NOTE AND PLEDGE AGREEMENT
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$500,000.00
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December
1, 2007
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On
January 1, 2009, for value received, International Fuel Technology,
Inc., a Nevada corporation with a place of business at 0000 Xxxxxxxx
Xxxxxx, Xxx. 0000, Xxxxxxx XX 00000 (the "Maker"), promises to pay to the order
of Xxxxx Xxxxxxxxx of
Sao Paulo, Brazil, or his successors or assigns (the "Holder"), the sum of
Five Hundred Thousand Dollars ($500,000.00) and accrued interest on that amount
at the rate of fifteen percent (15%) per year, until paid. Interest hereon shall
be calculated on the basis of a 365 day year. Payments shall be applied as
follows: (1) late fees and costs of collection, if any; (2) to the interest, if
any, on the unpaid balance of the debt evidenced hereby; and (3) the remainder
of the unpaid principal of the debt, until the same is paid in
full.
There
shall be a default hereunder in the event interest or principal is not paid when
due; or if any proceedings, procedure of remedy supplementary to or in
enforcement of judgment shall be resorted to or commenced against, or with
respect to any property of Maker or Guarantor; or any proceeding for the relief
or adjustment of indebtedness, reorganization, bankruptcy, composition or
arrangement shall be commenced or filed, or any proceedings shall be instituted
under such law, by or against Maker or if any governmental authority or any
court at the instance thereof shall take possession of any substantial part of
the property of, or assume control over the affairs or operations of, or a
receiver shall be appointed of the property of, or a writ or order of attachment
or garnishment shall be issued or made against any of the property of Maker or
Guarantor; or if the Guarantor shall die; or if there shall occur any change in
the control or ownership of Maker; or if Guarantor sells or otherwise assigns
any of the Pledged Collateral (as defined below) except pursuant to the security
interest created hereby. At any time after the occurrence of any and all of such
events, the Holder shall have the option to declare immediately due and payable
the entire unpaid balance of both principal and interest without notice. Failure
to exercise this option in the event of any such default shall not constitute a
waiver of the right to exercise this option in the event of any subsequent
default. Maker and Guarantor severally agree that on or after a default, if this
Note and Pledge Agreement is placed in the hands of any attorney for collection
or if an action is instituted upon the obligation stated here in any court of
competent jurisdiction, costs and reasonable attorney's fees will be added to
the then balance of principal and interest
The
undersigned Maker and Guarantor jointly and severally authorize irrevocably any
attorney-at-law, including an attorney employed by or retained by Maker or
Guarantor, to appear for the undersigned in any court of record in or of the
State of Missouri, or in any other state or territory of the United States or
the District of Columbia, at any time amounts under this Note and Pledge
Agreement are due and payable, whether by acceleration or otherwise, to waive
the issuing and service of process and to confess a judgment against Maker or
Guarantor in favor of Holder for all amounts due and owing by Maker to Holder
hereunder, together with interest, costs of suit and reasonable attorney fees,
admitting the allegations of any complaint filed in connection with this Note
and Pledge Agreement, and to waive and release all errors which may intervene in
any such proceedings, and consent to immediate enforcement of the judgment, here
ratifying and confirming all that the attorney may do by virtue of
authority.
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3
Maker's
obligations hereunder shall be secured by a pledge by Guarantor of Three Million
(3,000,000) shares of the common stock of Maker (the "Shares"). Guarantor hereby
grants a first priority security interest in, and pledges, the Shares and all
proceeds thereon (the pledged Shares, together with the property described in
the next paragraph of this Note and Pledge Agreement, and all proceeds of the
foregoing, being referred to as the "Pledged Collateral") to Holder to secure
the satisfaction by Maker and/or Guarantor of all its obligations to Holder
under this Note and Pledge Agreement; provided, however, that unless and until
Maker and/or Guarantor defaults on an obligation hereunder, Guarantor shall be
entitled to all cash dividends and cash distributions with respect to the
pledged Shares, free and clear of the security interest granted hereby. This
pledge shall be governed by all applicable provisions of, and Holder shall have
all rights and remedies with respect to the Pledged Collateral of a secured
party under, the Uniform Commercial Code as in effect in the State of
Missouri. Concurrently with the delivery of this Note and Pledge Agreement to
Holder or his nominee, Maker has delivered to Holder the certificates
representing the Shares pledged hereby, together with a stock power therefore
duly executed by Guarantor in blank. Maker agrees to deliver to Holder such
other documents of transfer as Holder may from time to time request to enable
Holder to transfer the pledged Shares into its name or the name of its nominee
and to perfect Holder's security interest in the Pledged Collateral under
applicable laws. Maker agrees that he will not (i) sell or otherwise dispose of,
or grant any option with respect to, any of the Pledged Collateral without the
prior written consent of Holder or (ii) create or permit to exist any lien upon
or with respect to any of the Pledged Collateral, except for the security
interest granted hereby. Notwithstanding the foregoing, Guarantor shall be
entitled to arrange with Holder for a sale by Maker of pledged Shares, free of
the security interest granted hereby, provided mat Guarantor directs that the
proceeds of such sale first be used to satisfy his obligations pursuant to this
Note and Pledge Agreement and makes such additional agreements to satisfy such
obligations in full as may be required by Holder.
In the
event that, during the term of this Note and Pledge Agreement, any stock
dividend, reclassification, readjustment or other change is declared or made in
the capital structure of Holder, then Holder shall have a security interest in
all securities (whether shares of Common Stock or other securities) issued to or
acquired by Guarantor by reason of such event, and such securities shall become
part of the Pledged Collateral.
During
the term of this Note and Pledge Agreement and so long as the Pledged Collateral
is owned by Guarantor, Guarantor shall have the right to vote the pledged Shares
and exercise any voting rights pertaining to such Pledged Collateral, and to
give consents, ratifications and waivers with respect thereto, for all
purposes.
Maker
hereby acknowledges that Holder's right to recover amounts payable hereunder
shall not be limited to the Pledged Collateral and that Holder shall have full
recourse against any other assets of Maker and/or Guarantor.
All or
any portion of the principal amount evidenced by this Note and Pledge Agreement
may be prepaid at any time without premium or penalty, but together with all
interest accrued thereon.
The
obligations of Maker, and the rights of Holder, under this Note and Pledge
Agreement shall be absolute and shall not be subject to any counterclaim,
set-off, deduction or defense.
Maker and
all other parties liable herefor, including without limitation any guarantors
hereof, hereto severally waive demand, protest, presentment and notice of every
kind, and waive recourse to suretyship defenses generally, including extensions
of time, releases of security, and other indulgences which may be granted from
time to time by the holder of this Note and Pledge Agreement to the Maker or any
party liable herefor.
This Note
and Pledge Agreement is secured by a stock pledge and guarantee, and by any
other mortgage, security agreement, guarantee, or other security document that
either: (i) specifically refers to this Note and Pledge Agreement or the
attached guaranty, or (ii) generally secures all obligations of Maker or the
Guarantor to Holder.
If any
provision or clause hereof or application thereof to any person or
circumstances, is held invalid, such invalidity shall not affect other
provisions, or applications hereof, which can be given effect without the
invalid provision or application.
This Note
and Pledge Agreement shall be binding upon and inure to the benefit of the
Maker, Holder and their respective successors and assigns.
The times
for the performance of any obligation hereunder shall be strictly construed,
time being of the essence.
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This
instrument shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of Missouri, exclusive
of its conflicts of law rules.
No
extension or modification will release any of the undersigned from the
obligations of this instrument.
IN
WITNESS WHEREOF, Maker and Guarantor have duly executed this Note and Pledge
Agreement under seal, with the intention that it constitute a sealed instrument,
as of the day and year first above written.
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WARNING, BY SIGNING
THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT
PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR
KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER
CAUSE.
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INTERNATIONAL
FUEL TECHNOLOGY, INC.
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| /s/ Xxxxxxxx R Burst | ||
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By:
Xxxxxxxx R Burst
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Its
President
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ATTEST:
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/s/
Xxxxxx X. Xxxxxx
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By:
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Its
Secretary
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GUARANTY
For value
received, Xxx Xxxx ("Guarantor") unconditionally agrees to his obligations set
forth in the within Note and Pledge Agreement, and unconditionally guarantees
payment of the within Note and Pledge Agreement upon demand after default and
further agrees to pay all costs of enforcing or collecting this guaranty,
including reasonable attorneys' fees. Guarantor further waives recourse to any
and all suretyship or guarantorship defenses whatsoever. Guarantor's obligations
hereunder shall be secured by the Pledged Collateral, in accordance with the
terms set forth in the within Note and Pledge Agreement.
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/s/
Xxx Xxxx
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XXX
XXXX
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