Document:

Debenture

Exhibit
10.2

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

	

Date:  August 16,
2007

	

$3,250,000

SENIOR SECURED PROMISSORY NOTE
DUE AUGUST 16, 2010

THIS NOTE is the duly authorized and issued Senior Secured
Promissory Note of Universal Property Development and Acquisition
Corporation, a Nevada corporation whose principal place of business is
located at 14255 US HWY, 1 Suite 209, Juno Beach, FL  33408
(“UPDA” or the “Company”), designated as
its Senior Secured Promissory Note, due on August 16, 2010 (the
“Note”).

FOR VALUE RECEIVED, the Company promises to pay to Sheridan
Asset Management, LLC or its assigns (the “Holder”), the
principal sum of $3,250,000 (“Principal Amount”), together
with interest from August 15, 2007 on the balance of principal from time to time
outstanding at the rates and on the dates hereinafter described.  This Note is
subject to the following additional provisions:

       Section
1.     Definitions.  For the purposes
hereof, in addition to the terms defined elsewhere in the Note: (a) capitalized
terms not otherwise defined herein have the meanings given to such terms in the
Loan Agreement, and (b) the following terms shall have the following
meanings:

             “Business
Day” means any day except Saturday, Sunday and any day which shall be
a federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

             “Capital
Expenditures” means all expenditures which in accordance with GAAP
would be classified as capital expenditures, including without limitation,
Capital Lease Obligations.

             “Capital
Lease” means any lease of property, real or personal, the obligations
with respect to which are required to be capitalized on a balance sheet of the
lessee in accordance with GAAP.

   

             “Capital
Lease Obligations” means the capitalized lease obligations relating to
a Capital Lease determined in accordance with GAAP.

             “Cash
Flow Coverage Ratio” means the ratio of Consolidated EBITDA to the
interest and principal payable under the Note and the Capital
Expenditures.

             “Change
in Directorship” means Kamal Abdallah or a replacement for any such
Person approved in accordance with this definition shall cease for any reason to
serve as a member of the board of directors of the Company. 

             “Change
of Control Transaction” means the occurrence after the date hereof, of
any of (i) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in
excess of 50% of the voting securities of the Company, (ii) a replacement at one
time or within a three year period of more than one-half of the members of the
Company’s board of directors which is not approved by a majority of those
individuals who are members of the board of directors on the date hereof (or by
those individuals who are serving as members of the board of directors on any
date whose nomination to the board of directors was approved by a majority of
the members of the board of directors who are members on the date hereof), or
(iii) the execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set forth above
in (i) or (ii).

             “Collateral”
shall have the meaning given to such term in the Security Agreement.

             “Consolidated
EBITDA” means, for any period, Consolidated Net Income plus
Consolidated Interest Expense, plus, to the extent the following items are
deducted in calculating Consolidated Net Income, (i) all provisions for any
Federal, state or other income taxes for such period, plus (ii) depreciation,
amortization and other non-cash charges for such period. 

             “Consolidated
Interest Expense” means, for any period, all interest expense,
excluding amortization of debt discount and premium but including the interest
component under Capital Leases for such period, of the Company and its
Subsidiaries on a consolidated basis determined in accordance with
GAAP.

             “Consolidated
Net Income” means, for any period, the net income (excluding
extraordinary losses, but including extraordinary gains) of the Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP applied
on a consistent basis for such period.  

             “Event
of Default” shall have the meaning set forth in Section 7.

             “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

             “Interest
Period” means each period from and including a Settlement Date (or, in
the case of the initial Interest Period, from and including the Closing Date) to
but excluding the next succeeding Settlement Date (or, in the case of the final
Interest Period, the Maturity Date).

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             “Late
Fee” shall have the meaning set forth in section 3(e) to this
Note.

             “Loan
Agreement” means that certain Loan Agreement, dated as of August 16,
2007, by and among the Company, the Holder, the Subsidiaries and the Guarantors
as amended, modified or supplemented from time to time in accordance with its
terms.

             “Mandatory
Repayment Amount” means the amount equal the sum of (i) 115% of the
principal amount of Note to be repaid and (i) all other amounts, costs, expenses
and liquidated damages due in respect of the Note.

             “Maturity
Date” means August 16, 2010 or such earlier date as the Note is
required or permitted to be repaid as provided in this Note.

             “Person”
means a corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

             “Purchase
Agreement” shall mean that certain Purchase and Sale Agreement dated
August 16, 2007, by and between Catlin Oil and Gas Corp., as seller and
Heartland Oil and Gas Corp., as buyer.  

             “Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

             “UPDA
First Loan Agreement” means the Loan Agreement dated as of April 6,
2007, as amended as of August 16, 2007, by and among Universal Property
Development and Acquisition Corporation, Canyon Creek Oil and Gas, Inc., Catlin
Oil and Gas, Inc., Kamal Abdallah, Christopher J. McCauley and the Holder.

       Section
2.     Loan Agreement.

       This Note is the Note
referred to in, and is entitled to the benefits of, the Loan Agreement.  The
Loan Agreement, among other things, provides for the making of a term loan (the
“Loan”) by the Holder to the Company, in the U.S. Dollar
amount set forth therein, the indebtedness of the Company resulting from such
Loan being evidenced by this Note.  All obligations under the Note are secured
by the Loan Agreement, the Transaction Documents and the Collateral and entitled
to the benefits thereof.  

       Section
3.     Payment of Principal and
Interest.

             a)     Payment
of Principal.  The outstanding Principal Amount under the Loan shall be due
and payable by the Company, in thirty-six (36) consecutive equal installments in
the amount of $90,277.78, due on each Settlement Date. 

             b)     Interest
Rate.  The Company shall pay interest on the unpaid Principal Amount of the
Loan, from August 15, 2007 until such principal amount shall be paid in full, at
the rate of 15% per annum.  Interest shall be computed daily based on a year of
360 days and the actual days elapsed (including the first day but excluding the
last day) in the period for which interest is payable.

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             c)     Payment
of Interest.  Interest shall be payable in the manner set forth in Section
4.6 of` the Loan Agreement on the outstanding balance of the Loan (i) in arrears
for each Interest Period on the Settlement Date immediately succeeding such
Interest Period, (ii) on the Maturity Date, and (iii) if any interest accrues or
remains payable after the Maturity Date, upon demand by the Holder. 

             d)     PIK
Interest.  In addition to the 15% per annum interest payable by the Company
to the Holder as described above in Section 3(b), the Company shall pay to the
Holder interest at the rate of 5% per annum, on the principal amount outstanding
from time to time hereunder (“PIK Amount”) on the Maturity
Date.  The interest hereunder will be computed daily on a year of 360 days and
the actual days elapsed (including the first day but excluding the last day) in
the period for which interest is payable.  The PIK Amount shall be payable, at
the Holder’s option either, in (1) cash or (2) in kind with such number of
shares of the Company’s Common Stock determined by dividing (x) the PIK
Amount accrued and unpaid as of the Maturity Date by (y) 85% of an amount equal
to the average daily closing price of the Company’s Common Stock over the
thirty day period ending on the trading day one day prior to the Maturity
Date.

             e)     Late
Fee.  All overdue accrued and unpaid principal to be paid hereunder shall
entail a late fee at the rate of 20% per annum (or such lower maximum amount of
interest permitted to be charged under applicable law) (“Late
Fee”).

             f)     Optional
Prepayment.  So long as the cumulative interest paid under the Note,
including the date of such prepayment (“Prepayment Date”),
shall be not less than $750,000 (“Interest Threshold
Amount”), exclusive of the accumulated PIK Amount, the Company shall
have the right to prepay, in cash, all, but not less than all, of the amount
outstanding under the Note, upon not less than ten (10) Business Days written
notice to the Holder by paying to the Holder, in immediately available funds, an
amount equal to 100% of the then outstanding principal amount thereof and all
interest and other amounts, costs, expenses and liquidated damages due in
respect of the Note.  Notwithstanding the foregoing, if the Company has not paid
the Interest Threshold Amount, the Company may pay the Holder the difference
between the Interest paid the Company by the Prepayment Date and the Interest
Threshold Amount to meet the obligation set forth in the previous sentence for
the prepayment of the Note.  The PIK Amount required to be paid by the Company
upon prepayment of the Note shall be equal to the amount that would have been
otherwise payable if the loan was held until the Maturity Date in accordance
with the terms set forth in Section 3(d) above.

       Section
4.     Registration of Transfers and
Exchanges. 

             a)     Different
Denominations.  This Note is exchangeable for an equal aggregate principal
amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same.  No service charge will be made for such
registration of transfer or exchange.

             b)     Reliance
on Note Register.  Prior to due presentment to the Company for transfer of
this Note, the Company and any agent of the Company may treat the Person in
whose name this Note is duly registered on the note register as the owner hereof
for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Note is overdue, and neither the Company nor any
such agent shall be affected by notice to the
contrary.

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       Section
5.     Negative Covenants.  Other than
pursuant to the terms of or as contemplated in any Transaction Document or any
“Transaction Document” (as such term is defined in the UPDA First
Loan Agreement), so long as any portion of this Note is outstanding, the Company
will not and will not permit any of its Subsidiaries to directly or
indirectly:

             a)     enter
into, create, incur, assume or suffer to exist any indebtedness or liens of any
kind on or with respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom that is
senior to, pari passu with or subordinated to in any respect, the
Company’s obligations under the Notes;

             b)     amend
its certificate of incorporation, bylaws or its charter documents;

             c)     repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock or other equity
securities other than such repayments, repurchases, offers, acquisitions,
dividends or distributions from the Company’s wholly-owned Subsidiaries to
the Company; 

             d)     engage
in any transactions with any officer, director, employee or any affiliate of the
Company, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of
$10,000;

             e)     sell,
transfer or otherwise dispose of any of its assets, except for the sale by UPDA
of Catlin Oil and Gas, Inc. assets to Heartland Oil and Gas Corp. pursuant to
the terms of the Purchase Agreement, on terms where it is or may be leased to or
re-acquired or acquired by the Company or any of its Subsidiaries;

             f)     dispose,
in a single transaction, or in a series of transactions all or any part of its
assets (other than cash) unless such disposal is (i) in the ordinary course of
business, (ii) for fair market value, (iii) for cash, (iv) approved by the board
of directors of the Company and (v) the proceeds received upon such sale are
used to repay the Note; 

             g)     issue
or pay to any Person more than $250,000 (based on fair market value at the time
of issuance) in Common Stock or securities exchangeable for, convertible into or
exercisable for Common Stock;

             h)     incur
any capital expense in excess of $500,000;

             i)     consummate
any merger or acquisition except on terms satisfactory to Holder; or

             j)     enter
into any agreement with respect to any of the
foregoing.

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       Section
6.     Other Covenants.   So long as any
portion of this Note is outstanding, the Company will comply with the following
covenants:

             a)     Financial
Reporting.  The Company shall comply with the reporting requirements of the
Exchange Act, shall timely file all annual, quarterly and other reports under
the Exchange Act and shall provide such other monthly financial reporting or
other monthly financial reports or other information as the Holder shall
request. 

             b)     Cash
Flow Coverage Ratio.  The Company shall maintain a Cash Flow Coverage Ratio
of at least 1:1.  

       Section
7.     Events of Default.  

             a)     “Event
of Default”, wherever used herein, means any one of the following
events (whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):

                         i.     any
default in the payment of (A) the principal of amount of the Note, or (B)
interest (including Late Fees) on, the Note, as and when the same shall become
due and payable (whether on the Maturity Date or by acceleration or otherwise)
which default, is not cured, within 2 Business Days;

                         ii.     the
Company, any of its Subsidiaries or Guarantors shall fail to observe or perform
any other covenant or agreement contained in this Note or any of the other
Transaction Documents which failure is not cured, if possible to cure, within 2
Business Days;

                         iii.     a
default or event of default (subject to any grace or cure period provided for in
the applicable agreement, document or instrument) shall occur under (A) any of
the Transaction Documents, or (B) any other material agreement, lease, document
or instrument to which the Company, any Subsidiary, or any Guarantor is
bound;

                         iv.     any
representation or warranty made herein, in any other Transaction Document, in
any written statement pursuant hereto or thereto, or in any other report,
financial statement or certificate made or delivered to the Holder or any other
holder of Notes shall be untrue or incorrect in any material respect as of the
date when made or deemed made;

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                         v.     
(i) the Company, any of its Subsidiaries or Guarantors shall commence, or there
shall be commenced against the Company, any such Subsidiary or Guarantor, a case
or other similar proceeding under any applicable bankruptcy or insolvency laws
as now or hereafter in effect or any successor thereto which remain undismissed
for a period of 60 days, or the Company, any Subsidiary or Guarantor commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company, any
Subsidiary thereof, or any Guarantor; (ii) the Company, any Subsidiary thereof,
or any Guarantor is adjudicated by a court of competent jurisdiction insolvent
or bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or (iii) the Company, any Subsidiary thereof, or any
Guarantor suffers any appointment of any custodian or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of 60 days; or (iv) the Company, any Subsidiary thereof, or any Guarantor
or makes a general assignment for the benefit of creditors; or (v) the Company
shall fail to pay, or shall state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or (vi) the Company, any
Subsidiary thereof, or any Guarantor shall call a meeting of its creditors with
a view to arranging a composition, adjustment or restructuring of its debts; or
(vii) the Company, any Subsidiary thereof or any Guarantor shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or (viii) any corporate or other action is taken by the
Company, any Subsidiary thereof or any Guarantor for the purpose of effecting
any of the foregoing;

                         vi.     the
Company, any Subsidiary thereof, or any Guarantor shall default in any of its
obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced any indebtedness for
borrowed money or money due under any long term leasing or factoring arrangement
of the Company in an amount exceeding $25,000, whether such indebtedness now
exists or shall hereafter be created and such default shall result in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable; 

                         vii.     a
Loan Party shall have experienced a Material Adverse Effect; 

                         viii.     the
Company shall be a party to any Change of Control Transaction, shall agree to
sell or dispose of all or in excess of 33% of its assets in one or more
transactions (whether or not such sale would constitute a Change of Control
Transaction) or shall redeem or repurchase more than a de minimis number of its
outstanding shares of Common Stock or other equity securities of the Company
(other than repurchases of shares of Common Stock or other equity securities of
departing officers and directors of the Company; provided such repurchases shall
not exceed $100,000, in the aggregate, for all officers and directors during the
term of this Note); 

                         ix.     Change
in Directorship shall occur; 

                         x.     Fail
to provide the Holder within 60 days from the date of this Note a written title
opinion from Kansas counsel for Heartland Oil and Gas Corp., in form acceptable
to Holder, which opines that: Holder has an unencumbered first mortgage lien in
the Leases identified in the mortgage under which 16 certain wells have been
identified as primary collateral under that mortgage. For purposes of the
preceding sentence, Leases means a working interest of Heartland Oil and Gas,
Corp. in an amount not less than as represented to Lender prior to the date of
this Note; or

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                         xi.     Fail
to provide the Holder with a key man insurance policy on Kamal Abdallah pursuant
to Section 3.1(ff) of the Loan Agreement within two month from the date of this
Note.

             b)     Remedies
Upon Event of Default. If any Event of Default occurs, the full principal
amount of this Note, together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become, at the Holder’s
election, immediately due and payable in cash, and the aggregate amount payable
under this Note shall be increased to the Mandatory Repayment Amount.  After the
occurrence of any Event of Default that results in the eventual acceleration of
this Note, interest on the principal amount of this Note shall accrue at the
rate of 20% per annum, or such lower maximum amount of interest permitted to be
charged under applicable law.  The Holder need not provide and the Company
hereby waives any presentment, demand, protest or other notice of any kind, and
the Holder may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law.  Such declaration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall
have all rights as a Note holder until such time, if any, as the full payment
under this Section shall have been received by it.  No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

       Section
8.     Miscellaneous.

             a)     Notices.
Any and all notices or other communications or deliveries to be provided by the
Holder hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service, addressed to the
Company, at the address set forth above, facsimile number (561) 277-2430, Attn:
Christopher J. McCauley, or such other address or facsimile number as the
Company may specify for such purposes by notice to be delivered in accordance
with this Section.  Any and all notices or other communications or deliveries to
be provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier
service addressed to the Holder at 1025 Westchester Avenue, Suite 311, White
Plains, NY 10604, facsimile number (914) 285-0071, Attn:  Chris J. Morrissey.
Any notice or other communication or deliveries hereunder shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 5:30 p.m. (New York City time) on a Business
Day, (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on such date
or if the date of such transmission is not a Business Day, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

             b)     Absolute
Obligation. Except as expressly provided herein, no provision of this Note
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, interest and liquidated damages (if any)
on, this Note at the time, place, and rate, and in the coin or currency, herein
prescribed.  This Note is a direct debt obligation of the Company.

8
   

             c)     Lost
or Mutilated Note.  If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof, and indemnity, if requested, all reasonably satisfactory to the
Company.

             d)     Security
Interest.  This Note is a direct debt obligation of the Company and,
pursuant to the Security Agreement is secured by a perfected security interest
in all of the assets of the Company and the Subsidiaries and pursuant to the
Guaranties for the benefit of the Holders.

             e)     Governing
Law.  All questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.  Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”).  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, or such New York Courts are
improper or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Note and
agrees that such service shall constitute good and sufficient service of process
and notice thereof.  Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Note or the transactions contemplated hereby. If either party
shall commence an action or proceeding to enforce any provisions of this Note,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorney’s fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

             f)     Waiver
of a Breach.  Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other provision of
this Note.  The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note.  Any waiver must
be in writing.

9
   

             g)     Waiver
of Presentment.  The Company hereby waives presentation, demand, protest and
notice of any kind.  No failure to exercise, and no delay in exercising, any
rights hereunder on the part of the Holder shall operate as a waiver of such
rights.

             h)     Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance
of this Note shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances.  If it shall be found that any interest or other
amount deemed interest due hereunder violates applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum permitted rate of interest. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or applicable usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on this Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.

             i)     Next
Business Day.  Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

             j)     Headings.
The headings contained herein are for convenience only, do not constitute a part
of this Note and shall not be deemed to limit or affect any of the provisions
hereof.

             k)     Seniority.
This Note is intended to constitute a senior secured obligation of the Company
and to be senior in right of payment to any and all other indebtedness of the
Company.

             l)     Remedies.
In the event the Holder assigns any portion of its interest under the Note, no
action shall be taken under the Note except upon the written consent of the Note
holders holding Notes representing a majority of the principal amount under the
Note, which shall include the Holder.

[END
OF
PAGE]
   

10
   

       IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed by a duly authorized officer as
of the date first above indicated.

	

UNIVERSAL PROPERTY DEVELOPMENT AND
ACQUISITION
CORPORATION

	
 
	
 
	

By:  __________________________________________

Name: 
        Title:

11EXHIBIT G

Exhibit
10.3

AMENDED AND RESTATED
SECURITY
AGREEMENT

       SECURITY AGREEMENT,
dated as of August 16, 2007 (this “Agreement”), by and among
Universal Property Development and Acquisition Corporation, a Nevada
corporation (“UPDA”), whose principal place of business is
located at 124 N. Church St., Jacksboro, TX 76458, Canyon Creek Oil and Gas,
Inc., a Nevada corporation (“Canyon”), whose principal
place of business is located at 124 N. Church Street, Jacksboro, TX 76458,
Catlin Oil and Gas, Inc., a Nevada corporation
(“Catlin”), whose principal place of business is located at
124 N. Church Street, Jacksboro, TX 76458, Kamal Abdallah, a US citizen
and resident of the state of Texas, whose primary residence is 8 Links Green,
San Antonio, TX  78257, Christopher J. McCauley, a US citizen and
resident of the state of Ohio, whose primary residence is 5408 Valley Pkwy.,
Brecksville, OH 44141, Heartland Oil and Gas Corp.
(“HOGC”), a Nevada corporation whose principal place of
business is located at 1610 Industrial Drive, Paola, KS 66071, Heartland Gas
Gathering, LLC (“HGG”), a Kansas limited liability
company whose principal place of business is located at 1610 Industrial Drive,
Paola, KS 66071, Heartland Oil and Gas Inc. (“Heartland
Oil”), a Nevada corporation whose principal place of business is
located at 1610 Industrial Drive, Paola, KS 66071, UPDA Operators, Inc.,
a Nevada corporation whose principal place of business is located at 124 N.
Church St., Jacksboro, TX 76458 (“UPDAO”), Heartland
International Oil Corp. a British Virgin Island Company (“Heartland
International”), whose principal place of business is located at 12603
Southwest Freeway, Suite 285, Stafford, TX 77477, Aztec Well Services,
Inc., a Nevada corporation whose principal place of business is located at
1610 Industrial Drive, Paola, KS 66071 (“Aztec”) (Messrs.
Abdallah, McCauley, Canyon, Catlin, HOGC, HGG, Heartland Oil, Heartland
International, UPDAO, and Aztec collectively, the
“Guarantors”, UPDA and Guarantors are collectively referred
to as the “Debtors”) and Sheridan Asset Management
LLC, a Delaware limited liability company whose principle place of business
is located at 1025 Westchester Ave., Suite 311, White Plains, NY 10604, as the
holder of UPDA’s Senior Secured Promissory Note due April 6, 2008 in the
original aggregate principal amount of $3,635,000 (as amended, the
“UPDA First Note”), and as the holder of the UPDA’s
Senior Secured Promissory Note due August 16, 2010 in the original aggregate
principal amount of $3,250,000 (the “UPDA Second Note,”
collectively with the UPDA First Note, the “Notes”), and each
of its endorsees, transferees and assigns (collectively referred to as, the
“Secured Party”).

W I T N E S S E T H:

       WHEREAS, the Secured
Party has (i) extended a loan (the “UPDA First Loan”) to UPDA
evidenced by the UPDA First Note and (ii) agreed to extend a loan (“the
“UPDA Second Loan,” together with the UPDA First Loan, the
“Loans”) to UPDA evidenced by the UPDA Second Note;

       WHEREAS, in connection
with the UPDA First Loan, UPDA and the Guarantors executed that certain Security
Agreement, dated as of April 6, 2007 (the “Original Security
Agreement”);

       WHEREAS, UPDA has
agreed to cause any and all of its subsidiaries to execute an Amended and
Restated Subsidiary Guarantee in the form of Exhibit A attached hereto
dated as of the date hereof (the “Guaranty”), pursuant to
which the Guarantors shall jointly and severally guaranty and act as surety for
the timely fulfillment of UPDA’s obligations under the First Notes and
certain other obligations as set forth therein;

       WHEREAS, Messrs.
Abdallah and McCauley have agreed to execute Amended and Restated Guaranties
pursuant to which they shall guaranty and act as surety for payment of all of
UPDA’s obligations in connection with the Loans (the “Personal
Guaranties” and, together with the Guaranty, the
“Guaranties”);

   

       WHEREAS, in order to
induce the Secured Party to extend the UPDA Second Loan, UPDA has agreed to, and
to cause each Debtor to execute and deliver to the Secured Party this Agreement,
to amend and restate the Original Security Agreement and to grant the Secured
Party, a perfected security interest in the property of such Debtor to secure
the prompt payment, performance and discharge in full of all of the Obligations
(as hereinafter defined).

       NOW, THEREFORE, in
consideration of the agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:

       1.     Certain
Definitions.  As used in this Agreement, the following terms shall have the
meanings set forth in this Section 1.  Terms used but not otherwise defined in
this Agreement that are defined in Article 9 of the UCC (such as
“account”, “chattel paper”, “commercial tort
claim”, “deposit account”, “document”,
“equipment”, “fixtures”, “general
intangibles”, “goods”, “instruments”,
“inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and
“supporting obligations”) shall have the respective meanings given
such terms in Article 9 of the UCC.  Terms used and not otherwise defined in
this Agreement shall have the meaning provided in the Loan Agreements or the
Notes, as such terms relate to such agreements.

             (a)     “Business
Day” shall have the meaning set forth in the Notes. 

             (b)     “Collateral”
shall include the following personal property of the Debtors, whether presently
owned or existing or hereafter acquired or coming into existence, wherever
situated, and all additions and accessions thereto and all substitutions and
replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in
connection therewith, all Pledged Securities (defined below) and all dividends,
interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect
of, or in exchange for, any or all of the Pledged Securities:

                         (i)     All
goods, including, without limitations, (A) all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with any
Debtor’s businesses and all improvements thereto; and (B) all
inventory;

                         (ii)     All
contract rights and other general intangibles, including, without limitation,
all partnership interests, membership interests, stock or other securities,
rights under any of the Organizational Documents, agreements related to the
Pledged Securities, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or
developed by any Debtor), computer software development rights, leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, Intellectual Property, and income tax refunds;

                         (iii)     All
accounts, together with all instruments, all documents of title representing any
of the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title,
security and guaranties with respect to each account, including any right of
stoppage in transit; 

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                         (iv)     All
documents, letter-of-credit rights, instruments and chattel paper;

                         (v)     All
commercial tort claims;

                         (vi)     All
deposit accounts and all cash (whether or not deposited in such deposit
accounts);

                         (vii)     All
investment property;

                         (viii)     All
supporting obligations; and

                         (ix)     All
files, records, books of account, business papers, and computer programs;
and

                         (x)     the
products and proceeds of all of the foregoing Collateral set forth in clauses
(i)-(ix) above.

                         Without
limiting the generality of the foregoing, the “Collateral”
shall include all investment property and general intangibles respecting
ownership and/or other equity interests in the Guarantors, including, without
limitation, the shares of capital stock and the other equity interests listed on
Schedule H hereto (as the same may be modified from time to time pursuant
to the terms hereof), and any other shares of capital stock and/or other equity
interests of any other direct or indirect subsidiary of any Debtor obtained in
the future, and, in each case, all certificates representing such shares and/or
equity interests and, in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be received, receivable or
distributed in respect of, or exchanged for, any of the foregoing (all of the
foregoing being referred to herein as the “Pledged
Securities”) and all rights arising under or in connection with the
Pledged Securities, including, but not limited to, all dividends, interest and
cash.

                         Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable law, this
Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in the proceeds of such asset.

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             (c)     “Intellectual
Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether 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, or otherwise, and all common law
rights related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v) all
rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.

             (d)     “Loan
Agreements” means the Loan Agreement, dated as of April 6, 2007, by
and among UPDA, Canyon, Catlin, Kamal Abdallah, Christopher J. McCauley and
Sheridan (as amended as of August 16, 2007, the “UPDA First Loan
Agreement”) and the Loan Agreement, dated as of even date hereof, by
and among UPDA, the Guarantors and Sheridan (the “UPDA Second Loan
Agreement”).  

             (e)     “Necessary
Endorsement” shall mean undated stock powers endorsed in blank or
other proper instruments of assignment duly executed and such other instruments
or documents as the Secured Party may reasonably request.

             (f)     “Obligations”
means all of the Debtors’ obligations under this Agreement, the Notes, the
Guaranties, the Subordinate Guaranties, the Security Documents (as defined under
the UPDA First Loan Agreement) Security Documents (as defined under the UPDA
Second Loan Agreement), the Loan Agreements and any other instruments,
agreements or other documents executed and/or delivered in connection herewith
or therewith, in each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from the Secured Party as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted, extended
or modified from time to time.  Without limiting the generality of the
foregoing, the term “Obligations” shall include, without limitation:
(i) principal of and interest on the Notes and the loans extended pursuant
thereto; (ii) any and all other fees, indemnities, costs, obligations and
liabilities of the Debtors from time to time under or in connection with this
Agreement, the Notes, the Guaranties and any other instruments, agreements or
other documents executed and/or delivered in connection herewith or therewith;
and (iii) all amounts (including but not limited to post-petition interest) in
respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving any
Debtor.

             (g)     “Organizational
Documents” means with respect to any of Guarantors, the documents by
which such Debtor was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including,
without limitation, any certificates of designation for preferred stock or other
forms of preferred equity) and which relate to the internal governance of such
Debtor (such as bylaws, a partnership agreement or an operating, limited
liability or members agreement).

4
   

             (h)     “Sheridan”
means Sheridan Asset Management LLC, a Delaware limited liability company.

             (i)     “UCC”
means the Uniform Commercial Code of the State of New York and or any other
applicable law of any state or states which has jurisdiction with respect to
all, or any portion of, the Collateral or this Agreement, from time to time.  It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term “Collateral” will be
construed in its broadest sense.  Accordingly if there are, from time to time,
changes to defined terms in the UCC that broaden the definitions, they are
incorporated herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling. 

       2.     Grant
of Perfected Security Interest.  As an inducement for the Secured Party to
extend the loans as evidenced by the Notes and to secure the complete and timely
payment, performance and discharge in full, as the case may be, of all of the
Obligations, each Debtor hereby unconditionally and irrevocably pledges, grants
and hypothecates to the Secured Party a continuing and perfected security
interest in and to, a lien upon and a right of set-off against all of such
Debtor’s respective right, title and interest of whatsoever kind and
nature in and to, the Collateral (the “Security Interest”).

       3.     Delivery
of Certain Collateral.  Contemporaneously or prior to the execution of this
Agreement, each Debtor shall deliver or cause to be delivered to the Secured
Party (a) any and all certificates and other instruments representing or
evidencing the Pledged Securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements.  The Debtors are, contemporaneously
with the execution hereof, delivering to the Secured Party, or have previously
delivered to the Secured Party, a true and correct copy of each Organizational
Document governing any of the Pledged Securities.

       4.     Representations,
Warranties, Covenants and Agreements of the Debtors. Except as set forth in
or contemplated by the Loan Agreements, the Notes and the related transaction
documents, each Debtor represents and warrants to, and covenants and agrees
with, the Secured Party as follows:

             (a)     Each
Debtor which is a corporation has the requisite corporate or limited liability
company power and authority to enter into this Agreement and otherwise to carry
out its obligations hereunder. The execution, delivery and performance by each
such Debtor of this Agreement and the filings contemplated therein have been
duly authorized by all necessary action on the part of such Debtor and no
further action is required by such Debtor.  This Agreement has been duly
executed by each Debtor.  This Agreement constitutes the legal, valid and
binding obligation of each Debtor, enforceable against each Debtor in accordance
with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application
relating to or affecting the rights and remedies of creditors and by general
principles of equity.

             (b)     The
Debtors have no place of business or offices where their respective books of
account and records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where Collateral is stored or located,
except as set forth on Schedule A attached hereto.  Except as
specifically set forth on Schedule A, each Debtor is the record owner of
the real property where such Collateral is located, and there exist no mortgages
or other liens on any such real property.  Except as disclosed on Schedule
A, none of such Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor.

5
   

             (c)     Except
as set forth on Schedule B attached hereto, the Debtors are the sole
owner of the Collateral (except for non-exclusive licenses granted by any Debtor
in the ordinary course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and are fully authorized to grant the
Security Interest.  There is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than
those that will be filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral.  So long as this
Agreement shall be in effect, the Debtors shall not execute and shall not
knowingly permit to be on file in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms of this
Agreement).

             (d)     Except
as set forth on Schedule I attached hereto, no written claim has been
received that any Collateral or Debtor’s use of any Collateral violates
the rights of any third party. There has been no adverse decision to any
Debtor’s claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction or to any Debtor’s right to keep and
maintain such Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of any Debtor,
threatened before any court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.

             (e)     Each
Debtor shall at all times maintain its books of account and records relating to
the Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule A attached hereto and may not relocate
such books of account and records or tangible Collateral unless it delivers to
the Secured Party at least 30 days prior to such relocation (i) written notice
of such relocation and the new location thereof (which must be within the United
States) and (ii) evidence that appropriate financing statements under the UCC
and other necessary documents have been filed and recorded and other steps have
been taken to perfect the Security Interest to create in favor of the Secured
Party a valid, perfected and continuing perfected first priority lien in the
Collateral.

             (f)     This
Agreement creates in favor of the Secured Party a valid, security interest in
the Collateral, securing the payment and performance of the Obligations.  Upon
making the filings described in the immediately following paragraph, all
security interests created hereunder in any Collateral which may be perfected by
filing UCC financing statements shall have been duly perfected.  Except for the
filing of the UCC financing statements referred to in the immediately following
paragraph, the recordation of the Intellectual Property Security Agreement (as
defined below) with respect to copyrights and copyright applications in the
United States Copyright Office referred to in paragraph (p), the execution and
delivery of deposit account control agreements satisfying the requirements of
Section 9-104(a)(2) of the UCC with respect to each deposit account of the
Debtors, and the delivery of the certificates and other instruments provided in
Section 3, no action is necessary to create, perfect or protect the security
interests created hereunder.  Without limiting the generality of the foregoing,
except for the filing of said financing statements, the recordation of said
Intellectual Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and no
authorization, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for (i) the execution,
delivery and performance of this Agreement, (ii) the creation or perfection of
the Security Interests created hereunder in the Collateral or (iii) the
enforcement of the rights of the Secured Party
hereunder.

6
   

             (g)     Each
Debtor hereby authorizes the Secured Party to file one or more financing
statements under the UCC, with respect to the Security Interest with the proper
filing and recording agencies in any jurisdiction deemed proper by
them.

             (h)     The
execution, delivery and performance of this Agreement by the Debtors does not
(i) violate any of the provisions of any Organizational Documents of any Debtor
which is a corporation or any judgment, decree, order or award of any court,
governmental body or arbitrator or any applicable law, rule or regulation
applicable to any Debtor or (ii) assuming execution and delivery of the
amendments to the UPDA First Loan Agreement and the UPDA First Note, conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing any Debtor’s debt or otherwise) or other understanding to
which any Debtor is a party or by which any property or asset of any Debtor is
bound or affected.  Assuming execution and delivery of the amendments to the
UPDA First Loan Agreement and the UPDA First Note, no consent (including,
without limitation, from stockholders or creditors of any Debtor) is required
for any Debtor to enter into and perform its obligations hereunder.

             (i)     The
capital stock and other equity interests listed on Schedule H hereto
represent all of the capital stock and other equity interests in UPDA owned by
Messrs. Abdallah and McCauley, and represent all capital stock and other equity
interests owned, directly or indirectly, by UPDA.  All of the Pledged Securities
are validly issued, fully paid and nonassessable, (i) UPDA is the legal and
beneficial owner of the Pledged Securities issued by the Guarantors, and (ii)
HOGC is the legal and beneficial owner of the Pledged Securities issued by the
Guarantors in each case free and clear of any lien, security interest or other
encumbrance except for the security interests created by this
Agreement.

             (j)     The
ownership and other equity interests in partnerships and limited liability
companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are
securities governed by Article 8 of the UCC and are not held in a securities
account or by any financial intermediary.

             (k)     Each
Debtor shall at all times maintain the liens and Security Interest provided for
hereunder as valid and perfected first priority liens and security interests in
the Collateral in favor of the Secured Party until this Agreement and the
Security Interest hereunder shall be terminated pursuant to Section 14 hereof.
Each Debtor hereby agrees to defend the same against the claims of any and all
persons and entities. Each Debtor shall safeguard and protect all Collateral for
the account of the Secured Party.   At the request of the Secured Party, each
Debtor will sign and deliver to the Secured Party at any time or from time to
time one or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Secured Party and will pay the cost of filing the same in
all public offices wherever filing is, or is deemed by the Secured Party to be,
necessary or desirable to effect the rights and obligations provided for herein.
Without limiting the generality of the foregoing, each Debtor shall pay all
fees, taxes and other amounts necessary to maintain the Collateral and the
Security Interest hereunder, and each Debtor shall obtain and furnish to the
Secured Party from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.

7
   

             (l)     No
Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral (except for non-exclusive licenses granted by a
Debtor in its ordinary course of business and sales of inventory by a Debtor in
its ordinary course of business) without the prior written consent of the
Secured Party.

             (m)     Each
Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.

             (n)     Each
Debtor shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral against loss or damage of the kinds and in the
amounts customarily insured against by entities of established reputation having
similar properties similarly situated and in such amounts as are customarily
carried under similar circumstances by other such entities and otherwise as is
prudent for entities engaged in similar businesses but in any event sufficient
to cover the full replacement cost thereof.  Each Debtor shall cause each
insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to the Secured Party that (a) the Secured Party
will be named as lender loss payee and additional insured under each such
insurance policy; (b) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly notify
the Secured Party and such cancellation or change shall not be effective as to
the Secured Party for at least thirty (30) days after receipt by the Secured
Party of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (c) the Secured Party will have the right (but no
obligation) at its election to remedy any default in the payment of premiums
within thirty (30) days of notice from the insurer of such default.  If no Event
of Default (as used in the Notes, as applicable) under either of the Notes
exists and if the proceeds arising out of any claim or series of related claims
do not exceed $50,000, loss payments in each instance will be applied by the
applicable Debtor to the repair and/or replacement of property with respect to
which the loss was incurred to the extent reasonably feasible, and any loss
payments or the balance thereof remaining, to the extent not so applied, shall
be payable to the applicable Debtor, provided, however, that payments received
by any Debtor after an Event of Default occurs and is continuing under either
Note or in excess of $50,000 for any occurrence or series of related occurrences
shall be paid to the Secured Party and, if received by such Debtor, shall be
held in trust for and immediately paid over to the Secured Party unless
otherwise directed in writing by the Secured Party.   Copies of such policies or
the related certificates, in each case, naming the Secured Party as lender loss
payee and additional insured shall be delivered to the Secured Party at least
annually and at the time any new policy of insurance is issued.

             (o)     Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Party promptly, in sufficient detail, of any substantial change in the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Party’s
security interest therein.

             (p)     Each
Debtor shall promptly execute and deliver to the Secured Party such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, if applicable, the execution
and delivery of a separate security agreement with respect to each
Debtor’s Intellectual Property (“Intellectual Property Security
Agreement”) in which the Secured Party has been granted a security
interest hereunder, substantially in a form acceptable to the Secured Party,
which Intellectual Property Security Agreement, other than as stated therein,
shall be subject to all of the terms and conditions
hereof.

8
   

             (q)     Each
Debtor shall permit the Secured Party and its representatives and agents to
inspect the Collateral at any time, and to make copies of records pertaining to
the Collateral as may be requested by the Secured Party from time to
time.

             (r)     Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.

             (s)     Each
Debtor shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by such
Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Party hereunder.

             (t)     All
information heretofore, herein or hereafter supplied to the Secured Party by or
on behalf of any Debtor with respect to the Collateral is accurate and complete
in all material respects as of the date furnished.

             (u)     The
Debtors shall at all times preserve and keep in full force and effect their
respective valid existence and good standing and any rights and franchises
material to its business.

             (v)     No
Debtor will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate
structure, or identity, or add any new fictitious name unless it provides at
least 20 days prior written notice to the Secured Party of such change and, at
the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue perfected the
perfected security Interest granted and evidenced by this Agreement.

             (w)     No
Debtor may consign any of its Inventory or sell any of its Inventory on bill and
hold, sale or return, sale on approval, or other conditional terms of sale
without the consent of the Secured Party which shall not be unreasonably
withheld, except to the extent such consignment or sale does not exceed 15% of
the total value of all of the Company’s finished goods in
Inventory.

             (x)     No
Debtor may relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to the Secured Party and so
long as, at the time of such written notification, such Debtor provides any
financing statements or fixture filings necessary to perfect and continue
perfected the perfected Security Interest granted and evidenced by this
Agreement.

             (y)     Each
Debtor which is a corporation was organized and remains organized solely under
the laws of the state set forth next to such Debtor’s name in the first
paragraph of this Agreement.  Schedule D attached hereto sets forth each
Debtor’s organizational identification number or, if any Debtor does not
have one, states that one does not exist.

             (z)     (i)
The actual name of each Debtor is the name set forth in the preamble above; (ii)
no Debtor has any trade names except as set forth on Schedule E attached
hereto; (iii) no Debtor has used any name other than that stated in the preamble
hereto or as set forth on Schedule E for the preceding five years; and
(iv) no entity has merged into any Debtor or been acquired by any Debtor within
the past five years except as set forth on Schedule
E.

9
   

             (aa)     At
any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by the
secured party to perfect the security interest created hereby, the applicable
Debtor shall deliver such Collateral to the Secured Party.

             (bb)     Each
of the Guarantors, in its capacity as issuer, hereby agrees to comply with any
and all orders and instructions of the Secured Party regarding the Pledged
Interests consistent with the terms of this Agreement without the further
consent of any Debtor as contemplated by Section 8-106 (or any successor
section) of the UCC.  Further, each Debtor agrees that it shall not enter into a
similar agreement (or one that would confer “control” within the
meaning of Article 8 of the UCC) with any other person or entity.

             (cc)     Each
Debtor shall cause all tangible chattel paper constituting Collateral to be
delivered to the Secured Party, or, if such delivery is not possible, then to
cause such tangible chattel paper to contain a legend noting that it is subject
to the security interest created by this Agreement.  To the extent that any
Collateral consists of electronic chattel paper, the applicable Debtor shall
cause the underlying chattel paper to be “marked” within the meaning
of Section 9-105 of the UCC (or successor section thereto).

             (dd)     Reserved.

             (ee)     To
the extent that any Collateral consists of letter-of-credit rights, the
applicable Debtor shall cause the issuer of each underlying letter of credit to
consent to an assignment of the proceeds thereof to the Secured Party.

             (ff)     To
the extent that any Collateral is in the possession of any third party, the
applicable Debtor shall join with the Secured Party in notifying such third
party of the Secured Party’ security interest in such Collateral and shall
use its best efforts to obtain an acknowledgement and agreement from such third
party with respect to the Collateral, in form and substance satisfactory to the
Secured Party.

             (gg)     If
any Debtor shall at any time hold or acquire a commercial tort claim, such
Debtor shall promptly notify the Secured Party in a writing signed by such
Debtor of the particulars thereof and grant to the Secured Party in such writing
a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
the Secured Party.

             (hh)     Each
Debtor shall immediately provide written notice to the Secured Party of any and
all accounts which arise out of contracts with any governmental authority and,
to the extent necessary to perfect or continue the perfected status of the
Security Interest in such accounts and proceeds thereof, shall execute and
deliver to the Secured Party an assignment of claims for such accounts and
cooperate with the Secured Party in taking any other steps required, in their
judgment, under the Federal Assignment of Claims Act or any similar federal,
state or local statute or rule to perfect or continue the perfected status of
the Security Interest in such accounts and proceeds
thereof.

10
   

             (ii)     Each
of the Guarantors shall cause each subsidiary of such Debtor to immediately
become a party hereto (an “Additional Debtor”), by executing
and delivering an Additional Debtor Joinder in substantially the form of Annex A
attached hereto and comply with the provisions hereof applicable to the Debtors.
Concurrent therewith, the Additional Debtor shall deliver replacement schedules
for, or supplements to all other Schedules to (or referred to in) this
Agreement, as applicable, which replacement schedules shall supersede, or
supplements shall modify, the Schedules then in effect.  The Additional Debtor
shall also deliver such opinions of counsel, authorizing resolutions, good
standing certificates, incumbency certificates, organizational documents,
financing statements and other information and documentation as the Secured
Party may reasonably request.  Upon delivery of the foregoing to the Secured
Party, the Additional Debtor shall be and become a party to this Agreement with
the same rights and obligations as the Debtors, for all purposes hereof as fully
and to the same extent as if it were an original signatory hereto and shall be
deemed to have made the representations, warranties and covenants set forth
herein as of the date of execution and delivery of such Additional Debtor
Joinder, and all references herein to the “Debtors” shall be deemed
to include each Additional Debtor.

             (jj)     Each
Debtor shall vote the Pledged Securities of such Debtor to comply with the
covenants and agreements set forth herein and in the Note.

             (kk)     Each
of the Guarantors shall register the pledge of the applicable Pledged Securities
on the books of such Debtor.  Each Debtor shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the
name of the Secured Party on the books of such issuer.  Further, except with
respect to certificated securities delivered to the Secured Party, the
applicable Debtor shall deliver to the Secured Party an acknowledgement of
pledge (which, where appropriate, shall comply with the requirements of the
relevant UCC with respect to perfection by registration) signed by the issuer of
the applicable Pledged Securities, which acknowledgement shall confirm that: (a)
it has registered the pledge on its books and records; and (b) at any time
directed by the Secured Party during the continuation of an Event of Default,
such issuer will transfer the record ownership of such Pledged Securities into
the name of any designee of the Secured Party, will take such steps as may be
necessary to effect the transfer, and will comply with all other instructions of
the Secured Party regarding such Pledged Securities without the further consent
of the applicable Debtor.

             (ll)     In
the event that, upon an occurrence of an Event of Default under either Note, the
Secured Party shall sell all or any of the Pledged Securities to another party
or parties (herein called the “Transferee”) or shall purchase
or retain all or any of the Pledged Securities, each Debtor shall, to the extent
applicable: (i) deliver to the Secured Party or the Transferee, as the case may
be, the articles of incorporation, bylaws, minute books, stock certificate
books, corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other Organizational
Documents and records of the Debtors and their direct and indirect subsidiaries;
(ii) use its best efforts to obtain resignations of the persons then serving as
officers and directors of the Debtors and their direct and indirect
subsidiaries, if so requested; and (iii) use its best efforts to obtain any
approvals that are required by any governmental or regulatory body in order to
permit the sale of the Pledged Securities to the Transferee or the purchase or
retention of the Pledged Securities by the Secured Party and allow the
Transferee or the Secured Party to continue the business of the Debtors and
their direct and indirect subsidiaries.

             (mm)     Without
limiting the generality of the other obligations of the Debtors hereunder, each
Debtor shall promptly (i) cause to be registered at the United States Copyright
Office all of its material copyrights, (ii) cause the security interest
contemplated hereby with respect to all Intellectual Property registered at the
United States Copyright Office or United States Patent and Trademark Office to
be duly recorded at the applicable office, and (iii) give the Secured Party
notice whenever it acquires (whether absolutely or by license) or creates any
additional material Intellectual Property.

11
   

             (nn)     Each
Debtor will from time to time, at the joint and several expense of the Debtors,
promptly execute and deliver all such further instruments and documents, and
take all such further action as may be necessary or desirable, or as the Secured
Party may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce their rights and remedies hereunder and with
respect to any Collateral or to otherwise carry out the purposes of this
Agreement.

             (oo)     Schedule
F attached hereto lists all of the patents, patent applications, trademarks,
trademark applications, registered copyrights, and domain names owned by any of
the Debtors as of the date hereof.  Schedule F lists all material
licenses in favor of any Debtor for the use of any patents, trademarks,
copyrights and domain names as of the date hereof.  All material patents and
trademarks of the Debtors have been duly recorded at the United States Patent
and Trademark Office and all material copyrights of the Debtors have been duly
recorded at the United States Copyright Office.

             (pp)     Except
as set forth on Schedule G attached hereto, none of the account debtors
or other persons or entities obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or any
similar federal, state or local statute or rule in respect of such
Collateral.

       5.     Effect
of Pledge on Certain Rights.  If any of the Collateral subject to
this Agreement consists of nonvoting equity or ownership interests (regardless
of class, designation, preference or rights) that may be converted into voting
equity or ownership interests upon the occurrence of certain events (including,
without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership
interests pursuant to this Agreement or the enforcement of any of the Secured
Party’ rights hereunder shall not be deemed to be the type of event which
would trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.

       6.     Defaults.
The following events shall be “Events of Default”:

             (a)     The
occurrence of an Event of Default under either of the Notes (as used in the
applicable Note);

             (b)     Any
representation or warranty of any Debtor in this Agreement shall prove to have
been incorrect in any material respect when made;

             (c)     The
failure by any Debtor to observe or perform any of its obligations hereunder for
two (2) Business Days; or

             (d)     If
any provision of this Agreement shall at any time for any reason be declared to
be null and void, or the validity or enforceability thereof shall be contested
by any Debtor, or a proceeding shall be commenced by any Debtor, or by any
governmental authority having jurisdiction over any Debtor, seeking to establish
the invalidity or unenforceability thereof, or any Debtor shall deny that any
Debtor has any liability or obligation purported to be created under this
Agreement.

12
   

       7.     Duty
To Hold In Trust. 

             (a)     Upon
the occurrence of any Event of Default hereunder and at any time thereafter,
each Debtor shall, upon receipt of any revenue, income, dividend, interest or
other sums subject to the Security Interest, whether payable pursuant to the
Notes or otherwise, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Party and shall forthwith endorse and transfer any such sums or
instruments, or both (to the extent permitted by law), to the Secured Party for
application to the satisfaction of the Obligations.  

             (b)     If
any Debtor shall become entitled to receive or shall receive any securities or
other property (including, without limitation, shares of Pledged Securities or
instruments representing Pledged Securities acquired after the date hereof, or
any options, warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Party; (ii) hold the same in trust on behalf of and for the benefit of
the Secured Party; and (iii) to deliver any and all certificates or instruments
evidencing the same to the Secured Party on or before the close of business on
the fifth business day following the receipt thereof by such Debtor, in the
exact form received together with the Necessary Endorsements, to be held by the
Secured Party subject to the terms of this Agreement as Collateral.

       8.     Rights
and Remedies Upon Default. 

             (a)     Upon
the occurrence of any Event of Default hereunder and at any time thereafter, the
Secured Party, acting through any agent it appoints for such purpose, shall have
the right to exercise all of the remedies conferred hereunder and under the
Notes, and the Secured Party shall have all the rights and remedies of a secured
party under the UCC.  Without limitation, the Secured Party shall have the
following rights and powers to the extent permitted by applicable law:

                         (i)     The
Secured Party shall have the right to take possession of the Collateral and, for
that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and each Debtor shall assemble the Collateral and make it available to the
Secured Party at places which the Secured Party shall reasonably select, whether
at such Debtor’s premises or elsewhere, and make available to the Secured
Party, without rent, all of such Debtor’s respective premises and
facilities for the purpose of the Secured Party taking possession of, removing
or putting the Collateral in saleable or disposable form.

                         (ii)     Upon
notice to the Debtors by the Secured Party, all rights of each Debtor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of each Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease.  Upon such notice, the Secured Party shall have the right to receive any
interest, cash dividends or other payments on the Collateral and, at its option,
to exercise in its discretion all voting rights pertaining thereto.  Without
limiting the generality of the foregoing, the Secured Party shall have the right
(but not the obligation) to exercise all rights with respect to the Collateral
as if it were the sole and absolute owners thereof, including, without
limitation, to vote and/or to exchange, at its sole discretion, any or all of
the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or
any Debtor or any of its direct or indirect
subsidiaries.

13
   

                         (iii)     The
Secured Party shall have the right to operate the business of each Debtor using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to any Debtor or right of redemption of a
Debtor, which are hereby expressly waived.  Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured Party may, unless
prohibited by applicable law which cannot be waived, purchase all or any part of
the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of any Debtor, which are hereby waived and
released.

                         (iv)     The
Secured Party shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Party and to enforce the Debtors’ rights against
such account debtors and obligors.

                         (v)     The
Secured Party may (but is not obligated to) direct any financial intermediary or
any other person or entity holding any investment property to transfer the same
to the Secured Party or their designee.

                         (vi)     The
Secured Party may (but is not obligated to) transfer any or all Intellectual
Property registered in the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Party or
any designee or any purchaser of any Collateral.

             (b)     The
Secured Party may comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral.  The
Secured Party may sell the Collateral without giving any warranties and may
specifically disclaim such warranties.  If the Secured Party sells any of the
Collateral on credit, the Debtors will only be credited with payments actually
made by the purchaser in cash.  In addition, to the extent permitted by
applicable law, each Debtor waives any and all rights that it may have to a
judicial hearing in advance of the enforcement of any of the Secured
Party’ rights and remedies hereunder, including, without limitation, its
right following an Event of Default hereunder to take immediate possession of
the Collateral and to exercise its rights and remedies with respect
thereto.

             (c)     For
the purpose of enabling the Secured Party to further exercise rights and
remedies under this Section 8 or elsewhere provided by agreement or applicable
law, each Debtor hereby grants to the Secured Party an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to such
Debtor) to use, license or sublicense following an Event of Default hereunder,
any Intellectual Property now owned or hereafter acquired by such Debtor, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout
thereof.

14
   

             (d)     In
the event the Secured Party assigns any portion of its interest under either of
the Notes, no action shall be taken under the terms of this Agreement except
upon the written consent of the Note holders holding Notes representing a
majority of the principal amount under either of the Loans, which majority shall
include Sheridan. 

       9.     Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of
the Collateral hereunder shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like
(including, without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, to the reasonable attorneys’ fees
and expenses incurred by the Secured Party in enforcing its rights hereunder and
in connection with collecting, storing and disposing of the Collateral, and then
to satisfaction of the other Obligations, and to the payment of any other
amounts required by applicable law, after which the Secured Party shall pay to
the applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Party is legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 20%
per annum or the lesser amount permitted by applicable law (the
“Default Rate”), and the reasonable fees of any attorneys
employed by the Secured Party to collect such deficiency.  To the extent
permitted by applicable law, each Debtor waives all claims, damages and demands
against the Secured Party arising out of the repossession, removal, retention or
sale of the Collateral, unless due solely to the gross negligence or willful
misconduct of the Secured Party as determined by a final judgment (not subject
to further appeal) of a court of competent jurisdiction.

       10.     Securities
Law Provision.  Each Debtor recognizes that the Secured Party may be limited
in its ability to effect a sale to the public of all or part of the Pledged
Securities by reason of certain prohibitions in the Securities Act of 1933, as
amended, or other federal or state securities laws (collectively, the
“Securities Laws”), and may be compelled to resort to one or
more sales to a restricted group of purchasers who may be required to agree to
acquire the Pledged Securities for their own account, for investment and not
with a view to the distribution or resale thereof.  Each Debtor agrees that
sales so made may be at prices and on terms less favorable than if the Pledged
Securities were sold to the public, and that the Secured Party has no obligation
to delay the sale of any Pledged Securities for the period of time necessary to
register the Pledged Securities for sale to the public under the Securities
Laws.  Each Debtor shall cooperate with the Secured Party in its attempt to
satisfy any requirements under the Securities Laws (including, without
limitation, registration thereunder if requested by the Secured Party)
applicable to the sale of the Pledged Securities by the Secured Party.

       11.     Costs
and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees,
costs and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements pursuant to the UCC,
continuation statements, partial releases and/or termination statements related
thereto or any expenses of any searches reasonably required by the Secured
Party.  The Debtors shall also pay all other claims and charges which in the
reasonable opinion of the Secured Party might prejudice, imperil or otherwise
affect the Collateral or the Security Interest therein.  The Debtors will also,
upon demand, pay to the Secured Party the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Secured Party may incur in connection with (i) the
enforcement of this Agreement, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, or (iii)
the exercise or enforcement of any of the rights of the Secured Party under the
Notes. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Notes and shall bear interest at the Default
Rate.

15
   

       12.     Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in
connection with all Collateral, and the Obligations shall in no way be affected
or diminished by reason of the loss, destruction, damage or theft of any of the
Collateral or its unavailability for any reason.  The Secured Party agrees to
act in accordance with commercially reasonable standards and the UCC.  Without
limiting the generality of the foregoing, (a) no Secured Party (i) has any duty
(either before or after an Event of Default) to collect any amounts in respect
of the Collateral or to preserve any rights relating to the Collateral, or (ii)
has any obligation to clean-up or otherwise prepare the Collateral for sale, and
(b) each Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by such Debtor
thereunder.  The Secured Party shall have no obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or the
receipt by the Secured Party of any payment relating to any of the Collateral,
nor shall the Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the
Secured Party in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to the Secured Party may be
entitled at any time or times.

       13.     Security
Interest Absolute. All rights of the Secured Party and all obligations of
the Debtors hereunder, shall be absolute and unconditional, irrespective of: (a)
any lack of validity or enforceability of this Agreement, the Notes or any
agreement entered into in connection with the foregoing, or any portion hereof
or thereof; (b) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the Notes or
any other agreement entered into in connection with the foregoing; (c) any
exchange, release or nonperfection of any of the Collateral, or any release or
amendment or waiver of or consent to departure from any other collateral for, or
any guaranty, or any other security, for all or any of the Obligations; (d) any
action by the Secured Party to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in connection with
the Collateral; or (e) any other circumstance which might otherwise constitute
any legal or equitable defense available to a Debtor, or a discharge of all or
any part of the Security Interest granted hereby.  Until the Obligations shall
have been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy.  Each
Debtor expressly waives presentment, protest, notice of protest, demand, notice
of nonpayment and demand for performance. In the event that at any time any
transfer of any Collateral or any payment received by the Secured Party
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States, or shall be deemed to be otherwise due to
any party other than the Secured Party, then, in any such event, each
Debtor’s obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof.  Each
Debtor waives all right to require the Secured Party to proceed against any
other person or entity or to apply any Collateral which the Secured Party may
hold at any time, or to marshal assets, or to pursue any other remedy. Each
Debtor waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.

       14.     Term
of Agreement. This Agreement and the Security Interest shall terminate on
the date on which all payments under the Notes have been indefeasibly paid in
full and all other Obligations have been paid or discharged; provided, however,
that all indemnities of the Debtors contained in this Agreement shall survive
and remain operative and in full force and effect regardless of the termination
of this Agreement.

16
   

       15.     Power
of Attorney; Further Assurances.

             (a)     Each
Debtor authorizes the Secured Party, and does hereby make, constitute and
appoint the Secured Party and its officers, agents, successors or assigns with
full power of substitution, as such Debtor’s true and lawful
attorney-in-fact, with power, in the name of the Secured Party or such Debtor,
to (i) endorse any note, checks, drafts, money orders or other instruments of
payment (including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the
Secured Party; (ii) sign and endorse any financing statement pursuant to the UCC
or any invoice, freight or express bill, bill of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to the Collateral;
(iii) pay or discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on or threatened against the
Collateral; (iv) demand, collect, receipt for, compromise, settle and sue for
monies due in respect of the Collateral; (v) transfer any Intellectual Property
or provide licenses respecting any Intellectual Property; and (vi) generally, at
the option of the Secured Party, and at the expense of the Debtors, at any time,
or from time to time, execute and deliver any and all documents and instruments
and to do all acts and things which the Secured Party deems necessary to
protect, preserve and realize upon the Collateral and the Security Interest
granted therein in order to effect the intent of this Agreement and the Notes
all as fully and effectually as the Debtors might or could do; and each Debtor
hereby ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof.  This power of attorney is coupled with an interest and shall be
irrevocable for the term of this Agreement and thereafter as long as any of the
Obligations shall be outstanding.  The designation set forth herein shall be
deemed to amend and supersede any inconsistent provision in the Organizational
Documents or other documents or agreements to which any Debtor is subject or to
which any Debtor is a party.  Without limiting the generality of the foregoing,
after the occurrence and during the continuance of an Event of Default
hereunder, the Secured Party is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any patents,
trademarks, copyrights or other Intellectual Property with the United States
Patent and Trademark Office and the United States Copyright Office.

             (b)     On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies in
any jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule C attached hereto, all such instruments, and take all such
action as may reasonably be deemed necessary or advisable, or as reasonably
requested by the Secured Party, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Secured Party the grant or perfection of a
perfected security interest in all the Collateral under the UCC.

             (c)     Each
Debtor hereby irrevocably appoints the Secured Party as such Debtor’s
attorney-in-fact, with full authority in the place and instead of such Debtor
and in the name of such Debtor, from time to time in the Secured Party’
discretion, to take any action and to execute any instrument which the Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of such Debtor where permitted by law,
which financing statements may (but need not) describe the Collateral as
“all assets” or “all personal property” or words of like
import, and ratifies all such actions taken by the Secured Party.  This power of
attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be
outstanding.

17
   

       16.     Notices.
All notices, requests, demands and other communications hereunder shall be
subject to the notice provision of the applicable Loan Agreement.

       17.     Other
Security. To the extent that the Obligations are now or hereafter secured by
property other than the Collateral or by the guarantee, endorsement or property
of any other person, firm, corporation or other entity, then the Secured Party
shall have the right, in its sole discretion, to pursue, relinquish,
subordinate, modify or take any other action with respect thereto, without in
any way modifying or affecting any of the Secured Party’ rights and
remedies hereunder.

       18.     Miscellaneous.

             (a)     No
course of dealing between the Debtors and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under either Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.

             (b)     All
of the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Notes or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.

             (c)     This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to this Agreement
and signed by the parties hereto.

             (d)     In
the event any provision of this Agreement is held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable.  If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.

             (e)     No
waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
or right, whether of the same or similar nature or otherwise.

             (f)     This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.

             (g)     Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.

18
   

             (h)     All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof.  Each Debtor agrees that all proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and the Notes (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York, Borough of Manhattan.
Each Debtor hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.  Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If any party shall commence a proceeding to enforce any
provisions of this Agreement, then the prevailing party in such proceeding shall
be reimbursed by the other party for its reasonable attorney’s fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such proceeding.

             (i)     This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.

             (j)     All
Debtors shall jointly and severally be liable for the obligations of each Debtor
to the Secured Party hereunder.

             (k)     Each
Debtor shall indemnify, reimburse and hold harmless the Secured Party and its
partners, members, shareholders, officers, directors, employees and agents
(collectively, “Indemnitees”) from and against any and all
losses, claims, liabilities, damages, penalties, suits, costs and expenses, of
any kind or nature, (including fees relating to the cost of investigating and
defending any of the foregoing) imposed on, incurred by or asserted against such
Indemnitee in any way related to or arising from or alleged to arise from this
Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross
negligence or willful misconduct of the Indemnitee as determined by a final,
nonappealable decision of a court of competent jurisdiction.  This
indemnification provision is in addition to, and not in limitation of, any other
indemnification provision in the Notes, the Loan Agreements or any other
agreement, instrument or other document executed or delivered in connection
herewith or therewith.

19
   

             (l)     Nothing
in this Agreement shall be construed to subject the Secured Party to liability
as a partner in any Debtor or any if its direct or indirect subsidiaries that is
a partnership or as a member in any Debtor or any of its direct or indirect
subsidiaries that is a limited liability company, nor shall the Secured Party be
deemed to have assumed any obligations under any partnership agreement or
limited liability company agreement, as applicable, of any such Debtor or any of
its direct or indirect subsidiaries or otherwise, unless and until any the
Secured Party exercises its right to be substituted for such Debtor as a partner
or member, as applicable, pursuant hereto.

             (m)     To
the extent that the grant of the Security Interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any
Debtor or any direct or indirect subsidiary of any Debtor, such Debtor hereby
grants, or shall cause its Subsidiary to grant, such consent and approval and
waive any such noncompliance with the terms of said documents.  The Company
shall cause each of its subsidiaries formed or acquired on or subsequent to the
date hereof to become a Guarantor for all purposes of this Agreement by
executing and delivering an Assumption Agreement in the form attached as Annex 1
to the Guaranty.

[SIGNATURE PAGES FOLLOW]

20
   

       IN WITNESS WHEREOF, the
parties hereto have caused this Amended and Restated Security Agreement to be
duly executed on the day and year first above written.

	

UNIVERSAL PROPERTY DEVELOPMENT AND

ACQUISITION
CORPORATION

	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	

KAMAL ABDALLAH

	
 
	
 
	

_____________________________________________

	
 
	
 
	

CHRISTOPHER
MCCAULEY

	
 
	
 
	

_____________________________________________

	
 
	
 
	

CANYON CREEK OIL AND GAS INC.

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	
 
	

CATLIN OIL AND GAS, INC.

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	
 
	

SHERIDAN ASSET MANAGEMENT LLC

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 

21
   

	
 
	

HEARTLAND OIL AND GAS CORP.

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	
 
	

HEARTLAND GAS GATHERING, LLC 

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	
 
	

HEARTLAND OIL & GAS, INC.

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	

HEARTLAND INTERNATIONAL OIL CORP.

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	
 
	

UPDA OPERATORS,
INC.

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

	
 
	
 
	

AZTEC WELLS SERVICES, INC.

	
 
	
 
	

By: __________________________________________

      Name:

      Title:

	
 
	
 

22
   

	

SHERIDAN ASSET
MANAGEMENT

	
 
	
 
	

By:
__________________________________________

  Name:
      Title:

23
   

SCHEDULE A

LOCATION OF COLLATERAL

Principal Place of Business of Debtors:

UNIVERSAL PROPERTY DEVELOPMENT AND ACQUISITION
CORPORATION
14255 US Hwy
1
Suite 209, 
Juno Beach, FL
33408

CATLIN OIL AND GAS, INC.
124 N. Church
Street
Jacksboro, TX 76458

CANYON CREEK OIL AND GAS, INC.
124 N.
Church Street 
Jacksboro, TX 76458

HEARTLAND OIL AND GAS CORP.
12603
Southwest Freeway 
Suite 285

Stafford, TX 77477

HEARTLAND GAS GATHERING, LLC 
1610
Industrial Drive
Paola, KS 66071

HEARTLAND OIL & GAS, INC.
1610
Industrial Drive
Paola, KS 66071

UPDA OPERATORS, INC.
124 N. Church
Street
Jacksboro, TX 76458

HEARTLAND INTERNATIONAL OIL CORP.
12603
Southwest Freeway 
Suite 285

Stafford, TX 77477

AZTEC WELL SERVICES, INC.
1610
Industrial Drive
Paola, KS 66071

KAMAL ABDALLAH
8 Links
Green
San Antonio, TX 78257

24
   

CHRISTOPHER J. MCCAULEY

5408 Valley Pkwy.
Brecksville, OH
44141

Locations Where Collateral is Located or
Stored:

All collateral is located in Texas and Kansas.  

Heartland Oil and Gas Corp. currently has assets located in an
office in Colorado.  The office in Colorado will close on September 14, 2007 and
all assets currently located in Colorado will be moved to Texas.  

The Company has a mailing address in Florida.  There are no
assets at the Florida location.

There are no assets in Nevada.  

25
   

SCHEDULE B

EXISTING LIENS ON COLLATERAL

1.     Liens arising under and in
connection with the UPDA First Loan.  

26
   

SCHEDULE C

JURISDICTIONS IN WHICH COLLATERAL LOCATED

Kansas

Texas

Nevada

Colorado

Florida 

Ohio

27
   

SCHEDULE D

ORGANIZATIONAL IDENTIFICATION NUMBERS

	

CORPORATION

	

EIN/SSN

	

AZTEC WELL SERVICES, INC

	

26-0179549

	

CANYON CREEK OIL AND GAS INC.

	

20-3110367

	

CATLIN OIL AND GAS, INC.

	

20-5336700

	

CHRISTOPHER MCCAULEY

	

###-##-####

	

HEARTLAND GAS GATHERING, LLC

	

20-3966472

	

HEARTLAND OIL & GAS, INC.

	

98-0396103

	

HEARTLAND OIL AND GAS CORP.

	

91-1918326

	

KAMAL ABDALLAH

	

###-##-####

	

UNIVERSAL PROPERTY DEVELOPMENT AND

ACQUISITION CORPORATION

	

20-3014499

	

UPDA OPERATORS, INC.

	

20-4792685

28
   

SCHEDULE E

NAMES; MERGERS AND ACQUISITIONS

	

1

	

Acquisition of Heartland Oil and Gas Corp. by UPDA as of April 6,
2007.  

	
 
	

2.

	

Aztec Well Services, Inc. is registering the name Aztec Premium
Well Services, Inc. in Texas.

	
 
	

3.

	

Acquisition of controlling interest in Continental Fuels, Inc.,
f/k/a Colorado Industries, Inc. as of April 23, 2007.

29
   

SCHEDULE F

INTELLECTUAL PROPERTY

www,universalpropertydevelopment,
com

www,heartlandoilandgas,com

30
   

SCHEDULE G

ACCOUNT DEBTORS

None.

31
   

SCHEDULE H

PLEDGED SECURITIES

60,000 shares of Common Stock of Canyon Creek Oil and Gas Inc.,
par value $0.001 per share, Certificate No. 101 Dated March 7, 2007.

90,000 shares of Common Stock  of Catlin Oil and Gas, Inc., par
value $0.001 per share, Certificate No. 101 Dated March 7, 2007.

2,060,000 common shares in Universal Property Development and
Acquisition Corporation, par value $0.001 per share, Certificate Nos. 2074,
2075, 2097, 2101 and 2126 dated August 18, 2005, August 18, 2005, October 1,
2005, September 30, 2005, and November 29, 2005. 

80,000 Class “A” Convertible Preferred stock in
Universal Property Development and Acquisition Corporation, par value $10.00 per
share, Certificate No. 8001, dated July 27, 2005.

20,000 Class “A” Convertible Preferred stock of
Universal Property Development and Acquisition Corporation, par value $10.00 per
share, Certificate No. 8002, dated July 27, 2005.

5,063,177 shares of Common Stock of Heartland Oil and Gas Corp.,
par value $0.001 per share, Certificate No. 310, dated August 13,
2007.

100,000 shares of Common Stock of Heartland Oil and Gas Inc., par
value $0.001 per share, Certificate No. 101, dated August 1, 2007.

100,000 shares of Common Stock of Aztec Well Services Inc., par
value $0.001 per share, Certificate No. 101, dated August 1, 2007. 

100,000 shares of Common Stock of UPDA Operators Inc. , par value
$0.001 per share, Certificate No. 102, dated August 15, 2007.

10o shares of Common Stock of Heartland International Oil Corp.,
par value $1.00 per share, Certificate No. 102, dated August 15,
2007.

32
   

SCHEDULE I

CLAIMS

1.     Pending suit regarding leases and
wells of Canyon Creek Oil and Gas, Inc. 

2.     USPX v. UPDA, pending in Fort
Bend County, Texas.

33
   

 ANNEX AbtobSECURITYbAGREEMENT	

FORM OF ADDITIONAL DEBTOR
JOINDER

Amended and Restated Security Agreement dated as of August 16,
2007 made by Universal Property Development and Acquisition Corporation, its
subsidiaries party thereto from time to time, Kamal Abdallah, Christopher J.
McCauley, Heartland Oil and Gas Corp., Canyon Creek Oil and Gas, Inc., Catlin
Oil and Gas, Inc., Heartland Gas Gathering, LLC, Heartland Oil & Gas, Inc.,
UPDA Operators, Inc., Heartland International Oil Corp. and Aztec Well Services,
Inc. as Debtors to and in favor of the Secured Party identified therein (the
“Security Agreement”)

       Reference is made to
the Security Agreement as defined above; capitalized terms used herein and not
otherwise defined herein shall have the meanings given to such terms in, or by
reference in, the Security Agreement.

       The undersigned hereby
agrees that upon delivery of this Additional Debtor Joinder to the Secured Party
referred to above, the undersigned shall (a) be an Additional Debtor under the
Security Agreement, (b) have all the rights and obligations of the Debtors under
the Security Agreement as fully and to the same extent as if the undersigned was
an original signatory thereto and (c) be deemed to have made the representations
and warranties set forth in Section 4 therein as of the date of execution and
delivery of this Additional Debtor Joinder.  WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTY A
SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY
AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET
FORTH THEREIN.

       Attached hereto are
supplemental and/or replacement Schedules to the Security Agreement, as
applicable.

       An executed copy of
this Joinder shall be delivered to the Secured Party, and the Secured Party may
rely on the matters set forth herein on or after the date hereof.  This Joinder
shall not be modified, amended or terminated without the prior written consent
of the Secured Party.

   

       IN WITNESS WHEREOF, the
undersigned has caused this Joinder to be executed in the name and on behalf of
the undersigned.

	
 	

_______________________________

	
 	

By:

	
 	

Name:

	
 	

Title:

	
 
	
 	

Address:

	
 
	

Dated:

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