Document:

LOAN
      AGREEMENT

     

    This
      Loan
      Agreement (this “Agreement”)
      is
      dated as of April 6, 2007 between
      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”), Canyon
      Creek Oil and Gas, Inc.
      and
Catlin
      Oil and Gas, Inc.
      (the
“Operating Subsidiaries”), Nevada corporations whose principal place of business
      is located at 14255 US HWY, 1 Suite 209, Juno Beach, FL 33408, 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 (Messrs. Abdallah and McCauley,
      collectively, the “Guarantors”), and Sheridan
      Asset Management, LLC,
      a
      Delaware limited liability company whose principal place of business is located
      at 1025 Westchester Avenue, Suite 311, White Plains, NY 10604 (“Sheridan” or the
“Lender”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement, the Company
      desires to borrow, and the Lender desires to lend to the Company, certain funds
      as more fully described in this Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Lender agree as
      follows:

     

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1  Definitions.
      In
      addition to the terms defined elsewhere in this Agreement: (a) capitalized
      terms
      that are not otherwise defined herein have the meanings given to such terms
      in
      the Note (as defined herein), and (b) the following terms have the meanings
      indicated in this Section 1.1:

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144 under the Securities
      Act.
      With
      respect to a Lender, any investment fund or managed account that is managed
      on a
      discretionary basis by the same investment manager as the Lender will be deemed
      to be an Affiliate of the Lender.

     

    “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.

    

    “Closing”
means
      the closing of the Loan pursuant to Section 2.1.

    

    “Closing
      Date”
means
      the Business Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Lenders’ obligations to deliver the Loan Amount and (ii) the Company’s
      obligations to deliver the Note, have been satisfied or waived.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Common
      Stock”
means
      the common stock of the Company, par value $.001, and any securities into which
      such common stock shall hereinafter have been reclassified into.

     

    “Company’s
      Counsel”
means
      McGuireWoods LLP.

     

    “Disclosure
      Schedules”
shall
      have the meaning ascribed to such term in Section 3.1 hereof.

     

    “Escrow
      Agreement”
      means
      that certain Escrow Agreement, dated the date hereof, between the Lender, the
      Company, and Katten Muchin Rosenman LLP, as escrow agent.

     

    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.1(f) hereof.

     

    “Guaranties”
means
      those certain Guaranty Agreements given by each of the Guarantors.

     

    “Guarantor
      Shares”
means
      the shares of Common Stock and Preferred Stock pledged by the Guarantors to
      the
      Lender pursuant to the Security Agreement.

     

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction. 

     

    “Loan”
shall
      have the meaning ascribed to such term in Section 2.1. 

     

    “Loan
      Amount”
means,
      as to the Lender, the aggregate principal amount of the Note, in United States
      Dollars.

     

    “Loan
      Party”
means
      any of the Company, the Subsidiaries and the Guarantors.

     

    “Material
      Adverse Effect”
shall
      have the meaning assigned to such term in Section 3.1(a) hereof.

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(k).

     

    “Mortgages”
shall
      mean the mortgages in favor of the Lender secured by each property listed on
      Schedule A attached hereto.

     

    “Note”
means
      the Senior Secured Promissory Note due, subject to the terms therein, one year
      from its date of issuance, issued by the Company to the Lender hereunder, in
      the
      form of Exhibit
      A.

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Pledged
      Shares”
shall
      mean the shares of capital stock of the Operating Subsidiaries pledged to the
      Lenders by the Company pursuant to the Security Agreement.

     

    “Preferred
      Stock”
shall
      mean the Company’s Class A convertible preferred stock, par value $10.00, and
      any other classes of preferred stock authorized or outstanding.

     

     

    
      
        
        

      

      
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    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Registration
      Rights Agreement”
means
      that certain Registration Rights Agreement dated the date hereof, between the
      Lender and the Company.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Security
      Agreement”
means
      the Security Agreement, dated the date hereof, among the Company, the Lender
      and
      any and all of the Company’s Subsidiaries, in the form of Exhibit
      B
      attached
      hereto.

     

    “Security
      Documents”
means
      the Security Agreement, any Subsidiary Guarantee(s), the Guaranties, the
      Mortgages, and any other documents and filings required thereunder in order
      to
      grant the Lenders a perfected security interest in all of the assets of the
      Company and the property pledged or encumbered by the Guaranties or the
      Mortgages, including but not limited to all UCC-1 filing receipts, the Guarantor
      Shares and the Pledged Shares.

     

    “Subscription
      Amount”
means
      $2,726,250.

     

    “Subordination
      Agreement”
means
      that certain Subordination Agreement, dated the date hereof, between the Lender
      and Kamal Abdallah.

     

    “Subsidiary”
means
      any subsidiary of the Company.

     

    “Subsidiary
      Guarantee(s)”
means
      the Subsidiary Guarantee(s) executed by each of the Operating Subsidiaries,
      in
      the form of Exhibit
      C
      attached
      hereto.

     

    “Transaction
      Documents”
means
      this Agreement, the Note, the Security Documents, the Registration Rights
      Agreement, the Warrant, the Subordination Agreement, the Escrow Agreement,
      and
      any other documents or agreements executed in connection with the transactions
      contemplated hereunder or required to be executed pursuant to the terms of
      any
      Transaction Document.

     

    “Warrant”
means
      that certain Warrant, dated the hereof, issued by the Company to the Lender,
      in
      the Form of Exhibit D. 

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1 Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein
      and
      in the Note, concurrent with the execution and delivery of this Agreement by
      the
      parties hereto, the Company agrees to borrow, and the Lender agrees to make
      a
      term loan to the Company (the “Loan”), in the aggregate principal amount of
      THREE MILLION SIX HUNDRED AND THIRTY FIVE THOUSAND DOLLARS $3,635,000 (with
      original issue discount of $908,750), secured by a lien, more fully described
      in
      the Security Agreement, on all assets of the Company and any and all
      Subsidiaries, and secured by the pledges, mortgages and other security interests
      set forth in the Security Documents.

     

     

    
      
        
        

      

      
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    The
      Lender shall deliver to the Company or at the Lender’s sole discretion, on
      behalf of the Company, to Katten Muchin Rosenman LLP, as escrow agent pursuant
      to the Escrow Agreement, via wire transfer, immediately available funds equal
      to
      the Subscription Amount, and the Company shall deliver to the Lender its Note
      and the other items set forth in Section 2.2 issuable at the Closing. Upon
      satisfaction of the conditions set forth in Section 2.2, the Closing shall
      occur
      at the offices of the Lender, or such other location as the parties shall
      mutually agree. 

     

    If
      no
      Escrow Notice is delivered pursuant to the Escrow Agreement within the time
      period specified therein, the Lender shall cancel and return the Note to the
      Company and all fees and other amounts payable under this Agreement shall
      continue to constitute Obligations (as such term is defined under the Security
      Agreement) secured under the Security Documents. The Subscription Amount shall
      be released in whole or in part, first to pay any outstanding expenses under
      Section 5.1 hereunder, and then, simultaneously with the consummation of the
      acquisition of the outstanding capital stock of HOGC (as defined below) and
      the
      SDS Note (as defined below).

    2.2 Deliveries

     

    
      	a)  	
              On
                the Closing Date, the Company shall deliver to the counsel for the
                Lender
                with respect to the Loan the
                following:

            

    

     

    
      	(i)  	
              this
                Agreement duly executed by the
                Company;

            

    

     

    
      	(ii)  	
              a
                Note with a principal amount equal to the Lender’s Loan Amount, in the
                name of such Lender;

            

    

     

    
      	(iii)  	
              the
                Security Agreement, duly executed by the Company, along with all
                of the
                Security Documents;

            

    

     

    
      	(iv)  	
              the
                Warrant, duly executed by the Company,

            

    

     

    
      	(v)  	
              the
                Registration Rights Agreement, duly executed by the
                Company;

            

    

     

    
      	(vi)  	
              the
                Subordination Agreement, duly executed by Kamal Abdullah;
                

            

    

     

    
      	(vii)  	
              a
                legal opinion of Company’s Counsel in form and substance satisfactory to
                the Lender; 

            

    

     

    
      	(viii)  	
              an
                executed copy of IRS form W-9 certifying that the Company is not
                subject
                to withholding requirements; and

            

    

     

    
      	(ix)  	
              evidence
                satisfactory to the Lender, in its discretion, as to the Company’s entry
                into definitive agreements to acquire (i) a majority of the outstanding
                capital stock of Heartland Oil and Gas Corporation (“HOGC”) and (ii) that
                certain note in the aggregate principal amount of $5.5 million made
                by
                HOGC in favor of SDS Capital SPC Ltd. (the “SDS
                Note”).

            

    

     

    
      	b)  	
              On
                the Closing Date, the Lender shall deliver or cause to be delivered
                to
                Company Counsel the following: 

            

    

     

     

    
      
        
        

      

      
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      	(i)  	
              this
                Agreement duly executed by such
                Lender;

            

    

     

    
      	(ii)  	
              the
                Lender’s Subscription Amount in accordance with Section
                2.1;

            

    

    
       

      	(iii)  	
              the
                Security Agreement, duly executed by such Lender;
                

            

    

    
      	 	 

    

    
      	(iv)  	
              the
                Registration Rights Agreement, duly executed by the Lender;
                and

            

    

     

    
      	(v)  	
              the
                Subordination Agreement, duly executed by the
                Lender.

            

    

     

    2.3 Closing
      Conditions. 

     

    
      	a)  	
              The
                obligations of the Company hereunder in connection with the Closing
                are
                subject to the following conditions being
                met:

            

    

     

    
      	(i)  	
              the
                accuracy in all material respects when made and on the Closing Date
                of the
                representations and warranties of the Lender contained
                herein;

            

    

     

    
      	(ii)  	
              all
                obligations, covenants and agreements of the Lender required to be
                performed at or prior to the Closing Date shall have been performed;
                and

            

    

     

    
      	(iii)  	
              the
                delivery by the Lender of the items set forth in Section 2.2(b) of
                this
                Agreement.

            

    

     

    
      	b)  	
              The
                obligations of the Lender hereunder in connection with the Closing
                are
                subject to the following conditions being
                met:

            

    

     

    
      	(i)  	
              the
                accuracy in all material respects on the Closing Date of the
                representations and warranties of the Company contained
                herein;

            

    

     

    
      	(ii)  	
              all
                obligations, covenants and agreements of the Company required to
                be
                performed at or prior to the Closing Date shall have been
                performed;

            

    

     

    
      	(iii)  	
              the
                Lender shall be satisfied with the results of its due diligence
                investigation of the Company;

            

    

     

    
      	(iv)  	
              the
                Lender shall be satisfied with the Company’s current and projected uses of
                cash; 

            

    

     

    
      	(v)  	
              the
                delivery by the Company of the items set forth in Section 2.2(a)
                of this
                Agreement;

            

    

     

    
      	(vi)  	
              the
                Company shall have no outstanding indebtedness (other than trade
                payables
                and liabilities incurred in the ordinary course of business) or Liens,
                other than those in favor of Kamal Abdallah pursuant to the Subordinated
                Debt; 

            

    

     

    
      	(vii)  	
              there
                shall have been no Material Adverse Effect with respect to the Company
                since the date hereof; and

            

    

     

     

    
      
        
        

      

      
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      	(viii)  	
              No
                banking moratorium have been declared either by the United States,
                Nevada
                or New York State authorities nor shall there have occurred any material
                outbreak or escalation of hostilities or other national or international
                calamity of such magnitude in its effect on, or any material adverse
                change in, any financial markets which, in each case, in the reasonable
                judgment of such Lender, makes it impracticable or inadvisable to
                purchase
                the Notes at the Closing.

            

    

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1  Representations
      and Warranties of the Company.
      Except
      as set forth in the Disclosure
      Schedule
      which
      Disclosure Schedule shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to the Lender:

     

    (a)  Organization
      and Qualification.
      The
      Company and each Subsidiary is an entity duly incorporated, validly existing
      and
      in good standing under the laws of the State of Nevada, with the requisite
      power
      and authority to own and use its properties and assets and to carry on its
      business as currently conducted. The Company and each Subsidiary is not in
      violation or default of any of the provisions of its certificate of
      incorporation, bylaws or other organizational or charter documents. The Company
      and each Subsidiary is duly qualified to conduct business and is in good
      standing as a foreign corporation or other entity in each jurisdiction in which
      the nature of the business conducted or property owned by it makes such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, could not have or reasonably be expected to result
      in (i) a material adverse effect on the legality, validity or enforceability
      of
      any Transaction Document, (ii) a material adverse effect on the results of
      operations, assets, business, prospects or financial condition of the Company
      or
      any Subsidiary, taken as a whole, or (iii) a material adverse effect on any
      Loan
      Party’s ability to perform in any material respect on a timely basis its
      obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    (b)  Authorization;
      Enforcement.
      The
      Company and each Subsidiary have the requisite corporate power and authority
      to
      enter into and to consummate the transactions contemplated by each of the
      Transaction Documents to which it is a party and otherwise to carry out its
      respective obligations thereunder. The execution and delivery of each of the
      Transaction Documents by the Company and each Subsidiary and the consummation
      by
      it of the transactions contemplated thereby have been duly authorized by all
      necessary action on the part of the Company and each Subsidiary and no further
      action is required by the Company or any Subsidiary in connection therewith.
      Each Transaction Document has been (or upon delivery will have been) duly
      executed by the Loan Parties signatory thereto, and, when delivered in
      accordance with the terms hereof, will constitute the valid and binding
      obligation of each such Loan Party enforceable against such Loan Party in
      accordance with its terms. 

     

    (c)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by each Loan
      Party and the consummation by such Loan Party of the other transactions
      contemplated thereby do not and will not: (i) conflict with or violate any
      provision of such Loan Party’s certificate of incorporation, bylaws or other
      organizational or charter documents, or (ii) conflict with, or constitute a
      default (or an event that with notice or lapse of time or both would become
      a
      default) under, result in the creation of any Lien upon any of the properties
      or
      assets of such Loan Party, 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 a Loan Party debt or otherwise) or other understanding to which
      such
      Loan Party is a party or by which any property or asset of such Loan Party
      is
      bound or affected, or (iii) conflict with or result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which such Loan Party is subject
      (including federal and state securities laws and regulations), or by which
      any
      property or asset of such Loan Party is bound or affected; except in the case
      of
      each of clauses (ii) and (iii), such as could not have or reasonably be expected
      to result in a Material Adverse Effect.

     

     

    
      
        
        

      

      
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    (d)  Filings,
      Consents and Approvals.
      Each
      Loan Party is not required to obtain any consent, waiver, authorization or
      order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with its execution, delivery and performance of the Transaction
      Documents.

     

    (e)  Capitalization.
      The
      capitalization of the Company and each Operating Subsidiary is as set forth
      in
      the Capitalization section of the Disclosure Schedule. Other than as set forth
      on the Disclosure Schedule, the Company has no indebtedness. The Company has
      not
      issued any capital stock not reflected on the Disclosure Schedule. No Person
      has
      any right of first refusal, preemptive right, right of participation, or any
      similar right to participate in the transactions contemplated by the Transaction
      Documents. Except as set forth in the Disclosure Schedule, there are no
      outstanding options, warrants, script rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exchangeable for, or giving any Person any
      right
      to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company is or may
      become bound to issue additional shares of Common Stock, or securities or rights
      convertible or exchangeable into shares of Common Stock. The issuance and sale
      of the Note will not obligate the Company to issue shares of Common Stock or
      other securities to any Person and will not result in a right of any holder
      of
      Company securities to adjust the exercise, conversion, exchange or reset price
      under such securities. All of the outstanding shares of capital stock of the
      Company are validly issued, fully paid and nonassessable, have been issued
      in
      compliance with all federal and state securities laws, and none of such
      outstanding shares was issued in violation of any preemptive rights or similar
      rights to subscribe for or purchase securities. No further approval or
      authorization of any stockholder, the Board of Directors of the Company or
      others is required for the issuance and sale of the Note. There are no
      stockholders agreements, voting agreements or other similar agreements with
      respect to the Company’s capital stock to which the Company is a party or, to
      the knowledge of the Company, between or among any of the Company’s
      stockholders.

     

    (f)  Financial
      Condition.
      The
      Company has heretofore furnished to the Lender the draft consolidated audited
      balance sheet of the Company as at December 31, 2006 and the related draft
      consolidated audited statement of income for the fiscal year ended on said
      date,
      the consolidated unaudited balance sheet of the Company as at September 30,
      2006
      and the related consolidated unaudited statement of income for the nine month
      period ended on said date (the “Financial Statements”). The Financial Statements
      of the Company have been prepared in accordance with United States generally
      accepted accounting principles applied on a consistent basis during the periods
      involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited Financial Statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company as the case may be, as of and for the dates
      thereof and the results of operations and cash flows for the periods then ended,
      subject, in the case of unaudited statements, to normal, immaterial, year-end
      audit adjustments. 

     

     

    
      
        
        

      

      
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    (g)  Material
      Changes.
      Since
      the date of its latest audited financial statements, (i) there has been no
      event, occurrence or development that has had or that could reasonably be
      expected to result in a Material Adverse Effect, (ii) the Company has not
      incurred any liabilities (contingent or otherwise) other than (A) trade payables
      and accrued expenses incurred in the ordinary course of business consistent
      with
      past practice and (B) liabilities not required to be reflected in the Company's
      financial statements pursuant to GAAP, (iii) the Company has not altered its
      method of accounting, (iv) the Company has not declared or made any dividend
      or
      distribution of cash or other property to its stockholders or purchased,
      redeemed or made any agreements to purchase or redeem any shares of its capital
      stock and (v) the Company has not issued any equity securities to any officer,
      director or Affiliate, except pursuant to existing Company stock option plans.
      

     

    (h)  Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company or any Loan Party, threatened
      against or affecting the Company or any Loan Party, or any of its properties
      before or by any court, arbitrator, governmental or administrative agency or
      regulatory authority (federal, state, county, local or foreign) (collectively,
      an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Note or (ii) could, if there were an
      unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect. Neither the Company nor any director or officer thereof is
      or
      has been the subject of any Action involving a claim of violation of or
      liability under federal or state securities laws or a claim of breach of
      fiduciary duty.

     

    (i)  Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of any Loan Party, is
      imminent with respect to any of the employees of the Company or any Subsidiary
      which could reasonably be expected to result in a Material Adverse
      Effect.

     

    (j)  Compliance.
      Each
      Loan Party (i) is not in default under or in violation of (and no event has
      occurred that has not been waived that, with notice or lapse of time or both,
      would result in a default by such Loan Party under), nor has such Loan Party
      received notice of a claim that it is in default under or that it is in
      violation of, any indenture, loan or credit agreement or any other agreement
      or
      instrument to which it is a party or by which it or any of its properties is
      bound (whether or not such default or violation has been waived), (ii) is not
      in
      violation of any order of any court, arbitrator or governmental body, and (iii)
      is not or has not been in violation of any statute, rule or regulation of any
      governmental authority, including without limitation all foreign, federal,
      state
      and local laws applicable to its business except in each case as could not
      have
      a Material Adverse Effect.

     

    (k)  Regulatory
      Permits.
      Each
      Loan Party possesses all certificates, authorizations and permits issued by
      the
      appropriate federal, state, local or foreign regulatory authorities necessary
      to
      conduct its businesses, except where the failure to possess such permits could
      not have or reasonably be expected to result in a Material Adverse Effect
      (“Material
      Permits”),
      and
      the Company has not received any notice of proceedings relating to the
      revocation or modification of any Material Permit.

     

     

    
      
        
        

      

      
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    (l)  Title
      to Assets.
      Each
      Loan Party has good and marketable title in fee simple to all real property
      it
      owns that is material to its business and good and marketable title in all
      personal property and other tangible or intangible assets it owns that is
      material to its business, including but not limited to oil and gas exploration
      and drilling rights, in each case free and clear of all Liens, except for a
      Lien
      on the assets of the Company, in favor of Kamal Abdallah that is subordinated
      to
      the Company’s obligation to the Lender under the Transaction Documents pursuant
      to the Subordination Agreement. Any real property and facilities held under
      lease by each Loan Party are held under valid, subsisting and enforceable leases
      of which such Loan Party is in compliance.

     

    (m)  Patents
      and Trademarks.
      Each
      Loan Party has, or has rights to use, all patents, patent applications,
      trademarks, trademark applications, service marks, trade names, copyrights,
      licenses and other similar rights necessary or material for use in connection
      with its respective businesses and which the failure to so have could have
      a
      Material Adverse Effect (collectively, the “Intellectual
      Property Rights”).
      No
      Loan Party has received a written notice that the Intellectual Property Rights
      used by each Loan Party violates or infringes upon the rights of any Person.
      To
      the knowledge of each Loan Party, all such Intellectual Property Rights are
      enforceable and there is no existing infringement by another Person of any
      of
      the Intellectual Property Rights of others.

     

    (n)  Insurance.
      Each
      Loan Party is insured by insurers of recognized financial responsibility against
      such losses and risks and in such amounts as are prudent and customary in the
      businesses in which such Loan Party is engaged, at least equal to the aggregate
      Loan Amount. To the best such Loan Party’s knowledge, such insurance contracts
      and policies are accurate and complete. Each Loan Party has no reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business without a significant increase in
      cost.

     

    (o)  Transactions
      With Affiliates and Employees.
      None of
      the officers or directors of the Company and, to the knowledge of the Company,
      none of the employees of the Company or any Subsidiary is presently a party
      to
      any transaction with the Company or any Subsidiary (other than for services
      as
      employees, officers and directors), 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, 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.

     

    (p)  Internal
      Accounting Controls.
      The
      Company maintains a system of internal accounting controls sufficient to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management's general or specific authorizations, (ii) transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      GAAP and to maintain asset accountability, (iii) access to assets is permitted
      only in accordance with management's general or specific authorization, and
      (iv)
      the recorded accountability for assets is compared with the existing assets
      at
      reasonable intervals and appropriate action is taken with respect to any
      differences. 

     

    (q)  Certain
      Fees.
      No
      brokerage or finder’s fees or commissions are or will be payable by any Loan
      Party to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement. The Lender shall have no obligation with respect
      to any fees or with respect to any claims made by or on behalf of other Persons
      for fees of a type contemplated in this Section that may be due in connection
      with the transactions contemplated by this Agreement.

     

     

    
      
        
        

      

      
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    (r)  Private
      Placement.
      Assuming the accuracy of the Lender’s representations and warranties set forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Note by the Company to the Lender as contemplated
      hereby.

     

    (s)  Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately after receipt of
      payment for the Note, will not be or be an Affiliate of, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended. The
      Company shall conduct its business in a manner so that it will not become
      subject to the Investment Company Act.

     

    (t)  Sophisticated
      Borrower.
      The
      Company has assets of at least $2,000,000 in value as reflected in its financial
      statements dated not more than ninety (90) days prior to the date of this
      Agreement which financial statements have been prepared in accordance with
      generally accepted accounting principles, and the Company and the Guarantors
      by
      reason of their business and financial experience, or that of their professional
      advisors, have the capacity to protect their own interests and the interests
      of
      the Company in connection with the Loan.

     

    (u)  Rule
      144.
      In the
      event that the Lender forecloses on the Guarantor Shares pursuant to the
      Security Documents, the Guarantor Shares will be eligible for resale by the
      Lender pursuant to Rule 144(k) without the need for an additional holding period
      by the Lender.

     

    (v)  Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company's Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Lender as a result
      of
      the Lender and the Company fulfilling their obligations or exercising their
      rights under the Transaction Documents, including without limitation as a result
      of the Company's issuance of the Note and the Lender’s ownership of the
      Note.

     

    (w)  Disclosure.
      All
      disclosure provided to the Lender regarding the Company, its business and the
      transactions contemplated hereby, including the Disclosure Schedules to this
      Agreement, furnished by or on behalf of the Company with respect to the
      representations and warranties made herein are true and correct with respect
      to
      such representations and warranties and do not contain any untrue statement
      of a
      material fact or omit to state any material fact necessary in order to make
      the
      statements made therein, in light of the circumstances under which they were
      made, not misleading. The Company acknowledges and agrees that the Lender does
      not make and has not made any representations or warranties with respect to
      the
      transactions contemplated hereby other than those specifically set forth in
      Section 3.2 hereof.

     

    (x)  Federal
      Reserve Regulations.
      No Loan
      Party is engaged in the business of extending credit for the purpose of buying
      or carrying Margin Stock within the meaning of Regulation U of the Board of
      Governors of the Federal Reserve System, and no part of the proceeds of any
      advance will be used, whether directly or indirectly, and whether immediately,
      incidentally or ultimately, for any purpose that entails a violation of, or
      that
      is inconsistent with, the provisions of the Regulations of the Board of
      Governors of the Federal Reserve System, including, to the extent applicable,
      Regulation U and Regulation X.

     

     

    
      
        
        

      

      
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    (y)  Solvency.
      Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the Note
      hereunder and the application of the proceeds thereof, (i) the Company's fair
      saleable value of its assets exceeds the amount that will be required to be
      paid
      on or in respect of the Company's existing debts and other liabilities
      (including known contingent liabilities) as they mature; (ii) the Company's
      assets do not constitute unreasonably small capital to carry on its business
      for
      the current fiscal year as now conducted and as proposed to be conducted
      including its capital needs taking into account the particular capital
      requirements of the business conducted by the Company, and projected capital
      requirements and capital availability thereof; and (iii) the current cash flow
      of the Company, together with the proceeds the Company would receive, were
      it to
      liquidate all of its assets, after taking into account all anticipated uses
      of
      the cash, would be sufficient to pay all amounts on or in respect of its debt
      when such amounts are required to be paid. The Company does not intend to incur
      debts beyond its ability to pay such debts as they mature (taking into account
      the timing and amounts of cash to be payable on or in respect of its debt).
      The
      Company has no knowledge of any facts or circumstances which lead it to believe
      that it will file for reorganization or liquidation under the bankruptcy or
      reorganization laws of any jurisdiction within one year from the Closing Date.
      The Financial Statements of the Company set forth as of the dates thereof all
      outstanding secured and unsecured Indebtedness of the Company or for which
      the
      Company has commitments. For the purposes of this Agreement, “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed other than trade
      accounts payable incurred in the ordinary course of business, (b) all
      guaranties, endorsements and other contingent obligations in respect of
      Indebtedness of others, whether or not the same are or should be reflected
      in
      the Company's balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments
      due under leases required to be capitalized in accordance with GAAP.
The
      Company is not in default with respect to any Indebtedness.

     

    (z)  Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company has filed all
      necessary federal, state and foreign income and franchise tax returns and has
      paid or accrued all taxes shown as due thereon, and the Company has no knowledge
      of a tax deficiency which has been asserted or threatened against
      it.

     

    (aa)  Patriot
      Act.
      The
      Company certifies that, to the best of Company’s knowledge, neither the Company
      nor any of its Subsidiaries has been designated, and is not owned or controlled,
      by a “suspected terrorist” as defined in Executive Order 13224. The Company
      hereby acknowledges that the Lender seeks to comply with all applicable
      laws concerning money laundering and related activities. In furtherance of
      those
      efforts, the Company hereby represents, warrants and agrees that: (i) none
      of
      the cash or property that the Company or any of its Subsidiaries will pay or
      will contribute to the Lender has been or shall be derived from, or related
      to, any activity that is deemed criminal under United States law; and (ii)
      no
      contribution or payment by the Company or any of its Subsidiaries to
      the Lender, to the extent that they are within the Company’s and/or its
      Subsidiaries’ control shall cause the Lender to be in violation of the
      United States Bank Secrecy Act, the United States International Money Laundering
      Control Act of 1986 or the United States International Money Laundering
      Abatement and Anti-Terrorist Financing Act of 2001. The Company shall promptly
      notify the Lender if any of these representations ceases to be true and
      accurate regarding the Company or any of its Subsidiaries. The Company agrees
      to
      provide the Lender any additional information regarding the Company or any
      of its Subsidiaries that the Lender deem necessary or convenient to ensure
      compliance with all applicable laws concerning money laundering and similar
      activities. The Company understands and agrees that if at any time it is
      discovered that any of the foregoing representations are incorrect, or if
      otherwise required by applicable law or regulation related to money laundering
      similar activities, the Lender may undertake appropriate actions to ensure
      compliance with applicable law or regulation, including but not limited to
      segregation and/or acceleration of the obligations to the Lender under the
      Note
      and the other Transaction Documents. The Company further understands that
      the Lender may release confidential information about the Company and its
      Subsidiaries and, if applicable, any underlying beneficial owners, to proper
      authorities if a Lender, in its sole discretion, determines that it is in
      the best interests of such Lender in light of relevant rules and
      regulations under the laws set forth in subsection (ii) above.

     

     

    
      
        
        

      

      
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    (bb)  Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any
      corrupt funds for unlawful contributions, gifts, entertainment or other unlawful
      expenses related to foreign or domestic political activity, (ii) made any
      unlawful payment to foreign or domestic government officials or employees or
      to
      any foreign or domestic political parties or campaigns from corporate funds,
      (iii) failed to disclose fully any contribution made by the Company (or made
      by
      any person acting on its behalf of which the Company is aware) which is in
      violation of law, or (iv) violated in any material respect any provision of
      the
      Foreign Corrupt Practices Act of 1977, as amended

     

    (cc)  Seniority.
      As of
      the Closing Date, no indebtedness or other equity of the Company is senior
      to,
      or pari passu with, the Note in right of payment, whether with respect to
      interest or upon liquidation or dissolution, or otherwise, other than
      indebtedness secured by purchase money security interests (which is senior
      only
      as to underlying assets covered thereby) and capital lease obligations (which
      is
      senior only as to the property covered thereby).

     

    (dd)  No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the accountants and lawyers formerly or
      presently employed by the Company and the Company is current with respect to
      any
      fees owed to its accountants and lawyers. By making this representation, the
      Company does not, in any manner, waive the attorney/client privilege or the
      confidentiality of the communications between the Company and its
      lawyers.

     

    (ee)  Acknowledgment
      Regarding Lender’s Making the Loan.
      The
      Company acknowledges and agrees that the Lender is acting solely in the capacity
      of an arm's length Lender with respect to the Transaction Documents and the
      transactions contemplated hereby. The Company further acknowledges that the
      Lender is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any advice given by the Lender or any of its
      representatives or agents in connection with this Agreement and the transactions
      contemplated hereby is merely incidental to the Lender’s making of the Loan. The
      Company further represents to the Lender that the Company’s decision to enter
      into this Agreement has been based solely on the independent evaluation of
      the
      transactions contemplated hereby by the Company and its representatives.

     

     

    
      
        
        

      

      
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    (ff)  Press
      Release.
      The
      Company will issue a press release reasonably satisfactory to the Lender and
      subject to the Lender’s prior approval publicly announcing the material terms of
      this deal within one Business Day of the Closing Date.

     

    

    3.2  Representations
      and Warranties of the Lender.
      The
      Lender hereby, for itself and for no other Person, represents and warrants
      as of
      the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a)  Organization;
      Authority.
      The
      Lender is an entity duly organized, validly existing and in good standing under
      the laws of the jurisdiction of its organization with full right, corporate
      or
      partnership power and authority to enter into and to consummate the transactions
      contemplated by the Transaction Documents and otherwise to carry out its
      obligations thereunder. The execution, delivery and performance by the Lender
      of
      the transactions contemplated by this Agreement have been duly authorized by
      all
      necessary corporate or similar action on the part of the Lender. Each
      Transaction Document to which it is a party has been duly executed by the
      Lender, and when delivered by the Lender in accordance with the terms hereof,
      will constitute the valid and legally binding obligation of the Lender,
      enforceable against it in accordance with its terms, except (i) as limited
      by
      general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    (b)  Experience
      of the Lender.
      The
      Lender, either alone or together with its representatives, has such knowledge,
      sophistication and experience in business and financial matters so as to be
      capable of evaluating the merits and risks of the prospective investment in
      the
      Note and the Warrant, and has so evaluated the merits and risks of such
      investment. The Lender is able to bear the economic risk of an investment in
      the
      Note and the Warrant and, at the present time, is able to afford a complete
      loss
      of such investment.

     

    The
      Company acknowledges and agrees that the Lenders do not make or have not made
      any representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in this Section 3.2.

    

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1  Securities
      Laws Disclosure; Publicity.
      The
      Company and the Lender shall consult with each other in issuing any other press
      releases with respect to the transactions contemplated hereby, and neither
      the
      Company nor the Lender shall issue any such press release or otherwise make
      any
      such public statement without the prior consent of the Company, with respect
      to
      any press release of the Lender, or without the prior consent of the Lender,
      with respect to any press release of the Company, which consent shall not
      unreasonably be withheld, except if such disclosure is required by law, in
      which
      case the disclosing party shall promptly provide the other party with prior
      notice of such public statement or communication. 

     

    4.2  Shareholder
      Rights Plan.
      No
      claim will be made or enforced by the Company or, to the knowledge of the
      Company, any other Person that the Lender is an “Acquiring Person” under any
      shareholder rights plan or similar plan or arrangement in effect or hereafter
      adopted by the Company, or that the Lender could be deemed to trigger the
      provisions of any such plan or arrangement, by virtue of receiving the Note
      and
      the Warrant, or the exercise thereof, under the Transaction Documents or under
      any other agreement between the Company and the Lender. The Company shall
      conduct its business in a manner so that it will not become subject to the
      Investment Company Act.

     

     

    
      
        
        

      

      
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    4.3  Reserved.
      

     

    4.4  Use
      of
      Proceeds.
      The
      Company’s use of the net proceeds from the Subscription Amount hereunder shall
      be as follows:

     

    i) $1,000,000
      will be used to acquire 52% of HOGC’s outstanding common stock.

     

    ii) $1,500,000
      will be used to acquire the SDS Note.

     

    and
      the
      remainder, first to pay at Closing (a) a $100,000 origination fee to the Lender
      and (b) Lender’s closing costs in connection with the transactions contemplated
      hereunder (including but not limited to Lender’s legal fees), and then any
      remainder will be used as working capital for the Company. 

     

    4.5  Reimbursement.
      If the
      Lender becomes involved in any capacity in any Proceeding by or against any
      Person who is a stockholder of the Company (except as a result of sales,
      pledges, margin sales and similar transactions by the Lender to or with any
      current stockholder), solely as a result of the Lender’s acquiring the Note
      under this Agreement, the Company will reimburse the Lender for its reasonable
      legal and other expenses (including the cost of any investigation preparation
      and travel in connection therewith) incurred in connection therewith, as such
      expenses are incurred. The reimbursement obligations of the Company under this
      paragraph shall be in addition to any liability which the Company may otherwise
      have, shall extend upon the same terms and conditions to any Affiliates of
      the
      Lender who are actually named in such action, proceeding or investigation,
      and
      partners, directors, agents, employees and controlling persons (if any), as
      the
      case may be, of the Lender and any such Affiliate, and shall be binding upon
      and
      inure to the benefit of any successors, assigns, heirs and personal
      representatives of the Company, the Lender and any such Affiliate and any such
      Person. The Company also agrees that neither the Lender nor any such Affiliates,
      partners, directors, agents, employees or controlling persons shall have any
      liability to the Company or any Person asserting claims on behalf of or in
      right
      of the Company solely as a result of acquiring the Note under this
      Agreement.

     

    4.6  Indemnification
      of Lender.
      Subject
      to the provisions of this Section 4.6, each Loan Party will indemnify and hold
      the Lender and its directors, officers, shareholders, partners, employees and
      agents (each, a “Lender
      Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any Lender Party may suffer or incur as a result of or
      relating to (a) any breach of any of the representations, warranties, covenants
      or agreements made by the Company in this Agreement or in the other Transaction
      Documents or (b) any action instituted against the Lender, or any of them or
      their respective Affiliates, by any stockholder of the Company who is not an
      Affiliate of the Lender, with respect to any of the transactions contemplated
      by
      the Transaction Documents (unless such action is based upon a breach of the
      Lender’s representation, warranties or covenants under the Transaction Documents
      or any agreements or understandings the Lender may have with any such
      stockholder or any violations by the Lender of state or federal securities
      laws
      or any conduct by the Lender which constitutes fraud, gross negligence, willful
      misconduct or malfeasance). If any action shall be brought against any Lender
      Party in respect of which indemnity may be sought pursuant to this Agreement,
      the Lender Party shall promptly notify the Company in writing, and the Company
      shall have the right to assume the defense thereof with counsel of its own
      choosing. Any Lender Party shall have the right to employ separate counsel
      in
      any such action and participate in the defense thereof, but the fees and
      expenses of such counsel shall be at the expense of the Lender Party except
      to
      the extent that (i) the employment thereof has been specifically authorized
      by
      the Company in writing, (ii) the Company has failed after a reasonable period
      of
      time to assume such defense and to employ counsel or (iii) in such action there
      is, in the reasonable opinion of such separate counsel, a material conflict
      on
      any material issue between the position of the Company and the position of
      the
      Lender Party. The Company will not be liable to any Lender Party under this
      Agreement (i) for any settlement by a Lender Party effected without the
      Company’s prior written consent, which shall not be unreasonably withheld or
      delayed; or (ii) to the extent, but only to the extent that a loss, claim,
      damage or liability is attributable to any Lender Party’s breach of any of the
      representations, warranties, covenants or agreements made by the Lender in
      this
      Agreement or in the other Transaction Documents.

     

     

    
      
        
        

      

      
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    4.7  Additional
      Perfection Requirements.
      The
      Loan Parties shall execute and file any additional documents and take all
      necessary action to perfect a first priority security interest in all of
      the collateral described in the Security Documents, including but not
      limited to oil and gas exploration and drilling rights, within 45 days of the
      Closing. The Company shall deliver all shares of HOGC capital stock (“HOGC
      Shares”) directly to the Lender immediately upon the acquisition of such HOGC
      capital stock (the “HOGC Closing”), and shall cause HOGC to become a signatory
      to the Security Agreement and the Subsidiary Guarantee. In addition, as soon
      as
      practicable, but not more than 30 days after the HOGC Closing, the Company
      shall
      take any actions necessary to cause HOGC to enter into a registration rights
      agreement (the “HOGC Registration Rights Agreement”) providing for the filing of
      a registration statement (the “HOGC Registration”) covering the resale by the
      Lender of the HOGC Shares in the event of a foreclosure upon such HOGC Shares
      pursuant to the Transaction Documents. The HOGC Registration shall be filed
      by
      the Company no later than 45 days after the HOGC Closing, and shall be declared
      effective by the Securities and Exchange Commission no later than 150 days
      after
      the HOGC Closing; in the event of any failure of the HOGC Registration to be
      filed or declared effective by such dates, or to cease to be effective or
      available to the Lender after effectiveness, the Company shall pay to the
      Lender, as liquidated damages and not as a penalty, $10,000 (representing 1%
      of
      the intrinsic value of the HOGC shares)(the “HOGC Late Fee”) on the last day of
      each calendar month after any such deadline is not met, and the HOGC Late Fee
      shall increase to $15,000 per month if any such deadline is not met for 180
      days
      or more. 

     

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1  Fees.
      At the
      Closing, the Company has agreed to (i) pay the Lender a closing fee of $100,000
      and (ii) reimburse the Lender’s reasonable out-of-pocket expenses, including but
      not limited to due diligence and legal expenses. The Company has previously
      delivered to the Lender a non-refundable deposit of $20,000 for legal fees
      and
      due diligence. Except as expressly set forth in the Transaction Documents to
      the
      contrary, the Loan Parties shall pay the fees and expenses of its advisers,
      counsel, accountants and other experts for both parties, if any, and all other
      expenses incurred by such party incident to the negotiation, preparation,
      execution, delivery and performance of this Agreement. The Company shall pay
      Lender a $70,000.00 “break-up fee” plus or minus any due diligence expense
      adjustments should Lender stand ready to close a financing substantially in
      conformance with the terms provided hereunder and Company chooses not to
      close

     

    5.2  Entire
      Agreement.
      The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules.

     

     

    
      
        
        

      

      
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    5.3  Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number set forth on the signature
      pages attached hereto prior to 5:30 p.m. (New York City time) on a Business
      Day,
      (b) the next Business Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto on a day that is not a Business Day or
      later
      than 5:30 p.m. (New York City time) on any Business Day, (c) the second Business
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth in the introductory paragraph of the
      Agreement.

     

    5.4  Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of amendments, by the Company and Lender, or,
      in
      the case of a waiver, by the party against whom enforcement of any such waiver
      is sought. No waiver of any default with respect to any provision, condition
      or
      requirement of this Agreement shall be deemed to be a continuing waiver in the
      future or a waiver of any subsequent default or a waiver of any other provision,
      condition or requirement hereof, nor shall any delay or omission of either
      party
      to exercise any right hereunder in any manner impair the exercise of any such
      right.

     

    5.5  Construction.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

     

    5.6  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Lender. The Lender may assign any or all of its rights under
      this
      Agreement and the other Transaction Documents to any Person.

     

    5.7  No
      Third-Party Beneficiaries.
      This
      Agreement is not for the benefit of, nor may any provision hereof be enforced
      by, any Person other than the parties hereto and their successors and permitted
      assigns.

     

    5.8  Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents 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 this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and federal courts sitting in the City of New York. Each party 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 (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, that
      such suit, action or proceeding is 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 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. The parties hereby waive all rights to a trial by jury. If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its attorneys’ fees and
      other costs and expenses incurred with the investigation, preparation and
      prosecution of such action or proceeding.

     

     

    
      
        
        

      

      
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    5.9  Survival.
      The
      representations and warranties contained herein shall survive the Closing for
      the applicable statue of limitations.

     

    5.10  Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

     

    5.11  Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    5.12  Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever the Lender exercises
      a right, election, demand or option under a Transaction Document and the Company
      does not timely perform its related obligations within the periods therein
      provided, then the Lender may rescind or withdraw, in its sole discretion from
      time to time upon written notice to the Company, any relevant notice, demand
      or
      election in whole or in part without prejudice to its future actions and
      rights.

     

    5.13  Replacement
      of Note.
      If any
      certificate or instrument evidencing the Note is mutilated, lost, stolen or
      destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement
      Note.

     

    5.14  Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Lender and the Company will
      be
      entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be adequate.

     

    5.15  Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to the Lender pursuant
      to
      any Transaction Document or a Lender enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any such restoration the obligation or part thereof
      originally intended to be satisfied shall be revived and continued in full
      force
      and effect as if such payment had not been made or such enforcement or setoff
      had not occurred.

     

     

    
      
        
        

      

      
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    5.16  Usury.
      To the
      extent it may lawfully do so, the Company hereby agrees not to insist upon
      or
      plead or in any manner whatsoever claim, and will resist any and all efforts
      to
      be compelled to take the benefit or advantage of, usury laws wherever enacted,
      now or at any time hereafter in force, in connection with any claim, action
      or
      proceeding that may be brought by the Lender in order to enforce any right
      or
      remedy under any Transaction Document. Notwithstanding any provision to the
      contrary contained in any Transaction Document, it is expressly agreed and
      provided that the total liability of the Company under the Transaction Documents
      for payments in the nature of interest shall not exceed the maximum lawful
      rate
      authorized under applicable law (the “Maximum
      Rate”),
      and,
      without limiting the foregoing, in no event shall any rate of interest or
      default interest, or both of them, when aggregated with any other sums in the
      nature of interest that the Company may be obligated to pay under the
      Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
      contract rate of interest allowed by law and applicable to the Transaction
      Documents is increased or decreased by statute or any official governmental
      action subsequent to the date hereof, the new maximum contract rate of interest
      allowed by law will be the Maximum Rate applicable to the Transaction Documents
      from the effective date forward, unless such application is precluded by
      applicable law. If under any circumstances whatsoever, interest in excess of
      the
      Maximum Rate is paid by the Company to the Lender with respect to indebtedness
      evidenced by the Transaction Documents, such excess shall be applied by the
      Lender to the unpaid principal balance of any such indebtedness or be refunded
      to the Company, the manner of handling such excess to be at the Lender’s
      election.

     

    (Signature
      Pages Follow)

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly
      executed by their respective authorized signatories as of the date first
      indicated above.

     

    
      	
              UNIVERSAL
                PROPERTY DEVELOPMENT AND ACQUISITION
                CORPORATION

            
	 
	
               

              
                

              

              Name:

              Title:

            
	
              With
                a copy to (which shall not constitute notice):

               

               

            
	
              CANYON
                CREEK OIL AND GAS INC

            
	 
	
               

              
                

              

              Name:

              Title:

            
	
              With
                a copy to (which shall not constitute notice):

               

               

            
	 
	
              CATLIN
                OIL AND GAS, INC. 

            
	 
	
               

               

              
                

              

              Name:

              Title:

            
	
              With
                a copy to (which shall not constitute notice):

               

            
	 
	 
	
              KAMAL
                ABDALLAH

            
	 
	
               

              
                

              

              Kamal
                Abdallah

            
	
              With
                a copy to (which shall not constitute notice):

               

            
	 

    

     

     

    
      
        
        

      

      
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          of 26

        
          

        

      

      
        
        

      

    

     

    
      	
              CHRISTOPHER
                J. MCCAULEY

            
	 
	
               

              
                

              

              Christopher
                J. McCauley

            
	
              With
                a copy to (which shall not constitute notice):

               

               

            
	 
	
              SHERIDAN
                ASSET MANAGEMENT LLC 

            
	 
	
               

              
                

              

              Name:

              Title:

            

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    

    
      
        
        

      

      
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    Schedule
      A

     

    
      	
              Personal
                Assets of Kamal
                Abdallah

            

    

     

    
      	 	 	
              Acquired
                On

            	 	
              Cost

            	 	
              Market

            	 	
              Mortgage

            
	
              Investment
                RE Property

            	
              3
                Sutton Ct., Palm Coast, FL 32164

            	
              2004

            	 	
              300,000

            	 	
              400,000

            	 	
              225,000

            
	
              Investment
                RE Property

            	
              604
                Hampshire Lans, Oviedo, FL 32765

            	
              2004

            	 	
              200,000

            	 	
              275,000

            	 	
              160,000

            
	
              Investment
                RE Property

            	
              7916
                Elmstone Circle, Orlando, FL 32822

            	
              2004

            	 	
              180,000

            	 	
              225,000

            	 	
              150,000

            
	 	 	
              Total

            	 	 	 	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Disclosure
      Schedule -- Capitalization

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

     

    Note

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

     

    Security
      Agreement

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      C

     

    Subsidiary
      Guaranty

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      D

     

    WarrantTHESE
      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.

     

    THIS
      NOTE
      IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). THE FOLLOWING INFORMATION
      IS BEING PROVIDED PURSUANT TO TREASURY REGULATION SECTION 1.1275-3:

     

    ISSUE
      PRICE: $3,635,000

    AMOUNT
      OF
      OID: $908,750

    ISSUE
      DATE: April 6, 2007

    YIELD
      TO
      MATURITY: 29.12%

    
 

    Original
      Issue Date: April 6, 2007 

     

    
      
         

      

      
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      	Original Issue Date: April 6,
              2007 	
               $3,635,000

            

    

        

    SENIOR
      SECURED PROMISSORY NOTE

    DUE
      April 6, 2008

    

    THIS
      NOTE
      is the duly authorized and issued Senior Secured Promissory
      Notes of Universal
      Property Development and Acquisition Company,
      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 April 6, 2008 (the “Note”).

     

    FOR
      VALUE
      RECEIVED, the Company promises to pay to Sheridan
      Asset Management, LLC
      or its
      assigns (the “Holder”),
      the
      principal sum of $3,635,000 on the date and in the principal amount set forth
      below. This Note is subject to the following additional provisions:

     

    Section
      1. Definitions.
      For the
      purposes hereof, in addition to the terms defined elsewhere in this 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.

    

    “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.

    

    “Employment
      Agreements”
shall
      mean that certain Employment Agreement between the Company and Mr. Kamal
      Abdallah dated October 1, 2005, that certain Employment Agreement between the
      Company and Mr. Christopher McCauley dated October 1, 2005 and that certain
      Employment Agreement between the Company and Mr. Steven Barrera dated January
      1,
      2006. 

     

    “Event
      of Default”
shall
      have the meaning set forth in Section 5.

     

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

    

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

    

    “Loan
      Agreement”
means
      the Loan Agreement, dated as of April 6, 2007, between and among the Company,
      the Holder, and the Guarantors as amended, modified or supplemented from time
      to
      time in accordance with its terms.

     

     

    
      
         

      

      
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    “Joint
      Ventures”
means
      that certain Joint
      Venture Agreement dated November 17, 2005 by and between by and between US
      Production & Exploration, LLC, the Company, and Triple Crown Consulting
      governing the formation and management of the joint venture entity Canyon Creek
      Oil & Gas, Inc., that
      certain Joint
      Venture Agreement dated October 2005 by and between by and between the Company,
      Triple Crown Consulting, Inc., RAKJ, Rene Kranvold and Masaood Group governing
      the formation and management of the joint venture entity West Oil & Gas,
      Inc., and that
      certain Memorandum
      of Understanding dated March 2006 by and between by and between Sundial
      Resources, Inc., Ty McDermett and Andrew McDermett, Jr. and the Company
      governing the formation and management of the joint venture entity Texas Energy,
      Inc. (all parties to the Joint Ventures are collectively referred to as the
      “Joint
      Venture Partners”)

    

    “Mandatory
      Repayment Amount”
shall
      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
      April 6, 2008 or
      such
      earlier date as the Note is required or permitted to be repaid as provided
      in
      this Note.

    

    “Original
      Issue Date”
shall
      mean the date of the first issuance of the Note regardless of the number of
      transfers of the Note and regardless of the number of instruments which may
      be
      issued to evidence the Note.

    

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

    

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

    

    “Subordinated
      Debt”
shall
      have the meaning given to that term in the Subordination Agreement.

    

    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.

     

    a) Payment
      of Principal.
      The
      outstanding principal under the Loan and this Note shall be due in one payment
      and payable on April
      6,
      2008.

    

    b) Late
      Fee.
      All
      overdue accrued and unpaid principal to be paid hereunder shall entail a late
      fee at the rate of 18% per annum (or such lower maximum amount of interest
      permitted to be charged under applicable law) (“Late
      Fee”).

     

     

    
      
         

      

      
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    c) Optional
      Prepayment.
      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 other amounts, costs, expenses and liquidated damages due in respect
      of
      the Note.

    

    

    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.

    

    Section
      5. Negative
      Covenants.
      Other
      than pursuant to the terms of any Transaction Document, 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 (other than the Subordinated Debt), 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 so as to adversely
      affect any rights of the Holder;

    

    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, Preferred 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 or to joint venture partners pursuant to the
      existing Joint Ventures; 

    

    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,
      other than (a) pursuant to the Employment Agreements or (b) pursuant to the
      Joint Ventures; or

    

    e) sell,
      transfer or otherwise dispose of any of its assets on terms where it is or
      may
      be leased to or re-acquired or acquired by the Company or any of its
      Subsidiaries;

     

     

    
      
         

      

      
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    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) permit
      Kamal Abdallah to cease serving as Chief Executive Officer, or to otherwise
      cease to be the principal operating officer with final decision-making authority
      for the Company;

    

    j) consummate
      any merger or acquisition except on terms satisfactory to Lender;
      or

    

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

     

    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)
      Tangible
      Net Worth.
      The
      difference obtained by subtracting the Company’s total assets from its current
      liabilities shall not be less than the aggregate principal, interest and other
      charges (including Late Fees) at any time. 

    

    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 any Guarantor 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,
      which
      default, solely in the case of a default under clause (B) above, is not cured,
      within 2 Business Days;

     

    
      
         

      

      
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    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;

    

    v. (i)
      the
      Company, any of its Subsidiaries, or any Guarantor 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 any
      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 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. No
      Loan
      Party shall have experienced a Material Adverse Effect; or

    

    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). 

     

     

    
      
         

      

      
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    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. Commencing 5 days 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 18% 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 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 Morissey. 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. 

     

    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.

     

     

    
      
         

      

      
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    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.
      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.

     

    g) 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.

     

     

    
      
         

      

      
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    h) 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.

    

    i) 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.

    

    j) Seniority.
      This
      Note constitutes a senior secured obligation of the Company and is senior in
      right of payment to any and all other indebtedness of the Company.

    

    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 COMPANY 

               

               

            
	
              
                

              

              Name:

              Title:

            

    

     

    
      
         

      

      
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