EXHIBIT 10f
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is dated as of June
___, 2001 between CHAPEAU, INC. dba BLUEPOINT ENERGY PRODUCTS, INC., a
Utah corporation (the "Debtor") and ▇▇▇▇▇ ▇▇▇▇▇ of Ramsey, NJ, (the
"Lender").
WHEREAS, in the Convertible Secured Promissory Note (the "Promissory
Note"), dated as of even date herewith, between Lender and Debtor,
Lender has agreed to provide funds to Debtor to facilitate the next
phase of development of Debtor's products in the stated amount of
$80,000.00; this Security Agreement, the Promissory Note, any
additional promissory notes, and all other agreements and documents in
connection therewith and with the Loans shall be referred to as the
"Loan Documents."
WHEREAS, the Debtor will benefit from the Lender's extension of the
Loan to Debtor, and desires to grant to Lender the security set forth
in this Security Agreement, as a condition precedent to Lender's
extension of the Loan to Debtor.
NOW, THEREFORE, in consideration of the premises and promises
contained herein and in order to induce the Lender to make the Loan,
the Debtor hereby agrees with the Lender as follows:
GRANT OF SECURITY INTEREST. THE DEBTOR HEREBY GRANTS TO THE
LENDER, TO SECURE THE PAYMENT OF ALL MONIES DUE BY DEBTOR TO
THE LENDER WITH RESPECT TO THE LOANS AND THE PERFORMANCE OF
ALL OBLIGATIONS OF DEBTOR TO THE LENDER ARISING UNDER THE
LOAN DOCUMENTS AND THE LOANS, AND UNDER ALL OTHER DOCUMENTS
AND AGREEMENTS DELIVERED BY DEBTOR TO LENDER PURSUANT TO THE
PROMISSORY NOTES, OF EVERY KIND AND DESCRIPTION, WHETHER
ABSOLUTE OR CONTINGENT, DUE OR TO BECOME DUE, NOW EXISTING
OR HEREAFTER INCURRED, INCLUDING AMOUNTS THAT WOULD BECOME
DUE BUT FOR THE OPERATION OF THE AUTOMATIC STAY UNDER
SECTION 362(A) OF THE BANKRUPTCY CODE, 11 U.S.C. 362(A),
(COLLECTIVELY, THE "OBLIGATIONS"), A SECURITY INTEREST IN
ALL ASSETS AND PROPERTY OF THE DEBTOR, WHEREVER LOCATED,
INCLUDING THE FOLLOWING (COLLECTIVELY THE "COLLATERAL"):
Equipment. All equipment now owned or hereafter acquired by
Debtor, all machinery, fixtures, vehicles, if any (including
motor vehicles and trailers), and any interest in any of the
foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any
of the foregoing, wherever located.
Inventory. All inventory now owned or hereafter acquired by
Debtor, including, without limitation, all merchandise, raw
materials, parts, supplies, packing and shipping materials, work
in process and finished products, and documents of title
representing any of the foregoing.
General Intangibles. All contract rights and general intangibles
now owned or hereafter acquired by Debtor, including, without
limitation, goodwill, leases, license agreements, blueprints,
drawings, purchase orders, customer lists, claims, computer
programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of
insurance and rights to payment of any kind;
Accounts. All now existing and hereafter arising receivables,
accounts, contract rights, royalties, license rights and all
other forms of obligations owing to Debtor arising out of the
sale or lease of goods, the licensing of technology or the
rendering of services by Debtor, 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 Debtor;
Proprietary Collateral. All now owned or hereafter acquired
Proprietary Collateral of Debtor. "Proprietary Collateral" means
all patents, patent applications, draft patent applications,
registered and unregistered trademarks, registered and
unregistered trade names, registered and unregistered service
marks, registered and unregistered copyrights, registered domain
names and other intellectual property, and all licenses, rights
and interests of Debtor related to any of the foregoing,
including: (i) all computer software in which Debtor has an
interest, including the source code thereof (collectively the
"Programs"), including without limitation all trade secrets
embodied in the Programs and all copyrights and patents with
respect to the Programs, in whatever form, whether tangible or
intangible, on paper or electronic; (ii) any databases maintained
by the Debtor for use in connection with the Programs, in
whatever form, whether tangible or intangible, on paper or
electronic; (iii) all claims, causes of action and rights to ▇▇▇
for past, present and future infringement or unconsented use of
any of the foregoing and all rights pertaining thereto; (iv) all
general intangibles, intangible intellectual property, and other
similar property of Debtor of any kind or nature, whether now
owned or hereafter acquired or developed, associated with or
arising out of any of the foregoing; (v) all proceeds of any of
the foregoing, including, without limitation, all license
royalties and proceeds of infringement suits; and (vi) all
derivative works, modifications, additions and substitutions of
the foregoing.
Investment Property. All investment property, securities and
other property of any kind of Debtor.
Negotiable Collateral. All of Debtor's letters of credit,
advices of credit, negotiable documents, warehouse receipts,
bills of lading, certificates of title, certificates of deposit,
chattel paper, instruments, notes, documents and documents of
title.
Debtor's Books. All of Debtor's Books. "Debtor's Books" means
all of Debtor's books, records, databases and other electronic
and computer records or tape files, including, without
limitation, ledgers and records with respect to Debtor's assets,
liabilities, business operations, financial condition, the
Collateral, clients, prospective clients, employees and
prospective employees, and the equipment containing such
information.
Proceeds. All proceeds of the foregoing (including, without
limitation, whatever is receivable or received when Collateral or
proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, including,
without limitation, rights to payment or performance with respect
to return premiums, insurance proceeds, indemnities, warranties,
and causes of action affecting or relating to the Collateral),
and all claims, rights and interests in any of the above and all
substitutions therefor and additions and accessions thereto.
REPRESENTATIONS, WARRANTIES AND COVENANTS. UNTIL THE
OBLIGATIONS ARE INDEFEASIBLY PAID AND PERFORMED IN FULL, THE
DEBTOR HEREBY REPRESENTS AND WARRANTS TO AND COVENANTS WITH
THE LENDER THAT:
Ownership of Collateral. Debtor is the owner of, and has good and
marketable title to, the Collateral, free and clear of all Liens.
"Lien" means any security interest, pledge, bailment, mortgage,
deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance
or other similar arrangement or interest in real or personal
property, whether such interest is based on common law, statute
or contract.
Enforceable Lien. This Agreement creates a valid and enforceable
Lien on the Collateral in favor of Lender, and all filings and
other actions necessary or desirable to protect and perfect such
Lien have been duly taken or will be taken upon the filing of UCC
financing statements, and the filing of collateral assignments
with respect to the Proprietary Collateral with the United States
Patent and Trademark Office ("PTO") and the United States
Copyright Office.
Location. Debtor's principal place of business, chief executive
office and Debtor's Books are located at ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇,
▇▇ ▇▇▇▇▇ ("Debtor's Location").
Name. Debtor does not conduct business under any business name,
trade name or style other than the name set forth in the
introductory paragraph hereof. None of the Collateral has been
held in the name of any other person or entity over the past 5
years.
Proprietary Collateral.
Schedule 1 attached hereto lists all of the
Debtor's patents, patent applications, patent disclosure
documents, draft patent applications, registered and
unregistered trademarks, registered and unregistered trade
names, registered and unregistered service marks, registered
and unregistered logos, registered and unregistered
copyrights and registered domain names All Proprietary
Collateral is subsisting and has not been adjudged invalid
or unenforceable, in whole or in part. All maintenance fees
required to be paid with respect to the registration or
recordation of, or otherwise on account of, such Proprietary
Collateral have been timely paid.
With respect to any Proprietary Collateral
for which Debtor is either a licensor or a licensee pursuant
to a license or licensing agreement, each such license or
licensing agreement is in full force and effect, and Debtor
is not in default of any of its obligations thereunder.
To the best knowledge of Debtor, no past,
present or contemplated future use of the Proprietary
Collateral by Debtor has, does or will infringe upon or
violate any right, privilege or license agreement of or with
any other person or entity. To the best knowledge of
Debtor, no material infringement or unauthorized use
presently is being made of any of the Proprietary Collateral
by any person or entity.
No Untrue Statement. All information set forth herein and in the
other Loan Documents, or hereafter supplied to Lender by or on
behalf of Debtor with respect to the Collateral, contains no
untrue statement of a material fact and does not omit and will
not omit to state any material fact necessary to make any
information so supplied, in light of the circumstances under
which they were supplied, not misleading.
Protection of Collateral and Lender's Lien. Debtor agrees to
perform all acts that may be necessary to maintain, preserve,
protect and perfect the Collateral, the Lien granted to Lender
therein and the first priority of Lender's Lien. Debtor's
obligations under this Section shall include the maintenance of
all Proprietary Collateral as Debtor's exclusive property and the
protection of Lender's interest therein, including the
maintenance of registrations and applications, and the filing of
renewals, affidavits of use, affidavits of incontestability and
opposition, and interference and cancellation proceedings. Debtor
agrees to appear in and defend any action or proceeding which may
affect its title to, or Lender's interest in, any Collateral that
is material to the business of Debtor, including, without
limitation, suits for infringement of any Proprietary Collateral.
Charges on Collateral. Debtor agrees to pay promptly when due
all taxes, Liens and all other charges now or hereafter imposed
upon or affecting any Collateral. Should the Debtor fail to do so
the Lender may, in its discretion, discharge taxes, charges and
other encumbrances at any time levied or placed on or assessed
with respect to the Collateral, make repairs thereof and pay any
necessary filing fees, if the failure to do so could have a
material adverse effect on the business, properties, assets,
operation or condition (financial or otherwise) of the Debtor and
any subsidiaries, taken as a whole. The Debtor agrees to
reimburse the Lender on demand for any and all expenditures so
made and until paid the amount thereof shall be a debt secured by
the Collateral. The Lender shall not have any obligation to the
Debtor to make any such expenditures, nor shall the making
thereof relieve the Debtor of any default prior to reimbursement
by the Debtor to the Lender in full of any such expenditures.
Further Assurances. Debtor agrees to procure, execute and
deliver from time to time any endorsements, assignments,
financing statements, collateral assignments and other writings
reasonably deemed necessary or appropriate by Lender to perfect,
maintain and protect its Lien hereunder and the priority thereof.
In furtherance thereof, if Debtor shall obtain rights to any new
Proprietary Collateral (whether pursuant to licenses, or
amendments or supplements to existing Proprietary Collateral, or
otherwise), the provisions of this Security Agreement shall
automatically apply thereto and Debtor shall give to Lender
prompt notice thereof. Debtor shall do all things deemed
necessary or advisable by Lender to ensure the validity,
perfection, priority and enforceability of the Lien of Lender in
such future acquired Proprietary Collateral.
Changes in Name or Location. Debtor shall not change its name,
its state of incorporation, the location of the Collateral or the
location of Debtor's principal executive office except upon 30
days' advance written notice to Lender.
Records of Collateral. Debtor shall keep separate, accurate and
complete records of the Collateral and provide Lender with such
records and such other reports and information relating to the
Collateral as Lender may reasonably request from time to time.
Transfer of Collateral. Debtor agrees not to sell, encumber,
lease, rent, license, abandon, or cause to be rendered invalid or
unenforceable, or otherwise dispose of or transfer any
Collateral, or right or interest therein, except for a de minimis
portion thereof, other than to Lender, or with the prior written
consent of Lender.
Notice of Loss. Debtor shall promptly notify Lender in writing of
any material loss, damage or destruction to, infringement of, and
the occurrence of any event that could have a material adverse
effect on, any Collateral or Lender's Lien therein, whether or
not covered by insurance, including, without limitation, any
petition under the Bankruptcy Code filed by or against any
licensor of any of the Proprietary Collateral for which Debtor is
a licensee.
CERTAIN REMEDIES. UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT HEREUNDER, THE LENDER MAY
AT ANY TIME IN ITS DISCRETION TRANSFER ANY PROPERTY
CONSTITUTING COLLATERAL INTO ITS OWN NAME OR THAT OF ITS
NOMINEE AND RECEIVE THE INCOME THEREON AND HOLD THE SAME AS
SECURITY FOR OBLIGATIONS OR APPLY IT ON PRINCIPAL OR
INTEREST DUE ON OBLIGATIONS. NONE OF THE AFOREMENTIONED
RIGHTS OR REMEDIES SHALL INURE TO THE BENEFIT OF THE LENDER
AT ANY TIME WHEN AN EVENT OF DEFAULT IS NOT CONTINUING. THE
POWERS CONFERRED ON THE LENDER BY THIS PARAGRAPH ARE SOLELY
TO PROTECT THE INTEREST OF THE LENDER AND SHALL NOT IMPOSE
ANY DUTIES ON THE LENDER TO EXERCISE ANY POWERS.
DEFAULT: REMEDIES. DEBTOR SHALL BE IN DEFAULT UNDER THIS
SECURITY AGREEMENT UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT AS DEFINED IN THE PURCHASE AGREEMENT OR ANY OTHER
EVENT OF DEFAULT UNDER ANY NOTE OR ANY OTHER LOAN DOCUMENTS,
INCLUDING WITHOUT LIMITATION ANY BREACH OF ANY
REPRESENTATION, WARRANTY OR COVENANT IN THIS SECURITY
AGREEMENT. THEREUPON, AND AS LONG AS SUCH EVENT OF DEFAULT
CONTINUES, THE LENDER SHALL THEN HAVE IN ANY JURISDICTION
WHERE ENFORCEMENT HEREOF IS SOUGHT, TO THE FULLEST EXTENT
PERMITTED BY LAW FROM TIME TO TIME, IN ADDITION TO ALL OTHER
RIGHTS AND REMEDIES, THE RIGHTS AND REMEDIES OF A SECURED
PARTY UNDER THE UNIFORM COMMERCIAL CODE OF CALIFORNIA,
INCLUDING WITHOUT LIMITATION THERETO THE RIGHT TO TAKE
IMMEDIATE POSSESSION OF THE COLLATERAL, AND FOR THIS PURPOSE
THE LENDER MAY, SO FAR AS DEBTOR CAN GIVE AUTHORITY
THEREFOR, ENTER UPON ANY PREMISES ON WHICH THE COLLATERAL,
OR ANY PART THEREOF, MAY BE SITUATED AND REMOVE THE SAME
THEREFROM. THE DEBTOR WILL UPON DEMAND MAKE THE COLLATERAL
AVAILABLE TO THE LENDER AT A PLACE AND TIME DESIGNATED BY
THE LENDER THAT IS REASONABLY CONVENIENT TO BOTH PARTIES.
THE LENDER WILL GIVE THE DEBTOR AT LEAST TEN DAYS PRIOR
WRITTEN NOTICE OF THE TIME AND PLACE OF ANY PUBLIC SALE OF
COLLATERAL OR OF THE TIME AFTER WHICH ANY PRIVATE SALE
THEREOF IS TO BE MADE.
PRIVATE SALE AND COMPLIANCE WITH LAW.
(a) Lender shall not incur any liability as a result of the
sale of Collateral, or any part thereof, at any private sale conducted
in a commercially reasonable manner. Debtor hereby waives any claim
against Lender arising by reason of the fact that the price at which
Collateral may have been sold at such a private sale conducted in a
commercially reasonable manner was less than the price which might
have been obtained at a public sale or was less than the aggregate
amount of the Obligations, even if Lender accepts the first offer
received and does not offer Collateral to more than one offeree.
(b) Debtor agrees that in any sale of any of the Collateral
whenever an event of default hereunder shall have occurred and be
continuing, Lender is hereby authorized to comply with any limitation
or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
or in order to obtain any required approval of the sale or of the
purchaser by any governmental regulatory authority or official, and
Debtor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall Lender be liable or
accountable to Debtor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction.
RIGHTS WITH RESPECT TO PROPRIETARY COLLATERAL. UPON THE
OCCURRENCE AND CONTINUANCE OF AN EVENT OF DEFAULT, LENDER
MAY ASSERT OR RETAIN ANY RIGHTS UNDER ANY LICENSE AGREEMENT
FOR ANY PROPRIETARY COLLATERAL, INCLUDING ANY RIGHTS OF
DEBTOR ARISING UNDER SECTION 365(N) OF THE BANKRUPTCY CODE;
MAY EXECUTE ANY AND ALL APPLICATIONS, DOCUMENTS, PAPERS AND
INSTRUMENTS FOR LENDER TO USE ANY PROPRIETARY COLLATERAL;
MAY GRANT OR ISSUE ANY EXCLUSIVE OR NON-EXCLUSIVE LICENSE
WITH RESPECT TO ANY PROPRIETARY COLLATERAL; AND MAY ASSIGN,
CONVEY OR OTHERWISE TRANSFER TITLE IN OR DISPOSE OF ANY
PROPRIETARY COLLATERAL. UPON THE OCCURRENCE AND CONTINUANCE
OF AN EVENT OF DEFAULT, LENDER MAY ENFORCE OR PROTECT ANY
PROPRIETARY COLLATERAL, AND MAY DEFEND, SETTLE, ADJUST OR
INSTITUTE ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY
PROPRIETARY COLLATERAL, IN WHICH EVENT DEBTOR SHALL, AT THE
REQUEST OF LENDER, DO ANY AND ALL LAWFUL ACTS AND EXECUTE
ANY AND ALL DOCUMENTS REQUESTED BY LENDER IN AID OF LENDER.
TO THE EXTENT THAT LENDER SHALL ELECT NOT TO BRING SUIT TO
ENFORCE ANY PROPRIETARY COLLATERAL, DEBTOR SHALL USE ALL
REASONABLE MEASURES AND ITS DILIGENT EFFORTS, WHETHER BY
ACTION, SUIT, PROCEEDING OR OTHERWISE, TO PREVENT THE
INFRINGEMENT, MISAPPROPRIATION OR VIOLATION THEREOF BY
OTHERS AND FOR THAT PURPOSE AGREES TO DILIGENTLY MAINTAIN
ANY ACTION, SUIT OR PROCEEDING AGAINST ANY PERSON OR ENTITY
NECESSARY TO PREVENT SUCH INFRINGEMENT, MISAPPROPRIATION OR
VIOLATION. IN FURTHERANCE OF LENDER'S RIGHTS HEREUNDER,
DEBTOR HEREBY GRANTS TO LENDER AN IRREVOCABLE, NON-EXCLUSIVE
LICENSE (EXERCISABLE WITHOUT ROYALTY OR OTHER PAYMENT BY
LENDER) TO USE, LICENSE OR SUBLICENSE ANY PROPRIETARY
COLLATERAL IN WHICH DEBTOR NOW OR HEREAFTER HAS ANY RIGHT,
TITLE OR INTEREST TOGETHER WITH THE RIGHT OF ACCESS TO ALL
MEDIA IN WHICH ANY OF THE FOREGOING MAY BE RECORDED OR
STORED.
APPLICATION OF PROCEEDS. ALL PROCEEDS RECEIVED BY THE
LENDER IN RESPECT OF ANY SALE OF, COLLECTION FROM, OR OTHER
REALIZATION UPON ALL OR ANY PART OF THE COLLATERAL SHALL BE
HELD BY THE LENDER AS COLLATERAL FOR, AND PROMPTLY APPLIED
IN WHOLE BY THE LENDER AGAINST, THE OBLIGATIONS IN THE
FOLLOWING ORDER OF PRIORITY:
FIRST: To the repayment of the costs and expenses of such
sale, collection or other realization, and all expenses, liabilities
and advances made or incurred by the Lender in connection therewith;
SECOND: After payment in full of the amounts specified in
the preceding subparagraph, to the payment of all Obligations; and
THIRD: After payment in full of the amounts specified in
the preceding subparagraphs, to the payment to or upon the order of
the Debtor, or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct, of any
surplus then remaining.
LENDER APPOINTED ATTORNEY-IN-FACT. THE DEBTOR HEREBY
IRREVOCABLY APPOINTS THE LENDER AS THE DEBTOR'S ATTORNEY-IN-
FACT, WITH FULL AUTHORITY IN THE PLACE AND STEAD OF THE
DEBTOR AND IN THE NAME OF THE DEBTOR, THE LENDER OR
OTHERWISE, FROM TIME TO TIME IN THE LENDER'S DISCRETION UPON
THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF
DEFAULT HEREUNDER, TO TAKE ANY ACTION AND TO EXECUTE ANY
INSTRUMENT WHICH THE LENDER MAY DEEM NECESSARY OR ADVISABLE
TO ACCOMPLISH THE PURPOSES OF THIS SECURITY AGREEMENT,
INCLUDING, WITHOUT LIMITATION TO FILE ANY CLAIMS OR TAKE ANY
ACTION OR INSTITUTE ANY PROCEEDINGS WHICH THE LENDER MAY
DEEM REASONABLY NECESSARY FOR THE COLLECTION OF ANY OF THE
COLLATERAL OR OTHERWISE TO ENFORCE THE RIGHTS OF THE LENDER
WITH RESPECT TO ANY OF THE COLLATERAL.
LENDER'S DUTIES. THE POWERS CONFERRED ON THE LENDER
HEREUNDER ARE SOLELY TO PROTECT ITS INTEREST IN THE
COLLATERAL AND SHALL NOT IMPOSE ANY DUTY UPON IT TO EXERCISE
ANY SUCH POWERS. EXCEPT FOR THE SAFE CUSTODY OF ANY
COLLATERAL IN ITS POSSESSION AND THE ACCOUNTING FOR MONEYS
ACTUALLY RECEIVED BY IT HEREUNDER, THE LENDER SHALL HAVE NO
DUTY AS TO ANY COLLATERAL OR AS TO THE TAKING OF ANY
NECESSARY STEPS TO PRESERVE RIGHTS AGAINST PRIOR PARTIES OR
ANY OTHER RIGHTS PERTAINING TO ANY COLLATERAL.
INDEMNITY AND EXPENSES.
(a) The Debtor agrees to defend, indemnify and hold
harmless the Lender from and against any and all claims, losses and
liabilities growing out of or resulting from this Security Agreement
(including, without limitation, enforcement of this Security
Agreement), except claims, losses or liabilities resulting from the
Lender's gross negligence or willful misconduct.
(b) The Debtor will upon demand pay to the Lender the
amount of any and all reasonable expenses, including the reasonable
fees and disbursements of counsel and of any experts and agents, which
the Lender may incur in connection with (i) the administration of this
Security Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights
of the Lender hereunder or (iv) the failure by the Debtor to perform
or observe any of the provisions hereof.
AMENDMENTS, ETC. NO AMENDMENT OR WAIVER OF ANY PROVISION OF
THIS SECURITY AGREEMENT NOR CONSENT TO ANY DEPARTURE BY THE
DEBTOR HEREFROM SHALL IN ANY EVENT BE EFFECTIVE UNLESS THE
SAME SHALL BE IN WRITING AND SIGNED BY THE LENDER, AND THEN
SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE
SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH
GIVEN. NONE OF THE DEBTOR'S RIGHTS OR OBLIGATIONS OR ANY
INTEREST THEREIN HEREUNDER MAY BE ASSIGNED WITHOUT THE
WRITTEN CONSENT OF THE LENDER.
ADDRESSES FOR NOTICES. ANY NOTICE REQUIRED OR PERMITTED
UNDER THIS SECURITY AGREEMENT SHALL BE GIVEN IN WRITING AND
SHALL BE DEEMED EFFECTIVELY GIVEN UPON PERSONAL DELIVERY TO
THE PARTY TO BE NOTIFIED OR UPON DELIVERY BY CONFIRMED
FACSIMILE TRANSMISSION, NATIONALLY RECOGNIZED OVERNIGHT
COURIER SERVICE, OR UPON DEPOSIT WITH THE UNITED STATES POST
OFFICE, BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID AND
ADDRESSED TO THE PARTY TO BE NOTIFIED AT THE ADDRESS
INDICATED BELOW, OR AT SUCH OTHER ADDRESS AS SUCH PARTY MAY
DESIGNATE BY TEN (10) DAYS' ADVANCE WRITTEN NOTICE TO THE
OTHER PARTIES.
If to the Debtor: Chapeau, Inc. dba BluePoint Energy
Products, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Lender: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CONTINUING SECURITY INTEREST. THIS AGREEMENT SHALL CREATE A
CONTINUING SECURITY INTEREST IN THE COLLATERAL, AND SHALL
(A) REMAIN IN FULL FORCE AND EFFECT UNTIL PAYMENT AND
PERFORMANCE IN FULL OF THE OBLIGATIONS (OR 91 DAYS AFTER
PAYMENT AND PERFORMANCE IN FULL OF THE OBLIGATIONS SOLELY IF
THE LENDER HAS, IN GOOD FAITH BASED UPON AN OPINION OF
LENDER'S COUNSEL, REASONABLE CAUSE TO BELIEVE THAT SUCH
PAYMENT MAY CONSTITUTE A VOIDABLE PREFERENCE UNDER FEDERAL
BANKRUPTCY LAW AND NO REASONABLE DEFENSE TO SUCH PREFERENCE
EXISTS), (B) BE BINDING UPON THE DEBTOR, ITS SUCCESSORS AND
ASSIGNS AND (C) INURE TO THE BENEFIT OF THE LENDER AND THEIR
SUCCESSORS, TRANSFEREES AND ASSIGNS. UPON THE PAYMENT IN
FULL OF THE OBLIGATIONS (OR 91 DAYS AFTER PAYMENT AND
PERFORMANCE IN FULL OF THE OBLIGATIONS SOLELY IF THE LENDER
HAS, IN GOOD FAITH BASED UPON AN OPINION OF LENDER'S
COUNSEL, REASONABLE CAUSE TO BELIEVE THAT SUCH PAYMENT WILL
CONSTITUTE A VOIDABLE PREFERENCE UNDER FEDERAL BANKRUPTCY
LAW AND NO REASONABLE DEFENSE TO SUCH PREFERENCE EXISTS),
THE SECURITY INTEREST GRANTED HEREBY SHALL TERMINATE AND ALL
RIGHTS TO THE COLLATERAL SHALL REVERT TO THE DEBTOR. UPON
ANY SUCH TERMINATION, THE LENDER WILL, AT THE DEBTOR'S
EXPENSE, EXECUTE AND DELIVER TO THE DEBTOR SUCH DOCUMENTS AS
THE DEBTOR SHALL REASONABLY REQUEST TO EVIDENCE SUCH
TERMINATION.
GOVERNING LAW: TERMS. THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEVADA, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE
OF NEVADA. UNLESS OTHERWISE DEFINED HEREIN, TERMS DEFINED
IN THE UNIFORM COMMERCIAL CODE IN EFFECT IN THE STATE OF
NEVADA ARE USED HEREIN AS THEREIN DEFINED.
CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
CONSENT TO JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY (I) AGREES THAT ANY SUIT, ACTION OR OTHER LEGAL
PROCEEDING ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN THE
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
CALIFORNIA OR, IF SUCH COURT DOES NOT HAVE JURISDICTION OR WILL
NOT ACCEPT JURISDICTION, IN ANY COURT OF GENERAL JURISDICTION IN
THE COUNTY OF PLACER, CALIFORNIA; (II) CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING; AND (III) WAIVES ANY OBJECTION WHICH SUCH PARTY MAY
HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT AMONG OR PROCEEDING
IN ANY SUCH COURT.
SERVICE OF PROCESS. EACH PARTY IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY PROCESS, PLEADING, NOTICES OR OTHER PAPERS BY THE
MAILING OF COPIES THEREOF BY REGISTERED, CERTIFIED OR FIRST CLASS
MAIL, POSTAGE PREPAID, TO SUCH PARTY AT SUCH PARTY'S ADDRESS AS
SET FORTH IN THIS AGREEMENT, OR BY ANY OTHER METHOD PROVIDED OR
PERMITTED UNDER NEVADA LAW.
WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).
4. INJUNCTIVE RELIEF. THE PARTIES HERETO ACKNOWLEDGE AND AGREE
THAT ANY PARTY'S REMEDY AT LAW FOR A BREACH OR THREATENED BREACH OF
ANY OF THE PROVISIONS OF THIS AGREEMENT WOULD BE INADEQUATE AND SUCH
BREACH OR THREATENED BREACH SHALL BE PER SE DEEMED AS CAUSING
IRREPARABLE HARM TO SUCH PARTY. THEREFORE, IN THE EVENT OF SUCH
BREACH OR THREATENED BREACH, THE PARTIES HERETO AGREE THAT, IN
ADDITION TO ANY AVAILABLE REMEDY AT LAW, INCLUDING BUT NOT LIMITED TO
MONETARY DAMAGES, AN AGGRIEVED PARTY, WITHOUT POSTING ANY BOND, SHALL
BE ENTITLED TO SEEK EQUITABLE RELIEF IN THE FORM OF SPECIFIC
ENFORCEMENT, TEMPORARY RESTRAINING ORDER, TEMPORARY OR PERMANENT
INJUNCTION, OR ANY OTHER EQUITABLE REMEDY THAT MAY THEN BE AVAILABLE
TO THE AGGRIEVED PARTY.
5. COUNTERPARTS. THIS AGREEMENT MAY BE SIGNED IN COUNTERPARTS, WITH
THE SAME EFFECT AS IF THE SIGNATURES WERE ON THE SAME INSTRUMENT.
6. SEVERABILITY. IF ONE OR MORE PROVISIONS OF THIS AGREEMENT ARE
HELD TO BE UNENFORCEABLE UNDER APPLICABLE LAW, THE PARTIES AGREE TO
RENEGOTIATE SUCH PROVISION IN GOOD FAITH. IN THE EVENT THAT THE
PARTIES CANNOT REACH A MUTUALLY AGREEABLE AND ENFORCEABLE REPLACEMENT
FOR SUCH PROVISION, THEN (A) SUCH PROVISION SHALL BE EXCLUDED FROM
THIS AGREEMENT, (B) THE BALANCE OF THE AGREEMENT SHALL BE INTERPRETED
AS IF SUCH PROVISION WERE SO EXCLUDED AND (C) THE BALANCE OF THE
AGREEMENT SHALL BE ENFORCEABLE IN ACCORDANCE WITH ITS TERMS.
IN WITNESS WHEREOF, the Debtor and the Lender have executed this
Security Agreement as of the date first above written.
CHAPEAU, INC. (LENDER)
By:
▇▇▇▇▇ ▇▇▇▇▇
Printed Name:
Title: