SECURITY AGREEMENT
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1. |
Identification. |
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This
Security Agreement (the "Agreement"), dated as of April ___, 2005, is
entered into by and between Energy & Engine Technology Corporation, a
Nevada corporation (“Debtor”), and Xxxxxxx Xxxxxxx, as collateral agent
acting in the manner and to the extent described in the Collateral Agent
Agreement defined below (the "Collateral Agent"), for the benefit of the
parties identified on Schedule A hereto (collectively, the
"Lenders"). |
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2. |
Recitals. |
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2.1 |
The
Lenders have made or are making loans to Debtor (the "Loans"). It is
beneficial to Debtor that the Loans were made and are being
made. |
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2.2 |
The
Loans are evidenced by certain convertible promissory notes (each a
“Convertible Note”) issued by Debtor on or about the date of this
Agreement pursuant to subscription agreements (each a “Subscription
Agreement”) to which Debtor and Lenders are parties. The Notes are further
identified on Schedule A hereto and were and will be executed by Debtor as
“Borrower” or “Debtor” for the benefit of each Lender as the “Holder” or
“Lender” thereof. Schedule A hereto may be amended to include such other
Lenders who become parties hereto and sign this Agreement, the Collateral
Agent Agreement and any other agreement reasonably requested by the
Collateral Agent, who will have purchased Notes pursuant to the
Subscription Agreement, in the aggregate principal amount of
$500,000. |
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2.3 |
In
consideration of the Loans made by Lenders to Debtor and for other good
and valuable consideration, and as security for the performance by Debtor
of its obligations under the Notes and as security for the repayment of
the Loans and all other sums due from Debtor to Lenders arising under the
Notes presently outstanding or to be outstanding in the future,
Subscription Agreements, and any other agreement between or among them
(collectively, the "Obligations"), Debtor, for good and valuable
consideration, receipt of which is acknowledged, has agreed to grant to
the Collateral Agent, for the benefit of the Lenders, a security interest
in the Collateral (as such term is hereinafter defined), on the terms and
conditions hereinafter set forth. Obligations include all future advances
by Lenders to Debtor advanced on a pro rata basis by all Lenders on
substantially the same terms. |
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2.4 |
The
Lenders have appointed Xxxxxxx Xxxxxxx as Collateral Agent pursuant to
that certain Collateral Agent Agreement dated at or about April ____, 2005
(“Collateral Agent Agreement”), among the Lenders and Collateral
Agent. |
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2.5 |
The
following defined terms which are defined in the Uniform Commercial Code
in effect in the State of New York on the date hereof are used herein as
so defined: Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and
Proceeds. |
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3. |
Grant
of General Security Interest in Collateral. |
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3.1 |
As
security for the Obligations of Debtor, Debtor hereby grants the
Collateral Agent, for the benefit of the Lenders, a security interest in
the Collateral. |
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3.2 |
“Collateral”
shall mean all of the following property of
Debtor: |
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(A) |
All
now owned and hereafter acquired right, title and interest of Debtor in,
to and in respect of all Accounts, Goods, real or personal property, all
present and future books and records relating to the foregoing and all
products and Proceeds of the foregoing, and as set forth
below: |
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(i) |
Accounts:
All now owned and hereafter acquired right, title and interest of Debtor
in, to and in respect of all: Accounts, interests in goods represented by
Accounts, returned, reclaimed or repossessed goods with respect thereto
and rights as an unpaid vendor; contract rights; Chattel Paper; investment
property; General Intangibles (including but not limited to, tax and duty
claims and refunds, registered and unregistered patents, trademarks,
service marks, certificates, copyrights trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints,
customer lists, licenses, whether as licensor or licensee, chooses in
action and other claims, and existing and future leasehold interests in
equipment, real estate and fixtures); Documents; Instruments; letters of
credit, bankers’ acceptances or guaranties; cash moneys, deposits;
securities, bank accounts, deposit accounts, credits and other property
now or hereafter owned or held in any capacity by Debtor, as well as its
affiliates, agreements or property securing or relating to any of the
items referred to above; |
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(ii) |
Goods:
All now owned and hereafter acquired right, title and interest of Debtor
in, to and in respect of goods, including, but not limited
to: |
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(a) |
All
Inventory, wherever located, whether now owned or hereafter acquired, of
whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Debtor’ business; finished goods, timber cut or to be cut, oil, gas,
hydrocarbons, and minerals extracted or to be extracted, and all names or
marks affixed to or to be affixed thereto for purposes of selling same by
the seller, manufacturer, lessor or licensor thereof and all Inventory
which may be returned to Debtor by its customers or repossessed by Debtor
and all of Debtor’ right, title and interest in and to the foregoing
(including all of Debtor’ rights as a seller of
goods); |
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(b) |
All
Equipment and fixtures, wherever located, whether now owned or hereafter
acquired, including, without limitation, all machinery, motor vehicles,
furniture and fixtures, and any and all additions, substitutions,
replacements (including spare parts), and accessions thereof and thereto
(including, but not limited to Debtor’ rights to acquire any of the
foregoing, whether by exercise of a purchase option or
otherwise); |
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(iii) |
Property:
All now owned and hereafter acquired right, title and interests of Debtor
in, to and in respect of any real or other personal property in or upon
which Debtor has or may hereafter have a security interest, lien or right
of setoff; |
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(iv) |
Books
and Records:
All present and future books and records relating to any of the above
including, without limitation, all computer programs, printed output and
computer readable data in the possession or control of the Debtor, any
computer service bureau or other third party;
and |
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(v) |
Products
and Proceeds:
All products and Proceeds of the foregoing in whatever form and wherever
located, including, without limitation, all insurance proceeds and all
claims against third parties for loss or destruction of or damage to any
of the foregoing. |
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(B) |
All
now owned and hereafter acquired right, title and interest of Debtor in,
to and in respect of the following: |
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(i) |
the
shares of stock, partnership interests, member interests or other equity
interests at any time and from time to time acquired by Debtor of any and
all entities now or hereafter existing, all or a portion of such stock or
other equity interests which are acquired by such entities at any time
(such entities, together with the existing issuers, being hereinafter
referred to collectively as the "Pledged Issuers" and individually as a
"Pledged Issuer"), the certificates representing such shares, partnership
interests, member interests or other interests all options and other
rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares, partnership interests,
member interests or other interests; |
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(ii) |
all
additional shares of stock, partnership interests, member interests or
other equity interests from time to time acquired by Debtor, of any
Pledged Issuer, the certificates representing such additional shares, all
options and other rights, contractual or otherwise, in respect thereof and
all dividends, distributions, cash, instruments, investment property and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, interests or equity; and |
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(iii) |
all
security entitlements of Debtor in, and all Proceeds of any and all of the
foregoing in each case, whether now owned or hereafter acquired by Debtor
and howsoever its interest therein may arise or appear (whether by
ownership, security interest, lien, claim or
otherwise). |
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3.3 |
The
Collateral Agent is hereby specifically authorized, after the Maturity
Date (defined in the Notes) accelerated or otherwise, or after an Event of
Default (as defined herein) and the expiration of any applicable cure
period, to transfer any Collateral into the name of the Collateral Agent
and to take any and all action deemed advisable to the Collateral Agent to
remove any transfer restrictions affecting the
Collateral. |
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4. |
Perfection
of Security Interest. |
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4.1 |
Debtor
shall prepare, execute and deliver to the Collateral Agent UCC-1 Financing
Statements. The Collateral Agent is instructed to prepare and file at
Debtor’s cost and expense, financing statements in such jurisdictions
deemed advisable to the Collateral Agent, including but not limited to
Nevada. The Financing Statements are deemed to have been filed for the
benefit of the Collateral Agent and Lenders identified on Schedule A
hereto. |
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4.2 |
All
other certificates and instruments constituting Collateral from time to
time required to be pledged to Collateral Agent pursuant to the terms
hereof (the "Additional Collateral") shall be delivered to Collateral
Agent promptly upon receipt thereof by or on behalf of Debtor. All such
certificates and instruments shall be held by or on behalf of Collateral
Agent pursuant hereto and shall be delivered in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment or undated stock powers executed in blank, all in
form and substance satisfactory to Collateral Agent. If any Collateral
consists of uncertificated securities, unless the immediately following
sentence is applicable thereto, Debtor shall cause Collateral Agent (or
its custodian, nominee or other designee) to become the registered holder
thereof, or cause each issuer of such securities to agree that it will
comply with instructions originated by Collateral Agent with respect to
such securities without further consent by Debtor. If any Collateral
consists of security entitlements, Debtor shall transfer such security
entitlements to Collateral Agent (or its custodian, nominee or other
designee) or cause the applicable securities intermediary to agree that it
will comply with entitlement orders by Collateral Agent without further
consent by Debtor. |
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4.3 |
Within
five (5) days after the receipt by Debtor of any Additional Collateral, a
Pledge Amendment, duly executed by Debtor, in substantially the form of
Annex I hereto (a "Pledge Amendment"), shall be delivered to Collateral
Agent in respect of the Additional Collateral to be pledged pursuant to
this Agreement. Debtor hereby authorizes Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all certificates or
instruments listed on any Pledge Amendment delivered to Collateral Agent
shall for all purposes hereunder constitute
Collateral. |
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4.4 |
If
Debtor shall receive, by virtue of Debtor being or having been an owner of
any Collateral, any (i) stock certificate (including, without limitation,
any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification,
merger, consolidation, sale of assets, combination of shares, stock split,
spin-off or split-off), promissory note or other instrument,
(ii) option or right, whether as an addition to, substitution for, or
in exchange for, any Collateral, or otherwise, (iii) dividends payable in
cash (except such dividends permitted to be retained by Debtor pursuant to
Section 5.2 hereof) or in securities or other property or
(iv) dividends or other distributions in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, Debtor shall receive such
stock certificate, promissory note, instrument, option, right, payment or
distribution in trust for the benefit of Collateral Agent, shall segregate
it from Debtor's other property and shall deliver it forthwith to
Collateral Agent, in the exact form received, with any necessary
endorsement and/or appropriate stock powers duly executed in blank, to be
held by Collateral Agent as Collateral and as further collateral security
for the Obligations. |
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5. |
Distribution
on Liquidation. |
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5.1 |
If
any sum is paid as a liquidating distribution on or with respect to the
Collateral, Debtor shall deliver same to the Collateral Agent to be
applied to the Obligations, then due, in accordance with the terms of the
Convertible Notes. |
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5.2 |
So
long as no Event of Default exists, Debtor shall be entitled (i) to
exercise all voting power pertaining to any of the Collateral, provided
such exercise is not contrary to the interests of the Lenders and does not
impair the Collateral and (ii) may receive and retain any and all
dividends, interest payments or other distributions paid in respect of the
Collateral. |
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5.3. |
Upon
the occurrence and during the continuation of an Event of Default, all
rights of Debtor, upon notice given by Collateral Agent, to exercise the
voting power and receive payments, which it would otherwise be entitled to
pursuant to Section 5.2, shall cease and all such rights shall thereupon
become vested in Collateral Agent, which shall thereupon have the sole
right to exercise such voting power and receive such
payments. |
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5.4 |
All
dividends, distributions, interest and other payments which are received
by Debtor contrary to the provisions of Section 5.3 shall be received in
trust for the benefit of Collateral Agent, shall be segregated from other
funds of Debtor, and shall be forthwith paid over to Collateral Agent as
Collateral in the exact form received with any necessary endorsement
and/or appropriate stock powers duly executed in blank, to be held by
Collateral Agent as Collateral and as further collateral security for the
Obligations. |
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6. |
Further
Action By Debtor; Covenants and Warranties. |
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6.1 |
Collateral
Agent at all times shall have a perfected security interest in the
Collateral. Subject to the security interests described herein, Debtor has
and will continue to have full title to the Collateral free from any
liens, leases, encumbrances, judgments or other claims. Collateral Agent's
security interest in the Collateral constitutes and will continue to
constitute a first, prior and indefeasible security interest in favor of
Collateral Agent. Debtor will do all acts and things, and will execute and
file all instruments (including, but not limited to, security agreements,
financing statements, continuation statements, etc.) reasonably requested
by Collateral Agent to establish, maintain and continue the perfected
security interest of Collateral Agent in the Collateral, and will promptly
on demand, pay all costs and expenses of filing and recording, including
the costs of any searches reasonably deemed necessary by Collateral Agent
from time to time to establish and determine the validity and the
continuing priority of the security interest of Collateral Agent, and also
pay all other claims and charges that, in the opinion of Collateral Agent,
exercised in good faith, are reasonably likely to materially prejudice,
imperil or otherwise affect the Collateral or Collateral Agent’s or
Lenders’ security interests therein. Notwithstanding
anything to the foregoing in this Section 6.1, the Debtor may grant a
purchase money security interest in the assets to be purchased from Anchor
Tampa, Inc. to secure its obligations under that certain purchase money
note to be issued in connection with such acquisition in an amount not to
exceed $137,500 for a term not longer than one (1) year, and shall
constitute an exception to Collateral Agent’s first priority perfected
lien on the Assets. |
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6.2 |
Other
than in the ordinary course of business, and except for Collateral which
is substituted by assets of identical or greater value or which has become
obsolete or is of inconsequential in value, Debtor will not sell,
transfer, assign or pledge those items of Collateral (or allow any such
items to be sold, transferred, assigned or pledged), without the prior
written consent of Collateral Agent other than a transfer of the
Collateral to a wholly-owned subsidiary on prior notice to Collateral
Agent, and provided the Collateral remains subject to the security
interest herein described. Although Proceeds of Collateral are covered by
this Agreement, this shall not be construed to mean that Collateral Agent
consents to any sale of the Collateral, except as provided herein. Sales
of Collateral in the ordinary course of business shall be free of the
security interest of Lenders and Collateral Agent and Lenders and
Collateral Agent shall promptly execute such documents (including without
limitation releases and termination statements) as may be required by
Debtor to evidence or effectuate the same. |
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6.3 |
Debtor
will, at all reasonable times and upon reasonable notice, allow Collateral
Agent or its representatives free and complete access to the Collateral
and all of Debtor's records which in any way relate to the Collateral, for
such inspection and examination as Collateral Agent reasonably deems
necessary. |
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6.4 |
Debtor,
at its sole cost and expense, will protect and defend this Security
Agreement, all of the rights of Collateral Agent and Lenders hereunder,
and the Collateral against the claims and demands of all other
persons. |
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6.5 |
Debtor
will promptly notify Collateral Agent of any levy, distraint or other
seizure by legal process or otherwise of any part of the Collateral, and
of any threatened or filed claims or proceedings that are reasonably
likely to affect or impair any of the rights of Collateral Agent under
this Security Agreement in any material
respect. |
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6.6 |
Debtor,
at its own expense, will obtain and maintain in force insurance policies
covering losses or damage to those items of Collateral which constitute
physical personal property. The insurance policies to be obtained by
Debtor shall be in form and amounts reasonably acceptable to Collateral
Agent. Debtor shall make the Collateral Agent first a loss payee thereon
to the extent of its interest in the Collateral. Collateral Agent is
hereby irrevocably (until the Obligations are paid in full) appointed
Debtor’ attorney-in-fact to endorse any check or draft that may be payable
to Debtor so that Collateral Agent may collect the proceeds payable for
any loss under such insurance. The proceeds of such insurance (subject to
the rights of senior secured parties), less any costs and expenses
incurred or paid by Collateral Agent in the collection thereof, shall be
applied either toward the cost of the repair or replacement of the items
damaged or destroyed, or on account of any sums secured hereby, whether or
not then due or payable. |
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6.7 |
Collateral
Agent may, at its option, and without any obligation to do so, pay,
perform and discharge any and all amounts, costs, expenses and liabilities
herein agreed to be paid or performed by Debtor. Upon
Debtor’s
failure to
do so,
all amounts expended by Collateral Agent in so doing shall become part of
the Obligations secured hereby, and shall be immediately due and payable
by Debtor to Collateral Agent upon demand | ||
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6.8 |
Upon
the request of Collateral Agent, Debtor will furnish to Collateral Agent
within five (5) business days thereafter, or to any proposed assignee of
this Security Agreement, a written statement in form reasonably
satisfactory to Collateral Agent, duly acknowledged, certifying the amount
of the principal and interest and any other sum then owing under the
Obligations, whether to its knowledge any claims, offsets or defenses
exist against the Obligations or against this Security Agreement, or any
of the terms and provisions of any other agreement of Debtor securing the
Obligations. In connection with any assignment by Collateral Agent of this
Security Agreement, Debtor hereby agrees to cause the insurance policies
required hereby to be carried by Debtor, if any, to be endorsed in form
satisfactory to Collateral Agent or to such assignee, with loss payable
clauses in favor of such assignee, and to cause such endorsements to be
delivered to Collateral Agent within ten (10) calendar days after request
therefor by Collateral Agent. | ||
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6.9 |
Debtor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
reasonable assurances or instruments and take further steps relating to
the Collateral and other property or rights covered by the security
interest hereby granted, as the Collateral Agent may reasonably require to
perfect its security interest hereunder. |
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6.10 |
Debtor
represents and warrants that it is the true and lawful exclusive owner of
the Collateral, free and clear of any liens and
encumbrances. |
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6.11 |
Debtor
hereby agrees not to divest itself of any right under the Collateral
except as permitted herein absent prior written approval of the Collateral
Agent, except to a subsidiary organized and located in the United States
on prior notice to Collateral Agent provided the Collateral remains
subject to the security interest herein
described. |
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6.12 |
Debtor
shall cause each Subsidiary of Debtor not in existence on the date hereof
to execute and deliver to Collateral Agent promptly and in any event
within 10 days after the formation, acquisition or change in status
thereof (A) a guaranty guaranteeing the Obligations and (B) a security and
pledge agreement substantially in the form of this Agreement together with
(x) certificates evidencing all of the capital stock of any entity owned
by such Subsidiary, (y) undated stock powers executed in blank with
signature guaranteed, and (z) such opinion of counsel and such approving
certificate of such Subsidiary as Collateral Agent may reasonably request
in respect of complying with any legend on any such certificate or any
other matter relating to such shares and (E) such other agreements,
instruments, approvals, legal opinions or other documents reasonably
requested by Collateral Agent in order to create, perfect, establish the
first priority of or otherwise protect any lien purported to be covered by
any such pledge and security agreement or otherwise to effect the intent
that all property and assets of such Subsidiary shall become Collateral
for the Obligations. For purposes of this Agreement, “Subsidiary”
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate,
association, joint venture or other business entity) of which more
than 50% of (A) the outstanding capital stock having (in the absence
of contingencies) ordinary voting power to elect a majority of the board
of directors or other managing body of such entity, (B) in the case
of a partnership or limited liability company, the interest in the capital
or profits of such partnership or limited liability company or (C) in
the case of a trust, estate, association, joint venture or other entity,
the beneficial interest in such trust, estate, association or other entity
business is, at the time of determination, owned or controlled directly or
indirectly through one or more intermediaries, by such
entity. |
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7. |
Power
of Attorney. |
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After
the occurrence and during the uncured continuation of an Event of Default
as defined in Section 9 below, Debtor hereby irrevocably constitutes and
appoints the Collateral Agent as the true and lawful attorney of Debtor,
with full power of substitution, in the place and stead of Debtor and in
the name of Debtor or otherwise, at any time or times, in the discretion
of the Collateral Agent, to take any action and to execute any instrument
or document which the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement. This power of attorney is
coupled with an interest and is irrevocable until the Obligations are
satisfied. |
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8. |
Performance
By The Collateral Agent. |
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If
Debtor fails to perform any material covenant, agreement, duty or
obligation of Debtor under this Agreement, the Collateral Agent may, after
any applicable cure period, at any time or times in its discretion, take
action to effect performance of such obligation. All reasonable expenses
of the Collateral Agent incurred in connection with the foregoing
authorization shall be payable by Debtor as provided in Paragraph 12.1
hereof. No discretionary right, remedy or power granted to the Collateral
Agent under any part of this Agreement shall be deemed to impose any
obligation whatsoever on the Collateral Agent with respect thereto, such
rights, remedies and powers being solely for the protection of the
Collateral Agent. |
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9. |
Event
of Default. |
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An
event of default ("Event of Default") shall be deemed to have occurred
hereunder upon the occurrence of any event of default as defined and
described in this Agreement, in the Notes, Subscription Agreement, and any
other agreement to which Debtor and a Lender are parties. Upon and after
any Event of Default, after the applicable cure period, if any, any or all
of the Obligations shall become immediately due and payable at the option
of the Collateral Agent, for the benefit of the Lenders, and the
Collateral Agent may dispose of Collateral as provided below. A default by
Debtor of any of its material obligations pursuant to this Agreement shall
be an Event of Default hereunder and an event of default as defined in the
Notes, and Subscription Agreement. |
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10. |
Disposition
of Collateral. |
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Upon
and after any Event of Default which is then
continuing, |
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10.1 |
The
Collateral Agent may exercise its rights with respect to each and every
component of the Collateral, without regard to the existence of any other
security or source of payment for the Obligations. In addition to other
rights and remedies provided for herein or otherwise available to it, the
Collateral Agent shall have all of the rights and remedies of a lender on
default under the Uniform Commercial Code then in effect in the State of
New York. |
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10.2 |
If
any notice to Debtor of the sale or other disposition of Collateral is
required by then applicable law, five business (5) days prior written
notice (which Debtor agrees is reasonable notice within the meaning of
Section 9.612(a) of the Uniform Commercial Code) shall be given to Debtor
of the time and place of any sale of Collateral which Debtor hereby agrees
may be by private sale. The rights granted in this Section are in addition
to any and all rights available to Collateral Agent under the Uniform
Commercial Code. |
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10.3 |
The
Collateral Agent is authorized, at any such sale, if the Collateral Agent
deems it advisable to do so, in order to comply with any applicable
securities laws, to restrict the prospective bidders or purchasers to
persons who will represent and agree, among other things, that they are
purchasing the Collateral for their own account for investment, and not
with a view to the distribution or resale thereof, or otherwise to
restrict such sale in such other manner as the Collateral Agent deems
advisable to ensure such compliance. Sales made subject to such
restrictions shall be deemed to have been made in a commercially
reasonable manner. |
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10.4 |
All
proceeds received by the Collateral Agent for the benefit of the Lenders
in respect of any sale, collection or other enforcement or disposition of
Collateral, shall be applied (after deduction of any amounts payable to
the Collateral Agent pursuant to Paragraph 12.1 hereof) against the
Obligations pro rata among the Lenders in proportion to their interests in
the Obligations. Upon payment in full of all Obligations, Debtor shall be
entitled to the return of all Collateral, including cash, which has not
been used or applied toward the payment of Obligations or used or applied
to any and all costs or expenses of the Collateral Agent incurred in
connection with the liquidation of the Collateral (unless another person
is legally entitled thereto). Any assignment of Collateral by the
Collateral Agent to Debtor shall be without representation or warranty of
any nature whatsoever and wholly without recourse. To the extent allowed
by law, each Lender may purchase the Collateral and pay for such purchase
by offsetting up to such Lender’s pro rata portion of the purchase price
with sums owed to such Lender by Debtor arising under the Obligations or
any other source. |
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11. |
Waiver
of Automatic Stay.
Debtor acknowledges and agrees that should a proceeding under any
bankruptcy or insolvency law be commenced by or against Debtor, or if any
of the Collateral should become the subject of any bankruptcy or
insolvency proceeding, then the Collateral Agent should be entitled to,
among other relief to which the Collateral Agent or Lenders may be
entitled under the Note, Subscription Agreement and any other agreement to
which the Debtor, Lenders or Collateral Agent are parties, (collectively
"Loan Documents") and/or applicable law, an order from the court granting
immediate relief from the automatic stay pursuant to 11 U.S.C. Section 362
to permit the Collateral Agent to exercise all of its rights and remedies
pursuant to the Loan Documents and/or applicable law. Debtor EXPRESSLY
WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362.
FURTHERMORE, Debtor EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11
U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER
STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105)
SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY
OF THE COLLATERAL AGENT TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER
THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. Debtor hereby consents to any
motion for relief from stay which may be filed by the Collateral Agent in
any bankruptcy or insolvency proceeding initiated by or against Debtor,
and further agrees not to file any opposition to any motion for relief
from stay filed by the Collateral Agent. Debtor represents, acknowledges
and agrees that this provision is a specific and material aspect of this
Agreement, and that the Collateral Agent would not agree to the terms of
this Agreement if this waiver were not a part of this Agreement. Debtor
further represents, acknowledges and agrees that this waiver is knowingly,
intelligently and voluntarily made, that neither the Collateral Agent nor
any person acting on behalf of the Collateral Agent has made any
representations to induce this waiver, that Debtor has been represented
(or has had the opportunity to be represented) in the signing of this
Agreement and in the making of this waiver by independent legal counsel
selected by Debtor and that Debtor has had the opportunity to discuss this
waiver with counsel. Debtor further agrees that any bankruptcy or
insolvency proceeding initiated by Debtor will only be brought in the
Federal Court within the Southern District of New
York. |
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12. |
Miscellaneous. |
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12.1 |
Expenses.
Debtor shall pay to the Collateral Agent, on demand, the amount of any and
all reasonable expenses, including, without limitation, attorneys' fees,
legal expenses and brokers' fees, which the Collateral Agent may incur in
connection with (a) sale, collection or other enforcement or disposition
of Collateral; (b) exercise or enforcement of any the rights, remedies or
powers of the Collateral Agent hereunder or with respect to any or all of
the Obligations upon breach or threatened breach; or (c) failure by Debtor
to perform and observe any agreements of Debtor contained herein which are
performed by the Collateral Agent. |
|
12.2 |
Waivers,
Amendment and Remedies.
No course of dealing by the Collateral Agent and no failure by the
Collateral Agent to exercise, or delay by the Collateral Agent in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any
other or further exercise thereof or the exercise of any other right,
remedy or power of the Collateral Agent. No amendment, modification or
waiver of any provision of this Agreement and no consent to any departure
by Debtor therefrom, shall, in any event, be effective unless contained in
a writing signed by the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given. The rights, remedies and powers of the Collateral
Agent, not only hereunder, but also under any instruments and agreements
evidencing or securing the Obligations and under applicable law are
cumulative, and may be exercised by the Collateral Agent from time to time
in such order as the Collateral Agent may
elect. |
126
|
12.3 |
Notices.
All notices or other communications given or made hereunder shall be in
writing and shall be personally delivered or deemed delivered the first
business day after being faxed (provided that a copy is delivered by first
class mail) to the party to receive the same at its address set forth
below or to such other address as either party shall hereafter give to the
other by notice duly made under this
Section: |
|
To
Debtor: |
Energy
& Engine Technology Corporation
0000
Xxxx Xxxxx Xxxxxxx
Xxxxx,
XX 00000
Attn:
Jolie X. Xxxx,
Esq.
Fax: (000) 000-0000 |
|
To
Lenders: |
To
the addresses and telecopier numbers set forth on
Schedule A |
|
To
the Collateral Agent: |
Xxxxxxx
X. Xxxxxxx Grushko
& Xxxxxxx, P.C. 000
Xxxxx Xxxxxx, Xxxxx 0000 Xxx
Xxxx, Xxx Xxxx 00000 Fax:
(000) 000-0000 |
|
Any
party may change its address by written notice in accordance with this
paragraph. |
|
12.4 |
Term;
Binding Effect.
This Agreement shall (a) remain in full force and effect until payment and
satisfaction in full of all of the Obligations; (b) be binding upon
Debtor, and its successors and permitted assigns; and (c) inure to the
benefit of the Collateral Agent, for the benefit of the Lenders and their
respective successors and assigns. All the rights and benefits granted by
Debtor to the Collateral Agent and Lenders in the Loan Documents and other
agreements and documents delivered in connection therewith are deemed
granted to both the Collateral Agent and
Lenders. |
|
12.5 |
Captions.
The captions of Paragraphs, Articles and Sections in this Agreement have
been included for convenience of reference only, and shall not define or
limit the provisions hereof and have no legal or other significance
whatsoever. |
|
12.6 |
Governing
Law; Venue; Severability.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without
regard to conflicts
of laws principles
that
would result in the application of the substantive laws of another
jurisdiction,
except to the extent that the perfection of the security interest granted
hereby in respect of any item of Collateral may be governed by the law of
another jurisdiction. Any legal action or proceeding against Debtor with
respect to this Agreement may be brought in the courts in the State of New
York or of the
United States for the Southern District of New York, and, by execution and
delivery of this Agreement, Debtor hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Debtor hereby irrevocably waives any
objection which they may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement brought in the aforesaid courts and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum. If any provision of this Agreement,
or the application thereof to any person or circumstance, is held invalid,
such invalidity shall not affect any other provisions which can be given
effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions
shall remain of full force and effect. |
|
12.7 |
Entire
Agreement.
This Agreement contains the entire agreement of the parties and supersedes
all other agreements and understandings, oral or written, with respect to
the matters contained herein. |
127
|
12.8 |
Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by the
different signatories hereto on separate counterparts, each of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. This Agreement may be executed
by facsimile signature and delivered by facsimile
transmission. |
|
13. |
Intercreditor
Terms.
As between the Lenders, any distribution under paragraph 5 shall be made
proportionately based upon the remaining principal amount (plus accrued
and unpaid interest) to each as to the total amount then owed to the
Lenders as a whole. The rights of each Lender hereunder are pari
passu to
the rights of the other Lenders hereunder. Any recovery hereunder shall be
shared ratably among the Lenders according to the then remaining principal
amount owed to each (plus accrued and unpaid interest) as to the total
amount then owed to the Lenders as a whole. Xxxxx X. Xxxxx is deemed a
Lender hereunder in connection with the Obligations described on Schedule
A hereto. |
[THIS
SPACE INTENTIONALLY LEFT BLANK]
128
IN WITNESS WHEREOF,
the
undersigned have executed and delivered this Security Agreement, as of the date
first written above.
|
"DEBTOR" |
"THE
COLLATERAL AGENT" |
|
ENERGY
& ENGINE TECHNOLOGY CORPORATION |
XXXXXXX
X. XXXXXXX |
|
a
Nevada corporation |
|
By: |
|||
|
Its: |
APPROVED
BY “LENDERS”:
|
LONGVIEW
FUND, LP |
LONGVIEW
EQUITY FUND, LP | |
|
LONGVIEW
INTERNATIONAL EQUITY FUND, LP |
||
|
XXXXX
X. XXXXX |
This
Security Agreement may be signed by facsimile signature
and
delivered
by confirmed facsimile transmission.
129
SCHEDULE
A TO SECURITY AGREEMENT
|
LENDER |
INITIAL
CLOSING PURCHASE PRICE |
SECOND
CLOSING PURCHASE PRICE |
|
LONGVIEW
FUND, LP
000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Fax:
(000) 000-0000 |
$400,000.00 |
$200,000.00 |
|
LONGVIEW
EQUITY FUND, LP
000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Fax:
(000) 000-0000 |
$420,000.00 |
$210,000.00 |
|
LONGVIEW
INTERNATIONAL EQUITY FUND, LP
000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Fax:
(000) 000-0000 |
$180,000.00 |
$90,000.00 |
|
TOTALS |
$1,000,000.00 |
$500,000.00 |
|
XXXXX
X. XXXXX
0000
Xxxx Xxxxx Xxxxx
Xxxxxxx,
XX 00000
Fax:
(000) 000-0000 |
$800,000.00
of Obligations
(for
purposes of determining pro rata
apportionment
of collateral only) |
130
ANNEX
I
TO
SECURITY
AGREEMENT
PLEDGE
AMENDMENT
This
Pledge Amendment, dated _________ __ 200_, is delivered pursuant to Section 4.3
of the Security Agreement referred to below. The undersigned hereby agrees that
this Pledge Amendment may be attached to the Security Agreement, dated April
___, 2005, as it may heretofore have been or hereafter may be amended, restated,
supplemented or otherwise modified from time to time and that the shares listed
on this Pledge Amendment shall be hereby pledged and assigned to Collateral
Agent and become part of the Collateral referred to in such Security Agreement
and shall secure all of the Obligations referred to in such Security
Agreement.
|
Name
of Issuer
|
Number
of Shares
|
Class
|
Certificate
Number(s)
|
|
ENERGY
& ENGINE TECHNOLOGY CORPORATION |
|
By: |
131
