Document:

seaway10ksba1123107ex10-7.htm

    
      

      

    

    EXHIBIT 10.7

     

    
      CONVERTIBLE PROMISSORY
NOTE

      $1,200,000
PLUS INTEREST DUE & PAYABLE

      DOCUMENT
B-12102007

      
 

      THIS NOTE
AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE
EXEMPTION OR SAFE HARBOR PROVISION.

      

      FOR VALUE
RECEIVED, on the Effective Date, as defined below  Seaway Valley Capital
Corp. as Obligor ("Borrower,” or “Obligor”), hereby promises to pay to
the Lender (“Lender” or “ Holder”), as defined below, the Principal Sum, as
defined below, along with the Interest Rate, as defined below, according to the
terms herein.

      

      

      
        	
                 

                The
      "Effective Date" shall be:

              	
                 

                December
      10, 2007

              
	
                 

                The
      "Lender" shall be:

              	
                 

                JMJ
      Financial / Its Principal, or Its Assignees

              
	
                 

                The
      "Principal Sum" shall be:

              	
                 

                $1,200,000
      (one million two hundred thousand) US Dollars; Subject to the following:
      accrued, unpaid interest shall be added to the Principal Sum.  The
      Principal Sum includes a one-time $200,000 original issue discount
      immediately incurred at the Effective Date.

              
	
                 

                The
      “Consideration” shall be:

              	
                 

                $1,000,000
      (one million) dollars in the form of the Secured & Collateralized
      Promissory Note Document C-12102007 (including Security & Collateral
      Agreement).

              
	
                 

                The
      "Interest Rate" shall be:

              	
                 

                10%
      one-time interest charge on the Principal Sum incurred at the Effective
      Date.   No interest or principal payments are required until the
      Maturity Date, but both principal and interest may be included in
      conversion prior to maturity date.  

              
	
                 

                 

                The
      "Conversion Price" shall be the following price:

              	
                 

                As
      applied to the Conversion Formula set forth in 2.2, the lesser of (a)
      $0.01 or (b) 75% of the lowest trade price in the 20 trading days previous
      to the conversion; as applies to Seaway Valley Capital Corp. voting common
      stock.

              
	
                 

                The
      "Maturity Date" is the date upon which the Principal Sum of this Note, as
      well as any unpaid interest shall be due and payable, and that date shall
      be:

              	
                 

                 

                December
      10, 2011

              
	
                 

                The
      “Prepayment Terms” shall be:

              	
                 

                Prepayment
      is permitted at any time by payment in the form of any of the following:
      (1) cash, or (2) other  negotiated form of payment mutually agreed to
      in writing, or (3) by surrender of the Secured & Collateralized
      Promissory Note Document C-12102007.   Prepayment will incur a 5%
      annual charge penalty on the outstanding balance of principal and accrued
      interest amount.

              

      

      

      
 

      DOCUMENT
B-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      ARTICLE
1 PAYMENT-RELATED PROVISIONS

      

      1.1    
Interest Rate. Subject to the Holder's right to convert, interest payable on
this Note will accrue interest at the Interest Rate and shall be applied to the
Principal Sum.  Interest Rate is defined as 10% one-time interest charge on
the Principal Sum incurred at the Effective Date.   

       

      

      ARTICLE
2 CONVERSION RIGHTS

      

      The
Holder will have the right to convert the Principal Sum and accrued interest
under this Note into Shares of the Borrower's Common Stock as set forth
below.

      

      2.1   
Conversion Rights and Cashless Exercise. Subject to the terms set forth in
Section 2.7, the Holder will have the right at its election from and after the
Effective Date, and then at any time, to convert all or part of the outstanding
and unpaid Principal Sum and accrued interest into shares of fully paid and
nonassessable shares of common stock of Seaway Valley Capital Corp. (as such
stock exists on the date of issuance of this Note, or any shares of capital
stock of Seaway Valley Capital Corp.  into which such stock is hereafter
changed or reclassified, the "Common Stock") as per the Conversion Formula set
forth in Section 2.2. Any such conversion shall be cashless, and shall not
require further payment from Holder.  Unless otherwise agreed in writing by
both the Borrower and the Holder, at no time will the Holder convert any amount
of the Note into common stock that would result in the Holder owning more than
4.99% of the common stock outstanding of Seaway Valley Capital Corp.
  Shares from any such conversion will be delivered to Holder within 2
(two) business days of conversion notice delivery (see 3.1) via 10:30am priority
overnight delivery service (see Section 2.6).

       

      2.2.  
Conversion Formula. The number of shares issued through conversion is the
conversion amount divided by the conversion price.

      

      # Shares
= Conversion
Amount

           Conversion
Price

       

           
2.3     Conversion Formula Adjustments. The Conversion
Formula described in Sections 2.2 and the number and kind of shares or other
securities to be issued upon conversion is subject to adjustment upon any of the
events as described in 2.3.1 to 2.3.3, or any other event as mutually agreed in
writing by both the Holder and Borrower.  The adjustment due to any of the
described events shall be: The result of the Conversion Formula described in 2.2
above shall be multiplied by (2) two, such that the number of shares calculated
in the Conversion Formula would be doubled.

      

      2.3.1.
Merger, Consolidation or Sale of Assets. If the Borrower at any time
consolidates with or merges into, or sells or conveys all or substantially all
of its assets to, any other entity where the Borrower is not the surviving
entity, the unpaid Principal Sum of this Note and accrued interest thereon will
thereafter be deemed to evidence the right to purchase such number and kind of
shares or other securities and property as would have been issuable or
distributable, on account of such consolidation, merger, sale or conveyance,
upon or with respect to the securities subject to the conversion or
purchase right immediately prior to such consolidation, merger, sale or
conveyance. The foregoing provision will similarly apply to successive
transactions of a similar nature by any such successor or purchaser. Without
limiting the generality of the foregoing, the anti-dilution provisions of this
Note will apply to such securities of such successor or purchaser after any such
consolidation, merger, sale or conveyance.

      

      

      DOCUMENT
B-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      2.3.2.
Reclassification. If the Borrower at any time, by reclassification or otherwise,
changes the Common Stock into the same or a different number of securities of
any class or classes, the unpaid Principal Sum of this Note and accrued interest
thereon will thereafter be deemed to evidence the right to purchase such number
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such reclassification or
other change.

      

      2.3.3.
Stock Splits, Stock Dividends, and Combinations.  If the shares of Common
Stock are subdivided or combined into a greater or smaller number of shares of
Common Stock, or if a stock dividend is paid on the Common Stock.

      

      2.4.   
Adjustment Upon Dilutive Offers, Agreements, or Sales.  If the Borrower, at
any time while this Note is outstanding, enters into an agreement subsequent to
the Effective Date under which it issues or agrees to issue either its common
stock, options, or warrants to purchase or convert to its common stock at a
price or exercise price or conversion price (a "Subsequent Share Price"), as the
case may be, that is less than the conversion price or subsequent conversion
formula result set forth in Section 2.2, then the conversion price set forth in
Section 2.2. shall be automatically adjusted to equal the Subsequent Share
Price.

      

      2.5   
Reservation of Shares. As of the issuance date of this Note and for the
remaining period during which the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note constitutes full authority to its officers, agents and
transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.

      

      2.6.
  Delivery of Conversion Shares.  Shares from any such conversion will
be delivered to Holder within 2 (two) business days of conversion notice
delivery (see 3.1) via 10:30am priority overnight delivery service (see “Share
Delivery” attachment).  If those shares are not delivered in accordance
with this timeframe stated in this Section 2.6, at any time for any reason prior
to offering those shares for sale in a private transaction or in the public
market through its broker, Holder may rescind that particular conversion to have
the conversion amount returned to the note balance with the conversion shares
returned to the Borrower.

      

      2.7.
  Discharge By Payment.  Conversions under this Convertible Promissory
Note Document B-12102007 are available only after the Conversion Amount
described herein is discharged by payment of equal or greater value from the
Secured & Collateralized Promissory Note Document C-12102007 by either, at
the Holder’s choice, cash payment, or surrender of security/collateral, or other
negotiated form of payment mutually agreed to in writing.

      

       

      

      DOCUMENT
B-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ARTICLE
3 MISCELLANEOUS

      

      3.1.  
Notices. Any notice required or permitted hereunder must be in writing and
either personally served, sent by facsimile or email transmission, or sent by
overnight courier.  Notices will be deemed effectively delivered at the
time of transmission if by facsimile or email, and if by overnight courier the
business day after such notice is deposited with the courier service for
delivery.

      

      3.2.  
Amendment Provision. The term "Note" and all reference thereto, as used
throughout this instrument, means this instrument as originally executed, or if
later amended or supplemented, then as so amended or supplemented.

      

      3.3.  
Assignability. This Note will be binding upon the Borrower and its successors
and permitted assigns, and will inure to the benefit of the Holder and its
successors and permitted assigns, and may be assigned by the
Holder.

      

      3.4.  
Governing Law. This Note will be governed by, and construed and enforced in
accordance, with the laws of the State of Florida, without regard to the
conflict of laws principles thereof.

      

      3.5.  
Maximum Payments. Nothing contained herein may be deemed to establish or require
the payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law. In the event that the rate of interest required to
be paid or other charges hereunder exceed the maximum permitted by such law, any
payments in excess of such maximum will be credited against amounts owed by the
Borrower to the Holder and thus refunded to the Borrower.

      

      3.6.   
Attorney Fees. In the event any attorney is employed by either party to this
Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding will be
entitled to recover from the other party reasonable attorneys' fees and other
costs and expenses incurred, in addition to any other relief to which the
prevailing party may be entitled.

      

      3.7.   
No Public Announcement. No public announcement may be made regarding this Note,
payments, or conversions without written permission by both Borrower and
Holder.

      

      3.8.   
Opinion of Counsel. In the event that an opinion of counsel is needed for any
matter related to this Note, Holder has the right to have any such opinion
provided by its counsel.  Holder also has the right to have any such
opinion provided by Borrower’s counsel.

      

      3.9.   
Additional Financing.  The Holder, at its option, may invest up to an
additional $1,000,000 (one million dollars), in part, whole, and/or multiple
transactions, in Seaway Valley Capital Corp. on the same terms as set forth in
this agreement for a period of two years from the Effective Date.  In the
event that Holder wishes to exercise this right, the Borrower will be notified
by the Notice of Additional Financing Form, and any additional financing will be
memorialized by an additional Convertible Promissory Note(s), and if applicable
Secured & Collateralized Promissory Note by the Holder.

       

      

      DOCUMENT
B-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      3.10. 
Effective Date.  This Note will become effective only upon occurrence of
the three following events: the Effective Date of December 10, 2007 has been
reached, execution by both parties, and delivery of valid payment by the Lender
in the form of the Secured & Collateralized Promissory Note Document
C-12102007 (including Security & Collateral Agreement)..  

      

      3.11.
Director’s Resolution.  Once effective, Borrower will execute and deliver
to Holder a copy of a Board of Director’s resolution resolving that this note is
validly issued, paid, and effective.

      

      

      
        	
                BORROWER[S]:

              	 
      
	 
      	
                LENDER/HOLDER:

              
	 
      	 
      
	 
      	 
      
	 
      	
                /s/ JMJ FINANCIAL

              
	
                /s/ Thomas Scozzafava

              	 
      
	 
      	
                 JMJ
      Financial / Its Principal

              
	
                Thomas
      Scozzafava

              	 
      
	
                Chairman
      & CEO

              	 
      
	
                Seaway
      Valley Capital Corp.

              	 
      

      

      

       

      

      DOCUMENT
B-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SAMPLE

      

      NOTICE OF
CONVERSION

      

      (To be
executed by the Holder in order to convert the Note)

      

      The
undersigned hereby elects to convert a portion of the Note issued by Seaway
Valley Capital Corp. on December 10, 2007 into Shares of Common Stock of Seaway
Valley Capital Corp. according to the conditions set forth in such Note, as of
the date written below.

      

      Date of
Conversion:________________________________________________

      

      Conversion
Amount:__________________________________________________

      

      Conversion
Price:__________________________________________________

      

      Shares To
Be Delivered:_____________________________________________

      

      Signature:________________________________________________________

      

      Print
Name:______________________________________________________

      

      Address:________________________________________________________

      

      _______________________________________________________________

      

       _______________________________________________________________

      

      

      

      

      Shares
must be delivered to Holder within 2 (two) business days of conversion notice
via 10:30am priority overnight delivery service in accordance with Section 2.6.
 

      

      

      DOCUMENT
B-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      NOTICE OF ADDITIONAL FINANCING FORM

      

      (To be
executed by Holder when intending to invest additional funds)

      

      

      This Form
is notification that I intend to invest additional funds into Seaway Valley
Capital Corp. as set forth in Section 3.9 of the Convertible Promissory Note
dated December 10, 2007,

      

      

      Intended
Amount: $_______________________

      

      

      Intended
Execution Date of Documentation: ________________________________

      

      

      Intended
Delivery Date of Payment: _____________________________

      

      

      

      

      

      _______________________________________

      

      

      Dated:____________________________________

      

      

      

      DOCUMENT
B-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SHARE
DELIVERY ATTACHMENT

      

      EXAMPLE

      

      2.6.
 Delivery of Conversion Shares.  Shares from any such conversion will
be delivered to Holder within 2 (two) business days of conversion notice
delivery (see 3.1) via 10:30am priority overnight delivery service.  If
those shares are not delivered in accordance with this timeframe stated in this
Section 2.6, at any time for any reason prior to offering those shares for sale
in a private transaction or in the public market through its broker, Holder may
rescind that particular conversion to have the conversion amount returned to the
note balance with the conversion shares returned to the Borrower.

      

      Example:

      

      Holder
delivers conversion notice to Borrower at 4:45pm eastern time on Monday January
1 st
..

      

      Borrower’s
transfer agent must send shares to Holder via 10:30am overnight delivery no
later than Tuesday January 2 nd
..

      

      Holder
must have received the shares or received delivery attempt no later than 10:30am
eastern time on Wednesday January 3 rd
..

      

      

      

      DOCUMENT
B-12102007seaway10ksba1123107ex10-8.htm

    
      

      

    

    
      EXHIBIT 10.8

       

      SECURED & COLLATERALIZED PROMISSORY
NOTE

      $1,000,000
PLUS INTEREST DUE & PAYABLE

      DOCUMENT
C-12102007

      

      THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE HARBOR
PROVISION.

      

      FOR VALUE
RECEIVED, on the Effective Date, as defined below, JMJ Financial (the
"Borrower,” or “Writer”), hereby promises to pay to the Lender (“Lender” or “
Holder”), as defined below, the Principal Sum, as defined below, along with the
Interest Rate, as defined below, according to the terms herein.

      

      

      
        	
                 

                The
      "Effective Date" shall be:

              	
                 

                December
      10, 2007

              
	
                 

                The
      "Holder" shall be:

              	
                 

                Seaway
      Valley Capital Corp.

              
	
                 

                The
      "Principal Sum" shall be:

              	
                 

                $1,000,000
      (one million US Dollars); Subject to the following: accrued, unpaid
      interest shall be added to the Principal Sum.

              
	
                 

                The
      “Consideration” shall be:

              	
                 

                $1,000,000
      (one million) dollars in the form of this $1,000,000 Secured &
      Collateralized Promissory Note as memorialized and evidenced by the
      attached Exhibit A Collateral and Security Agreement.

              
	
                 

                The
      "Interest Rate" shall be:

              	
                 

                12%
      one-time interest charge on the Principal Sum.   No interest or
      principal payments are required until the Maturity Date, but both
      principal and interest may be prepaid prior to maturity date.
       

              
	
                 

                The
      “Recourse” terms shall be:

              	
                 

                This
      is a full recourse Note such that if the Writer defaults on the payment of
      this Note, forcing the Holder to foreclose on the security/collateral and
      there is a deficiency between (1) the outstanding principal and interest
      amount and (2) the foreclosure liquidation amount; then the Holder has the
      right to pursue additional claims against the Writer for that
      deficiency.

              
	
                 

                The
      “Collateral” or “Security” shall be:

              	
                 

                XXXX
      (XXXXXX) shares of common stock of XXXXXXX, a Nasdaq listed publicly
      traded company, worth in excess of $1,000,000, as memorialized and
      evidenced by the attached Exhibit A Collateral and Security
      Agreement.

              
	
                 

                The
      "Maturity Date" is the date upon which the Principal Sum of this Note, as
      well as any unpaid interest shall be due and payable, and that date shall
      be:

              	
                 

                 

                December
      10, 2012

              
	
                 

                The
      “Prepayment Terms” shall be:

              	
                 

                Prepayment
      is permitted at any time by payment in the form of  any of the
      following: (1) cash, or (2) other negotiated form of payment mutually
      agreed to in writing, or (3) by surrender of the Convertible Promissory
      Note Document B-12102007, or (4) by surrender of the of the Collateral or
      Security with which this Promissory Note is
  secured.

              

      

      

      

      DOCUMENT
C-12102007

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ARTICLE
1 PAYMENT-RELATED PROVISIONS

      

      1.1 Loan
Payment Schedule. While no principal or interest payments are required until the
Maturity Date, unless otherwise adjusted by Writer with written notice to
Holder, or unless otherwise prepaid as set forth above whereby prepayment is
permitted at any time by payment of cash, or other mutually agreed and
negotiated payment, or by surrender of the Convertible Promissory Note Document
B-12102007, or by surrender of the Collateral or Security related hereto;
provided that all conversions are honored as set forth under Convertible
Promissory Note Document B-12102007 and provided that Rule 144 is available to
remove the restrictive legend from those shares obtained in those conversions
and such that the shares effectively become immediately freely tradable, Writer
will plan to make payments in total monthly amounts of $100,000 beginning 180
days from the execution of this agreement.  Writer reserves the right to
(1) make payments prior to 180 days from the execution of this agreement, and
(2) to make payments in monthly amounts in excess of $100,000, and (3) to adjust
this payment schedule and payment amounts with written notice to
Holder.

      

      1.2  
Interest Rate.  Interest payable on this Note will accrue interest at the
Interest Rate and shall be applied to the Principal Sum.  Interest Rate is
defined as 12% one-time interest charge on the Principal Sum incurred at the
effective date.   

      

      1.3  
Application of Payment.  Unless otherwise specified in writing by Writer,
all payments made on this Note will be first applied to the Principal
Sum.

      

      

      

      ARTICLE
2 MISCELLANEOUS

      

      2.1. 
Notices. Any notice required or permitted hereunder must be in writing and be
either personally served, sent by facsimile or email transmission, or sent by
overnight courier.  Notices will be deemed effectively delivered at the
time of transmission if by facsimile or email, and if by overnight courier the
business day after such notice is deposited with the courier service for
delivery.

      

      2.2. 
Amendment Provision. The term "Note" and all reference thereto, as used
throughout this instrument, means this instrument as originally executed, or if
later amended or supplemented, then as so amended or supplemented.

      

      2.3. 
Assignability. This Note will be binding upon the Writer and its successors and
permitted assigns, and will inure to the benefit of the Holder and its
successors and permitted assigns, and may be assigned by the Holder only with
written consent by Writer.

      

      2.4. 
Governing Law. This Note will be governed by, and construed and enforced in
accordance, with the laws of the State of Florida, without regard to the
conflict of laws principles thereof.

      

      2.5. 
Maximum Payments. Nothing contained herein may be deemed to establish or require
the payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law. In the event that the rate of interest required to
be paid or other charges hereunder exceed the maximum permitted by such law, any
payments in excess of such maximum will be credited against amounts owed by the
Borrower to the Holder and thus refunded to the Writer.

      

      

      DOCUMENT
C-12102007

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      2.6. 
Attorney Fees. In the event any attorney is employed by either party to this
Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding will be
entitled to recover from the other party reasonable attorneys' fees and other
costs and expenses incurred, in addition to any other relief to which the
prevailing party may be entitled.

      

      2.7. No
Public Announcement. No public announcement may be made regarding this Note,
payments, or conversions without written permission by both Writer and
Holder.

      

      2.8. 
Transfer, Pledge, Sale, Collateral, Offer.  Holder may not transfer,
pledge, sell, use as collateral, offer, or hypothecate this Note to any third
party without written approval from Writer.  

      

      2.9. 
Effective Date.  This Note will become effective only upon occurrence of
the three following events: the Effective Date of December 10, 2007 has been
reached, execution by both parties, delivery of Document B-12102007 by the
Writer.  

      

      

      
        	
                HOLDER:

              	 
      
	 
      	
                WRITER:

              
	 
      	 
      
	 
      	 
      
	 
      	
                /s/
      JMJ FINANCIAL

              
	
                /s/ Thomas
      Sozzafava

              	 
      
	 
      	
                ____________________________

              
	
                Thomas
      Scozzafava

              	 
      
	 
      	
                JMJ
      Financial / Its Principal

              
	
                Chairman
      & CEO

              	 
      
	
                Seaway
      Valley Capital Corp.

              	 
      

      

      

       

      

        DOCUMENT
C-12102007

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        EXHIBIT
A

        COLLATERAL
& SECURITY AGREEMENT

        

        

        1. Security Interest .
Writer hereby grants to Holder a security interest in the following described
property (“Security” or “Collateral” or “Security Interest”):

        

        XXXXX
(XXXXXXXX) shares of common stock of XXXXXXX, a Nasdaq listed publicly traded
company, worth in excess of $1,000,000

        

        This
Collateral and security interest will secure the payment and performance of the
Writer’s Secured & Collateralized Promissory Note Document C-12102007 in the
amount of $1,000,000 (one million).

        

        

        2. 
Warranties and
Covenants of Writer .  Writer makes the following warranties and
covenants to Holder:

        

        (A)
Writer is the sole owner of the Collateral free from any lien, security
interest, or encumbrance, and Writer will defend the Collateral against all
claims and demands of all parties at any time claiming interest
therein.

        

        (B) This
Collateral has not been pledged, assigned, or hypothecated for any other
purpose, and no financing statement is on file in any local, state, or federal
institution, bureau, government, or public office.

        

        (C) While
the principal and interest balance of the Secured & Collateralized
Promissory Note Document C-12102007 remains outstanding, Writer will not
transfer, sell, offer to sell, assign, pledge, liquidate, spend, or otherwise
transfer to any party an amount of the Collateral equal to or greater than the
outstanding balance of the Secured & Collateralized Promissory Note Document
C-12102007.

        

        (D)
Writer will pay promptly when due all taxes, expenses, and assessments upon the
Collateral.

        

        

        3. Perfection . Holder
has the right, upon its election, to perfect the Collateral and security and
this Collateral and Security Agreement by filing a financing statement or like
instrument with its proper local, state, or federal institution, bureau,
government, or public office.  Holder is encouraged to perfect this
instrument, and Writer will reasonably assist in Holder’s doing so.

        

        

        4. Remedies Upon Default
.. In the event of Writer’s default on the Secured & Collateralized
Promissory Note Document C-12102007, Holder may declare all obligations secured
hereby immediately due and payable and shall have the remedies of a secured
party, including without limitation the right to take immediate and exclusive
possession of the Collateral or any part thereof, or to obtain a court order to
do so; and the Writer must surrender the security and Collateral to the Holder
within 5 (five) business days of receiving written notice that Holder is taking
possession of the Collateral as remedy of default.

        

        

        DOCUMENT
C-12102007

        
          
             

          

          
             

            
              

            

          

          
             

          

        

        5. 
Normal Course of
Business .  Provided that no default has occurred on the Secured
& Collateralized Promissory Note Document C-12102007, Writer will use and
possess the Collateral in the normal course of business.  Further, Writer
may liquidate, transfer, or exchange the Collateral into another viable
investment vehicle with equal or greater market value, such as liquidation of
shares into cash or money market, or liquidation of shares or money market fund
for purposes of investing in other viable investment vehicles including but not
limited to bonds, other money market funds, mutual funds, or stocks.
 However, any liquidation, transfer, or exchange into another viable
investment vehicle will not affect Holder’s security, rights, or claims to the
underlying Collateral. At any time upon Holder’s request, Writer will promptly
provide update on the investment vehicle placement of this
Collateral.

        

        

        6. 
Termination of
Security .  At the time of prepayment or payoff of the Secured &
Collateralized Promissory Note Document C-12102007 to Holder by Writer, Holder’s
security interest in this Collateral shall automatically terminate.  In the
event that the Collateral and security interest were perfected by Holder as set
forth in Section 3, upon termination of security as set forth in this section 6,
the Holder will withdraw any and all perfection instruments on the collateral
and security within 5 (five) business days.

        

        

        7. Governing Law . This
agreement will be governed by, and construed and enforced in accordance, with
the laws of the State of Florida, without regard to the conflict of laws
principles thereof.

        

        

        8. No Public
Announcement . No public announcement may be made regarding this
Collateral & Security Agreement without written permission by both Writer
and Holder.   In the
event that any securities law requires this document to be filed publicly, all
information regarding description of the Collateral that is considered personal
financial information shall be struck out with X and listed as
follows
:

        

        XXXXX
(XXXXXXXXXX) shares of common stock of XXXXX, a Nasdaq listed publicly traded
company, worth in excess of $1,000,000

        

        

        9. Effective Date .
 This agreement will become effective as set forth in Section 2.9 of
Secured & Collateralized Promissory Note Document C-12102007.

        

        

        

        
          	
                  HOLDER/SECURED
      PARTY:

                	 
      
	 
      	
                  WRITER:

                
	 
      	 
      
	 
      	 
      
	 
      	
                  /s/
      JMJ FINANCIAL

                
	
                  ____________________________

                	 
      
	 
      	
                  ____________________________

                
	
                  Thomas
      Scozzafava

                	 
      
	 
      	
                  JMJ
      Financial / Its Principal

                
	
                  Chairman
      & CEO

                	 
      
	
                  Seaway
      Valley Capital Corp.

                	 
      

        

        
 

        

        DOCUMENT
C-12102007

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}]]