Filed by Automated Filing Services Inc. (604) 609-0244 - Global Energy, Inc. - Exhibit 10.6






SECURITY AGREEMENT 

          THIS
SECURITY AGREEMENT (the “Agreement”), is entered into and made
effective as of July 6, 2007, by and between GLOBAL ENERGY, INC., a
Nevada corporation with its principal place of business located at Migdal Aviv,
7 Abba Hilel Street, Ramat Gan 52520, Israel (the “Parent”), and the each
subsidiary of the Parent listed on Schedule I attached hereto (each a
“Subsidiary,” and collectively and together with the Parent, the
“Company”), in favor of the BUYER(S) (the “Secured Party”)
listed on Schedule I attached to the Securities Purchase Agreement (the
“Securities Purchase Agreement”) dated the date hereof between the
Company and the Secured Party. 

          WHEREAS,
The Parent shall issue and sell to the Secured Party, as provided in the
Securities Purchase Agreement, and the Secured Party shall purchase, secured
convertible debentures (the “Convertible Debentures”), which shall be
convertible into shares of the Parent’s common stock, par value $0.001, in the
respective amounts set forth opposite each Buyer(s) name on Schedule I attached
to the Securities Purchase Agreement; 

          WHEREAS,
to induce the Secured Party to enter into the transaction contemplated by
the Securities Purchase Agreement, the Convertible Debentures, the Investor
Registration Rights Agreement of even date herewith between the Parent and the
Secured Party (the “Investor Registration Rights Agreement”), and the
Irrevocable Transfer Agent Instructions among the Parent, the Secured Party, the
Parent’s transfer agent, and David Gonzalez, Esq. (the “Transfer Agent
Instructions”) (collectively referred to as the “Transaction
Documents”), each Company hereby grants to the Secured Party a security
interest in and to the pledged property of each Company identified on Exhibit
A hereto (collectively referred to as the “Pledged Property”) to
secure all of the Obligations (as defined below). 

          NOW,
THEREFORE, in consideration of the promises and the mutual covenants herein
contained, and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows: 

ARTICLE 1. 

  DEFINITIONS AND INTERPRETATIONS

          Section
1.1.      Recitals.

          The
above recitals are true and correct and are incorporated herein, in their
entirety, by this reference. 

1 




          Section
1.2.      Interpretations.

          Nothing
herein expressed or implied is intended or shall be construed to confer upon any
person other than the Secured Party any right, remedy or claim under or by
reason hereof. 

          Section
1.3.      Obligations Secured. 

          The
security interest created hereby in the Pledged Property constitutes continuing
collateral security for all of the obligations of the Parent now existing or
hereinafter incurred to the Buyers, whether oral or written and whether arising
before, on or after the date hereof including, without limitation following
obligations (collectively, the “Obligations”): 

          (a)      for
so long as the Convertible Debentures are outstanding, the payment by the
Parent, as and when due and payable (by scheduled maturity, acceleration, demand
or otherwise), of all amounts from time to time owing by it in respect of the
Securities Purchase Agreement, the Convertible Debentures and the other
Transaction Documents; and 

          (b)     
for so long as the Convertible Debentures are outstanding, the due performance
and observance by the Parent of all of its other obligations from time to time
existing in respect of any of the Transaction Documents, including without
limitation, the Parent’s obligations with respect to any conversion or
redemption rights of the Secured Party under the Convertible Debentures. 

ARTICLE 2. 

  PLEDGED PROPERTY; EVENT OF DEFAULT

          Section
2.1.      Pledged Property. 

          (a)      As
collateral security for all of the Obligations, the Company hereby pledges to
the Secured Party, and creates in the Secured Party for its benefit, a
continuing security interest in and to all of the Pledged Property whether now
owned or hereafter acquired. 

          (b)      Without
limiting the generality of the foregoing, as additional security for the payment
and performance of the Obligations, each Company hereby grants to the Secured
Party a continuing security interest in, and hereby collaterally assigns to the
Secured Party, all of such Company’s right, title and interest in and to each
Deposit Account (as defined below) and in and to any deposits or other sums at
any time credited to each such Deposit Account. In connection with the
foregoing, each Company hereby authorizes and directs each bank or other
depository institution which maintains any Deposit Account to pay or deliver to
the Secured Party upon the Secured Party’s written demand thereof made at any
time after the occurrence of an Event of Default has occurred all balances in
each Deposit Account with such depository for application to the Obligations
then outstanding. 

2 




          (c)      Simultaneously
with the execution and delivery of this Agreement, the Company shall make,
execute, acknowledge, file, record and deliver to the Secured Party any
documents reasonably requested by the Secured Party to perfect its security
interest in the Pledged Property. Simultaneously with the execution and delivery
of this Agreement, the Company shall make, execute, acknowledge and deliver to
the Secured Party such documents and instruments, including, without limitation,
financing statements, certificates, affidavits and forms as may, in the Secured
Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or
to continue and preserve, the security interest of the Secured Party in the
Pledged Property, and the Secured Party shall hold such documents and
instruments as secured party, subject to the terms and conditions contained
herein. 

          Section
2.2.      Event of Default 

          An
“Event of Default” shall be deemed to have occurred under this Agreement
upon an Event of Default under and as defined in the Convertible Debentures.


ARTICLE 3. 

  ATTORNEY-IN-FACT; PERFORMANCE

          Section
3.1.      Secured Party Appointed
Attorney-In-Fact. 

          Upon
the occurrence and during the continuance of an Event of Default: (a) the
Company hereby appoints the Secured Party as its attorney-in-fact, with full
authority in the place and stead of the Company and in the name of the Company
or otherwise, from time to time in the Secured Party’s discretion to take any
action and to execute any instrument which the Secured Party may reasonably deem
necessary to accomplish the purposes of this Agreement, including, without
limitation, to receive and collect all instruments made payable to the Company
representing any payments in respect of the Pledged Property or any part thereof
and to give full discharge for the same; (b) the Secured Party may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize
on the Pledged Property as and when the Secured Party may determine, and (c) to
facilitate collection, the Secured Party may notify account debtors and obligors
on any Pledged Property to make payments directly to the Secured Party. 

          Section
3.2.      Secured Party May Perform. 

          If
the Company fails to perform any agreement contained herein, the Secured Party,
at its option, may itself perform, or cause performance of, such agreement, and
the expenses of the Secured Party incurred in connection therewith shall be
included in the Obligations secured hereby and payable by the Company under
Section 8.3. 

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ARTICLE 4. 
REPRESENTATIONS AND
WARRANTIES 

          Section
4.1.      Authorization; Enforceability.


          Each
of the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery, this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies. 

          Section
4.2.      Ownership of Pledged Property.


          The
Company represents and warrants that it is the legal and beneficial owner of the
Pledged Property free and clear of any lien, security interest, option or other
charge or encumbrance (each, a “Lien”) except for the security interest created
by this Agreement and other Permitted Liens. For purposes of this Agreement,
“Permitted Liens” means: (1) the security interest created by this Agreement,
(2) existing Liens disclosed by the Company to the Secured Party; (3) inchoate
Liens for taxes, assessments or governmental charges or levies not yet due, as
to which the grace period, if any, related thereto has not yet expired, or being
contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP; (4) Liens of carriers,
materialmen, warehousemen, mechanics and landlords and other similar Liens which
secure amounts which are not yet overdue by more than 60 days or which are being
contested in good faith by appropriate proceedings; (5) licenses, sublicenses,
leases or subleases granted to other Persons not materially interfering with the
conduct of the business of the Company; (6) Liens securing capitalized lease
obligations and purchase money indebtedness incurred solely for the purpose of
financing an acquisition or lease; (7) easements, rights-of-way, restrictions,
encroachments, municipal zoning ordinances and other similar charges or
encumbrances, and minor title deficiencies, in each case not securing debt and
not materially interfering with the conduct of the business of the Company and
not materially detracting from the value of the property subject thereto; (8)
Liens arising out of the existence of judgments or awards which judgments or
awards do not constitute an Event of Default; (9) Liens incurred in the ordinary
course of business in connection with workers compensation claims, unemployment
insurance, pension liabilities and social security benefits and Liens securing
the performance of bids, tenders, leases and contracts in the ordinary course of
business, statutory obligations, surety bonds, performance bonds and other
obligations of a like nature (other than appeal bonds) incurred in the ordinary
course of business (exclusive of obligations in respect of the payment for
borrowed money); (10) Liens in favor of a banking institution arising by
operation of law encumbering deposits (including the right of set-off) and
contractual set-off rights held by such banking institution and which are within
the general parameters customary in the banking industry and only burdening
deposit accounts or other funds maintained with a creditor depository
institution; (11) usual and customary set-off rights in leases and other
contracts; and (12) escrows in connection with acquisitions and dispositions.


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ARTICLE 5. 
DEFAULT; REMEDIES; SUBSTITUTE
COLLATERAL 

          Section
5.1      Method of Realizing Upon the Pledged
Property: Other Remedies. 

          If
any Event of Default shall have occurred and be continuing: 

          (a)      The
Secured Party may exercise in respect of the Pledged Property, in addition to
any other rights and remedies provided for herein or otherwise available to it,
all of the rights and remedies of a secured party upon default under the Uniform
Commercial Code (whether or not the Uniform Commercial Code applies to the
affected Pledged Property), and also may (i) take absolute control of the
Pledged Property, including, without limitation, transfer 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 assemble all or part of the Pledged Property 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 reasonably convenient to both parties, and the
Secured Party may enter into and occupy any premises owned or leased by the
Company where the Pledged Property or any part thereof is located or assembled
for a reasonable period in order to effectuate the Secured Party's rights and
remedies hereunder or under law, without obligation to the Company in respect of
such occupation, and (iii) without notice except as specified below and without
any obligation to prepare or process the Pledged Property for sale, (A) sell the
Pledged Property 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 Pledged Property 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 Pledged Property 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 Pledged Property is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale or other
disposition of any Pledged Property 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 against the Secured Party
arising by reason of the fact that the price at which the Pledged Property 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 Pledged Property to more than one offeree, and waives all rights
that the Company may have to require that all or any part of such Pledged
Property be marshaled upon any sale (public or private) thereof. The Company
hereby acknowledges that (i) any such sale of the 

5 




Pledged Property by the Secured Party may be made without
warranty, (ii) the Secured Party may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set forth
in clauses (i) and (ii) above shall not adversely affect the commercial
reasonableness of any such sale of Pledged Property.

          (b)     
Any cash held by the Secured Party as Pledged Property and all cash proceeds
received by the Secured Party in respect of any sale of or collection from, or
other realization upon, all or any part of the Pledged Property shall be applied
(after payment of any amounts payable to the Secured Party pursuant to Section
8.3 hereof) by the Secured Party against, all or any part of the Obligations in
such order as the Secured Party shall elect, consistent with the provisions of
the Securities Purchase Agreement. Any surplus of such cash or cash proceeds
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. 

          (c)     
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 rate specified in the Convertible Debentures 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. 

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

          (e)      The
Secured Party shall not be required to marshal any present or future collateral
security (including, but not limited to, this Agreement and the Pledged
Property) 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. 

          Section
5.2      Duties Regarding Pledged Property.


          The
Secured Party shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining 

6 




thereto, beyond the safe custody and reasonable care of any of
the Pledged Property actually in the Secured Party’s possession. 

ARTICLE 6. 

  AFFIRMATIVE COVENANTS

          The
Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied or the Convertible Debentures
have been fully converted, unless the Secured Party shall consent otherwise in
writing (as provided in Section 8.4 hereof): 

          Section
6.1.      Existence, Properties, Etc. 

          (a)      The
Company shall do, or cause to be done, all things, or proceed with due diligence
with any actions or courses of action, that may be reasonably necessary (i) to
maintain Company’s due organization, valid existence and good standing under the
laws of its state of incorporation, and (ii) to preserve and keep in full force
and effect all qualifications, licenses and registrations in those jurisdictions
in which the failure to do so could have a Material Adverse Effect (as defined
below); and (b) the Company shall not do, or cause to be done, any act impairing
the Company’s corporate power or authority (i) to carry on the Company’s
business as now conducted, and (ii) to execute or deliver this Agreement or any
other document delivered in connection herewith, including, without limitation,
any UCC-1 Financing Statements required by the Secured Party (which other loan
instruments collectively shall be referred to as the “Loan
Instruments”) to which it is or will be a party, or perform any of its
obligations hereunder or thereunder. For purpose of this Agreement, the term
“Material Adverse Effect” shall mean any material and adverse affect as
determined by Secured Party in its reasonable discretion, whether individually
or in the aggregate, upon (a) the Company’s assets, business, operations,
properties or condition, financial or otherwise; (b) the Company’s ability to
make payment as and when due of all or any part of the Obligations; or (c) the
Pledged Property. 

          Section
6.2.      Financial Statements and Reports.


          The
Company shall furnish to the Secured Party within a reasonable time such
financial data as the Secured Party may reasonably request. 

          Section
6.3.      Accounts and Reports. 

          The
Company shall maintain a standard system of accounting in accordance with
generally accepted accounting principles consistently applied (“GAAP”) and
provide, at its sole expense, to the Secured Party the following: 

          (a)      as
soon as available, a copy of any notice or other communication alleging any
nonpayment or other material breach or default, or any foreclosure or other
action respecting any material portion of its assets and properties, received
respecting any of the indebtedness of the Company in excess of $500,000 (other
than the Obligations), 

7 




or any demand or other request for payment under any guaranty,
assumption, purchase agreement or similar agreement or arrangement respecting
the indebtedness or obligations of others in excess of $500,000; and 

          (b)     
within fifteen (15) days after the making of each submission or filing, a copy
of any report, financial statement, notice or other document, whether periodic
or otherwise, submitted to the shareholders of the Company, or submitted to or
filed by the Company with any governmental authority involving or affecting (i)
the Company that could reasonably be expected to have a Material Adverse Effect;
(ii) the Obligations; (iii) any part of the Pledged Property; or (iv) any of the
transactions contemplated in this Agreement or the Loan Instruments (except, in
each case, to the extent any such submission, filing, report, financial
statement, notice or other document is posted on EDGAR Online). 

          Section
6.4.      Maintenance of Books and Records;
Inspection. 

          The
Company shall maintain its books, accounts and records in accordance with GAAP,
and permit the Secured Party, its officers and employees and any professionals
designated by the Secured Party in writing, at any time during normal business
hours and upon reasonable notice to visit and inspect any of its properties
(including but not limited to the collateral security described in the
Transaction Documents and/or the Loan Instruments), corporate books and
financial records, and to discuss its accounts, affairs and finances with any
employee, officer or director thereof (it being agreed that, unless an Event of
Default shall have occurred and be continuing, there shall be no more than two
(2) such visits and inspections in any Fiscal Year). 

     Section
6.5.      Maintenance and Insurance. 

          (a)      The
Company shall maintain or cause to be maintained, at its own expense, all of its
material assets and properties in good working order and condition, ordinary
wear and tear excepted, making all necessary repairs thereto and renewals and
replacements thereof. 

          (b)      The
Company shall maintain or cause to be maintained, at its own expense, insurance
in form, substance and amounts (including deductibles), which the Company deems
reasonably necessary to the Company’s business, (i) adequate to insure all
assets and properties of the Company of a character usually insured by persons
engaged in the same or similar business against loss or damage resulting from
fire or other risks included in an extended coverage policy; (ii) against public
liability and other tort claims that may be incurred by the Company; (iii) as
may be required by the Transaction Documents and/or applicable law and (iv) as
may be reasonably requested by Secured Party, all with financially sound and
reputable insurers. 

          Section
6.6.      Contracts and Other Collateral.


          The
Company shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Pledged
Property to which the Company is now or hereafter will be party on a timely
basis and in the manner 

8 




therein required, including, without limitation, this
Agreement, except to the extent the failure to so perform such obligations would
not reasonably be expected to have a Material Adverse Effect. 

          Section
6.7.      Defense of Collateral, Etc. 

          The
Company shall defend and enforce its right, title and interest in and to any
part of: (a) the Pledged Property; and (b) if not included within the Pledged
Property, those assets and properties whose loss would reasonably be expected to
have a Material Adverse Effect, each against all manner of claims and demands on
a timely basis to the full extent permitted by applicable law (other than any
such claims and demands by holders of Permitted Liens). 

          Section
6.8.      Taxes and Assessments. 

          The
Company shall (a) file all material tax returns and appropriate schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency (taking into account any extensions of the original due date), (b)
pay and discharge all material taxes, assessments and governmental charges or
levies imposed upon the Company, upon its income and profits or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
and (c) pay all material taxes, assessments and governmental charges or levies
that, if unpaid, might become a lien or charge upon any of its properties;
provided, however, that the Company in good faith may contest any such
tax, assessment, governmental charge or levy described in the foregoing clauses
(b) and (c) so long as appropriate reserves are maintained with respect thereto
if and to the extent required by GAAP.

          Section
6.9.      Compliance with Law and Other
Agreements.

          The
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (a) all applicable federal, state and
local laws, regulations and ordinances governing such business operations and
the use and ownership of such property, and (b) all agreements, licenses,
franchises, indentures and mortgages to which the Company is a party or by which
the Company or any of its properties is bound, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect. 

          Section
6.10.      Notice of Default.

          The
Company shall give written notice to the Secured Party of the occurrence of any
Event of Default. 

          Section
6.11.      Notice of Litigation. 

          The
Company shall give notice, in writing, to the Secured Party of (a) any actions,
suits or proceedings wherein the amount at issue is in excess of $250,000,
instituted by any persons against the Company, or affecting any of the assets of
the Company, and (b) any dispute, not resolved within fifteen (15) days of the
commencement thereof, 

9 




between the Company on the one hand and any governmental or
regulatory body on the other hand, which might reasonably be expected to have a
Material Adverse Effect on the business operations or financial condition of the
Company. 

          Section
6.13.      Future Subsidiaries. 

          If
the Company shall hereafter create or acquire any subsidiary, simultaneously
with the creation or acquisition of such subsidiary, the Company shall cause
such subsidiary to grant to the Secured Party a security interest of the same
tenor as created under this Agreement. The Company further agrees that it will
deliver all shares of any such subsidiary to the Secured Party in order to
perfect its lien on such assets created hereunder.

          Section
  6.14.      Establishment of Deposit Account,
  Dominion Account Agreements.

          Within
ten (10) days of the date hereof, each Company, the Secured Party, and each
applicable bank or other depository institution shall enter into a deposit
account agreement (“Deposit Account Agreement”) in the form of Exhibit B with
respect to each of the Company’s savings, passbook, money market or other
depository accounts, and all certificates of deposit, maintained by each Company
with any bank, savings and loan association, credit union or other depository
institution (each, a “Deposit Account”) maintained or used by each Company
providing dominion and control over such accounts to the Secured Party such that
upon notice by the Secured Party to such bank or other depository institution of
the occurrence of an Event of Default all actions under such account shall be
taken solely at the Secured Party’s direction. Each Company’s current Deposit
Accounts are set forth on Schedule 6.14 attached hereto.

          Each
Company shall cause all cash, all collections and proceeds from accounts
receivable, all receipts from credit card payments, and all proceeds from the
sale of any Pledged Property to be deposited into a Deposit Account in the
ordinary course of business and consistent with past practices. 

          While
any Convertible Debentures remain outstanding, the Company shall have valid and
effective Deposit Account Agreements in place at all times with respect to all
of its Deposit Accounts. No Deposit Account shall be established, used or
maintained by the Company unless it first enters into a Deposit Account
Agreement.

          With
respect to each Deposit Account, from an after the occurrence of an Event of
Default, the Secured Party shall have the right, at any time and from time to
time, to exercise its rights under such Deposit Account Agreement, including,
for the avoidance of any doubt, the exclusive right to give instructions to the
financial institution at which such Deposit Account is maintained as to the
disposition of funds or other property on deposit therein or credited thereto.
The Secured Party hereby covenants and agrees that it will not send any such
notice to a financial institution at which any such Deposit Account is
maintained directing the disposition of funds or other property therein unless
and until the occurrence of an Event of Default.

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ARTICLE 7. 
NEGATIVE COVENANTS


          The
Company covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, the Company shall not, unless the Secured
Party shall consent otherwise in writing: 

          Section
7.1.      Liens and Encumbrances. 

          Directly
or indirectly make, create, incur, assume or permit to exist any Lien in, to or
against any part of the Pledged Property other than Permitted Liens. 

          Section
7.2.      Restriction on Redemption and Cash
Dividends 

          Directly
or indirectly, redeem, repurchase or declare or pay any cash dividend or
distribution on its capital stock without the prior express written consent of
the Secured Party. 

          Section
7.3.      Incurrence of Indebtedness. 

          Directly
or indirectly, incur or guarantee, assume or suffer to exist any indebtedness,
other than the indebtedness evidenced by the Convertible Debentures and other
Permitted Indebtedness. “Permitted Indebtedness” means: (i) indebtedness
evidenced by Convertible Debentures; (ii) indebtedness described on the
Disclosure Schedule to the Securities Purchase Agreement; (iii) indebtedness
incurred solely for the purpose of financing the acquisition or lease of any
equipment by the Company, including capital lease obligations with no recourse
other than to such equipment; (iv) indebtedness (A) the repayment of which has
been subordinated to the payment of the Convertible Debentures on terms and
conditions acceptable to the Secured Party, including with regard to interest
payments and repayment of principal, (B) which does not mature or otherwise
require or permit redemption or repayment prior to or on the 91st day
after the maturity date of any Convertible Debentures then outstanding; and (C)
which is not secured by any assets of the Company; (v) indebtedness solely
between the Company and/or one of its domestic subsidiaries, on the one hand,
and the Company and/or one of its domestic subsidiaries, on the other which
indebtedness is not secured by any assets of the Company or any of its
subsidiaries, provided that (x) in each case a majority of the equity of any
such domestic subsidiary is directly or indirectly owned by the Company, such
domestic subsidiary is controlled by the Company and such domestic subsidiary
has executed a security agreement in the form of this Agreement and (y) any such
loan shall be evidenced by an intercompany note that is pledged by the Company
or its subsidiary, as applicable, as collateral pursuant to this Agreement; (vi)
reimbursement obligations in respect of letters of credit issued for the account
of the Company or any of its subsidiaries for the purpose of securing
performance obligations of the Company or its subsidiaries incurred in the
ordinary course of business so long as the aggregate face amount of all such
letters of credit does not exceed $500,000 at any one time; and (vii) 

11 




renewals, extensions and refinancing of any indebtedness
described in clauses (i) or (iii) of this subsection. 

          Section
7.4.      Places of Business. 

          Change
the location of its chief place of business, chief executive office or any place
of business disclosed to the Secured Party, unless the Company provides notice
to the Secured Party of new location within 10 days’ of such change in location.


ARTICLE 8. 

  MISCELLANEOUS

          Section
8.1.      Notices. 

          All
notices or other communications required or permitted to be given pursuant to
this Agreement shall be in writing and shall be considered as duly given on: (a)
the date of delivery, if delivered in person or by nationally recognized
overnight delivery service or (b) five (5) days after mailing if mailed from
within the continental United States by certified mail, return receipt requested
to the party entitled to receive the same: 

	If to the Secured Party: 	Cornell Capital Partners, LP
  
	  	101 Hudson Street-Suite 3700
  
	  	Jersey City, New Jersey 07302
  
	  	Attention: Mark Angelo 
	  	                   
      Portfolio Manager 
	  	Telephone:      (201) 986-8300
    
	  	Facsimile:       
       (201) 985-8266 
	  	 
	With a copy to: 	David Gonzalez, Esq. 
	  	101 Hudson Street, Suite 3700
  
	  	Jersey City, NJ 07302 
	  	Telephone:      (201) 985-8300
    
	  	Facsimile:         (201)
      985-8266 


12 





	And if to the Company: 	Migdal Aviv 
	  	7 Abba Hilel Street 
	  	Ramat Gan, 52520 
	  	Israel 
	  	Telephone:      011 972 3
      5913952 
	  	Facsimile:       
       011 +972 9 955 0454 
	  	 
	With a copy to: 	Clark Wilson LLP 
	  	800 – 885 West Georgia Street
  
	  	Vancouver, BC Canada 
	  	V6M 3R9 
	  	Attention:        Bernard
      Pinsky 
	  	Telephone:      604.687.5700
    
	  	Facsimile:        
      604.687.6314 


          Any
party may change its address by giving notice to the other party stating its new
address. Commencing on the tenth (10th) day after the giving of such
notice, such newly designated address shall be such party’s address for the
purpose of all notices or other communications required or permitted to be given
pursuant to this Agreement. 

          Section
8.2.      Severability. 

          If
any provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein. 

          Section
8.3.      Expenses. 

          In
the event of an Event of Default, the Company will pay to the Secured Party the
amount of any and all reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel, which the Secured Party may incur
in connection with: (i) the custody or preservation of, or the sale, collection
from, or other realization upon, any of the Pledged Property; (ii) the exercise
or enforcement of any of the rights of the Secured Party hereunder or (iii) the
failure by the Company to perform or observe any of the provisions hereof. 

          Section
8.4.      Waivers, Amendments, Etc. 

          The
Secured Party’s delay or failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants shall
not waive, affect, or diminish any right of the Secured Party under this
Agreement to demand strict compliance and performance herewith. Any waiver by
the Secured Party of any Event of Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto
and whether of the same or a different type. None 

13 




of the undertakings, agreements and covenants of the Company
contained in this Agreement, and no Event of Default, shall be deemed to have
been waived by the Secured Party, nor may this Agreement be amended, changed or
modified, unless such waiver, amendment, change or modification is evidenced by
an instrument in writing specifying such waiver, amendment, change or
modification and signed by the Secured Party in the case of any such waiver, and
signed by the Secured Party and the Company in the case of any such amendment,
change or modification. 

          Section
8.5.      Continuing Security Interest;
Partial Release. 

          (a)     
This Agreement shall create a continuing security interest in the Pledged
Property and shall: (i) remain in full force and effect until payment or
conversion in full of the Convertible Debentures; (ii) be binding upon the
Company and its successors and assigns; and (iii) inure to the benefit of the
Secured Party and its successors and assigns. Upon the payment or satisfaction
in full or conversion in full of the Convertible Debentures, this Agreement and
the security interest created hereby shall terminate, and, in connection
therewith, the Company shall be entitled to the return, at its expense, of such
of the Pledged Property as shall not have been sold in accordance with Section
5.2 hereof or otherwise applied pursuant to the terms hereof and the Secured
Party shall deliver to the Company such documents as the Company shall
reasonably request to evidence such termination. 

          (b)      Effective
upon the closing of a disposition of any Pledged Property, provided the Secured
Party consents in writing prior to such disposition or such disposition is made
in the ordinary course of business, the security interest granted hereunder in
the Pledged Property so disposed of shall terminate and the Secured Party shall
deliver such documents as the Company shall reasonably request to evidence such
termination; provided, however, the security interest granted hereunder in all
remaining Pledged Property shall remain in full force and effect. 

          Section
8.6.      Independent Representation. 

          Each
party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that it
has been sufficiently apprised of its rights and responsibilities with regard to
the substance of this Agreement. 

          Section
8.7.      Applicable Law: Jurisdiction.


          This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in Hudson
County, New Jersey, and expressly consent to the jurisdiction and venue of the
Superior Court of New Jersey, sitting in Hudson County and the United States
District Court for the District of New Jersey sitting in Newark, New Jersey for
the adjudication of any civil action asserted pursuant to this Paragraph. 

14 




          Section
8.8.      Waiver of Jury Trial. 

          AS
A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.

          Section
8.9.      Entire Agreement. 

          This
Agreement constitutes the entire agreement among the parties and supersedes any
prior agreement or understanding among them with respect to the subject matter
hereof. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

15 




          IN
WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written. 

COMPANY: 
GLOBAL ENERGY,
INC. 

By: /s/ Asi Shalgi 
Name:
Asi Shalgi 
Title: CEO 

16 




          IN
WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written. 

COMPANY: 
GLOBAL ENERGY
ISRAEL LTD. 

By: /s/ Asi Shalgi 
Name:
Asi Shalgi 
Title: CEO 

17 




          IN
WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written. 

COMPANY: 
GLOBAL NRG
PACIFIC LTD. 

By: /s/ Asi Shalgi 
Name:
Asi Shalgi 
Title: CEO 

18 




          
IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement
as of the date first above written. 

SECURED PARTY: 
CORNELL
CAPITAL PARTNERS, L.P. 

By: Yorkville Advisors, LLC

Its: Investment Manager 

By: /s/ Mark Angelo 
Name:
Mark Angelo 
Title: Portfolio Manager 

19 




SCHEDULE I 

LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES
OF 
ORGANIZATION 


	Company’s Name 	State of Organization 	Employer ID 	Organizational ID 
	Global Energy, Inc. 
	Nevada 
	
	

	Global Fuel Israel Ltd. 

Global NRG Pacific Ltd. 	

	

	





20 




EXHIBIT A 
DEFINITION OF PLEDGED
PROPERTY 

          For
the purpose of securing prompt and complete payment and performance by the
Company of all of the Obligations, the Company unconditionally and irrevocably
hereby grants to the Secured Party a continuing security interest in and to, and
lien upon, the following Pledged Property of the Company: 

                              (a)      all
goods of the Company, including, without limitation, machinery, equipment,
furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and
motor vehicles of every kind and description, now or hereafter owned by the
Company or in which the Company may have or may hereafter acquire any interest,
and all replacements, additions, accessions, substitutions and proceeds thereof,
arising from the sale or disposition thereof, and where applicable, the proceeds
of insurance and of any tort claims involving any of the foregoing; 

                              (b)      all
inventory of the Company, including, but not limited to, all goods, wares,
merchandise, parts, supplies, finished products, other tangible personal
property, including such inventory as is temporarily out of Company’s custody or
possession and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing; 

                              (c)      all
contract rights and general intangibles of the Company, including, without
limitation, goodwill, trademarks, trade styles, trade names, leasehold
interests, partnership or joint venture interests, patents and patent
applications, copyrights, deposit accounts whether now owned or hereafter
created; 

                              (d)      all
documents, warehouse receipts, instruments and chattel paper of the Company
whether now owned or hereafter created; 

                              (e)      all
accounts and other receivables, instruments or other forms of obligations and
rights to payment of the Company (herein collectively referred to as
“Accounts”), together with the proceeds thereof, all goods represented by
such Accounts and all such goods that may be returned by the Company’s
customers, and all proceeds of any insurance thereon, and all guarantees,
securities and liens which the Company may hold for the payment of any such
Accounts including, without limitation, all rights of stoppage in transit,
replevin and reclamation and as an unpaid vendor and/or lienor; 

                              (f)     
to the extent assignable, all of the Company’s rights under all present and
future authorizations, permits, licenses and franchises issued or granted in
connection with the operations of any of its facilities; 

                              (g)     
all equity interests, securities or other instruments in other companies,
including, without limitation, any subsidiaries, investments or other entities
(whether or not controlled); and 




                              (h)     
all products and proceeds (including, without limitation, insurance proceeds)
from the above-described Pledged Property. 




EXHIBIT B 

FORM OF DEPOSIT ACCOUNT AGREEMENT