Document:

Exhibit 10.2 Revolving Line of Credit Note

Exhibit 10.2

REVOLVING LINE OF CREDIT NOTE

___________________________________________________________________________________________________________

Principal Amount: 

$50,000

Interest Rate: 

9% Simple interest

Borrower:

Omnitek Engineering Corp.

Lender: 

Chachas Land Co., Inc.

___________________________________________________________________________________________________________

FOR VALUE RECEIVED, Omnitek Engineering Corp.,  a California  corporation (“Borrower”) promises to pay to Chachas Land Co., Inc., a Nevada corporation  (the “Lender”), or to order, the principal sum of Fifty Thousand Dollars ($50,000) or the aggregate unpaid principal amount of all advances made by Lender to Borrower pursuant to the terms of a Revolving Line of Credit Agreement (the “Loan Agreement”) of even date herewith, whichever is less, together with interest thereon from the date each advance is made until paid in full, at an interest rate of nine percent (9%) simple interest per annum (the “Interest Rate”).  Interest will be calculated on a basis of a 360-day year and charged for the actual number of days elapsed. 

1.

Maturity.   Unless otherwise accelerated pursuant to the Loan Agreement, the principal, any unpaid accrued interest and other charges and fees, shall be due and payable six (6) months from the Effective Date (the “Maturity Date”).  Notwithstanding the foregoing, the entire unpaid principal sum of this Promissory Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon the event of default as set forth in the Loan Agreement.

2.

Renewal and Extension of Line of Credit.  Provided that Borrower is not in default under the Loan Agreement or this Promissory Note, at the Maturity Date, the Borrower, at the Borrower’s option may extend and renew this Promissory Note for one additional term of six (6) months.

3.     

Interest.  All sums advanced pursuant to this Agreement shall bear interest from the date each Advance is made until paid in full at an interest rate of nine percent (9%) simple interest per annum (the “Interest Rate”).  Interest will be calculated on a basis of a 360-day year and charged for the actual number of days elapsed. 

 

4.

Default Interest.  Notwithstanding the foregoing, upon the occurrence of an Event of Default hereunder, the Interest Rate shall immediately increase to the highest rate allowable under applicable law, and shall continue at such rate, both before and after judgment, until the Credit Line has been repaid in full and all of Borrower’s other obligations to Lender hereunder have been fully paid and discharged.

 

5.

Interest Payments; Repayment.  Interest on the then outstanding principal balance shall be payable on a monthly basis commencing 30 days after the Effective Date, and continuing each month thereafter.   The entire unpaid principal balance, together with any unpaid accrued interest and other unpaid charges or fees hereunder, shall be due and payable on the Maturity Date.  Payment shall be made to the Lender at such place as the Lender may, from time to time, designate in lawful money of the United States of America.  All payments received hereunder shall be applied as follows: first, to any late charge; second, to any costs or expenses incurred by Lender in collecting such payment or to any other unpaid charges or expenses due hereunder; third, to accrued interest; fourth, to principal; and fifth, the balance, if any, to such person entitled thereto; provided, however, upon occurrence of an Event of Default, a Lender may, in its discretion, change the priority of the application of payments as it deems appropriate.  Borrower may prepay principal and/or interest at any time without penalty.

6.       

Prepayment.  Borrower may pre-pay the sums due under this Promissory Note, in whole or in part, at any time from time to time, without penalty or premium, subject to the requirements provided in the Loan Agreement.

 

7.      

Collateral; Security.  As security for all obligations of Borrower to Lender, the Loan Agreement and this Promissory Note shall be secured by such number of shares of the Common Stock of the Borrower (the “Shares”), which value of said Shares based on the closing bid is equal to two (2) times the then outstanding principal and unpaid interest under this Credit Line and the Promissory Note.  In order to facilitate the Security for this Credit Line the Borrower shall issue 100,000 Shares in the name of the Borrower to be held as Security in accordance with a separate Pledge Agreement (the “Pledge Agreement”) of even date herewith between the Borrower and the Lender.  In case of an Event of Default the Lender shall have the rights set forth in the Pledge Agreement.

8.    

Default.  Upon and after the occurrence of an Event of Default (as set forth in the Loan Agreement) unless such Event of Default is waived as provided in the Loan Agreement, this Note may, at the option of Lender and without further demand, notice or legal process of any kind, be declared by Lender, and in such case shall immediately become, due and payable.

 

9.   

Waiver.  Demand, presentment, protest and notice of non-payment and protest, notice of intention to accelerate maturity, notice of acceleration of maturity and notice of dishonor are hereby waived by Borrower.  Subject to the terms of the Loan Agreement, Lender may extend the time of payment of this Note, postpone the enforcement hereof, grant any indulgences, release any party primarily or secondarily liable hereon, or agree to any subordination of Borrower’s obligations hereunder without affecting or diminishing Lender’s right of recourse against Borrower, which right is hereby expressly reserved.

10.

Transfer; Successors and Assigns. The terms and conditions of this Promissory Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Notwithstanding the foregoing, the Lender may not assign, pledge, or otherwise transfer this Promissory Note without the prior written consent of the Borrower. Subject to the preceding sentence, this Promissory Note may be transferred only upon surrender of the original Promissory Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Borrower. Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee. Interest and principal are payable only to the registered Lender of this Promissory Note.

11.

Governing Law. This Promissory Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. This Promissory Note shall be deemed made and entered into in San Diego County, State of California and venue for any proceeding or action in connection with this Promissory Note shall be in San Diego County, California.

12.

Notices. All notices, requests, demands and other communications under this Promissory Note, shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given or within five (5) business days if mailed to the party to whom notice is to be given, by first-class mail, registered, or certified, postage prepaid and properly addressed as follows:

Page 2 of 3

If to the Borrower, addressed to:

Omnitek Engineering Corp.

Attn: Werner Funk, President

1945 S. Rancho Santa Fe Road

San Marcos, CA 92078

If to Lender, addressed to: 

Chachas Land Co., Inc.

Attn: Gregory J. Chachas

P.O. Box 151538

Ely, Nevada 89315

Any notice mailed to any party hereunder will be deemed effective within five (5) business days of deposit in the United States mail.

13.

Amendments and Waivers.  The terms of this Note may be amended only in writing signed by Borrower and Lender. This Note, together with the Loan Agreement, constitutes and contains the entire agreement between and among the parties regarding the subject matter hereof, and supersedes and replaces all prior agreements, promises and understandings, whether written or oral, proposed or otherwise, regarding the subject matter hereof.

14.

Counterparts; Facsimile Signatures.  This Promissory Note may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement.  Facsimile signatures shall be sufficient for execution of this Promissory Note.

15.

Action to Collect on Note. If action is instituted to collect on this Promissory Note, the Borrower promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in connection with such action.

16.

Loss of Note. Upon receipt by the Borrower of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Promissory Note or any Promissory Note exchanged for it, and indemnity satisfactory to the Borrower (in case of loss, theft or destruction) or surrender and cancellation of such Promissory Note (in the case of mutilation), the Borrower will make and deliver in lieu of such Promissory Note a new Note of like tenor.

IN WITNESS WHEREOF, this Promissory Note is executed as of February 15, 2012. 

BORROWER

OMNITEK ENGINEERING CORP.

/s/ Werner Funk               

By:  Werner Funk

Its: President and CEO

 

Page 3 of 3Exhibit 10.3 Stock Pledge Agreement

Exhibit 10.3

STOCK PLEDGE AGREEMENT

This Stock Pledge Agreement (this “Agreement”), effective as of February 15, 2012, is entered into between Omnitek Engineering Corp., a California corporation (the “Pledgor”), whose address is 1945 S. Rancho Sante Fe Road, San Marcos, California 92078 and Chachas Land Co., Inc. (the “Secured Party”),  whose address is P.O. Box 151538, Ely, Nevada 89315, with reference to the following:

Recitals

A.

Whereas, Secured Party has established revolving line of credit (the “Credit Line”) for Pledgor in the principal amount of Fifty Thousand dollars ($50,000) (the “Credit Limit”) pursuant to that Revolving Line of Credit Agreement (the “Loan Agreement”) of even date herewith and is the holder of a Promissory Note (the “Note”) accordance with the terms of the Loan Agreement.

B.

Whereas, the proceeds of the Note shall be used primarily to purchase materials and parts to fulfill existing orders and for no other purpose.

C.

As security for all obligations of Borrower to Lender, the Loan Agreement and the Note shall be secured by such number of shares of the Common Stock of the Borrower (the “Shares”), which value of said Shares based on the closing bid is equal to two (2) times the then outstanding principal and unpaid interest under this Credit Line and the Promissory Note.  In order to facilitate the Security for this Credit Line the Borrower shall issue 100,000 Shares in the name of the Borrower to be held as security in accordance with this Agreement.

AGREEMENT

Now, wherefore, for good and valuable consideration, the Pledgor hereby agrees with the Secured Party as follows:

ARTICLE I.

COLLATERAL PLEDGE; SECURITY INTEREST; DEFINITIONS

1.1

Pledge of Securities. In consideration of any financial accommodations granted by the Secured Party set forth above, to Pledgor, and to secure the Obligations of Pledgor to the Secured Party, Pledgor shall concurrently deliver to the Pledgeholder, a certificate representing one hundred thousand (100,000) of the Common Stock, no par value of Omnitek Engineering Corp., registered to Omnitek Engineering Corp., together with duly executed instruments of assignment thereof to the Pledgeholder (which, together with all replacements and substitutions therefor are hereinafter referred to as the "Securities").   Notwithstanding the above, the security for Loan Agreement and the Note shall be such number of shares of the Common Stock of the Pledgor (the “Shares”) which value of said shares based on the closing bid is equal to two (2) times the then outstanding principal and unpaid interest under this LoanAgreement and the Note, any any given time, and in the event of default. Pledgor hereby pledges to Secured Party and grants to the Secured Party a continuing lien and security interest (the “Security Interest”) in, all of the Pledgor’s right, title and interest in the Shares, and all rights and remedies relating to, or arising out of, any and all of the foregoing, and all proceeds thereof (collectively, the "Collateral") to secure the payment and performance of all Obligations of Pledgor to the Secured Party, whether or not such Obligations exist under this Agreement or any other agreements between Pledgor and the Secured Party , whether now or hereafter existing, including, without limitation, any note, any credit line agreement, any loan or security agreement, and any other agreement for services, financial accommodations or credit extended by the Secured Party to Pledgor even though not specifically enumerated herein. 

Any and all stock dividends, rights, warrants, options, puts, calls, conversion rights and other securities and any and all property and money distributed or delivered with respect to the Securities or issued upon the exercise of any puts, calls, conversion rights, options, warrants or other rights included in or pertaining to the Securities shall be included in the term "Securities" as used herein and shall be subject to this Pledge Agreement, and Pledgor shall deliver the same to the Secured Party immediately upon receipt thereof together with any necessary instruments of transfer; provided, however, that until an Event of Default (as hereinafter defined) shall occur, Pledgor may retain any dividends paid in cash or its equivalent, with respect to any stock included in the Securities and any interest paid with respect to any bonds, debentures or other evidences of indebtedness included in the Securities. Pledgor hereby acknowledges that the acceptance of the pledge of the Securities by the Secured Party shall not constitute a commitment of any kind by the Secured Party to permit Pledgor to incur Obligations.

1.2 

"Obligations" means all of the Pledgor’s obligations and liabilities to the Secured Party pursuant to the Loan Agreement and the Note.

1.3

Other Definitions. Unless otherwise defined, the terms set forth in this Agreement shall have the meanings set forth in the Loan Agreement and the Note. The defined terms hereunder shall be interpreted in a manner most favorable to the Secured Party.

ARTICLE II.

NO VOTING RIGHTS

2.1

 No Voting and Other Rights.  As the securies pledged by Pledgor as security hereudner ar Treasury Shares, unless and until there is a default under the Notes and this Agreementr resulting in the delivery of the Saecurites to the Secured  Party, there shall be no current voting rights with respect to the Securities, by Pledgor, Pledgeholder or the Secured Party.

 

ARTICLE III.

WARRANTIES AND COVENANTS

In addition to all other warranties, representations and covenants in the Loan Agreement or the Note, which are expressly incorporated herein, if Pledgor as part of this Agreement and while any Obligations of Pledgor to the Secured Party is unpaid or outstanding, Pledgor agrees, represents and warrants as follows:

3.1

Pledgor's Name, Location; Notice of Location Changes. Except as set forth herein, Pledgor's name and organizational structure have remained the same since the date of the Note.  Pledgor will continue to use only the name set forth with Pledgor's signature unless Pledgor gives Secured Party prior written notice of any change. Furthermore, Pledgor shall not do business under another name nor use any trade name without giving ten (10) days prior written notice to the Secured Party. Pledgor will not change its status or organizational structure without the prior written consent of the Secured Party. Pledgor will not change its location or registration (if Pledgor is a registered organization) to another state without prior written notice to the Secured Party. 

3.2 

Accuracy of Information/Verification.  All information, certificates and statements given to the Secured Party pursuant to this Agreement will be accurate and complete when given. Also, the Secured Party may verify any Securities or documents evidencing the Collateral in any manner and Pledgor shall assist the Secured Party in so doing.

Page 2 of 9

3.3 

Organization and Authority. The execution, delivery and performance of this Agreement, the accompanying assignments, stockpowers and other documents to which Pledgor is a party: (i) are within Pledgor's power; (ii) have been duly authorized by proper corporate, partnership or limited liability company action (if applicable); (iii) do not require the approval of any governmental agency, other entity or person; (iv) will not violate any law, agreement or restriction by which Pledgor is bound; and (v) any such assignments or pledges of any interest in any corporation, partnership or limited liability company, has been approved and acknowledged by the officers, directors, partners, managers or members of such corporation, partnership or limited liability company. This Agreement is the legal, valid and binding obligation of Pledgor, and is enforce­able against Pledgor in accordance with its terms.

3.4 

Warranty of Title of Securities/Collateral.  Pledgor now has, and throughout the term of this Agreement will at all times have, good title to the Securities/Collateral, free and clear of any and all security interests, liens and claims of any kind whatsoever.  The Securities are not subject to any restrictions on transfer and/or disposition by Pledgor or the Secured Party. 

3.5 

Maintenance of Securities/Collateral; Restriction on Liens and Dispositions. Pledgor will: (i) not permit waste, removal or loss of identity of the Collateral; (ii) keep the Collateral free from all liens, adverse claims, executions, attachments, claims, encumbrances and security interests (other than the Secured Party's sole and paramount security interest and those interests permitted in writing by the Secured Party); (iii) defend the Collateral against all claims and legal proceedings by persons other than the Secured Party; (iv) pay and discharge when due all taxes, levies and other charges or fees which may be assessed against the Collateral (except for payment of taxes contested by Pledgor in good faith by appropriate proceedings so long as no levy or lien has been imposed upon the Collateral); (v) not sell or transfer the Collateral to any party; (vi) not permit the Collateral to be used or owned in violation of any applicable law, regulation or policy of insurance; (vii) preserve the Secured Party's rights and security interest in the Collateral against all other parties; and (viii) not make any instructions or entitlement orders which are contrary to the terms of this Agreement. Pledgor will promptly deliver to the Secured Party a copy of any notices, statements or communications received by Pledgor regarding the Collateral.

3.6

Maintenance of Security Interest. Pledgor will take any action requested by the Secured Party to preserve the Collateral and to perfect, establish the priority of, continue perfection and enforce the Secured Party' interest in the Collateral and the Secured Party' rights under this Agreement (including the delivery of any stock or bond powers, assignments and endorsements deemed necessary by the Secured Party); and Pledgor will pay all costs and expenses related thereto. Pledgor shall also cooperate with the Secured Party in obtaining control (for purposes of perfection under the Uniform Commercial Code) of Collateral consisting of deposit accounts, investment property, letter of credit rights, electronic chattel paper and any other collateral where the Secured Party may obtain perfection through control. Pledgor hereby authorizes the Pledgeholder on behalf of the Secured Party to take any and all actions described above and in place of Pledgor with respect to the Collateral and hereby ratifies any such actions. 

3.7 

Delivery of Securities/Collateral.  All certificates or instruments representing or evidencing the Collateral shall be promptly delivered by Pledgor to Pledgholder pursuant hereto at a location designated by the Pledgeholder and shall be held by or on behalf of the Secured Party pursuant hereto, and shall be in suitable form for transfer by delivery, or shall be accompanied by duly endorsement stock powers, in blank, with signature medallion guaranteed or other instrument of transfer or assignment in blank, in form and substance satisfactory to the Pledgeholder. Upon the occurrence and during the continuance of an Event of Default and the failure to cure said default as provided herein, Secured Party shall have the right, at any time in its discretion and without notice to Pledgor, to transfer to or to register on the books of the Pledgor (or of any other Person maintaining records with respect to the Collateral) in the name of the Secured Party or any of its nominees any or all of the Collateral.

Page 3 of 9

ARTICLE IV.

RIGHTS AND DUTIES OF THE SECURED PARTY

In addition to all other rights of the Secured Party under the Note and the Security Agreement, which are expressly incorporated herein as a part of this Agreement, the following provisions will also apply:

4.1 

Authority to Perform for Pledgor/Entitlement Holder. To facilitate the Secured Party ability to preserve and dispose of the Collateral, Pledgor unconditionally appoints the Secured Party, as Pledgeholder and as Pledgor's attorney-in-fact (coupled with an interest and irrevocable while any Obligations remain unpaid) to do any of the following upon default by Pledgor hereunder (notwithstanding any notice requirements or grace/cure periods under this or any other agreements between Pledgor and the Secured Party): to file, endorse the name of Pledgor on any Collateral, payments, and any documents needed to perfect, protect and/or realize upon the Secured Party' interest in the Collateral; to nominate itself as entitlement holder as to any or all of the Collateral; and to do all such other acts and things necessary to carry out Pledgor's obligations under this Agreement and the Note, Security Agreement and Purchase Agreement. All acts taken by the Pledgeholder pursuant to the above-described authority are hereby ratified and approved by the Pledgor, and the Pledgeholder and the Secured Party will not be liable to Pledgor for any acts of commission or omission, nor for any errors of judgment or mistakes in undertaking such actions except for the Pledgeholder’s willful misconduct. For good and valuable consideration, Pledgor agrees not to assert any claims against any third-party (including any issuer or any securities intermediary) holding Collateral for complying with the Pledgeholder’s requests hereunder, and Pledgor waives any claims against such third parties for actions taken at the request of the Pledgeholder or the Secured Party.

4.2 

Collateral Preservation. The Pledgeholder will use reasonable care as to any Collateral in its physical possession but in determining such standard of reasonable care, Pledgor expressly acknowledges that the Pledgeholder has no duty to: (i) insure the Collateral against hazards; (ii) protect the Collateral from seizure, levy, lien, claim or conversion by third parties, or acts of God; (iii) give to Pledgor any notices, account statements, proxies or communications received by the Pledgeholder regarding the Collateral; (iv) perfect or continue perfection of any security interest in the Collateral in favor of Pledgor; (v) inform Pledgor of any decline in the value of the Collateral or the existence of any option or elections with respect to the Collateral; (vi) take any action to invest or manage the Collateral; (vii) exercise, preserve or notify Pledgor with respect to any exchanges, puts, calls, redemptions, conversions, maturities, offers, tenders and other rights or requirements regarding the Collateral or Pledgor's interest therein; or (viii) sue or otherwise take action to preserve Pledgor's or the Secured Party' interest in the Collateral. Notwithstanding any failure by the Pledgeholder to use reasonable care in preserving the Collateral, Pledgor agrees that neither the Pledgeholder or any Secured Party will be liable to Pledgor for any consequential or special damages arising from such failure. The foregoing also applies if the Secured Party are deemed entitlement holder as to any Collateral.

Page 4 of 9

ARTICLE V.

DEFAULTS AND REMEDIES

5.1 

Events of Defaults. Notwithstanding any cure periods described below, Pledgor will immediately notify Pledgeholder and the Secured Party in writing when Pledgor obtains knowledge of the occurrence of any default specified in this Agreement, the Note or the Loan Agreement.  A default shall occur hereunder if Pledgor (a) fails to perform any of the terms, covenants or conditions of this Agreement, the Note, or the Loan Agreement, or (b)  fails to make any payment when due, and has not cured said default within fourteen (14) days receipt of written notice thereof from Secured Party.

5.2 

Acceleration of Obligations. Upon the occurrence of an event of default as provided in Section 5.1 above and the passage of any applicable cure periods, the Secured Party through the Pledgeholder may at any time thereafter, by written notice to Pledgor, declare the unpaid principal balance of any Obligations, together with the interest accrued thereon and other amounts accrued hereunder, to be immediately due and payable; and the unpaid balance will thereupon be due and payable, all without presentation, demand, protest or further notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained herein or in any of the other Loan Documents. Notwithstanding the above, to the extent any of the Obligations referred to herein are payable upon demand, nothing herein will restrict nor negate the demand nature of such Obligations. 

5.3 

Remedies.  After maturity of any of the Obligations, or If an Event of Default shall occur, Pledgor shall give immediate written notice thereof to Pledgeholder and the Secured Party. Upon the occurrence of an Event of Default, and at, any time thereafter, the Secured Party through the Pledgeholder shall have the right, without notice to or demand upon Pledgor, to exercise any one or more of the following remedies: 

(a) 

accelerate and declare all or any part of the Obligations to be immediately due, payable and performable, notwithstanding any deferred or installment payments allowed by any agreement or instrument evidencing or relating to any of the same;

(b) 

transfer any of the Securities into the Secured Party, without notice to or consent of Pledgor;

(c)  

exercise all of Pledgor's rights as an entitlement holder and/or owner of the Securities;

(d)

notify any issuer, transfer agent or securities intermediary, or holder of any Collateral or Certificates of this pledge of the Collateral, and direct such issuer, transfer agent or securities intermediary to comply with all instructions and entitlement orders originated by the Pledgeholder on behalf of the Secured Party without further consent of Pledgor, and/or deliver directly in trust to the Secured Party any Collateral, Certificates and subsequent shares of stock, dividend payments or other distributions pertaining to the Collateral or arising from Pledgor's ownership of the Collateral, and in each case Pledgor hereby unconditionally directs such parties to comply with the Pledgeholder’s requests in all respects; and

(e)

sell or otherwise dispose of the Securities as provided for herein and at law, and other Collateral, at a public or private sale, for cash, or other property, or on credit, with the authority to adjourn or postpone any such sale from time to time without notice other than oral announcement at the time scheduled for sale.  The Secured Party may directly or through any affiliate purchase the Securities, and other Collateral, at any such public disposition, and if permissible under applicable law, at any private disposition. Pledgor and the Pledgeholder hereby agree that it shall conclusively be deemed commercially reasonable for the Secured Party, in connection with any sale or disposition of the Securities, to impose restrictions and conditions as to the investment intent of a purchaser or bidder, the ability of a purchaser or bidder to bear the economic risk of an investment in the Securities, the knowledge and experience in business and financial matters of a purchaser or bidder, the access of a purchaser or bidder to information concerning the issuer of the Securities, as well as legend conditions and stop transfer instructions restricting subsequent transfer of the Securities, and any other restrictions or conditions which the Pledeholder on behalf of the Secured Party believes to be necessary or advisable in order to comply with any state or federal securities or other laws. Pledgor acknowledges that the foregoing restrictions may result in fewer proceeds being received upon such sale then would otherwise be the case. Pledgor hereby agrees to provide to Pledgeholder any and all information required by Pledgeholder in connection with any sales of Securities by the Pledgeholder on behalf of the Secured Party hereunder. If, after the occurrence of any Event of Default, Rule 144 promulgated by the Securities and Exchange Commission (or any other similar rule) is available for use by Pledgeholder and/or the Secured Party in connection with the sales of any Securities hereunder, Pledgor agrees not to utilize Rule 144 in the sale of any securities held by Pledgor of the same class as the Securities, without the prior written consent of the Pledgeholder. Any and all attorneys' fees, expenses, costs, liabilities and obligations incurred by Pledgeholder on behalf of the Secured Party in connection with the foregoing shall be added to and become a part of the Obligations and shall be due from Pledgor to the Secured Party upon demand.

Page 5 of 9

5.4 

Cumulative Remedies; Notice; Waiver. In addition to the remedies set forth herein, the Secured Party will have all other rights and remedies for default provided by the uniform commercial code, as well as any other applicable law, including, without limitation, the right to dispose of the collateral without judicial process. The rights and remedies specified herein are cumulative and are not exclusive of any rights or remedies which the Secured Party would otherwise have. With respect to such rights and remedies:

(a) 

Notice of Disposition. Written notice, when required by law, sent to any address of Pledgor in this Agreement or otherwise provided to Pledgeholder and the Secured Party, at least five (5) calendar days (counting the day of sending) before the date of a proposed disposition of the Collateral will be deemed reasonable notice but less notice may be reasonable under the circumstances;

(b) 

Possession of Collateral/Commercial Reasonableness.  The Pledgeholder on behalf of the Secured Party shall not, at any time, be obligated to either take or retain possession or control of the Collateral. With respect to Collateral in the possession or control of the Pledgeholder, Pledgor, the Pledgeholder and the Secured Party agree that as a standard for determining commercial reasonableness, (and in addition to the provisions of Section 4.2 above) the Pledgeholder on behalf of the Secured Party need not liquidate, collect, sell or otherwise dispose of any of the Collateral if Pledgeholder believes, in good faith, that disposition of the Collateral would not be commercially reasonable, would subject Pledgerholder or the Secured Party to third-party claims or liability, would cause the Pledgeholder or the Secured Party to violate federal or state securities laws, that other potential purchasers could be attracted or that a better price could be obtained if Pledgeholder and/or the Secured Party held the Collateral for up to one (1) year.  The Pledgeholder on behalf of the Secured Party may sell Collateral without giving any warranties and may specifically disclaim any warranties of title or the like. Furthermore, Pledgeholder on behalf of the Secured Party may sell the Collateral on credit (and reduce the Obligations only when payment is received from the buyer), at wholesale and/or with or without an agent or broker; The Pledgeholder on behalf of the Secured Party need not register any securities collateral under state or federal law; and Pledgeholder on behalf of the Secured Party need not complete, process, or otherwise prepare the Collateral prior to disposition. If the purchaser fails to pay for the Collateral, Pledgeholder on behalf of the Secured Party may resell the Collateral and Pledgor shall be credited with the cash proceeds of the sale. The Pledgeholder on behalf of the Secured Party may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

Page 6 of 9

(c) 

Waiver by Pledgor.  Pledgeholder on behalf of the Secured Party has no obligation and Pledgor waives any obligation to attempt to satisfy the Obligations by collecting the obligations from any third parties and Pledgeholder on behalf of the Secured Party may release, modify or waive any collateral provided by any third party to secure any of the Obligations, all without affecting the Secured Party' rights against Pledgor. Pledgor further waives any obligation on the part of Pledgeholder on behalf of the Secured Party to marshal any assets in favor of Pledgor or in payment of the Obligations. Notwithstanding any provisions in this Agreement or any other agreement between Pledgor, the Pledgeholder or the Secured Party, Pledgor does not waive any statutory rights except to the extent that the waiver thereof is permitted by law.

(d) 

Waiver by The Secured Party.  Pledgeholder on behalf of the Secured Party, with the prior written consent of all the Secured Party, may permit Pledgor to attempt to remedy any default without waiving its rights and remedies hereunder, and Pledgeholder on behalf of the Secured Party, with the prior written consent of all the Secured Party, may waive any default without waiving any other subsequent or prior default by Pledgor. Furthermore, delay on the part of the Pledgeholder on behalf of the Secured Party in exercising any right, power or privilege hereunder or at law will not operate as a waiver thereof, nor will any single or partial exercise of such right, power or privilege preclude other exercise thereof or the exercise of any other right, power or privilege. No waiver or suspension will be deemed to have occurred unless the Pledgeholder on behalf of the Secured Party, with the prior written consent of all the Secured Party, has expressly agreed in writing to such waiver or suspension.

ARTICLE VI.

MISCELLANEOUS

6.1

Term.  This Agreement and the Secured Party' rights hereunder shall continue in full force and effect until all of the Obligations have been fully paid, performed and discharged. Upon termination, Pledgeholder on behalf of the Secured Party shall return the Collateral to Pledgor, with any necessary instruments of transfer.

6.2

 Revivor. If any payment made on any of the Obligations shall for any reason be required to be returned by the Secured Party, whether on the ground that such payment constituted a preference or for any other reason, then for purposes of this Agreement, and notwithstanding any prior termination of this Agreement, such payment on the Obligations shall be treated as not having been made, and this Agreement shall in all respects be effective with respect to the Obligations as though such payment had not been made; and if the Collateral has been released or returned to Pledgor, then Pledgor shall return the Collateral to Pledgeholder on behalf of the Secured Party, to be held and dealt with in accordance with the terms of this Agreement.

6.3 

Relationship to Other Documents. The warranties, representations, covenants and duties of Pledgor (and the rights and remedies of the Secured Party) that are outlined in this Agreement, the Note and Security Agreement, are intended to supplement each other. In the event of any inconsistencies between the terms in the Note, the Security Agreement, the Purchase Agreeement and this Agreement, all such inconsistencies will be construed so as to give the Secured Party the most favorable rights. Furthermore, Pledgor and the Secured Party waive any presumption or rule requiring construction of this Agreement against the drafter.

Page 7 of 9

6.4

Notices.  All notices, requests, demands and other communications under this Agreement, shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given or within five (5) business days if mailed to the party to whom notice is to be given, by first-class mail, registered, or certified, postage prepaid and properly addressed as follows:

If to the Borrower, addressed to:

Omnitek Engineering Corp.

Attn: Werner Funk, President

1945 S. Rancho Santa Fe Road

San Marcos, CA 92078

If to Lender, addressed to: 

Chachas Land Co., Inc.

Attn: Gregory J. Chachas

P.O. Box 151538

Ely, Nevada 89315

Any notice mailed to any party hereunder will be deemed effective within five (5) business days of deposit in the United States mail.

6.5 

Nature of Liability/Successors. The rights, powers and remedies granted in this Agreement to Pledgeholder and the Secured Party will extend to Pledgerholders’ and Secured Party' successors, Participant (as defined below) and assigns, and the provisions of this Agreement will be binding upon Pledgor and its successors and assigns. 

6.6

Expenses and Attorneys' Fees. Pledgor will reimburse Pledgeholder and the Secured Party for all fees and out-of-pocket disbursements incurred by the Pledgeholder on behalf of the Secured Party, the Secured Party and any Participant in connection with: the preparation of this Agreement; perfecting, establishing and confirming the priority of the Secured Party' security interest in the Collateral; any confirmations, audits or appraisals of Pledgor's business operations and the Collateral; the amendment, administration, defense and enforcement of this Agreement, the Note or Security Agreement, and any waivers with respect thereto. Pledgor also will reimburse Pledgeholder on behalf of the Secured Party and the Secured Party, including all attorneys' fees, before and after judgment, and all costs of preservation and/or liquidation of the Collateral.

6.7

Applicable Law and Jurisdiction; Interpretation and Modification. This Agreement, the Note and Security Agreement will be governed by and interpreted in accordance with the laws of the State of California.  This Agreement shall be deemed made and entered into in San Diego County, State of California and venue for any proceeding or action in connection with this Agreement shall be in San Diego County, California.  Invalidity of any provision of this Agreement will not affect the validity of any other provision. The provisions of this Agreement, the Note or Security Agreement, will not be altered, amended or waived without the express written consent of all the Secured Party (and Pledgor, when appropriate).  Pledgor hereby consents to the exclusive jurisdiction of any state or federal court situated in san diego  county, california, and waives any objection based on forum non conveniens, with regard to any actions, claims, disputes or proceedings relating to this agreement, the collateral, any other loan document, or any transactions arising therefrom, or enforcement and/or interpretation of any of the foregoing. Nothing herein will affect Pledgeholder or the Secured Party's right to serve process in any manner permitted by law, or limit the Pledgeholder on behalf of the Secured Party or the Secured Party right to bring proceedings against Pledgor in the competent courts of any other jurisdiction or jurisdictions. 

Page 8 of 9

6.8

Copies; Entire Agreement; Modification. Pledgor hereby acknowledges the receipt of a copy of this Agreements.

6.9 

Waiver of Jury Trial.   Pledgor and the Pledgerholder and the Secured Party hereby jointly and severally waive any and all right to trial by jury in any action or proceeding relating to any of the loan documents, this agreement, the obligations thereunder, the collateral or any transaction arising therefrom or connected thereto. Pledgor and the Pledgeholder and the Secured Party each represents to the other that this waiver is knowingly, willingly and voluntarily given.

6.10 

Attachments. All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Agreement, are hereby expressly incorporated by reference.

IN WITNESS WHEREOF, the undersigned has/have executed this Pledge Agreement the date and year first written above.

 

PLEDGOR

OMNITEK ENGINEERING CORP.

/s/ Werner Funk                               

By: Werner Funk

Its: President and CEO

SECURED PARTY

CHACHAS LAND CO., INC.

/s/ Gregory J. Chachas                    

By: Gregory J. Chachas

Its:  President

 

PLEDGEHOLDER

CHACHAS LAND CO., INC.

/s/ Gregory J. Chachas                    

By: Gregory J. Chachas

Its:  President

Page 9 of 9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00199-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00199-of-00352.parquet"}]]