal,
interest, fees, indemnities, costs, expenses, costs of collection thereunder
or otherwise.
Obligor means any person obligated with respect to any of the Collateral,
whether as an account debtor, obligor on an instrument, issuer of securities,
or otherwise.
Security Interest means the security interest granted and the pledge and
assignment made under Paragraph 4.
UCC means the Uniform Commercial Code as enacted in the State of Texas, or
other applicable jurisdiction, as amended at the time in question.
4. Security Interest. In order to secure the full and complete payment and
performance of the Obligations when due, each Debtor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in and to the Collateral and pledges and assigns the Collateral to
the Collateral Agent, for the ratable benefit of the Secured Parties. Such
security interest is granted and such pledge and assignment are made as
security only and shall not subject the Collateral Agent to, or transfer or in
any way affect or modify, any obligation of any Debtor with respect to any of
the Collateral or any transaction involving or giving rise thereto.
5. Representations, Warranties and Covenants of Debtors
(a) Representations and Warranties with Respect to the Collateral. Each
Debtor represents and warrants that (i) it has all requisite power and
authority to enter into this Agreement; (ii) except for any financing
statement that may be filed by the Collateral Agent, for the ratable benefit
of the Secured Parties, with respect to the Collateral, no financing statement
covering the Collateral, or any part thereof, has been filed with any filing
officer or agency; (iii) no other security agreement covering the Collateral,
or any part thereof, has been made and no security interest, other than the
one created herein, has attached to or been perfected in the Collateral or in
any part thereof; (iv) on the date hereof each Debtors jurisdiction of
organization and identification number from such jurisdiction of organization
is specified on Schedule 1 hereto, and (v) no dispute, right of setoff,
counterclaim, or defense exists with respect to any part of the Collateral.
(b) Affirmative Covenants of Debtors. Each Debtor covenants and agrees to
each and all of the following: (i) to execute and deliver promptly to the
Collateral Agent all such other assignments, certificates, and supplemental
writings, and to do all other acts or things, as the Collateral Agent may
reasonably request in order more fully to evidence and perfect the security
interest created herein and to promptly pay the reasonable costs and expenses
of the Collateral Agent in connection with the Collateral Agent's perfection
of its security interests in the Collateral hereunder; (ii) to furnish the
Collateral Agent promptly with any information or writing that the Collateral
Agent may reasonably request concerning the Collateral; (iii) to allow the
Collateral Agent to inspect all books and records of any Debtor relating to
the Collateral or the Notes, and to make and take away copies of such books
and records at the Collateral Agent's expense; (iv) to notify the Collateral
Agent promptly of any change in any material fact or circumstance warranted or
represented by any Debtor in this Agreement or in any other writings furnished
by any Debtor to the Collateral Agent in connection with the Collateral; (v)
to notify the Collateral Agent promptly of any claim, action, or proceeding
affecting title to the Collateral, or any part thereof, or the security
interest herein, and at the request of the Collateral Agent, to appear in and
defend, at Debtors' sole cost and expense, any action or proceeding; (vi) to
maintain insurance customarily obtained by similar businesses and (vii) to pay
to the Collateral Agent promptly the amount of all costs and expenses
(including reasonable attorney's fees) incurred by the Collateral Agent in the
enforcement of their rights hereunder.
(c) Negative Covenants of Debtors. Each Debtor covenants and agrees that,
without the prior written consent of the Collateral Agent (which consent may
be granted or withheld in the sole and absolute discretion of the Collateral
Agent), such Debtor will not (i) except for sales of inventory in the ordinary
course of business consistent with past practice, sell, assign, or transfer
the Collateral or any of its rights therein, (ii) create any other security
interest in, mortgage, or otherwise encumber the Collateral or any part
thereof, or permit the Collateral to be or become subject to any lien,
attachment, execution, sequestration, other legal or equitable process, or any
encumbrance of any kind or character, except the security interest created
herein, or (iii) change its jurisdiction of organization, name or corporate
structure. Notwithstanding the foregoing, in the event that the AIRs are not
exercised in full by the Purchasers, the Collateral Agent, upon the request of
the Company, shall permit the Collateral to be subject to a lien or security
interest that is subordinate and junior to the Security Interest to secure
additional debt financing (not to exceed the amount equal to (A) $7,000,000
less (B) the amount of gross proceeds received by the Company from the
exercise of the AIRs) incurred by any Debtor to finance specific mining
operations of such Debtor; provided that each Person providing any such
additional debt financing executes and enters into customary subordination and
intercreditor agreements and any other customary agreements and documents
reasonably requested by the Collateral Agent. In addition, in the event that
the AIRs are not exercised in full by the Purchasers, the Collateral Agent,
upon the written direction of the holders of more than 50% of the then
outstanding aggregate principal amount of the Notes, may (but shall not be
obligated to) subordinate the Security Interest in certain (but not all) of
the Collateral in favor of a security interest granted to other Persons who
may in the future provide additional debt financing (not to exceed the amount
equal to (A) $7,000,000 less (B) the amount of gross proceeds received by the
Company from the exercise of the AIRs) incurred by any Debtor to finance
specific mining operations of such Debtor.
6. Default; Remedies. Should a Default occur and be continuing, the Collateral
Agent may, at its election, exercise any and all rights available to the
Collateral Agent and the Secured Parties under the UCC, in addition to any and
all other rights afforded by this Agreement, at law, in equity, or otherwise,
including, without limitation, (a) requiring any Debtor to assemble all or
part of the Collateral and make it available to the Collateral Agent at a
place to be designated by the Collateral Agent which is reasonably convenient
to such Debtor and the Collateral Agent, (b) surrendering any policies of
insurance on all or part of the Collateral and receiving and applying the
unearned premiums as a credit on the Obligations, (c) applying by appropriate
judicial proceedings for appointment of a receiver for all or part of the
Collateral (and each Debtor hereby consents to any such appointment), (d)
applying to the Obligations any cash held by the Collateral Agent under this
Agreement, and (e) exercising any and all of the rights and remedies available
to the Collateral Agent under the Leasehold Mortgage. In furtherance of the
foregoing, the Collateral Agent agrees that, unless and until a Default has
occurred and is continuing, it will not exercise its rights under Section 2.1
of the Leasehold Mortgage to collect rent and other sums due under all
Subleases (as defined in the Leasehold Mortgage)).
(a) Notice. Reasonable notification of the time and place of any public sale
of the Collateral, or reasonable notification of the time after which any
private sale or other intended disposition of the Collateral is to be made,
shall be sent to Debtors and to any other person entitled to notice under the
UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, the
Collateral Agent may sell or otherwise dispose of the Collateral without
notification, advertisement, or other notice of any kind. It is agreed that
notice sent or given not less than three calendar days prior to the taking of
the action to which the notice relates is reasonable notification and notice
for the purposes of this subparagraph.
(b) Sales of Securities. In connection with the sale of any Collateral that is
securities, the Collateral Agent are authorized, but not obligated, to limit
prospective purchasers to the extent deemed necessary or desirable by the
Collateral Agent to render such sale exempt from the registration requirements
of the Securities Act of 1933, as amended, and any applicable state securities
laws, and no sale so made in good faith by the Collateral Agent shall be
deemed not to be "commercially reasonable" because so made.
(c) Application of Proceeds. The Collateral Agent shall apply the proceeds of
any sale or other disposition of the Collateral under this Paragraph 6 in the
following order: first, to the payment of all its reasonable expenses
incurred in retaking, holding, and preparing any of the Collateral for sale(s)
or other disposition, in arranging for such sale(s) or other disposition, and
in actually selling or disposing of the same (all of which are part of the
Obligations); second, toward repayment of any other amounts expended by the
Collateral Agent under this Agreement; and third, toward payment of the
balance of the Obligations on a pro rata basis. Any surplus remaining shall be
delivered to Debtors or as a court of competent jurisdiction may direct.
7. Other Rights.
(a) Performance. In the event any Debtor shall fail to pay when due all taxes
on any of the Collateral, or to preserve the priority of the Security Interest
in any of the Collateral, or otherwise fail to perform any of its obligations
under this Agreement with respect to the Collateral, then the Collateral Agent
may, at its option, but without being required to do so, pay such taxes,
prosecute or defend any suits in relation to the Collateral, or take all such
other action which any Debtor is required, but has failed or refused, to take
under this Agreement. Any sum which may be expended or paid by the Collateral
Agent under this subparagraph (including, without limitation, court costs and
attorneys' fees) shall bear interest from the dates of expenditure or payment
at the highest lawful rate until paid and, together with such interest, shall
be payable by each Debtor to the Collateral Agent upon demand and shall be
part of the Obligations.
(b) Collection. Upon notice from the Collateral Agent, each Obligor with
respect to any payments on any of the Collateral (including, without
limitation, dividends and other distributions with respect to securities and
insurance proceeds payable by reason of loss or damage to any of the
Collateral) is hereby authorized and directed by each Debtor to make payment
directly to the Collateral Agent, for the benefit of the Secured Parties,
regardless of whether any Debtor was previously making collections thereon.
Subject to Paragraph 7(e) hereof, until such notice is given, each Debtor is
authorized to retain and expend all payments made on the Collateral. The
Collateral Agent shall have the right in its own name or in the name of any
Debtor to compromise or extend time of payment with respect to all or any
portion of the Collateral for such amounts and upon such terms as the
Collateral Agent may determine; to demand, collect, receive, receipt for, xxx
for, compound, and give acquaintances for any and all amounts due or to become
due with respect to the Collateral; to take control of cash and other proceeds
of any Collateral; to endorse the name of any Debtor on any notes,
acceptances, checks, drafts, money orders, or other evidences of payment on
the Collateral that may come into the possession of the Collateral Agent; to
sign the name of any Debtor on any invoice or xxxx of lading relating to any
Collateral, on any drafts against Obligors or other persons making payment
with respect to the Collateral, on assignments and verifications of accounts
or other Collateral and on notices to Obligors making payment with respect to
the Collateral; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this Agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, the Collateral Agent is authorized, in its sole
discretion, either in its own name or in the name of any Debtor, to take such
action as the Collateral Agent shall deem appropriate for the collection of
any amounts owed with respect to the Collateral or upon which a delinquency
exists. Regardless of any other provision hereof, however, the Collateral
Agent shall never be liable for its failure to collect, or for its failure to
exercise diligence in the collection of, any amounts owed with respect to the
Collateral, nor shall it be under any duty whatever to anyone except Debtors
to account for funds that they shall actually receive hereunder. Without
limiting the generality of the foregoing, the Collateral Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders, or similar matters relating to any Collateral, or for
informing any Debtor with respect to any of such matters (irrespective of
whether the Collateral Agent actually has, or may be deemed to have, knowledge
thereof). The rights granted to the Collateral Agent under this subparagraph
may be exercised at any time, whether or not a Default has occurred and is
continuing.
(c) Record Ownership of Securities. Whether or not a Default has occurred and
is continuing, the Collateral Agent at any time may have any Collateral that
is securities and that is in the possession of the Collateral Agent, or their
nominee or nominees, registered in its name, or in the name of its nominee or
nominees, as pledgee; and, as to any securities so registered, the Collateral
Agent shall execute and deliver (or cause to be executed and delivered) to the
applicable Debtor all such proxies, powers of attorney, dividend coupons or
orders, and other documents as such Debtor may reasonably request for the
purpose of enabling such Debtor to exercise the voting rights and powers which
it is entitled to exercise under this Agreement and to receive the dividends
and other payments in respect of securities which it is authorized to receive
and retain under this Agreement.
(d) Voting of Securities. As long as a Default has not occurred and is not
continuing, Debtors shall be entitled to exercise all voting rights pertaining
to any Collateral that is securities. After the occurrence and during the
continuance of a Default, the right to vote any Collateral that is securities
shall be vested exclusively in the Collateral Agent. To this end, each Debtor
hereby irrevocably constitutes and appoints the Collateral Agent the proxy and
attorney-in-fact of such Debtor, with full power of substitution, to vote, and
to act with respect to, any and all Collateral that is securities standing in
the name of such Debtor or with respect to which such Debtor is entitled to
vote and act, subject to the understanding that such proxy may not be
exercised unless a Default has occurred and is continuing. The proxy herein
granted is coupled with an interest, is irrevocable, and shall continue until
the Obligations have been paid and performed in full.
(e) Certain Proceeds. Notwithstanding any provision of this Agreement to the
contrary, any and all stock dividends or distributions in property made on or
in respect of any Collateral that is securities, and any proceeds of any
Collateral that is securities, whether such dividends, distributions, or
proceeds result from a subdivision, combination, or reclassification of the
outstanding capital stock of any issuer thereof or as a result of any merger,
consolidation, acquisition, or other exchange of assets to which any issuer
may be a party, or otherwise, shall be part of the Collateral hereunder, and
shall, if received by any Debtor, be held in trust for the Collateral Agent,
for the benefit of the Secured Parties. Upon notice from the Collateral Agent,
such dividends, distributions or other proceeds shall forthwith be delivered
to the Collateral Agent (accompanied by proper instruments of assignment
and/or stock and/or bond powers executed by such Debtor in accordance with the
Collateral Agent's instructions) to be held subject to the terms of this
Agreement. Any cash proceeds of Collateral which come into the possession of
the Collateral Agent (including, without limitation, insurance proceeds) may,
at the Collateral Agent's option, be applied in whole or in part to the
Obligations (to the extent then due), be released in whole or in part to or on
the written instructions of Debtors for any general or specific purpose, or be
retained in whole or in part by the Collateral Agent as additional Collateral.
Any cash Collateral in the possession of the Collateral Agent may be invested
by the Collateral Agent in certificates of deposit of a term of 12 months or
less issued by any state or national bank having combined capital and surplus
greater than $100,000,000, or in securities issued or guaranteed by the United
States of America or any agency thereof that mature within a year of the date
of acquisition thereof. The Collateral Agent shall never be obligated to make
any such investment and shall never have any liability to any Debtor for any
loss that may result therefrom. All interest and other amounts earned from any
investment of Collateral may be dealt with by the Collateral Agent in the same
manner as other cash Collateral. The provisions of this subparagraph shall be
applicable whether or not a Default has occurred and is continuing.
(f) Subrogation. If any of the Obligations is given in renewal or extension
or applied toward the payment of indebtedness secured by any lien, the
Collateral Agent, for the ratable benefit of the Secured Parties shall be, and
is hereby, subrogated to all of the rights, titles, interests, and liens
securing the indebtedness so renewed, extended, or paid.
(g) Indemnification. Each Debtor hereby, jointly and severally, assumes all
liability for the Collateral, for the Security Interest, and for any use,
possession, maintenance, and management of, all or any of the Collateral,
including, without limitation, any taxes arising as a result of, or in
connection with, the transactions contemplated herein, and agrees to assume
liability for, and to indemnify and hold the Collateral Agent and the Secured
Parties harmless from and against, any and all claims, causes of action, or
liability, for injuries to or deaths of persons and damage to property,
howsoever arising from or incident to such use, possession, maintenance, and
management, whether such persons be agents or employees of any Debtor or of
third parties, or such damage be to property of any Debtor or of others. Each
Debtor, jointly and severally, agrees to indemnify, save, and hold the
Collateral Agent and the Secured Parties harmless from and against, and
covenants to defend the Collateral Agent and the Secured Parties against, any
and all losses, damages, claims, costs, penalties, liabilities, and expenses,
including, without limitation, court costs and attorneys' fees, howsoever
arising or incurred because of, incident to, or with respect to the Collateral
or any use, possession, maintenance, or management thereof and the execution,
delivery, enforcement, performance and administration of this Agreement.
(h) Duty of Collateral Agent. The Collateral Agent's sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9.207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Collateral Agent deals with similar property for
its own account. Neither the Collateral Agent, any Secured Party nor any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Debtor or any other person
or to take any other action whatsoever with regard to the Collateral or any
part thereof. The power conferred on the Collateral Agent and the Secured
Parties hereunder are solely to protect the Collateral Agent's and the Secured
Parties' interests in the Collateral and shall not impose any duty upon the
Collateral Agent or any Secured Party to exercise any such powers. The
Collateral Agent and the Secured Parties shall be accountable only to the
Debtors and only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Debtor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
8. Miscellaneous.
(a) Term. Upon full and final payment in cash and performance of the
Obligations, this Agreement (other than Paragraph 7(g) hereof) shall
thereafter terminate upon receipt by the Collateral Agent of the Company's
written notice of such termination.
(b) Actions Not Releases. The Security Interest and each Debtor's Obligations
and the Collateral Agent's and the Secured Parties' rights hereunder shall not
be released, diminished, impaired, or adversely affected by the occurrence of
any one or more of the following events: (i) the taking or accepting of any
other security or assurance for any or all of the Obligations; (ii) any
release, surrender, exchange, subordination, or loss of any security or
assurance at any time existing in connection with any or all of the
Obligations; (iii) the modification of, amendment to, or waiver of compliance
with any terms of this Agreement without the notification or consent of any
Debtor, except as required herein (the right to such notification or consent
being herein specifically waived by each Debtor); (iv) the insolvency,
bankruptcy, or lack of corporate, partnership or trust power of any party at
any time liable for the payment of any or all of the Obligations, whether now
existing or hereafter occurring; (v) any renewal, extension, or rearrangement
of the payment of any or all of the Obligations, either with or without notice
to or consent of any Debtor, or any adjustment, indulgence, forbearance, or
compromise that may be granted or given by the Collateral Agent to any Debtor;
(vi) any neglect, delay, omission, failure, or refusal of the Collateral Agent
to take or prosecute any action in connection with this Agreement or any other
agreement, document, guaranty, or instrument evidencing, securing, or assuring
the payment of all or any of the Obligations; (vii) any failure of the
Collateral Agent to notify any Debtor of any renewal, extension, or assignment
of the Obligations or any part thereof, or the release of any security, or of
any other action taken or refrained from being taken by the Collateral Agent
against any Debtor or any new agreement between Secured Parties and any
Debtor, it being understood that the Collateral Agent shall not be required to
give Debtor any notice of any kind under any circumstances whatsoever with
respect to or in connection with the Obligations, including, without
limitation, notice of acceptance of this Agreement or any Collateral ever
delivered to or for the account of the Collateral Agent hereunder; (viii) the
illegality, invalidity, or unenforceability of all or any part of the
Obligations against any party obligated with respect thereto by reason of the
fact that the Obligations, or the interest paid or payable with respect
thereto, exceeds the amount permitted by law, the act of creating the
Obligations, or any part thereof, is ultra xxxxx, or the officers, partners,
or trustees creating same acted in excess of their authority, or for any other
reason; or (ix) if any payment by any party obligated with respect thereto is
held to constitute a preference under applicable laws or for any other reason
the Collateral Agent is required to refund such payment or pay the amount
thereof to someone else.
(c) Waivers. Except to the extent expressly otherwise provided herein, each
Debtor waives (i) any right to require the Collateral Agent or Secured Parties
to proceed against any other person, to exhaust their rights in the
Collateral, or to pursue any other right which the Collateral Agent or Secured
Parties may have; (ii) with respect to the Obligations, presentment and demand
for payment, protest, notice of protest and nonpayment, and notice of the
intention to accelerate; and (iii) all rights of marshaling in respect of any
and all of the Collateral.
(d) Financing Statement. The Collateral Agent shall be entitled at any time to
file this Agreement or a carbon, photographic, or other reproduction of this
Agreement, as a financing statement, but the failure of the Collateral Agent
to do so shall not impair the validity or enforceability of this Agreement.
(e) Amendments. This instrument may be amended only by an instrument in
writing executed jointly by each Debtor and the Collateral Agent, and
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof; provided that the Collateral Agent shall only be
permitted to enter into any amendment that releases all or substantially all
of the Collateral or releases any Debtor from its obligations hereunder upon
the written direction of the holders of more than 50% of the then outstanding
aggregate principal amount of the Notes.
(f) Multiple Counterparts. This Agreement has been executed in a number of
identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
(g) Parties Bound; Assignment. This Agreement shall be binding on Debtors each
of their successors and permitted assigns and shall inure to the benefit of
the Collateral Agent and the Secured Parties and their respective successors
and assigns. No Debtor may, without the prior written consent of the
Collateral Agent, assign any rights, duties, or obligations hereunder. In the
event of an assignment of all or part of the Obligations, the Security
Interest and other rights and benefits hereunder, to the extent applicable to
the part of the Obligations so assigned, shall be transferred therewith.
(h) Governing Law; Exclusive Jurisdiction. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Texas,
without giving effect to the choice of law provisions. This Agreement shall
not be interpreted or construed with any presumption against the party causing
this Agreement to be drafted. Each Debtor, the Collateral Agent and each
Secured Party (i) hereby irrevocably submit to the exclusive jurisdiction of
the United States District Court sitting in the Northern District of Texas and
the courts of the State of Texas located in Dallas, Texas, for the purposes of
any suit, action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby, and (ii) hereby waive, and agree not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper.
(i) Complete Agreement. This Agreement, the Purchase Agreement, the Notes, and
all other agreements, instruments or documents executed and/or delivered in
connection therewith are intended by Debtors and the Collateral Agent as a
final expression of their agreement with respect to the subject matter hereof
and thereof, and supersede all prior agreements and understandings whether
oral or written with respect to the subject matter hereof and thereof.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
"Debtors":
CONSOLIDATED ENERGY, INC.
By: /s/Xxxxx Xxxxxxx, President
EASTERN CONSOLIDATED ENERGY, INC.
By: /s/Xxxxx Xxxxxxx, President
EASTERN CONSOLIDATED OIL AND GAS, INC.
By: /s/Xxxxx Xxxxxxx, President
CEI HOLDINGS, INC.
By: /s/Xxxxx Xxxxxxx, President
"Collateral Agent":
GRYPHON MASTER FUND, L.P.
By: Gryphon Partners, L.P., its General Partner
By: Gryphon Management Partners, L.P., its General Partner
By: Gryphon Advisors, L.L.C., its General Partner
By: /s/X.X. Xxxx, XX, Authorized Agent
