Exhibit 10.28

 

    

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 - WHE, LLC,
an Ohio limited liability company, and CYCLONE PERFORMANCE, LLC, a Florida
limited liability company (each of the foregoing sometimes individually referred
to as a “Company” and all of them sometimes collectively hereinafter referred to
as the “Companies”), in favor of Secured Party 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 Cyclone Power Technologies, Inc., a Florida corporation (“CPT”) and the
Secured Party (the “Purchase Agreement”), CPT has agreed to issue to the Secured
Party and the Secured Party has agreed to purchase from CPT 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, each
of the Companies, each being a majority-owned and controlled subsidiary of CPT,
has made and executed a Guaranty Agreement dated of even date herewith (the
“Guaranty”) in favor of Secured Party; and

 

WHEREAS, in order to induce the Secured Party to purchase the Debentures, and to
secure each Company’s liabilities and obligations under the Guaranty, each
Company has agreed to execute and deliver to the Secured Party this Agreement
for the benefit of the Secured Party, and each Company has agreed to grant to
the Secured Party an unconditional, continuing, first priority security interest
and lien in and against the Collateral of each Company (subject only to the
Permitted Encumbrances) to secure the prompt payment, performance and discharge
in full of all of each Company’s obligations under the Guaranty, the Purchase
Agreement and the other Transaction Documents;

 

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;” and (iv) throughout
this Agreement, the word “Company” or “Companies,” howsoever used, shall refer
to each Company, individually, to the extent the context so requires, and all of
the Companies, collectively, to the extent the context so requires, it being the
intent of the parties that each and every covenant, condition, representation
and warranty in this Agreement applicable to the Companies shall apply to each
Company, individually, and to all Companies, collectively, regardless of the
form or tense used for the word “Company” and regardless of whether each term
and provision of this Agreement refers to “each” Company or “any” Company, or
“all” Companies. 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):

 

 

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

 

(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 Companies’ 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 all 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 each of the Companies,
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, each
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 each 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 each Company’s books and records and
recorded data relating thereto (regardless of the medium of recording or
storage), together with each Company’s full 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 each Company has given rise to
Accounts and have been returned to, or repossessed or stopped in transit by,
each 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 each 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 each 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 each 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
each Company or any other Person from time to time acting for each Company, in
each case, to the extent of each 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) real estate property owned
by each Company, leasehold interests owned by each Company in real property and
the interest of each Company in fixtures or any other assets or property related
to such real property or leasehold interests; and (X) Proceeds, including all
Cash Proceeds and Noncash Proceeds, and products of any or all of the foregoing,
in each case howsoever each 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 each Company and of
CPT to Secured Party, whether arising, existing or incurred under this
Agreement, the Guaranty, the Purchase Agreement or any other Transaction
Documents, or any other agreement between any of the Companies or CPT 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, each 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 Companies.
With respect to all of the Collateral, each Company covenants, warrants and
represents, for the benefit of the Secured Party, as follows:

 

(i)     Each of the Companies 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 each Company of this Agreement and
the filings contemplated herein have been duly authorized by all necessary
action on the part of each Company and no further action is required by any
Company. This Agreement constitutes a legal, valid and binding obligation of
each 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.

 

 
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(ii)     Each of the Companies 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)     Each of the Companies is the sole owner of its respective Collateral
(except for non-exclusive licenses granted by the Companies in the Ordinary
Course of Business), free and clear of any and all Encumbrances, except for the
Permitted Encumbrances. Each of the Companies 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 Companies 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).

 

(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 any
Company that any Collateral or any Company’s use of any Collateral violates the
rights of any Person. There has been no adverse decision or claim to any
Company’s ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to any 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 Companies,
threatened, before any Governmental Authority.

 

(v)     Each of the Companies 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 Companies 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 Ordinary
Course of Business for each Company, 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 and State of Ohio, 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 each
Company of, or the effectiveness of, the security interest granted hereby or for
the execution, delivery and performance of this Agreement by each Company; or
(B) for the perfection of or exercise by the Secured Party of its rights and
remedies hereunder.

 

 

 
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(vii)     Simultaneous with the execution of this Agreement, each of the
Companies 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 such
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 Articles of Organization, operating
agreement, or any other organizational or governing documents of any 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 any 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; (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, any Company
or any of the Collateral. No Consent (including from members or creditors of any
Company) is required for each Company to enter into and perform its obligations
hereunder.

 

(ix)     Each of the Companies 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.
Each of the Companies 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, each 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 Companies shall pay all fees,
taxes and other amounts necessary to maintain the Collateral and the security
interests granted hereunder, and the Companies 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 Companies 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 Ordinary Course of Business of each
Company.

 

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

 

(xii)     Each of the Companies 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.

 

 

 
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(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.

 

(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)          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.

 

 
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(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.

 

(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.

 

 

 
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(xxii)          With respect to the Permitted Encumbrances, the Companies hereby
represent, warrant, covenant and agree 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 any of
the Companies 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 Companies 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 Companies shall immediately deliver to Secured Party any
notices (of default or otherwise) received by the Companies in connection with
the Permitted Encumbrances or the indebtedness underlying same; and (iv) the
Companies 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.

 

(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 any 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 any Company to perform, observe
or comply with any and all of the covenants, promises and agreements of such
Company in this Agreement, the Guaranty, 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.

 

 

 
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(c)     Information, Representations and Warranties. If any representation or
warranty made herein, in the Guaranty Agreement, 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 any 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 any 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, including, without
limitation, in connection with the Permitted Lien or the indebtedness underlying
same, 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,
Secured Party’s rights and remedies to realize upon such Collateral as set forth
herein, or the Secured Party’s ability to comply with the Transaction Documents.

 

(e)     Insolvency. Any 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 any 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 such Company; or
(ii) a reorganization of such Company or the business and affairs of such
Company; or (iii) the appointment of a receiver, liquidator, assignee,
custodian, trustee, or similar official for such Company of the property of such
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 any Company of a voluntary
case under the Bankruptcy Code or any foreign, federal or state insolvency or
similar laws or the consent by any Company to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, or similar
official for any Company of any of the property of the Company or the making by
any Company of an assignment for the benefit of creditors, or the failure by any
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 any 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 any 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.

 

 

 
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(j)     Attachment by Other Parties. Any Assets of any 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.

 

(k)     Default by CPT. Any default or Event of Default by CPT under the
Purchase Agreement or any other Transaction Documents.

 

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 Guaranty, 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:

 

(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;

 

 

 
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(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.

 

(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.

 

 

 
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(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 Guaranty, 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 Guaranty, 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.

 

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 Guaranty, 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 Guaranty, 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.

 

 

 
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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 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 Guaranty, 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
Guaranty, 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.

 

(b)     Applications of Payments and Collateral. Except as may be otherwise
specifically provided in this Agreement, the Guaranty, 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.

 

 

 
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(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 Guaranty, 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 Guaranty, 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 Guaranty, 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.

 

(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 Guaranty, 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 Guaranty, 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.

 

 

 
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(g)     Notices. All notices of request, demand and other communications
hereunder shall be addressed to the parties and deemed delivered in accordance
with the Purchase Agreement, it being agreed and acknowledged that notice to CPT
in accordance with the Purchase Agreement shall be deemed notice to each Company
hereunder.

 

(h)     Applicable Law and Consent to Jurisdiction. Each 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. Each 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. Each 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 each 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 Companies 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.

 

(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 Guaranty, 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.

 

 

 
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(l)     WAIVER OF JURY TRIAL. EACH 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 ANY 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 EACH
COMPANY AND EACH 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 EACH COMPANY AND SECURED PARTY, SO AS TO SERVE AS CONCLUSIVE
EVIDENCE OF SUCH WAIVER OF RIGHT TO TRIAL BY JURY. EACH 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.

 

(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.

 

 

 
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(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 Guaranty, or 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 Guaranty, 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 Debenture, then the Company shall immediately pay any
additional documentary stamp taxes or other charges in connection therewith.

 

 

 

[Signatures on the following page]

 

 

 
17

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

 

COMPANIES:

 

CYCLONE-WHE, LLC,

CYCLONE PERFORMANCE, LLC,

an Ohio limited liability company

a Florida limited liability company

 

 

By: /s/ Christopher Nelson

By: /s/ Harry Schoell

Name: Christopher Nelson

Name: Harry Schoell

Title: Managing Director

Title: Managing Director

 

 

SECURED PARTY:

 

 

 

TCA GLOBAL CREDIT MASTER FUND, LP

 

                   

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

 

By: /s/ Robert Press

       Robert Press, Director

 

 

 

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