Exhibit 10.27

 

     

SECURITY AGREEMENT

 

 

THIS SECURITY AGREEMENT (“Agreement”) is made as of this 31st day of July, 2013,
but made effective as of September 1, 2013, by and between CYCLONE POWER
TECHNOLOGIES, INC., a Florida corporation (the “Company”), in favor of TCA
GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the
“Secured Party”).

 

RECITALS

 

WHEREAS, pursuant to a Securities Purchase Agreement dated of even date herewith
between Company and the Secured Party (the “Purchase Agreement”), Company has
agreed to issue to the Secured Party and the Secured Party has agreed to
purchase from Company certain senior secured, convertible, redeemable debentures
(the “Debentures”), as more specifically set forth in the Purchase Agreement;
and

 

WHEREAS, in order to induce the Secured Party to purchase the Debentures, the
Company has agreed to execute and deliver to the Secured Party this Agreement
for the benefit of the Secured Party and to grant to Secured Party an
unconditional, continuing, first priority security interest in all of the assets
and property of the Company (subject only to the Permitted Encumbrances) to
secure the prompt payment, performance and discharge in full of all of Company’s
Obligations;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties each
intending to be legally bound, hereby do agree as follows:

 

1.     Recitals. The recitations set forth in the preamble of this Agreement are
true and correct and incorporated herein by this reference.

 

2.     Construction and Definition of Terms. In this Agreement, unless the
express context otherwise requires: (i) the words “herein,” “hereof” and
“hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular provision of this Agreement; (ii) references to the words
“Section” or “Subsection” refer to the respective Sections and Subsections of
this Agreement, and references to “Exhibit” or “Schedule” refer to the
respective Exhibits and Schedules attached hereto; (iii) wherever the word
“include,” “includes” or “including” is used in this Agreement, it will be
deemed to be followed by the words “without limitation.” All capitalized terms
used in this Agreement that are defined in the Purchase Agreement or otherwise
defined in Articles 8 or 9 of the Code shall have the meanings assigned to them
in the Purchase Agreement or the Code, respectively and as applicable, unless
the context of this Agreement requires otherwise. In addition to the capitalized
terms defined in the Code and the Purchase Agreement, unless the context
otherwise requires, when used herein, the following capitalized terms shall have
the following meanings (provided that if a capitalized term used herein is
defined in the Purchase Agreement and separately defined in this Agreement, the
meaning of such term as defined in this Agreement shall control for purposes of
this Agreement):

 

(a)     “Agreement” means this Security Agreement and all amendments,
modifications and supplements hereto.

 

 

 
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(b)     “Bankruptcy Code” means the United States Bankruptcy Code, as amended
from time to time, or any other similar laws, codes, rules or regulations
relating to bankruptcy, insolvency or the protection of creditors.

 

(c)     “Business Premises” shall mean the Company’s offices located at 601 N.E.
26th Court, Pompano Beach, FL 33064.

 

(d)     “Closing” shall mean the date on which this Agreement is fully executed
by both parties.

 

(e)     “Code” shall mean the Uniform Commercial Code as in effect from time to
time in the State of Nevada, provided that terms used herein which are defined
in the Code as in effect in the State of Nevada on the date hereof shall
continue to have the same meaning notwithstanding any replacement or amendment
of such statute, except as the Secured Party may otherwise agree.

 

(f)     “Collateral” shall mean any and all property of the Company, of any kind
or description, tangible or intangible, real, personal or mixed, wheresoever
located and whether now existing or hereafter arising or acquired, including the
following: (i) all property of, or for the account of, the Company now or
hereafter coming into the possession, control or custody of, or in transit to,
Secured Party or any agent or bailee for Secured Party or any parent, affiliate
or subsidiary of Secured Party or any participant with Secured Party in the
Obligations (whether for safekeeping, deposit, collection, custody, pledge,
transmission or otherwise), including all cash, earnings, dividends, interest,
or other rights in connection therewith and the products and proceeds therefrom,
including the proceeds of insurance thereon; (ii) the following additional
property of the Company, whether now existing or hereafter arising or acquired,
and wherever now or hereafter located, together with all additions and
accessions thereto, substitutions, betterments and replacements therefor,
products and Proceeds therefrom, and all of the Company’s books and records and
recorded data relating thereto (regardless of the medium of recording or
storage), together with all of the Company’s right, title and interest in and to
all computer software required to utilize, create, maintain and process any such
records or data on electronic media, including all: (A) Accounts, and all goods
whose sale, lease or other disposition by the Company has given rise to Accounts
and have been returned to, or repossessed or stopped in transit by, the Company,
or rejected or refused by an Account debtor; (B) As-extracted Collateral; (C)
Chattel Paper (whether tangible or electronic); (D) Commodity Accounts; (E)
Commodity Contracts; (F) Deposit Accounts, including all cash and other property
from time to time deposited therein and the monies and property in the
possession or under the control of the Secured Party or any affiliate,
representative, agent, designee or correspondent of the Secured Party; (G)
Documents; (H) Equipment; (I) Farm Products; (J) Fixtures; (K) General
Intangibles (including all Payment Intangibles); (L) Goods, and all accessions
thereto and goods with which the Goods are commingled; (M) Health-Care Insurance
Receivables; (N) Instruments; (O) Inventory, including raw materials,
work-in-process and finished goods; (P) Investment Property; (Q)
Letter-of-Credit Rights; (R) Promissory Notes; (S) Software; (T) all Supporting
Obligations; (U) all commercial tort claims hereafter arising; (V) all other
tangible and intangible personal property of the Company (whether or not subject
to the Code), including, all bank and other accounts and all cash and all
investments therein, all proceeds, products, offspring, accessions, rents,
profits, income, benefits, substitutions and replacements of and to any of the
property of the Company described within the definition of Collateral
(including, any proceeds of insurance thereon and all causes of action, claims
and warranties now or hereafter held by the Company in respect of any of the
items listed within the definition of Collateral), and all books,
correspondence, files and other Records, including, all tapes, desks, cards,
Software, data and computer programs in the possession or under the control of
the Company or any other Person from time to time acting for the Company, in
each case, to the extent of the Company’s rights therein, that at any time
evidence or contain information relating to any of the property described or
listed within the definition of Collateral or which are otherwise necessary or
helpful in the collection or realization thereof; (W) all real property
interests of the Company and the interest of the Company in fixtures related to
such real property interests; and (X) Proceeds, including all Cash Proceeds and
Noncash Proceeds, and products of any or all of the foregoing, in each case
howsoever the Company’s interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).

 

 

 
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(g)     “Event of Default” shall mean any of the events described in Section 4
hereof.

 

(h)     “Obligations” shall mean any and all obligations of the Company to
Secured Party, whether arising, existing or incurred under this Agreement, the
Purchase Agreement or any other Transaction Documents, or any other agreement
between the Company and the Secured Party, in each case, whether now or
hereafter existing or incurred, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later decreased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from the Secured Party as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.

 

3.     Security.

 

(a)     Grant of Security Interest. As security for the full payment and
performance of all of the Obligations, whether or not any instrument or
agreement relating to any Obligation specifically refers to this Agreement or
the security interest created hereunder, the Company hereby assigns, pledges and
grants to Secured Party an unconditional, continuing, first-priority security
interest in all of the Collateral, subject only to the Permitted Encumbrances.
Secured Party’s security interest shall continually exist until all Obligations
have been indefeasibly satisfied and/or paid in full.

 

(b)     Representations, Warranties, Covenants and Agreement of the Company. The
Company covenants, warrants and represents, for the benefit of the Secured
Party, as follows:

 

(i)     The Company has the requisite corporate power and authority to enter
into this Agreement and otherwise to carry out its obligations hereunder. The
execution, delivery and performance by the Company of this Agreement and the
filings contemplated herein have been duly authorized by all necessary action on
the part of the Company and no further action is required by the Company. This
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor’s rights generally.

 

(ii)     The Company represents and warrants that it has no place of business or
offices where its respective books of account and records are kept or places
where Collateral is stored or located, except for the Business Premises.

 

(iii)     The Company is the sole owner of the Collateral (except for
non-exclusive licenses granted by the Company in the Company’s Ordinary Course
of Business), free and clear of any and all Encumbrances, except for the
Permitted Encumbrances. The Company is fully authorized to grant the security
interests in and to pledge the Collateral to Secured Party. There is not on file
in any agency, land records or other office of any Governmental Authority, an
effective financing statement, security agreement, license or transfer or any
notice of any of the foregoing (other than the Permitted Encumbrances and those
that have been filed in favor of the Secured Party pursuant to this Agreement)
covering or affecting any of the Collateral. So long as this Agreement shall be
in effect, the Company shall not execute and shall not permit to be on file in
any such agency, land records or other office any such financing statement or
other document or instrument (except for the Permitted Encumbrances and to the
extent filed or recorded in favor of the Secured Party pursuant to the terms of
this Agreement).

 

 

 
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(iv)     No part of the Collateral has been judged invalid or unenforceable. No
Claim, Proceeding or other notice or other similar item has been received by the
Company that any Collateral or the Company’s use of any Collateral violates the
rights of any Person. There has been no adverse decision or Claim to the
Company’s ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to the Company’s right to keep and maintain such Collateral in
full force and effect, and there is no Claim or Proceeding of any nature
involving said rights pending or, to the best knowledge of the Company,
threatened, before any Governmental Authority.

 

(v)     The Company shall at all times maintain its books of account and records
relating to the Collateral and maintain the Collateral at the Business Premises,
and the Company shall not relocate such books of account and records or
Collateral, except and unless: (A) Secured Party first approves of such
relocation, which approval may be withheld in Secured Party’s sole and absolute
discretion; (B) evidence that appropriate financing statements and other
necessary documents have been filed and recorded and other steps have been taken
to create in favor of the Secured Party valid, perfected and continuing liens in
the Collateral; or (C) Collateral is moved or relocated in the Company’s
Ordinary Course of Business, provided, however, that any permanent relocation of
any of the Collateral shall require Secured Party’s prior written approval in
accordance with Subsection 3(b)(v)(A) above.

 

(vi)     Upon making the filings described in the immediately following
sentence, this Agreement creates, in favor of the Secured Party, a valid,
perfected, first-priority security interest in the Collateral, subject only to
the Permitted Encumbrances. Except for the filing of financing statements on
Form UCC-1 under the Code with the State of Florida, to the Company’s knowledge,
no authorization or approval of, or filing with, or notice to any Governmental
Authority is required either: (A) for the grant by the Company of, or the
effectiveness of, the security interest granted hereby or for the execution,
delivery and performance of this Agreement by the Company; or (B) for the
perfection of or exercise by the Secured Party of its rights and remedies
hereunder.

 

(vii)     Simultaneous with the execution of this Agreement, the Company hereby
authorizes the Secured Party to file one or more UCC financing statements, and
any continuations, amendments, or assignments thereof with respect to the
security interests on the Collateral granted hereby, in any jurisdictions as may
be requested or desired by the Secured Party.

 

(viii)     The execution, delivery and performance of this Agreement, and the
granting of the security interests contemplated hereby, will not: (A) constitute
a violation of or conflict with the Certificate of Incorporation, Bylaws or any
other organizational or governing documents of the Company; (B) constitute a
violation of, or a default or breach under (either immediately, upon notice,
upon lapse of time, or both), or conflicts with, or gives to any other Person
any rights of termination, amendment, acceleration or cancellation of, any
provision of any Contract or agreement to which Company is a party or by which
any of the Collateral may be bound; (C) constitute a violation of, or a default
or breach under (either immediately, upon notice, upon lapse of time, or both),
or conflicts with, any Judgment of any Governmental Authority; (D) constitute a
violation of, or conflict with, any Law; or (E) result in the loss or adverse
modification of, or the imposition of any fine, penalty or other Encumbrance
with respect to, any Permit granted or issued to, or otherwise held by or for
the use of, the Company or any of the Collateral. No Consent (including from
stockholders or creditors of the Company) is required for the Company to enter
into and perform its obligations hereunder.

 

 

 
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(ix)     The Company shall at all times maintain the liens and security
interests provided for hereunder as valid and perfected first-priority liens and
security interests in the Collateral (subject only to the Permitted
Encumbrances) in favor of the Secured Party until this Agreement and the
security interests hereunder shall terminate pursuant to Section 8(o) below. The
Company shall at all times safeguard and protect all Collateral, at its own
expense, for the account of the Secured Party. At the request of the Secured
Party, the Company will sign and deliver to the Secured Party at any time, or
from time to time, one or more financing statements pursuant to the Code (or any
other applicable statute) in form reasonably satisfactory to the Secured Party
and will pay the cost of filing the same in all public offices wherever filing
is, or is deemed by the Secured Party to be, necessary or desirable to effect
the rights and obligations provided for herein. Without limiting the generality
of the foregoing, the Company shall pay all fees, taxes and other amounts
necessary to maintain the Collateral and the security interests granted
hereunder, and the Company shall obtain and furnish to the Secured Party from
time to time, upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the security interests
hereunder.

 

(x)     The Company will not transfer, pledge, hypothecate, encumber, license,
sell or otherwise dispose of any of the Collateral without the prior written
consent of the Secured Party, which consent may be withheld in the Secured
Party’s sole and absolute discretion, except for the Permitted Encumbrances and
transfers, sales or licenses made in the Company’s Ordinary Course of Business.

 

(xi)     The Company shall keep, maintain and preserve all of the Collateral in
good condition, repair and order and the Company will use, operate and maintain
the Collateral in compliance with all Laws, and in compliance with all
applicable insurance requirements and regulations.

 

(xii)     The Company shall, within five (5) days of obtaining knowledge
thereof, advise the Secured Party promptly, in sufficient detail, of any
substantial or material change in the Collateral, and of the occurrence of any
event which would have a Material Adverse Effect on the value of the Collateral
or on the Secured Party’s security interest therein.

 

(xiii)     The Company shall promptly execute and deliver to the Secured Party
such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take
such further action as the Secured Party may from time to time request and may
in its sole discretion deem necessary to perfect, protect or enforce its
security interest in the Collateral, including, placing legends on Collateral or
on books and records pertaining to Collateral stating that Secured Party has a
security interest therein.

 

(xiv)     The Company will take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims, causes of
action and accounts receivable in respect of the Collateral.

 

(xv)     The Company shall promptly notify the Secured Party in sufficient
detail upon becoming aware of any Claim, Proceeding, or any other litigation,
attachment, garnishment, execution or other legal process levied against any
Collateral or of any Claim, Proceeding or any other litigation, attachment,
garnishment, execution or other legal process which Company knows or has reason
to believe is pending or threatened against it or the Collateral, and of any
other information received by the Company that may materially affect the value
of the Collateral, the security interests granted hereunder or the rights and
remedies of the Secured Party hereunder.

 

 

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

 

(xvii)          The Company will promptly pay when due all Taxes and all
transportation, storage, warehousing and all other charges and fees affecting or
arising out of or relating to the Collateral and shall defend the Collateral, at
Company’s expense, against all claims of any Persons claiming any interest in
the Collateral adverse to Company or Secured Party.

 

(xviii)     During normal business hours and subject to prior reasonable notice
from Secured Party to the Company (which notice may be e-mail or telephonic
notice), Secured Party and its agents and designees may enter the Business
Premises and any other premises of the Company and inspect the Collateral and
all books and records of the Company (in whatever form), and the Company shall
pay the reasonable costs of such inspections.

 

(xix)          The Company shall maintain comprehensive casualty insurance on
the Collateral against such risks, in such amounts, with such loss deductible
amounts and with such companies as may be reasonably satisfactory to the Secured
Party, and each such policy shall contain a clause or endorsement satisfactory
to Secured Party naming Secured Party as loss payee and a clause or endorsement
satisfactory to Secured Party that such policy may not be canceled or altered
and Secured Party may not be removed as loss payee without at least thirty (30)
days prior written notice to Secured Party. In all events, the amounts of such
insurance coverages shall conform to prudent business practices and shall be in
such minimum amounts that Company will not be deemed a co-insurer under
applicable insurance laws, policies or practices. The Company hereby assigns to
Secured Party and grants to Secured Party a security interest in any and all
proceeds of such policies and authorizes and empowers Secured Party to adjust or
compromise any loss under such policies and to collect and receive all such
proceeds. The Company hereby authorizes and directs each insurance company to
pay all such proceeds directly and solely to Secured Party and not to the
Company and Secured Party jointly. The Company authorizes and empowers Secured
Party to execute and endorse in Company’s name all proofs of loss, drafts,
checks and any other documents or instruments necessary to accomplish such
collection, and any persons making payments to Secured Party under the terms of
this subsection are hereby relieved absolutely from any obligation or
responsibility to see to the application of any sums so paid. After deduction
from any such proceeds of all costs and expenses (including attorney’s fees)
incurred by Secured Party in the collection and handling of such proceeds, the
net proceeds shall be applied as follows: if no Event of Default shall have
occurred and be continuing, such net proceeds may be applied, at Company’s
option, either toward replacing or restoring the Collateral, in a manner and on
terms satisfactory to Secured Party, or as a credit against such of the
Obligations, whether matured or unmatured, as Secured Party shall determine in
Secured Party’s sole discretion. In the event that Company may and does elect to
replace or restore any of the Collateral as aforesaid, then such net proceeds
shall be deposited in a segregated account opened in the name and for the
benefit of Secured Party, and such net proceeds shall be disbursed therefrom by
Secured Party in such manner and at such times as Secured Party deems
appropriate to complete and insure such replacement or restoration; provided,
however, that if an Event of Default shall occur at any time before or after
replacement or restoration has commenced, then thereupon Secured Party shall
have the option to apply all remaining net proceeds either toward replacing or
restoring the Collateral, in a manner and on terms satisfactory to Secured
Party, or as a credit against such of the Obligations, whether matured or
unmatured, as Secured Party shall determine in Secured Party’s sole discretion.
If an Event of Default shall have occurred prior to such deposit of the net
proceeds, then Secured Party may, in its sole discretion, apply such net
proceeds either toward replacing or restoring the Collateral, in a manner and on
terms satisfactory to Secured Party, or as a credit against such of the
Obligations, whether matured or unmatured, as Secured Party shall determine in
Secured Party’s sole discretion.

 

 

 
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(xx)          The Company shall cooperate with Secured Party to obtain and keep
in effect one or more control agreements in Deposit Accounts, Electronic Chattel
Paper, Investment Property and Letter-of-Credit Rights Collateral. In addition,
the Company, at the Company’s expense, shall promptly: (A) execute all notices
of security interest for each relevant type of Software and other General
Intangibles in forms suitable for filing with any United States or foreign
office handling the registration or filing of patents, trademarks, copyrights
and other intellectual property and any successor office or agency thereto; and
(B) take all commercially reasonable steps in any Proceeding before any such
office or any similar office or agency in any other country or any political
subdivision thereof, to diligently prosecute or maintain, as applicable, each
application and registration of any Software, General Intangibles or any other
intellectual property rights and assets that are part of the Collateral,
including filing of renewals, affidavits of use, affidavits of incontestability
and opposition, interference and cancellation proceedings.

 

(xxi)          Company shall not file any amendments, correction statements or
termination statements concerning the Collateral without the prior written
consent of Secured Party.

 

(xxii)          With respect to the Permitted Encumbrances, the Company hereby
represents, warrants, covenants and agrees as follows: (i) all indebtedness
underlying the Permitted Encumbrances is in good standing and there is no
material default or material breach of any nature or kind thereunder by the
Company or any other Person, and there is no event that has occurred that, with
the passage of time, the giving of notice, or both, would constitute a material
breach or material default under any of such indebtedness or any documents
evidencing same; (ii) the Company shall comply in all material respects with all
terms and conditions of all indebtedness underlying the Permitted Encumbrances,
including, making all payments required thereunder in a timely basis; (iii) the
Company shall immediately deliver to Secured Party any notices (of default or
otherwise) received by the Company in connection with the Permitted Encumbrances
or the indebtedness underlying same; and (iv) the Company shall not increase,
extend, or add additional property or Assets to, the Permitted Encumbrances or
the indebtedness underlying same.

 

(c)     Collateral Collections. After an Event of Default shall have occurred,
Secured Party shall have the right at any and all times to enforce the Company’s
rights against all Persons obligated on any of the Collateral, including the
right to: (i) notify and/or require the Company to notify any or all
Persons obligated on any of the Collateral to make payments directly to Secured
Party or in care of a post office lock box under the sole control of Secured
Party established at Company’s expense, and to take any or all action with
respect to Collateral as Secured Party shall determine in its sole discretion,
including, the right to demand, collect, sue for and receive any money or
property at any time due, payable or receivable on account thereof, compromise
and settle with any Person liable thereon, and extend the time of payment or
otherwise change the terms thereof, without incurring any liability or
responsibility to the Company whatsoever; and/or (ii) require the Company to
segregate and hold in trust for Secured Party and, on the day of Company’s
receipt thereof, transmit to Secured Party in the exact form received by the
Company (except for such assignments and endorsements as may be required by
Secured Party), all cash, checks, drafts, money orders and other items of
payment constituting any portion of the Collateral or proceeds of the
Collateral. Secured Party’s collection and enforcement of Collateral against
Persons obligated thereon shall be deemed to be commercially reasonable if
Secured Party exercises the care and follows the procedures that Secured Party
generally applies to the collection of obligations owed to Secured Party.

 

 

 
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(d)     Care of Collateral. Company shall have all risk of loss of the
Collateral. Secured Party shall have no liability or duty, either before or
after the occurrence of an Event of Default, on account of loss of or damage to,
to collect or enforce any of its rights against, the Collateral, to collect any
income accruing on the Collateral, or to preserve rights against Persons with
prior interests in the Collateral. If Secured Party actually receives any
notices requiring action with respect to Collateral in Secured Party’s
possession, Secured Party shall take reasonable steps to forward such notices to
the Company. The Company is responsible for responding to notices concerning the
Collateral, voting the Collateral, and exercising rights and options, calls and
conversions of the Collateral. Secured Party’s sole responsibility is to take
such action as is reasonably requested by Company in writing, however, Secured
Party is not responsible to take any action that, in Secured Party’s sole
judgment, would affect the value of the Collateral as security for the
Obligations adversely. While Secured Party is not required to take certain
actions, if action is needed, in Secured Party’s sole discretion, to preserve
and maintain the Collateral, Company authorizes Secured Party to take such
actions, but Secured Party is not obligated to do so.

 

4.     Events of Default. The occurrence of any one or more of the following
events shall constitute an “Event of Default” hereunder:

 

(a)     Failure to Pay. The failure of Company to pay any sum due under or as
part of the Obligations as and when due and payable (whether by acceleration,
declaration, extension or otherwise).

 

(b)     Covenants and Agreements. The failure of Company to perform, observe or
comply with any and all of the covenants, promises and agreements of the Company
in this Agreement, the Purchase Agreement or any other Transaction Documents,
which such failure is not cured by the Company within fifteen (15) days after
receipt of written notice thereof from Secured Party, except that there shall be
no notice or cure period with respect to any failure to pay any sums due under
or as part of the Obligations.

 

(c)     Information, Representations and Warranties. If any representation or
warranty made herein, in the Purchase Agreement or any other Transaction
Documents, or if any information contained in any financial statement,
application, schedule, report or any other document given by the Company in
connection with the Obligations, with the Collateral, or with any Transaction
Document, is not in all material respects true, accurate and complete, or if the
Company omitted to state any material fact or any fact necessary to make such
information not misleading.

 

(d)     Default on Other Obligations. The occurrence of any default under any
other borrowing, obligation or Contract of the Company, if the result of such
default would: (i) permit any Person which is a party to any such borrowing,
obligation or Contract, to accelerate the maturity thereof, or to cancel or
terminate any such borrowing, obligation or Contract; (ii) cause or be
reasonably expected to cause a Material Adverse Effect; or (iii) materially and
adversely affect, as determined by Secured Party in good faith, but in its sole
discretion, any of the Collateral, the value thereof, or Secured Party’s rights
and remedies to realize upon such Collateral as set forth herein.

 

 

 
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(e)     Insolvency. Company shall be or become insolvent or unable to pay its
debts as they become due, or admits in writing to such insolvency or to such
inability to pay its debts as they become due.

 

(f)     Involuntary Bankruptcy. There shall be filed against Company an
involuntary petition or other pleading seeking the entry of a decree or order
for relief under the Bankruptcy Code or any similar foreign, federal or state
insolvency or similar laws ordering: (i) the liquidation of the Company; or
(ii) a reorganization of Company or the business and affairs of Company; or
(iii) the appointment of a receiver, liquidator, assignee, custodian, trustee,
or similar official for Company of the property of Company, and the failure to
have such petition or other pleading denied or dismissed within sixty (60)
calendar days from the date of filing.

 

(g)     Voluntary Bankruptcy. The commencement by the Company of a voluntary
case under the Bankruptcy Code or any foreign, federal or state insolvency or
similar laws or the consent by the Company to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, or similar
official for Company of any of the property of the Company or the making by the
Company of an assignment for the benefit of creditors, or the failure by the
Company generally to pay its debts as the debts become due.

 

(h)     Judgments, Awards. The entry of any final and non-appealable Judgment or
other determination or adjudication against the Company and a determination by
Secured Party, in good faith but in its sole discretion, that any such Judgment
or other determination or adjudication could have a Material Adverse Effect, or
could otherwise adversely affect the prospect for Secured Party to fully and
punctually realize the full benefits conferred on Secured Party by this
Agreement and the other Transaction Documents, or the prospect of repayment of
all the Obligations.

 

(i)     Injunction. The injunction or restraint of the Company in any manner
from conducting its business in whole or in part and a determination by Secured
Party, in good faith but in its sole discretion, that the same could have a
Material Adverse Effect, or could otherwise adversely affect the prospect for
Secured Party to fully and punctually realize the full benefits conferred on
Secured Party by this Agreement and the other Transaction Documents, or the
prospect of repayment of all the Obligations.

 

(j)     Attachment by Other Parties. Any Assets of the Company shall be
attached, levied upon, seized or repossessed, or come into the possession of a
trustee, receiver or other custodian and a determination by Secured Party, in
good faith but in its sole discretion, that the same could have a Material
Adverse Effect, or could otherwise adversely affect the prospect for Secured
Party to fully and punctually realize the full benefits conferred on Secured
Party by this Agreement and the other Transaction Documents, or the prospect of
repayment of all the Obligations.

 

5.     Rights and Remedies.

 

(a)     Rights and Remedies of Secured Party. Upon and after the occurrence of
an Event of Default, Secured Party may, without notice or demand, exercise in
any jurisdiction in which enforcement hereof is sought, the following rights and
remedies, in addition to the rights and remedies available to Secured Party
under the Purchase Agreement and any other Transaction Documents, the rights and
remedies of a secured party under the Code, and all other rights and remedies
available to Secured Party under applicable law or in equity, all such rights
and remedies being cumulative and enforceable alternatively, successively or
concurrently:

 

 

 
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(i)     Take absolute control of the Collateral, including transferring into the
Secured Party’s name or into the name of its nominee or nominees (to the extent
the Secured Party has not theretofore done so) and thereafter receive, for the
benefit of the Secured Party, all payments made thereon, give all consents,
waivers and ratifications in respect thereof and otherwise act with respect
thereto as though it were the outright owner thereof;

 

(ii)     Require the Company to, and the Company hereby agrees that it will at
its expense and upon request of the Secured Party forthwith, assemble all or
part of the Collateral as directed by the Secured Party and make it available to
the Secured Party at a place or places to be designated by the Secured Party
that is convenient to Secured Party, and the Secured Party may enter into and
occupy the Business Premises or any other premises owned or leased by the
Company where the Collateral or any part thereof is located or assembled in
order to effectuate the Secured Party’s rights and remedies hereunder or under
law, including removing such Collateral therefrom, without any obligation or
liability to the Company in respect of such occupation, the Company HEREBY
WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND TO JUDICIAL HEARING WITH RESPECT
TO REPOSSESSION OF COLLATERAL AND THE COMPANY HEREBY GRANTING TO SECURED PARTY
AND ITS AGENTS AND REPRESENTATIVES FULL AUTHORITY TO ENTER SUCH PREMISES;

 

(iii)     Without notice, except as specified below, and without any obligation
to prepare or process the Collateral for sale: (A) sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of the
Secured Party’s offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the Secured
Party may deem commercially reasonable; and/or (B) lease, license or dispose of
the Collateral or any part thereof upon such terms as the Secured Party may deem
commercially reasonable. The Company agrees that, to the extent notice of sale
or any other disposition of the Collateral shall be required by law, at least
ten (10) days’ notice to the Company of the time and place of any public sale or
the time after which any private sale or other disposition of the Collateral is
to be made shall constitute reasonable notification. The Secured Party shall not
be obligated to make any sale or other disposition of any Collateral regardless
of notice of sale having been given. The Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor and such sale may, without further notice, be made at the time and
place to which it was so adjourned. The Company hereby waives any claims and
actions against the Secured Party arising by reason of the fact that the price
at which any of the Collateral may have been sold at a private sale was less
than the price which might have been obtained at a public sale or was less than
the aggregate amount of the Obligations, even if the Secured Party accepts the
first offer received and does not offer such Collateral to more than one
offeree, and waives all rights that the Company may have to require that all or
any part of such Collateral be marshaled upon any sale (public or private)
thereof. The Company hereby acknowledges that: (X) any such sale of the
Collateral by the Secured Party shall be made without warranty; (Y) the Secured
Party may specifically disclaim any warranties of title, possession, quiet
enjoyment or the like; and (Z) such actions set forth in clauses (X) and
(Y) above shall not adversely affect the commercial reasonableness of any such
sale of Collateral. In addition to the foregoing: (1) upon written notice to the
Company from the Secured Party after and during the continuance of an Event of
Default, the Company shall cease any use of any intellectual property or any
trademark, patent or copyright similar thereto for any purpose described in such
notice; (2) the Secured Party may, at any time and from time to time after and
during the continuance of an Event of Default, license, whether general, special
or otherwise, and whether on an exclusive or non-exclusive basis, any of the
Company’s intellectual property, throughout the universe for such term or terms,
on such conditions, and in such manner, as the Secured Party shall in its sole
discretion determine; and (3) the Secured Party may, at any time, pursuant to
the authority granted under this Agreement (such authority being effective upon
the occurrence and during the continuance of an Event of Default), execute and
deliver on behalf of the Company, one or more instruments of assignment of any
intellectual property (or any application or registration thereof), in form
suitable for filing, recording or registration in any country.

 

 

 
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(iv)     Operate, manage and control the Collateral (including use of the
Collateral and any other property or assets of Company in order to continue or
complete performance of Company’s obligations under any contracts of Company),
or permit the Collateral or any portion thereof to remain idle or store the
same, and collect all rents and revenues therefrom.

 

(v)     Enforce the Company’s rights against any Persons obligated upon any of
the Collateral.

 

(vi)     The Company hereby acknowledges that if the Secured Party complies with
any applicable foreign, state, provincial or federal law requirements in
connection with a disposition of the Collateral, such compliance will not
adversely affect the commercial reasonableness of any sale or other disposition
of the Collateral.

 

(vii)     The Secured Party shall not be required to marshal any present or
future collateral security (including, this Agreement and the Collateral) for,
or other assurances of payment of, the Obligations or any of them or to resort
to such collateral security or other assurances of payment in any particular
order, and all of the Secured Party’s rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising. To the extent that
the Company lawfully may, the Company hereby agrees that it will not invoke any
law relating to the marshaling of collateral which might cause delay in or
impede the enforcement of the Secured Party’s rights under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Company hereby irrevocably waives the benefits
of all such laws.

 

(b)     Power of Attorney. Effective upon the occurrence of an Event of Default,
Company hereby designates and appoints Secured Party and its designees as
attorney-in-fact of and for the Company, irrevocably and with full power of
substitution, with authority to endorse the Company’s name on any notes,
acceptances, checks, drafts, money orders, instruments or other evidences of
payment or proceeds of the Collateral that may come into Secured Party’s
possession; to execute proofs of claim and loss; to adjust and compromise any
claims under insurance policies; and to perform all other acts necessary and
advisable, in Secured Party’s sole discretion, to carry out and enforce this
Agreement and the rights and remedies conferred upon the Secured Party by this
Agreement, the Purchase Agreement or any other Transaction Documents. All acts
of said attorney or designee are hereby ratified and approved by the Company and
said attorney or designee shall not be liable for any acts of commission or
omission, nor for any error of judgment or mistake of fact or law. This power of
attorney is coupled with an interest and is irrevocable so long as any of the
Obligations remain unpaid or unperformed or there exists any commitment by
Secured Party which could give rise to any Obligations.

 

(c)     Costs and Expenses. The Company agrees to pay to the Secured Party, upon
demand, the amount of any and all costs and expenses, including the reasonable
fees, costs, expenses and disbursements of counsel for the Secured Party and of
any experts and agents, which the Secured Party may incur in connection with:
(i) the preparation, negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification or termination of this
Agreement; (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Collateral; (iii) the exercise
or enforcement of any of the rights of the Secured Party hereunder; or (iv) the
failure by the Company to perform or observe any of the provisions hereof.
Included in the foregoing shall be the amount of all expenses paid or incurred
by Secured Party in consulting with counsel concerning any of its rights
hereunder, under the Purchase Agreement or under applicable law, as well as such
portion of Secured Party’s overhead as Secured Party shall allocate to
collection and enforcement of the Obligations in Secured Party’s sole but
reasonable discretion. All such costs and expenses shall bear interest from the
date of outlay until paid, at the highest rate set forth in the Debenture, or if
none is so stated, the highest rate allowed by law. The provisions of this
Subsection shall survive the termination of this Agreement and Secured Party’s
security interest hereunder and the payment of all Obligations.

 

 

 
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6.     Security Interest Absolute. All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (i) any lack of validity or enforceability of this Agreement,
the Purchase Agreement, and any other Transaction Documents or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof;
(ii) any change in the time, manner or place of payment or performance of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the terms and provisions of the
Purchase Agreement, any other Transaction Documents, or any other agreement
entered into in connection with the foregoing; (iii)  any exchange, release or
non-perfection of any of the Collateral, or any release or amendment or waiver
of or consent to departure from any other collateral for, or any guaranty, or
any other security, for all or any of the Obligations; (iv) any action by the
Secured Party to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral;
or (v) any other circumstance which might otherwise constitute any legal or
equitable defense available to the Company, or a discharge of all or any part of
the security interests granted hereby. Until the Obligations shall have been
paid and performed in full, the rights of the Secured Party shall continue even
if the Obligations are barred for any reason, including, the running of the
statute of limitations or bankruptcy. In the event that at any time any transfer
of any Collateral or any payment received by the Secured Party hereunder shall
be deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the Bankruptcy Code or any
other similar insolvency or bankruptcy laws of any jurisdiction, or shall be
deemed to be otherwise due to any party other than the Secured Party, then, in
any such event, the Company’s obligations hereunder shall survive cancellation
of this Agreement, and shall not be discharged or satisfied by any prior payment
thereof and/or cancellation of this Agreement, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions
hereof. The Company waives all right to require the Secured Party to proceed
against any other Person or to apply any Collateral which the Secured Party may
hold at any time, or to pursue any other remedy. The Company waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.

 

7.     Indemnity. The Company agrees to defend, protect, indemnify and hold the
Secured Party forever harmless from and against any and all Claims of any nature
or kind (including reasonable legal fees, costs, expenses, and disbursements of
counsel) to the extent that they arise out of, or otherwise result from, this
Agreement (including, enforcement of this Agreement). This indemnity shall
survive termination of this Agreement.

 

8.     Miscellaneous.

 

(a)     Performance for Company. The Company agrees and hereby authorizes that
Secured Party may, in Secured Party’s sole discretion, but Secured Party shall
not be obligated to, whether or not an Event of Default shall have occurred,
advance funds on behalf of the Company, without prior notice to the Company, in
order to insure the Company’s compliance with any covenant, warranty,
representation or agreement of the Company made in or pursuant to this
Agreement, the Purchase Agreement, or any other Transaction Documents, to
continue or complete, or cause to be continued or completed, performance of the
Company’s obligations under any Contracts of the Company, or to preserve or
protect any right or interest of Secured Party in the Collateral or under or
pursuant to this Agreement, the Purchase Agreement or any other Transaction
Documents, including, the payment of any insurance premiums or taxes and the
satisfaction or discharge of any Claim, Obligation, Judgment or any other
Encumbrance upon the Collateral or other property or Assets of Company;
provided, however, that the making of any such advance by Secured Party shall
not constitute a waiver by Secured Party of any Event of Default with respect to
which such advance is made, nor relieve the Company of any such Event of
Default. The Company shall pay to Secured Party upon demand all such advances
made by Secured Party with interest thereon at the highest rate set forth in the
Debenture, or if none is so stated, the highest rate allowed by law. All such
advances shall be deemed to be included in the Obligations and secured by the
security interest granted Secured Party hereunder; provided, however, that the
provisions of this Subsection shall survive the termination of this Agreement
and Secured Party’s security interest hereunder and the payment of all other
Obligations.

 

 

 
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(b)     Applications of Payments and Collateral. Except as may be otherwise
specifically provided in this Agreement or the Purchase Agreement, all
Collateral and proceeds of Collateral coming into Secured Party’s possession and
all payments made by any Person to Secured Party with respect to any Collateral
may be applied by Secured Party (after payment of any amounts payable to the
Secured Party pursuant to Section 5(c) hereof) to any of the Obligations,
whether matured or unmatured, as Secured Party shall determine in its sole, but
reasonable discretion. Any surplus held by the Secured Party and remaining after
the indefeasible payment in full in cash of all of the Obligations shall be paid
over to whomsoever shall be lawfully entitled to receive the same or as a court
of competent jurisdiction shall direct. Secured Party may defer the application
of Noncash Proceeds of Collateral, to the Obligations until Cash Proceeds are
actually received by Secured Party. In the event that the proceeds of any such
sale, collection or realization are insufficient to pay all amounts to which the
Secured Party is legally entitled, the Company shall be liable for the
deficiency, together with interest thereon at the highest rate specified in the
Debenture for interest on overdue principal thereof or such other rate as shall
be fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses and other client charges of any attorneys
employed by the Secured Party to collect such deficiency.

 

(c)     Waivers by Company. The Company hereby waives, to the extent the same
may be waived under applicable law: (i) notice of acceptance of this Agreement;
(ii) all claims and rights of the Company against Secured Party on account of
actions taken or not taken by Secured Party in the exercise of Secured Party’s
rights or remedies hereunder, under the Purchase Agreement, and other
Transaction Documents or under applicable law; (iii) all claims of the Company
for failure of Secured Party to comply with any requirement of applicable law
relating to enforcement of Secured Party’s rights or remedies hereunder, under
the Purchase Agreement, under any other Transaction Documents or under
applicable law; (iv) all rights of redemption of the Company with respect to the
Collateral; (v) in the event Secured Party seeks to repossess any or all of the
Collateral by judicial proceedings, any bond(s) or demand(s) for possession
which otherwise may be necessary or required; (vi) presentment, demand for
payment, protest and notice of non-payment and all exemptions applicable to any
of the Collateral or the Company; (vii) any and all other notices or demands
which by applicable law must be given to or made upon the Company by Secured
Party; (viii) settlement, compromise or release of the obligations of any Person
primarily or secondarily liable upon any of the Obligations; (ix) all rights of
the Company to demand that Secured Party release account debtors or other
Persons liable on any of the Collateral from further obligation to Secured
Party; and (x) substitution, impairment, exchange or release of any Collateral
for any of the Obligations. The Company agrees that Secured Party may exercise
any or all of its rights and/or remedies hereunder, under the Purchase
Agreement, the other Transaction Documents and under applicable law without
resorting to and without regard to any Collateral or sources of liability with
respect to any of the Obligations. Upon termination of this Agreement and
Secured Party’s security interest hereunder and payment of all Obligations,
within ten (10) business days following the Company’s request to Secured Party,
Secured Party shall release control of any security interest in the Collateral
perfected by control and Secured Party shall send Company a statement
terminating any financing statement filed against the Collateral.

 

 

 
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(d)     Waivers by Secured Party. No failure or any delay on the part of Secured
Party in exercising any right, power or remedy hereunder, under this Agreement,
the Purchase Agreement, and other Transaction Documents or under applicable law,
shall operate as a waiver thereof.

 

(e)     Secured Party’s Setoff. Secured Party shall have the right, in addition
to all other rights and remedies available to it, following an Event of Default,
to set off against any Obligations due Secured Party, any debt owing to the
Company by Secured Party.

 

(f)     Modifications, Waivers and Consents. No modifications or waiver of any
provision of this Agreement, the Purchase Agreement, or any other Transaction
Documents, and no consent by Secured Party to any departure by the Company
therefrom, shall in any event be effective unless the same shall be in writing,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given, and any single or partial written waiver by
Secured Party of any term, provision or right of Secured Party hereunder shall
only be applicable to the specific instance to which it relates and shall not be
deemed to be a continuing or future waiver of any other right, power or remedy.
No notice to or demand upon the Company in any case shall entitle Company to any
other or further notice or demand in the same, similar or other circumstances.

 

(g)     Notices. All notices of request, demand and other communications
hereunder shall be addressed to the parties and be deemed delivered in the
manner and as otherwise set forth in the Purchase Agreement.

 

(h)     Applicable Law and Consent to Jurisdiction. The Company irrevocably
agrees that any dispute arising under, relating to, or in connection with,
directly or indirectly, this Agreement (whether or not such claim is based upon
breach of contract or tort) shall be subject to the exclusive jurisdiction and
venue of the state and/or federal courts located in Broward County, Florida. 
This provision  is intended to be a “mandatory” forum selection clause and
governed by and interpreted consistent with Florida law. The Company hereby
consents to the exclusive jurisdiction and venue of any state or federal court
having its situs in said county, and waives any objection based on forum non
conveniens. The Company hereby waives personal service of any and all process
and consents that all such service of process may be made by certified mail,
return receipt requested, directed to the Company as set forth herein or in the
manner provided by applicable statute, law, rule of court or otherwise. Except
for the foregoing mandatory forum selection clause, all terms and provisions
hereof and the rights and obligations of the Company and Secured Party hereunder
shall be governed, construed and interpreted in accordance with the laws of the
State of Nevada, without reference to conflict of laws principles, except to the
extent that the validity and perfection or the perfection and the effect of
perfection or non-perfection of the security interest created hereby, or
remedies hereunder, in respect of any particular Collateral are governed under
the Code by the law of a jurisdiction other than the State of Nevada, in which
case such issues shall be governed by the laws of the jurisdiction governing
such issues under the Code.

 

 

 
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(i)     Survival: Successors and Assigns. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery hereof, shall survive Closing and shall continue in full force and
effect until all Obligations have been indefeasibly paid in full, there exists
no commitment by Secured Party which could give rise to any Obligations and all
appropriate termination statements have been filed terminating the security
interest granted Secured Party hereunder. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. In the event that Secured Party assigns
this Agreement and/or its security interest in the Collateral, Secured Party
shall give written notice to the Company of any such assignment and such
assignment shall be binding upon and recognized by the Company. All covenants,
agreements, representations and warranties by or on behalf of the Company which
are contained in this Agreement shall inure to the benefit of Secured Party, its
successors and assigns. The Company may not assign this Agreement or delegate
any of its rights or obligations hereunder, without the prior written consent of
Secured Party, which consent may be withheld in Secured Party’s sole and
absolute discretion.

 

(j)     Severability. If any term, provision or condition, or any part thereof,
of this Agreement shall for any reason be found or held invalid or unenforceable
by any court or governmental authority of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of such term,
provision or condition nor any other term, provision or condition, and this
Agreement shall survive and be construed as if such invalid or unenforceable
term, provision or condition had not been contained therein.

 

(k)     Merger and Integration. This Agreement and the attached Schedules (if
any), together with the Purchase Agreement and the other Transaction Documents,
contain the entire agreement of the parties hereto with respect to the matters
covered and the transactions contemplated hereby and thereby, and no other
agreement, statement or promise made by any party hereto or thereto, or by any
employee, officer, agent or attorney of any party hereto, which is not contained
herein or therein shall be valid or binding.

 

(l)     WAIVER OF JURY TRIAL. THE COMPANY HEREBY: (a) COVENANTS AND AGREES NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY; AND (b) WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE COMPANY AND SECURED PARTY
MAY BE PARTIES, ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO
THIS AGREEMENT, THE PURCHASE AGREEMENT AND/OR ANY TRANSACTIONS, OCCURRENCES,
COMMUNICATIONS, OR UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING
IN ANY WAY TO DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE PARTIES. IT IS UNDERSTOOD
AND AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS SECURITY AGREEMENT. THIS WAIVER OF JURY
TRIAL IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
COMPANY AND THE COMPANY HEREBY AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION
HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. SECURED PARTY IS HEREBY AUTHORIZED TO
SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER
AND THE COMPANY AND SECURED PARTY, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH
WAIVER OF RIGHT TO TRIAL BY JURY. THE COMPANY REPRESENTS AND WARRANTS THAT IT
HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND/OR THAT
IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

 

 

 
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(m)     Execution. This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed and considered one and the same
Agreement, and same shall become effective when counterparts have been signed by
each party and each party has delivered its signed counterpart to the other
party. In the event that any signature is delivered by facsimile transmission or
by e-mail delivery of a “.pdf” format file or other similar format file, such
signature shall be deemed an original for all purposes and shall create a valid
and binding obligation of the party executing same with the same force and
effect as if such facsimile or “.pdf” signature page was an original thereof.

 

(n)     Headings. The headings and sub-headings contained in the titling of this
Agreement are intended to be used for convenience only and shall not be used or
deemed to limit or diminish any of the provisions hereof.

 

(o)     Termination. This Agreement and the security interests hereunder shall
terminate on the date on which all Obligations have been indefeasibly paid or
discharged in full and there are no commitments outstanding for Secured Party to
advance any funds to the Company, either under the Purchase Agreement or any
other Contract. Upon such termination, the Secured Party, at the request and at
the expense of the Company, will join in executing any termination statement
with respect to any financing statement executed and filed pursuant to this
Agreement.

 

(p)     Gender and Use of Singular and Plural. All pronouns shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the party or parties or their personal representatives, successors and assigns
may require.

 

(q)     Further Assurances. The parties hereto will execute and deliver such
further instruments and do such further acts and things as may be reasonably
required to carry out the intent and purposes of this Agreement.

 

(r)     Time is of the Essence. The parties hereby agree that time is of the
essence with respect to performance of each of the parties’ obligations under
this Agreement. The parties agree that in the event that any date on which
performance is to occur falls on a Saturday, Sunday or state or national
holiday, then the time for such performance shall be extended until the next
business day thereafter occurring.

 

(s)     Joint Preparation. The preparation of this Agreement has been a joint
effort of the parties and the resulting documents shall not, solely as a matter
of judicial construction, be construed more severely against one of the parties
than the other.

 

(t)     Increase in Obligations. It is the intent of the parties to secure
payment of the Obligations, as the amount of such Obligations may increase from
time to time in accordance with the terms and provisions of the Purchase
Agreement, and all of the Obligations, as so increased from time to time, shall
be and are secured hereby. Upon the execution hereof, the Company shall pay any
and all documentary stamp taxes and/or other charges required to be paid in
connection with the execution and enforcement of the Purchase Agreement and this
Agreement, and if, as and to the extent the Obligations are increased from time
to time in accordance with the terms and provisions of the Purchase Agreement,
then the Company shall immediately pay any additional documentary stamp taxes or
other charges in connection therewith.

 

 

[Signatures on the following page]

 

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of
the day and year first above written.

 

 

COMPANY:

     

CYCLONE POWER TECHNOLOGIES, INC., a Florida corporation

     

By: /s/ Harry Schoell

 

Name: Harry Schoell

 

Title: Chairman

             

SECURED PARTY:

     

TCA GLOBAL CREDIT MASTER FUND, LP

     

By: TCA Global Credit Fund GP, Ltd., its general partner

     

By: /s/ Robert Press

 

Name: Robert Press

 

Title: Director

       

 

17