Document:

helix_8k-ex1003.htm

 

Exhibit 10.3

 

	
$49,297.50

	
August 12, 2011

HELIX WIND, CORP.

 

Secured Convertible Promissory Note

 

FOR VALUE RECEIVED, Helix Wind, Corp., a Nevada corporation (the “Borrower”), hereby promises to pay to St. George Investments, LLC, an Illinois limited liability company, its successor or assigns (the “Lender,” and together with the Borrower, the “Parties”), the principal sum of $49,297.50 (the “Principal Amount”) together with all accrued and unpaid interest thereon, fees incurred or other amounts owing hereunder, all as set forth below in this Convertible Promissory Note (this “Note”). This Note is issued pursuant to that certain Note Purchase Agreement of even date herewith, entered into by and between the Borrower and the Lender (the “Purchase Agreement”).

 

1.            Principal and Interest Payments. Interest on the unpaid principal balance of this Note shall accrue at the rate of 6% per annum. Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed. As set forth hereafter, upon the occurrence of a Trigger Event (as defined below) or an Event of Default (as defined below), the Outstanding Balance (as defined below) of this Note shall accrue simple interest at the rate of 15% per annum from and after the date of the occurrence of the Trigger Event or Event of Default, whether before or after judgment, until paid in full. Notwithstanding any provision to the contrary herein, in no event shall the applicable interest rate at any time exceed the maximum interest rate allowed under applicable law.  If not sooner converted as provided below, the entire unpaid principal balance and all accrued and unpaid interest, if any, shall be due and payable upon the date that is six months from the date of this Note (the “Maturity Date”). All payments owing hereunder shall be made in lawful money of the United States of America delivered to the Lender at the address furnished to the Borrower for that purpose. All payments shall be applied first to costs of collection, if any, then to accrued and unpaid interest, and thereafter to principal. For purposes hereof, the term “Outstanding Balance” means the sum of the outstanding principal balance of this Note and any accrued but unpaid interest, collection and enforcement costs, and any other fees and penalties incurred under this Note.

 

 2.           Prepayment by the Borrower. Subject to the terms of the Prepayment Right (as defined below), the Borrower may, in its sole and absolute discretion, pay all or any portion of the Outstanding Balance at any time prior to the Maturity Date without penalty or premium.  Notwithstanding anything to the contrary herein, so long as no Trigger Event or Event of Default (as defined hereafter) has occurred, the Borrower may fully repay this Note (the “Prepayment Right”) at any time prior to the Maturity Date at a price equal to $34,075.00, plus Lender’s Transaction Expenses (as defined in the Purchase Agreement), plus a multiple of (a) $34,075.00 times (b) three-tenths (0.3) times (c) a fraction, the numerator of which is the number of days elapsed since the date of this Note and the denominator of which is one hundred eighty (180).  For avoidance of doubt, (x) interest hereunder, if applicable, shall at all times be computed based on the greater of the Principal Amount or the Outstanding Balance, and (y) if a Trigger Event or Event of Default has occurred, the Borrower shall not have the Prepayment Right.

 

3.           Original Issue Discount.  The Borrower acknowledges that the Principal Amount of this Note exceeds the Initial Net Purchase Price (as defined in the Note Agreement) and that such excess is comprised of an original issue discount and the Lender’s Transaction Expenses (as defined in the Purchase Agreement) and shall be fully earned and charged to the Borrower upon the execution of this Note, and shall be paid to the Lender as part of the outstanding principal balance as set forth in this Note.   

 

  

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4.           Conversion.

 

 

(a)           Optional Conversion. At any time or from time to time after the date of this Note and prior to payment in full of the Outstanding Balance, the Lender shall have the right, at the Lender’s option, to convert the Outstanding Balance, in whole or in part (the “Conversion Amount”), into common stock (the “Common Stock”) of the Borrower.  The number of shares of Common Stock to be issued upon such conversion shall be determined by dividing (i) the Conversion Amount by (ii) the lower of (1) 100% of the average volume-weighted average price of the Common Stock (the “VWAP”) for the three (3) trading days with the lowest VWAP during the twenty (20) trading days immediately preceding the date set forth on the Notice of Conversion (defined below), or (2) 50% of the lower of (A) the average VWAP over the five (5) trading days immediately preceding the date set forth in the Notice of Conversion or (B) the VWAP on the day immediately preceding the date set forth in the Notice of Conversion (the lower of the foregoing (1) and (2), the “Conversion Price”).  The trading data used to compute the VWAP shall be as reported by Bloomberg, LP (“Bloomberg”), or if such information is not then being reported by Bloomberg, then as reported by such other data information source as may be selected by the Lender.

 

(b)           Conversion Mechanics. In order to convert this Note into Common Stock, the Lender shall give written notice to the Borrower at its principal corporate office or the notice address provided in the Purchase Agreement (which notice, notwithstanding anything herein to the contrary, may be given via facsimile, email, or other means in the discretion of the Lender) pursuant to a Notice of Conversion in substantially the form attached hereto as Exhibit A (the “Notice of Conversion”) of the election to convert the same pursuant to this Section.  Such Notice of Conversion shall state the Conversion Amount, the number of shares of Common Stock to which Lender is entitled pursuant to the Notice of Conversion (the “Conversion Shares”), and the account in which the shares of Common Stock are to be deposited (the “Lender Account”).  The Borrower shall immediately, but in no event later than three (3) days after receipt of a Notice of Conversion (the “Delivery Date”), deliver the Conversion Shares to the Lender Account.  Notwithstanding anything herein to the contrary, all such deliveries of Conversion Shares shall be electronic, via DWAC or DTC if Borrower is then eligible for such electronic delivery program.  In the event the Borrower fails to deliver the Conversion Shares on or before the Delivery Date, in addition to all other remedies available to the Lender hereunder and at law or in equity, a penalty equal to 1.5% of the Conversion Amount shall be added to the balance of this Note per day until such Conversion Shares are delivered.  The conversion shall be deemed to have been made immediately prior to the close of business on the date of the Notice of Conversion, and the person or entity entitled to receive the shares of Common Stock upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date.

 

(c)           No Fractional Shares. Conversion calculations pursuant to Section 4(a) shall be rounded up to the nearest whole share, and no fractional shares shall be issuable by the Borrower upon conversion of this Note. All shares issuable upon a conversion of this Note (including fractions thereof) shall be aggregated for purposes of determining whether such conversion would result in the issuance of a fractional share.

 

  

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(d)           No Impairment.  The Borrower will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Borrower, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Lender against impairment.

 

5.           Certain Adjustments. The number and class or series of shares into which this Note may be converted under Section 4 shall be subject to adjustment in accordance with the following provisions:

 

(a)           Computation of Adjusted Conversion Price.  Except as hereinafter provided, in case the Borrower shall at any time after the date hereof issue or sell any (i) shares of Common Stock or preferred shares convertible into Common Stock, or (ii) debt, warrants, options or other instruments or securities which are convertible into or exercisable for shares of Common Stock (together herein referred to as “Equity Securities”), in each case for consideration (or with a conversion price) per common share less than the Conversion Price in effect immediately prior to the issuance or sale of such securities or instruments, or without consideration, other than Excepted Issuances (as defined below) then forthwith upon such issuance or sale, the Conversion Price shall (until another such issuance or sale) be reduced to the price (calculated to the nearest full cent) equal to the price (or conversion or exercise price) of any such securities or instruments. For the purposes of this Section 5, the term Conversion Price shall mean the Conversion Price per share set forth in Section 4(a) hereof, as adjusted from time to time pursuant to the provisions of this Section.

 

“Excepted Issuances” shall mean, collectively, (i) the Borrower’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and in which holders of such securities or debt are not at any time granted registration rights, and (ii) the Borrower’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to plans which are constituted on the date of this Note.

 

For purposes of any computation to be made in accordance with this Section 5, the following provisions shall be applicable:

 

(i)           In case of the issuance or sale of any shares of Equity Securities for consideration part or all of which shall be cash, the amount of the cash consideration shall be deemed to be the amount of cash received by the Borrower for such shares (or, if shares of stock are offered by the Borrower for subscription, the subscription price, or, if either of such securities shall be sold to underwriters or dealers for public offering without a subscription price, the public offering price, before deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or other persons or entities performing similar services), or any expenses incurred in connection therewith and less any amounts payable to security holders or any affiliate thereof, including, without limitation, any employment agreement, royalty, consulting agreement, covenant not to compete, earnout or contingent payment right or similar arrangement, agreement or understanding, whether oral or written; all such amounts shall be valued at the aggregate amount payable thereunder whether such payments are absolute or contingent and irrespective of the period or uncertainty of payment, the rate of interest, if any, or the contingent nature thereof.

 

  

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(ii)           In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Borrower) of shares of Equity Securities for a consideration part or all of which shall be other than cash, the amount of the consideration therefore other than cash shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors of the Borrower.

 

(iii)           Shares of Equity Securities issuable by way of dividend or other distribution on any capital stock of the Borrower shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration.

 

(iv)           The reclassification of securities of the Borrower other than shares of Equity Securities into securities including shares of Equity Securities shall be deemed to involve the issuance of such shares of Equity Securities for consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of stock shall be determined as provided in this Section 5.

 

(v)           The number of shares of Equity Securities at any one time outstanding shall include the aggregate number of shares issued or issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of then outstanding options, rights, warrants, and convertible and exchangeable securities.

 

 (b)            Adjustment for Reorganization or Recapitalization. If, while this Note remains outstanding and has not been converted, there shall be a reorganization or recapitalization of the Borrower (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), all necessary or appropriate lawful provisions shall be made so that the Lender shall thereafter be entitled to receive upon conversion of this Note, the greatest number of shares of stock or other securities or property that a holder of the class of securities deliverable upon conversion of this Note would have been entitled to receive in such reorganization or recapitalization if this Note had been converted immediately prior to such reorganization or recapitalization, all subject to further adjustment as provided in this Section 5. If the per share consideration payable to the Lender for such class of securities in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Borrower’s Board of Directors. The foregoing provisions of this subsection shall similarly apply to successive reorganizations or recapitalizations and to the stock or securities of any other corporation that are at the time receivable upon the conversion of this Note. In all events, appropriate adjustment shall be made in the application of the provisions of this Note (including adjustment of the conversion price and number of shares into which this Note is then convertible pursuant to the terms and conditions of this Note) with respect to the rights and interests of the Lender after the transaction, to the end that the provisions of this Note shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable or issuable after such reorganization or recapitalization upon conversion of this Note.

 

  

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(c)            Adjustments for Split Subdivision or Combination of Shares.  If the Borrower at any time while this Note remains outstanding and unconverted, shall split or subdivide any class of securities into which this Note may be converted into a different number of securities of the same class, the number of shares of such class issuable upon conversion of this Note immediately prior to such split or subdivision shall be proportionately increased and the Conversion Price, Trigger Price (as defined below), and any other applicable prices for such class of securities shall be proportionately decreased. If the Borrower at any time while this Note, or any portion hereof, remains outstanding and unconverted shall combine any class of securities into which this Note may be converted, into a different number of securities of the same class, the number of shares of such class issuable upon conversion of this Note immediately prior to such combination shall be proportionately decreased and the Conversion Price, Trigger Price, and any other applicable prices for such class of securities shall be proportionately increased.

 

(d)            Adjustments for Dividends in Stock or Other Securities or Property. If, while this Note remains outstanding and unconverted, the holders of any class of securities as to which conversion rights under this Note exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Borrower by way of dividend, then and in each case, this Note shall represent the right to acquire, in addition to the number of shares of such class of security receivable upon conversion of this Note, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Borrower that such holder would hold on the date of such conversion had it been the holder of record of the class of security receivable upon conversion of this Note on the date hereof and had thereafter, during the period from the date hereof to and including the date of such conversion, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 5.

 

(e)            No Change Necessary. The form of this Note need not be changed because of any adjustment in the number of shares of Common Stock issuable upon its conversion.

 

6.           Further Adjustments. In case at any time or, from time to time, the Borrower shall take any action that affects the class of securities into which this Note may be converted under Section 4, other than an action described herein, then, unless such action will not have a material adverse effect upon the rights of the Lender, the number of shares of such class of securities (or other securities) into which this Note is convertible shall be adjusted in such a manner and at such time as shall be equitable under the circumstances.

 

  

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7.           Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to Section 5 or Section 6, the Borrower at its sole expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Lender a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Lender, furnish or cause to be furnished to the Lender a like certificate setting forth (i) such adjustments and readjustments, and (ii) the number and class of securities and the amount, if any, of other property which at the time would be received upon the conversion of this Note under Section 4.

 

8.           Security. This Note is secured by that certain Security Agreement of even date herewith (the “Borrower Security Agreement”) executed by the Borrower in favor of the Lender encumbering certain assets of the Borrower, as more specifically set forth in the Borrower Security Agreement, all the terms and conditions of which are hereby incorporated into and made a part of this Note. Furthermore, the Borrower’s obligations under this Note are guarantied by Helix Wind, Inc., a Nevada corporation and subsidiary of the Borrower (“Guarantor”), pursuant to a separate Guaranty executed by Guarantor for the benefit of the Lender (the “Guaranty”). Such Guaranty is secured by a certain Security Agreement of even date herewith (the “Guarantor Security Agreement,” and together with the Borrower Security Agreement, the “Security Agreements”) executed by Guarantor in favor of the Lender encumbering certain assets of Guarantor, as more specifically set forth in the Guarantor Security Agreement.

 

9.           Change of Control.  In the event of (i) any transaction or series of related transactions (including any reorganization, merger or consolidation) that results in the transfer of 50% or more of the outstanding Common Stock of the Borrower, or (ii) a sale of all or substantially all of the assets of the Borrower to another person or entity, this Note shall be automatically due and payable. The Borrower will give the Lender not less than ten (10) business days prior written notice of the occurrence of any events referred to in this Section 9.

 

10.           Representations and Warranties of the Borrower.  In addition to the representations and warranties set forth in the Purchase Agreement, the Guaranty and the Security Agreements, which are incorporated herein, the Borrower hereby represents and warrants to the Lender that:

 

(a)           The Borrower understands and acknowledges that the number of Conversion Shares issuable upon conversion of this Note will increase in certain circumstances. The Borrower further acknowledges that its obligation to issue Conversion Shares upon conversion of this Note in accordance with its terms is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Borrower;

 

(b)           The Borrower’s Common Stock is registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”);

 

(c)           The Borrower is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and has filed all required reports under section 13 or 15(d) of the Exchange Act during the 12 months prior to the date hereof (or for such shorter period that the issuer was required to file such reports); and

 

  

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(d)           The issuance of this Note is duly authorized. Upon conversion in accordance with the terms of this Note, the Conversion Shares, when issued, will be validly issued, fully paid and non-assessable, free from all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description. The Borrower has reserved from its duly authorized capital stock the appropriate number of shares of Common Stock for issuance upon conversion of this Note as required by the terms of this Note.

 

11.           Affirmative and Negative Covenants. In addition to the covenants set forth in the Purchase Agreement, the Guaranty and the Security Agreements, the Borrower covenants and agrees, while any amounts under this Note are outstanding, as follows:

 

(a)           The Borrower shall do all things necessary to preserve and keep in full force and effect its corporate existence, including, without limitation, all licenses or similar qualifications required by it to engage in its business in all jurisdictions in which it is at the time so engaged; and continue to engage in business of the same general type as conducted as of the date hereof; and  continue to conduct its business substantially as now conducted or as otherwise permitted hereunder;

 

(b)           The Borrower shall pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property before the same shall become delinquent or in default, which, if unpaid, might reasonably be expected to give rise to liens or charges upon such properties or any part thereof, unless, in each case, the validity or amount thereof is being contested in good faith by appropriate proceedings and the Borrower has maintained adequate reserves with respect thereto in accordance with GAAP;

 

(c)           The Borrower shall comply in all material respects with all federal, state and local laws and regulations, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations and requirements applicable to it (collectively, “Requirements”) of all governmental bodies, departments, commissions, boards, companies or associations insuring the premises, courts, authorities, officials or officers which are applicable to the Borrower or any of its properties, except where the failure to so comply would not have a material adverse effect on the Borrower or any of its properties; provided, however, that nothing provided herein shall prevent the Borrower from contesting the validity or the application of any Requirements;

 

(d)           The Borrower shall keep proper records and books of account with respect to its business activities, in which proper entries, reflecting all of their financial transactions, are made in accordance with GAAP;

 

(e)           From the date hereof until the date that is six months after all the Conversion Shares either have been sold by the Lender, or may permanently be sold by the Lender without any restrictions pursuant to Rule 144 (the “Registration Period”), the Borrower shall file with the Securities and Exchange Commission (the “SEC”) in a timely manner all required reports under section 13 or 15(d) of the Exchange Act, as amended, and such reports shall conform to the requirement of the Exchange Act and the SEC for filing thereunder;

 

  

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(f)           The Borrower shall furnish to the Lender so long as the Lender owns Common Stock, promptly upon written request, (i) a written statement by the Borrower that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Borrower and such other reports and documents so filed by the Borrower, and (iii) such other information as may be reasonably requested to permit the Lender to sell such securities pursuant to Rule 144 without registration;

 

(g)           During the Registration Period, the Borrower shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination;

 

(h)           On the date hereof, the Borrower shall reserve for issuance to the Lender the number of shares of its Common Stock that shall be necessary to effect the full conversion of this Note multiplied by 1.5, for issuance upon conversions of this Note (the “Share Reserve”). The Borrower represents that it has sufficient authorized and unissued shares of Common Stock available to create the Share Reserve after considering all other commitments that may require the issuance of Common Stock. The Borrower shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect the full conversion of the Note multiplied by 1.5. If at any time the Share Reserve is insufficient to effect the full conversion of the Note, the Borrower shall increase the Share Reserve accordingly. If the Borrower does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, the Borrower shall call and hold a special meeting of the stockholders within thirty (30) days of such occurrence, for the sole purpose of increasing the number of shares authorized. The Borrower’s management shall recommend to the stockholders to vote in favor of increasing the number of shares of Common Stock authorized. Management shall also vote all of its shares in favor of increasing the number of authorized shares of Common Stock;

 

(i)           The Common Stock shall be listed or quoted for trading on any of (i) NYSE Amex, (ii) the New York Stock Exchange, (iii) the Nasdaq Global Market, (iv) the Nasdaq Capital Market, (v) the OTC Bulletin Board, or (f) the OTCQX or OTCQB (each, a “Primary Market”). The Borrower shall promptly secure the listing of all shares of Common Stock representing any or all of the Conversion Shares upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice of issuance), and shall maintain such listing of all such securities from time to time issuable under the terms of the Transaction Documents (as such term is defined in the Purchase Agreement);

 

(j)           The Borrower shall notify the Lender in writing, promptly upon learning thereof, of any litigation or administrative proceeding commenced or threatened against the Borrower involving a claim in excess of $100,000.00;

 

  

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(k)           The Borrower shall use the proceeds from this for its business operations; and

 

(l)           The Borrower will not issue any instructions to Island Stock Transfer or any other transfer agent of the Company contrary to the instructions set forth in the Irrevocable Instructions to Transfer Agent of even date herewith given by the Borrower to Island Stock Transfer.

 

12.           Trigger Events.  Upon each occurrence of any of the following events (each, a “Trigger Event”), the Outstanding Balance shall be immediately and automatically increased to 125% of the Outstanding Balance in effect immediately prior to the occurrence of such Trigger Event (the “Balance Adjustment”), and upon the first occurrence of a Trigger Event, the Outstanding Balance, as adjusted above, shall accrue interest at the rate of 15% per annum until this Note is repaid in full; provided, however, that notwithstanding anything to the contrary herein, in no event shall the Balance Adjustment  be applied more than two (2) times:

 

(a)           Decline in VWAP.  A decline in the average VWAP for the Common Stock during any consecutive five (5) day trading period to a per share price of less than $0.0002 (the “Trigger Price”) (as such number may be adjusted for stock splits, combinations and otherwise as set forth in Section 5 above).

 

(b)           Events of Default. The occurrence of any Event of Default hereunder (other than an Event of Default under Section 13(i)) that (i) is not cured for a period exceeding ten (10) business days after notice of a declaration of such Event of Default from Lender, or (ii) is not waived in writing by Lender.

 

13.           Default. If any of the events specified below shall occur (each, an “Event of Default”), (i) the Lender may by written notice to the Borrower declare the entire Outstanding Balance immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction Documents to the contrary notwithstanding; provided, however, that upon the occurrence or existence of any Event of Default described in Section 12(e) or (g), immediately and without notice, all outstanding obligations payable by the Borrower hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Transaction Documents to the contrary notwithstanding, (ii) the Lender may exercise default remedies under and according to the terms of this Note, the Guaranty and the Security Agreements, and (iii) the Outstanding Balance shall accrue interest at the rate of 15% per annum until this Note is repaid in full:

 

(a)           Failure to Pay. The Borrower’s failure to make any payment when due and payable under the terms of this Note including, without limitation, any payment of costs, fees, interest, principal or other amount due hereunder.

 

(b)           Failure to Deliver Shares. The Borrower’s failure to deliver the Conversion Shares as provided under Section 4(b) of this Note.

 

  

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(c)           Breaches of Covenants. The Borrower or its subsidiaries, if any, shall fail to observe or perform any other covenant, obligation, condition or agreement contained in this Note, the Guaranty, the Security Agreement, or the other Transaction Documents (as defined in the Purchase Agreement).

 

(d)           Representations and Warranties. Any representation, warranty, certificate, or other statement (financial or otherwise) made or furnished by or on behalf of the Borrower to the Lender in writing included in this Note or in connection with any of the Transaction Documents, or as an inducement to the Lender to enter into this Note or any of the Transaction Documents, shall be false, incorrect, incomplete or misleading in any material respect when made or furnished or becomes false thereafter.

 

(e)           Failure to Pay Debts; Voluntary Bankruptcy. If any of the Borrower’s assets are assigned to its creditors, if the Borrower fails to pay its debts generally as they become due, or if the Borrower files any petition, proceeding, case or action for relief under any bankruptcy, reorganization, insolvency or moratorium law, rule, regulation, statute or ordinance (collectively, “Laws and Rules”), or any other Law and Rule for the relief of, or related to, debtors.

 

(f)           Insufficient Authorized Shares. The Borrower’s failure to maintain sufficient authorized but unissued shares of Common Stock to honor the conversion of any note made by the Borrower in favor of the Lender, including without limitation this Note.

 

(g)           Involuntary Bankruptcy. If any involuntary petition is filed under any bankruptcy or similar Law or Rule against the Borrower, or a receiver, trustee, liquidator, assignee, custodian, sequestrator or other similar official is appointed to take possession of any of the assets or properties of the Borrower or any guarantor.

 

(h)           Governmental Action. If any governmental or regulatory authority takes or institutes any action that will materially affect the Borrower’s financial condition, operations or ability to pay or perform the Borrower’s obligations under this Note.

 

(i)           Trigger Event. The occurrence of any Trigger Event (other than a Trigger Event under Section 12(b)) that is not cured by the Borrower within fifteen (15) days of the occurrence thereof or waived in writing by the Lender.

 

(j)           Cross Default. If after the date of this Note, any default or an event which, with the passage of time or the giving of notice or both, would constitute a default, by Borrower, occurs on any note, indenture, purchase agreement, contract, agreement, or undertaking with respect to Lender or any affiliate of Lender, it being the intent of Borrower and Lender to cross default the Transaction Documents with any other loan from Lender to Borrower.

 

(k)           Collection Actions. If any party commences collection procedures of any kind whatsoever against Borrower or any Collateral (as defined in the Security Agreements).

 

14.           Ownership Limitation. Notwithstanding the provisions of this Note, if at any time after the date hereof, the Lender shall or would receive shares of Common Stock in payment of interest or principal under this Note or upon conversion of this Note, so that the Lender would, together with other shares of Common Stock held by it or its Affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 9.99% of the number of shares of Common Stock outstanding on such date (the “9.99% Cap”), the Borrower shall not be obligated and shall not issue to the Lender shares of Common Stock which would exceed the 9.99% Cap, but only until such time as the 9.99% Cap would no longer be exceeded by any such receipt of shares of Common Stock by the Borrower. The foregoing limitations are enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of the Lender.

 

  

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15.           No Rights or Liabilities as Stockholder. This Note does not by itself entitle the Lender to any voting rights or other rights as a stockholder of the Borrower. In the absence of conversion of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of the Lender, shall cause the Lender to be a stockholder of the Borrower for any purpose.

 

16.           Binding Effect. This Note shall be binding on the Parties and their respective heirs, successors, and assigns; provided, however, that the Borrower shall not assign its rights hereunder in whole or in part without the express written consent of the Lender. The Lender may assign this Note, in whole or in part, to any third party in its sole discretion without having to obtain the Borrower’s consent to such assignment.

 

17.           Governing Law; Venue. The terms of this Note shall be construed in accordance with the laws of the State of Illinois as applied to contracts entered into by Illinois residents within the State of Illinois which contracts are to be performed entirely within the State of Illinois.  With respect to any disputes arising out of or related to this Note, the Parties consent to the exclusive personal jurisdiction of, and venue in, the state courts in Illinois (or in the event of federal jurisdiction, the United States District Court for the Northern District of Illinois), and hereby waive, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of the suite, action or proceeding is improper.

 

18.           Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of the Parties to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.

 

19.            Attorneys’ Fees. If any action at law or in equity is necessary to enforce this Note or to collect payment under this Note, the Lender shall be entitled to recover reasonable attorneys’ fees directly related to such enforcement or collection actions.

 

20.            Amendments and Waivers; Remedies. No failure or delay on the part of a Party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a Party hereto at law, in equity or otherwise. Any amendment, supplement or modification of or to any provision of this Note, any waiver of any provision of this Note, and any consent to any departure by either Party from the terms of any provision of this Note, shall be effective (i) only if it is made or given in writing and signed by the Borrower and the Lender and (ii) only in the specific instance and for the specific purpose for which made or given.

 

  

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21.           Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing.  Any notice, request, demand, claim or other communication hereunder shall be deemed duly given if it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient, as set forth in the Purchase Agreement. Any Party may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth in the Purchase Agreement using any other means (including personal delivery, expedited courier, messenger service, facsimile, ordinary mail, or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient or receipt is confirmed electronically or by return mail.  Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Party notice in any manner herein set forth.

 

22.           Entire Agreement. This Note, together with the Guaranty, the Security Agreement and the other Transaction Documents, contains the complete understanding and agreement of the Borrower and Lender and supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations. THIS NOTE, TOGETHER WITH THE GUARANTY, THE SECURITY AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

23.           Lawful Interest. It being the intention of the Lender and the Borrower to comply with all applicable laws with regard to the interest charged hereunder, it is agreed that, notwithstanding any provision to the contrary in this Note or any other Transaction Document, no such provision, including without limitation any provision of this Note providing for the payment of interest or other charges, shall require the payment or permit the collection of any amount in excess of the maximum amount of interest permitted by law to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the indebtedness evidenced by this Note or by any extension or renewal hereof (“Excess Interest”). If any Excess Interest is provided for, or is adjudicated to be provided for, in this Note or any other Transaction Document, then in such event:

 

(a)           the provisions of this Section 23 shall govern and control;

 

(b)           the Borrower shall not be obligated to pay any Excess Interest;

 

(c)           any Excess Interest that the Lender may have received hereunder shall, at the option of the Lender, be (i) applied as a credit against the principal balance due under this Note or the accrued and unpaid interest thereon not to exceed the maximum amount permitted by law, or both, (ii) refunded to the Borrower, or (iii) any combination of the foregoing;

 

  

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(d)           the applicable interest rate or rates shall be automatically subject to reduction to the maximum lawful rate allowed to be contracted for in writing under the applicable governing usury laws, and this Note and the Transaction Documents shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in such interest rate or rates; and

 

(e)           the Borrower shall not have any action or remedy against the Lender for any damages whatsoever or any defense to enforcement of this Note or arising out of the payment or collection of any Excess Interest.

 

24.           Cross Default. Borrower has executed additional promissory notes in favor of Lender, including without limitation the following (“Other Indebtedness”): (a) Consolidated Secured Convertible Promissory Note dated August 12, 2011, in the principal amount of $525,856.91; (b) Convertible Promissory Note dated July 1, 2011, in the principal amount of $72,500, (c) Secured Convertible Promissory Note dated July 15, 2011, in the principal amount of $65,000, (d) Secured Convertible Promissory Note dated August 1, 2011, in the principal amount of $65,000, and (e) Secured Convertible Promissory Note dated August 15, 2011, in the principal amount of $65,000. Any default under this Note or any of the promissory notes constituting the Other Indebtedness shall result in a cross default of this Note and the Other Indebtedness, thereby accelerating all amounts owing under this Note and the Other Indebtedness and permitting Lender to immediately pursue all of its available rights and remedies, as applicable.

 

[Remainder of page intentionally left blank]

  

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IN WITNESS WHEREOF, the Borrower has executed this Note as of the date set forth above.

Exhibit

Exhibit A – Notice of Conversion

 

	 	
HELIX WIND, CORP.

By:  /s/ James Tilton

      Name: James Tilton

      Title:   Chief Operating Officer

 

 

 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

ST. GEORGE INVESTMENTS, LLC

 

By: Fife Trading, Inc., Manager

     By: /s/ John M. Fife

           John M. Fife, President

 

 

  

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EXHIBIT A

NOTICE OF CONVERSIONhelix_8k-ex1004.htm

Exhibit 10.4

 

SECURITY AGREEMENT

 

 This Security Agreement (this “Security Agreement”), dated as of August 12, 2011, is executed by Helix Wind, Inc., a Nevada corporation (“Guarantor”), in favor of St. George Investments, LLC, an Illinois limited liability company (“Secured Party”).

 

A. Guarantor’s parent company, Helix Wind, Corp., a Nevada corporation (“Corp”), has issued to Secured Party that certain Secured Convertible Promissory Note of even date herewith in the face amount of $49,297.50 (the “Note”) pursuant to the terms set forth in that certain Note Purchase Agreement dated as of August 12, 2011, entered into by and between Corp and Secured Party (the “Purchase Agreement”).

 

B. Pursuant to the Purchase Agreement, Corp has issued a Consolidated Secured Convertible Promissory Note to Secured Party in the adjusted principal amount of $525,856.91 (the “Consolidated Note”) as a replacement for the following promissory notes previously issued by Corp in favor of the Secured Party (collectively, the “Original Promissory Notes”): (i) Convertible Promissory Note dated March 31, 2011, in the original principal amount of $65,000, (ii) Convertible Promissory Note dated April 15, 2011, in the original principal amount of $65,000, (iii) Convertible Promissory Note dated April 30, 2011, in the original principal amount of $65,000, (iv) Convertible Promissory Note dated May 18, 2011, in the original principal amount of $65,000, and (v) Convertible Promissory Note dated May 31, in the original principal amount of $65,000.

 

C. As a condition to Secured Party’s agreement to enter into the Purchase Agreement and acquire the Note, Guarantor executed that certain Guaranty of even date herewith in favor of Secured Party (the “Guaranty”), pursuant to which Guarantor guarantied all of Corp’s obligations under the Note and the Consolidated Note.

 

D. Guarantor is a wholly owned subsidiary of Corp and shall materially benefit from the loan made by Secured Party to Corp that is evidenced by the Note.

 

D.           In order to induce Secured Party to enter into the Purchase Agreement and extend the credit evidenced by the Note, Guarantor has further agreed to enter into this Security Agreement and to grant Secured Party the security interest in the Collateral (as defined below) described below in order to secure Guarantor’s obligations under the Guaranty.

 

NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Guarantor hereby agrees with Secured Party as follows:

 

1. Definitions and Interpretation.  When used in this Security Agreement, the following terms have the following respective meanings:

 

“Collateral” has the meaning given to that term in Section 2 hereof.

 

  

  

  

“Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing of any financing statement or similar instrument under the UCC or comparable law of any jurisdiction.

 

“Obligations” means (a) all loans, advances, debts, liabilities and obligations, howsoever arising, owed by Corp or Guarantor to Secured Party or any affiliate of Secured Party of every kind and description, now existing or hereafter arising, whether created by the Note, the Consolidated Note, this Security Agreement, the Purchase Agreement, any other Transaction Documents (as defined in the Purchase Agreement), guaranty of payment or other contract or by a quasi-contract, tort, statute or other operation of law, whether incurred directly to Secured Party or as an affiliate of Secured Party or acquired by Secured Party or an affiliate of Secured Party by purchase, pledge or otherwise, (b) all costs and expenses, including attorneys’ fees, incurred by Secured Party or any affiliate of Secured Party in connection with the Note, the Consolidated Note, or in connection with the collection of any portion of the indebtedness described in the foregoing clause (a), (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Security Agreement, (d) the performance of the covenants and agreements of Guarantor contained in this Security Agreement and all other Transaction Documents, (e) the performance of the covenants and agreements of Corp contained in the Transaction Documents, and (f) all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by Guarantor hereunder and thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.

 

“Permitted Liens” means (a) Liens for taxes not yet delinquent or Liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established; (b) Liens in respect of property or assets imposed by law which were incurred in the ordinary course of business, such as carriers’, warehousemen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings for which adequate reserves have been established; (c) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security; (d) Liens in favor of Secured Party under this Security Agreement; (e) Liens in an aggregate amount not exceeding $5,000.00 securing obligations under a capital lease if such Liens do not extend to property other than the property leased under such capital lease; and (f) Liens in an aggregate amount not exceeding $5,000.00  upon any equipment acquired or held by Guarantor to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment, so long as such Lien extends only to the equipment financed, and any accessions, replacements, substitutions and proceeds (including insurance proceeds) thereof or thereto.

 

  

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“UCC” means the Uniform Commercial Code as in effect in the State of Nevada from time to time.

 

  Unless otherwise defined herein, all terms defined in the UCC have the respective meanings given to those terms in the UCC.

 

2. Grant of Security Interest.  As security for the Obligations, Guarantor hereby pledges to Secured Party and grants to Secured Party a security interest in all right, title and interests of Guarantor in and to the property described in Schedule A hereto and all proceeds, products, and accessions thereof (collectively, the “Collateral”).

 

3. Authorization to File Financing Statements.  Guarantor hereby irrevocably authorizes Secured Party at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction or other jurisdiction of Guarantor any financing statements or documents having a similar effect and amendments thereto that provide any other information required by the Uniform Commercial Code (or similar law of any non-United States jurisdiction, if applicable) such state or jurisdiction for the sufficiency or filing office acceptance of any financing statement or amendment, including whether Guarantor is an organization, the type of organization and any organization identification number issued to Guarantor. Guarantor agrees to furnish any such information to Secured Party promptly upon Secured Party’s request. Secured Party is further authorized to make any necessary filings with the United States Patent and Trademark Office and any other applicable office to perfect its security interest in any patents, trademarks, copyrights and other intellectual property included in the Collateral.

 

4. General Representations and Warranties.  Guarantor represents and warrants to Secured Party that (a) Guarantor is a wholly owned subsidiary of Corp, (b) Guarantor shall materially benefit from the financial accommodations granted to Corp via Secured Party’s purchase of the Note, (c) Guarantor is the owner of the Collateral and that no other person has any right, title, claim or interest (by way of Lien or otherwise) in, against or to the Collateral, other than Permitted Liens, (d) upon the filing of UCC-1 financing statements with the Nevada Secretary of State, Secured Party shall have a perfected security interest in the Collateral to the extent that a security interest in the Collateral can be perfected by such filing, except for Permitted Liens, and (e) the Liens in favor of Security Party under this Agreement are senior in priority to any other Lien granted to or arising in favor of any third party under the Uniform Commercial Code.

 

5. Additional Covenants.  Guarantor hereby agrees:

 

(a) to perform all acts that may be necessary to maintain, preserve, protect and perfect in the Collateral, the Lien granted to Secured Party therein, and the perfection and priority of such Lien, except for Permitted Liens;

 

(b) to procure, execute and deliver from time to time any endorsements, assignments, financing statements and other writings reasonably deemed necessary or appropriate by Secured Party to perfect, maintain and protect Secured Party’s Lien hereunder and the priority thereof;

 

  

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(c) to provide at least fifteen (15) days prior written notice to Secured Party of any of the following events: (i) any changes or alterations of Guarantor’s name, (ii) any changes with respect to Guarantor’s address or principal place of business, (iii) any reorganization, merger or consolidation involving Guarantor, (iv) any change to the jurisdiction under which Guarantor is organized, (v) any adverse change in the condition of any Collateral, (vi) any adverse change to Secured Party’s interest in the Collateral, (vii) any Lien arising against the Collateral, other than a Permitted Lien, provided that any Permitted Liens arising under the Uniform Commercial Code shall be disclosed to Secured Party, (viii) change to Secured Party’s interest  or Secured Party’s, or (ix) the formation of any subsidiaries of Guarantor;

 

(d) upon Secured Party’s request, to endorse, assign and deliver any promissory notes included in the Collateral to Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as Secured Party may from time to time specify;

 

(e) to the extent the Collateral is not delivered to Secured Party pursuant to this Security Agreement, to keep the Collateral at the principal office of Guarantor and not to remove the Collateral from such location without providing at least thirty (15) days prior written notice to the Secured Party; and

 

(f) not to sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein, other than inventory in the ordinary course of Guarantor’s business.

 

6. Authorized Action by Secured Party.  Guarantor hereby irrevocably appoints Secured Party as its attorney-in-fact (which appointment is coupled with an interest) and agrees that Secured Party may perform (but Secured Party shall not be obligated to and shall incur no liability to Guarantor or any third party for failure so to do) any act which Guarantor is obligated by this Security Agreement to perform, and to exercise such rights and powers as Guarantor might exercise with respect to the Collateral, including the right to (a) collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter payable on or on account of the Collateral; (b) execute and file UCC financing statements and other documents, instruments and agreements required hereunder; and (c) take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Security Agreement. The powers conferred on Secured Party under this Section 6 are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers. Secured Party shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither Secured Party nor any of its stockholders, directors, officers, managers, employees or agents shall be responsible to Guarantor for any act or failure to act, except with respect to Secured Party’s own gross negligence or willful misconduct.

 

7. Default and Remedies.

 

(a) Default.  Guarantor shall be deemed in default under this Security Agreement upon the occurrence of an Event of Default (as defined in the Note and the Consolidated Note), provided Guarantor has not cured such Event of Default as provided in the Guaranty.

 

  

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(b) Remedies.  Upon the occurrence of any such Event of Default, Secured Party shall have the rights of a secured creditor under the UCC, all rights granted by this Security Agreement and by law, including, without limiting the foregoing, (i) the right to require Guarantor to assemble the Collateral and make it available to Secured Party at a place to be designated by Secured Party, and (ii) the right to take possession of the Collateral, and for that purpose Secured Party may enter upon premises on which the Collateral may be situated and remove the Collateral therefrom.  Guarantor hereby agrees that ten (10) days’ notice of a public sale of any Collateral or notice of the date after which a private sale of any Collateral may take place is reasonable.  In addition, Guarantor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of Secured Party’s rights and remedies hereunder, including, without limitation, Secured Party’s right following an Event of Default to take immediate possession of Collateral and to exercise Secured Party’s rights and remedies with respect thereto.  Secured Party may also have a receiver appointed to take charge of all or any portion of the Collateral and to exercise all rights of Secured Party under this Agreement.  Secured Party may exercise any of its rights under this Section 7(b) without demand or notice of any kind.  The remedies in this Security Agreement, including without limitation this Section 7(b), are in addition to, not in limitation of, any other right, power, privilege, or remedy, either in law, in equity, or otherwise, to which Secured Party may be entitled.  No failure or delay on the part of Secured Party in exercising any right, power, or remedy will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder.  All of Secured Party’s rights and remedies, whether evidenced by this Agreement or by any other agreement, instrument or document shall be cumulative and may be exercised singularly or concurrently.

 

(c) Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Secured Party to exercise remedies in a commercially reasonable manner, Guarantor acknowledges and agrees that it is not commercially unreasonable for Secured Party (i) to fail to incur expenses reasonably deemed significant by Secured Party to prepare Collateral for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (iv) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same business as Guarantor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral. Guarantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Secured Party would fulfill Secured Party’s duties under the UCC in Secured Party’s exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to Guarantor or to impose any duties on Secured Party that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

  

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(d) Application of Collateral Proceeds.  The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Secured Party at the time of, or received by Secured Party after, the occurrence of an Event of Default) shall be paid to and applied as follows:

 

(i) First, to the payment of reasonable costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by Secured Party;

 

(ii) Second, to the payment to Secured Party of the amount then owing or unpaid under the Note and/or the Consolidated Note (to be applied first to accrued interest and second to outstanding principal); and

 

(iii) Third, to the payment of the surplus, if any, to Corp, itssuccessors and assigns, or to whosoever may be lawfully entitled to receive the same.

 

In the absence of final payment and satisfaction in full of all of the Obligations, Guarantor shall remain liable for any deficiency.

 

8. Miscellaneous.

(a) Notices.  Except as otherwise provided herein, all notices, requests, demands, consents, instructions or other communications to or upon Guarantor or Secured Party under this Security Agreement shall be directed as set forth below (or as the recipient thereof shall otherwise have directed in writing in accordance herewith) in a manner set forth below and will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile, email or other form of electronic communication (with receipt of appropriate confirmation), (iv) one business day after being deposited with an overnight courier service of recognized standing, or (v) three days after being deposited in the U.S. mail, first class with postage prepaid.

Guarantor:                          Helix Wind, Inc.

 Attn: James Tilton

13125 Danielson Street

San Diego, California  92064

  

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Secured Party:                    St. George Investments, LLC

Attn: John M. Fife

303 East Wacker Drive, Suite 1200

Chicago, Illinois 60601

With a copy to (which shall not constitute notice):

Carman Lehnhof Israelsen LLP

Attn: Jonathan K. Hansen

4626 North 300 West, Suite 160

Provo, Utah 84604

 

(b) Nonwaiver.  No failure or delay on Secured Party’s part in exercising any right hereunder shall operate as a waiver thereof or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof or of any other right.

 

(c) Amendments and Waivers.  This Security Agreement may not be amended or modified, nor may any of its terms be waived, except by written instruments signed by Guarantor and Secured Party. Each waiver or consent under any provision hereof shall be effective only in the specific instances for the purpose for which given.

 

(d) Assignment.  This Security Agreement shall be binding upon and inure to the benefit of Secured Party and Guarantor and their respective successors and assigns; provided, however, that Guarantor may not sell, assign or delegate rights and obligations hereunder without the prior written consent of Secured Party.

 

(e) Cumulative Rights, etc.  The rights, powers and remedies of Secured Party under this Security Agreement shall be in addition to all rights, powers and remedies given to Secured Party by virtue of any applicable law, rule or regulation of any governmental authority, or the Note, the Consolidated Note, or the Guaranty, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently without impairing Secured Party’s rights hereunder.  Guarantor waives any right to require Secured Party to proceed against any person or entity or to exhaust any Collateral or to pursue any remedy in Secured Party’s power.

 

(f)            Partial Invalidity.  If any part of this Security Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

 

(g) Expenses.  Guarantor shall pay on demand all reasonable fees and expenses, including reasonable attorneys’ fees and expenses, incurred by Secured Party in connection with the custody, preservation or sale of, or other realization on, any of the Collateral or the enforcement or attempt to enforce any of the Obligations which are not performed as and when required by this Security Agreement.

 

  

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(h) Entire Agreement.  This Security Agreement and the other Transaction Documents, taken together, constitute and contain the entire agreement of Guarantor and Secured Party with respect to this particular matter and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.

 

(i) Governing Law; Venue.  Except as otherwise specifically set forth herein, the parties expressly agree that this Agreement shall be governed solely by the laws of the State of Illinois, without regard to its principles of conflict of laws. Guarantor hereby expressly consents to the personal jurisdiction of the state and federal courts located in or about Cook County, Illinois for any action or proceeding arising from or relating to this Agreement, waives, to the maximum extent permitted by law, any argument that venue in any such forum is not convenient, and agrees that any such action or proceeding shall only be venued in such courts.

 

(j) Counterparts.  This Security Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one instrument.  Facsimile copies of signed signature pages will be deemed binding originals.

 

(k) Termination of Security Interest.  Upon the payment in full of all Obligations, the security interest granted herein shall terminate and all rights to the Collateral shall revert to Guarantor. Upon such termination, Secured Party hereby authorizes Guarantor to file any UCC termination statements necessary to effect such termination and Secured Party, at Guarantor’s expense, will execute and deliver to Guarantor any additional documents or instruments as Guarantor shall reasonably request to evidence such termination.

 

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IN WITNESS WHEREOF, Secured Party and Guarantor have caused this Security Agreement to be executed as of the day and year first above written.

 

 

	 	
SECURED PARTY:

	 
	 	 	 
	 	
ST. GEORGE INVESTMENTS, LLC

	 
	 	 	 
	 	
By: Fife Trading, Inc., Manager

	 
	 	 	 	 
	
 

	
By: 

	/s/ John M. Fife	 
	 	 	John M. Fife, President	 

	 	
GUARANTOR:

	 
	 	 	 
	 	
HELIX WIND, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Kevin K. Claudio	 
	 	 	Name: Kevin K. Claudio	 
	 	 	Title: Chief Financial Officer	 
	 	 	 	 

  

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SCHEDULE A

 

TO SECURITY AGREEMENT

 

All right, title, interest, claims and demands of Guarantor in and to the following property:

 

(i) All goods and equipment now owned or hereafter acquired, including, without limitation, all equipment, computer equipment, office equipment, machinery, fixtures, vehicles, and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

 

(ii) All inventory now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Guarantor’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Guarantor’s books relating to any of the foregoing;

 

(iii) All accounts receivable, contract rights, general intangibles, health care insurance receivables, payment intangibles and commercial tort claims, now owned or hereafter acquired, including, without limitation, all patents, patent rights (and applications and registrations therefor), trademarks and service marks (and applications and registrations therefor), inventions, copyrights, mask works (and applications and registrations therefor), trade names, trade styles, software and computer programs including source code, trade secrets, methods, processes, know how, drawings, specifications, descriptions, and all memoranda, notes, and records with respect to any research and development, goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment of any kind and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic media;

 

(iv) All now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing to Guarantor arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Guarantor (subject, in each case, to the contractual rights of third parties to require funds received by Guarantor to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Guarantor and Guarantor’s books relating to any of the foregoing;

 

(v) All documents, cash, deposit accounts, letters of credit, letter of credit rights, supporting obligations, certificates of deposit, instruments, chattel paper, electronic chattel paper, tangible chattel paper and investment property, including, without limitation, all securities, whether certificated or uncertificated, security entitlements, securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired and Guarantor’s books relating to the foregoing;

 

(vi) All other goods and personal property of Guarantor, wherever located, whether tangible or intangible, and whether now owned or hereafter acquired; and

 

(vii) Any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds and products thereof, including, without limitation, insurance, condemnation, requisition or similar payments and the proceeds thereof.

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