EXHIBIT 10.09
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of September 14, 2001, by ENVIRONMENTAL POWER
CORPORATION, a Delaware corporation, ("Debtor") in favor of ALCO FINANCIAL
SERVICES, LLC, a California limited liability company ("Secured Party").
1. Definitions.
1.1. All capitalized terms used, but not defined, herein shall have the
respective meanings provided therefor in the Note, and if not therein defined,
then in the UCC.
1.2. The following terms shall have the meanings set forth below:
1.2.1. "Buzzard Stock" - the capital stock of Buzzard Power
Corporation now owned or hereafter acquired by Debtor.
1.2.2. "Collateral" - all now owned and hereafter acquired personal
property and fixtures, and proceeds thereof (including proceeds of proceeds),
including without limitation: Accounts; Chattel Paper; Inventory; Equipment;
Instruments, including Promissory Notes; Investment Property; Documents;; and
General Intangibles. Notwithstanding the foregoing, "Collateral" shall not
include the Buzzard Stock.
1.2.3. "Event of Default" -means the failure of the Debtor to pay or
perform any of the Obligations as and when due to be paid or performed under the
terms of the Note, which failure is not cured within ten (10) .
1.2.4. "Negotiable Collateral" - all of Debtor's present and future
letters of credit, notes, drafts, instruments, certificated and uncertificated
securities (including the shares of stock of subsidiaries of Borrower),
documents, personal property leases wherein Borrower is the lessor, chattel
paper, and Borrower's books and records relating to each of the foregoing.
1.2.5. "Note" - the Promissory Note, dated September 14, 2001, made
by Debtor in favor of Secured Party.
1.2.6. "Obligations" - all of the indebtedness, obligations, and
liabilities of the Debtor to the Secured Party, individually or collectively,
whether direct or indirect, joint or several, absolute or contingent, due or to
become due, now existing or hereafter arising under or in respect of the Note,
any other instruments or agreements executed and delivered pursuant thereto or
in connection therewith, or this Agreement.
1.2.7. "Permitted Liens" - The liens, if any listed on Exhibit
1.2.7.
1.2.8. "State" - California.
1.2.9. "UCC" - The Uniform Commercial Code in effect in the State at
the date on which a determination thereunder is to be made.
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2. Grant of Security Interest. To secure the payment and performance in full of
the Obligations, the Debtor grants to the Secured Party a security interest in
the Collateral, and all proceeds and products thereof.
3. Authorization to File Financing Statements.
3.1. The Debtor hereby irrevocably authorizes the Secured Party at any
time and from time to time to file in any Uniform Commercial Code jurisdiction
any initial financing statements and amendments thereto that:
3.1.1. indicate the Collateral as all assets of the Debtor (except
the Buzzard Stock) or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the UCC, or as being of an equal or lesser scope or with greater detail;
3.1.2. contain any other information required by Part 5 of Article 9
of the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether the Debtor is an organization, the
type of organization, and any organization identification number issued to the
Debtor and, (ii) in the case of a financing statement filed as a fixture filing
or indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates; and
3.1.3. contain a notification that the Debtor has granted a negative
pledge to the Secured Party, and that any subsequent lienor may be tortuously
interfering with Secured Party's rights;
3.1.4. advises third parties that any notification of Debtor's
Account Debtors will interfere with Secured Party's collection rights.
3.2. The Debtor agrees to furnish any of the foregoing information to the
Secured Party promptly upon request.
3.3. The Debtor ratifies its authorization for the Secured Party to have
filed any like initial financing statements or amendments thereto if filed prior
to the date hereof.
3.4. The Secured Party may add any supplemental language to any such
financing statement as Secured Party may determine to be necessary or helpful in
acquiring or preserving rights against third parties.
4. Other Actions. Debtor agrees to take the following actions at its own
expense with respect to the following Collateral:
4.1. Promissory Notes and Tangible Chattel Paper. If the Debtor shall at
any time hold any promissory notes or tangible chattel paper, the Debtor shall
forthwith endorse, assign, and deliver the same to the Secured Party,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Secured Party may from time to time specify.
4.2. Deposit Accounts.
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4.2.1. For each deposit account maintained at any time by the
Debtor, the Debtor shall, at the Secured Party's request and option, pursuant to
an agreement in form and substance satisfactory to the Secured Party, cause the
Secured Party to acquire Control over the deposit accounts.
4.2.2. The Secured Party shall not give any such instructions or
withhold any withdrawal rights from the Debtor, unless an Event of Default has
occurred and is continuing, or, after giving effect to any withdrawal would
occur.
4.2.3. The provisions of this paragraph shall not apply to (i) any
deposit account for which the Debtor, the depositary bank, and the Secured Party
have entered into a cash collateral agreement specially negotiated among the
Debtor, the depositary bank, and the Secured Party for the specific purpose set
forth therein, (ii) deposit accounts for which the Secured Party is the
depositary, and (iii) deposit accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of the Debtor's salaried employees.
4.3. Investment Property.
4.3.1. If the Debtor shall at any time hold or acquire any
certificated securities (other than the Buzzard Stock), the Debtor shall
forthwith endorse, assign, and deliver the same to the Secured Party,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Secured Party may from time to time specify.
4.3.2. If any securities now or hereafter acquired by the Debtor
(other than the Buzzard Stock) are uncertificated and are issued to the Debtor
or its nominee directly by the issuer thereof, the Debtor shall immediately
notify the Secured Party thereof and, at the Secured Party's request and option,
Debtor shall cause the Secured Party to acquire Control with respect thereto.
4.4. Collateral in the Possession of a Bailee.
4.4.1. If any goods are at any time in the possession of a bailee,
the Debtor shall promptly notify the Secured Party thereof and, if requested by
the Secured Party, shall promptly obtain an acknowledgement from the bailee, in
form and substance satisfactory to the Secured Party, that the bailee holds such
Collateral for the benefit of the Secured Party and shall act upon the
instructions of the Secured Party, without the further consent of the Debtor.
4.5. The Secured Party agrees with the Debtor that the Secured Party shall
not give any such instructions unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Debtor
with respect to the bailee.
4.6. Letter-of-Credit Rights. If the Debtor is at any time a beneficiary
under a Letter of Credit it shall promptly notify the Secured Party thereof and,
at the request and option of the Secured Party, the Debtor shall cause the
Secured Party to acquire Control thereof, in form satisfactory to Secured Party.
4.7. Commercial Tort Claims.
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4.7.1. If the Debtor shall at any time hold or acquire a Commercial
Tort Claim, the Debtor shall immediately notify the Secured Party in a writing
signed by the Debtor of the brief details thereof and grant to the Secured Party
in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Party.
4.7.2. The Debtor will not grant any security interest in any future
Commercial Tort Claim to any entity other than Secured Party.
4.8. Other Actions as to any and all Collateral. The Debtor shall take any
other action reasonably requested by the Secured Party to ensure the attachment,
perfection, and first priority of, and the ability of the Secured Party to
enforce, the Secured Party's security interest in the Collateral including,
without limitation:
4.8.1. causing the Secured Party's name to be noted as secured party
on any certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the Secured Party to
enforce its security interest therein;
4.8.2. complying with any provision of any statute, regulation, or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection, or priority of, or ability
of the Secured Party to enforce, its security interest therein;
4.8.3. obtaining governmental and other third party consents and
approvals, including without limitation any consent of any licensor, lessor, or
other person obligated on Collateral;
4.8.4. obtaining waivers from mortgagees and landlords in form and
substance satisfactory to the Secured Party; and
4.8.5. Taking all actions required by any earlier versions of the
Uniform Commercial Code or by other law, as applicable in any relevant Uniform
Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction.
5. Representations and Warranties. The Debtor represents and warrants that:
5.1. The Debtor is the owner of the Collateral, free from any adverse
lien, security interest, or other encumbrance, except for the security interest
created by this Agreement and Permitted Liens, if any;
5.2. None of the Collateral constitutes, or is the proceeds of, "farm
products" as defined in the UCC;
5.3. None of the Account Debtors or other persons obligated on any of the
Collateral is a governmental authority subject to the Federal Assignment of
Claims Act or like federal, state, or local statute or rule in respect of such
Collateral; and
5.4. The Debtor holds no Commercial Tort Claims.
6. Covenants.
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6.1. Legal Status.
6.1.1. Without providing at least 30 days prior written notice to
the Secured Party, the Debtor will not change its name, its place of business
or, if more than one, its chief executive office, mailing address, or
organizational identification number if it has one.
6.1.2. If the Debtor does not have an organizational identification
number and later obtains one, the Debtor shall forthwith notify the Secured
Party of such organizational identification number.
6.1.3. The Debtor will not change its type of organization,
jurisdiction of organization, or other legal structure.
6.1.4. The Debtor shall advise Secured Party promptly upon its
forming an intention to consult with legal counsel concerning either (i) the
filing of a case under the Bankruptcy Code, or (ii) the commencement of
litigation against Secured Party.
6.2. Collateral.
6.2.1. Except for the security interest herein granted and Permitted
Liens, the Debtor shall be the owner of the Collateral free from any lien,
security interest, or other encumbrance, and the Debtor shall defend the same
against all claims and demands of all persons at any time claiming the same or
any interests therein adverse to the Secured Party.
6.2.2. The Debtor shall not pledge, mortgage, or create or suffer to
exist a security interest in the Collateral in favor of any person other than
the Secured Party except for Permitted Liens.
6.2.3. The Debtor will keep the Collateral in good order and repair
and will not use the same in violation of law or any policy of insurance
thereon.
6.2.4. The Debtor will permit the Secured Party to inspect the
Collateral at any reasonable time, wherever located.
6.2.5. The Debtor will pay promptly when due all taxes, assessments,
governmental charges, and levies upon the Collateral or incurred in connection
with the use or operation of such Collateral or incurred in connection with this
Agreement.
6.2.6. The Debtor will not sell or otherwise dispose, or offer to
sell or otherwise dispose, of the Collateral or any interest therein except for:
6.2.6.1. sales and leases of inventory and licenses of general
intangibles in the ordinary course of business, and
6.2.6.2. so long as no Event of Default has occurred and is
continuing, sales or other dispositions of obsolescent items
of equipment in the ordinary course of business consistent
with past practices.
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6.2.7. After written notice by Secured Party to Debtor, and
automatically, without notice after an Event of Default, Debtor shall not,
without the prior written consent of Secured Party in each instance:
6.2.7.1. grant any extension of time for payment of any
Accounts;
6.2.7.2. compromise or settle any Accounts for less than the
full amount thereof;
6.2.7.3. release in whole or in part any Account Debtor; or
6.2.7.4. Grant any credits, discounts, allowances, deductions,
return authorizations, or the like with respect to any
Accounts.
6.2.8. At such times as Secured Party may request and in the manner
specified by Secured Party, Debtor shall deliver to Secured Party or Secured
Party's representative original invoices, agreements, proof of rendition of
services and delivery of goods, and other documents evidencing or relating to
the transactions which gave rise to any of the Collateral, together with
customer statements, schedules describing the Accounts or statements of account
and confirmatory assignments to Secured Party of the Accounts in form and
substance satisfactory to Secured Party and duly executed by Debtor.
6.2.9. In addition, in the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Debtor shall,
immediately upon written request therefor from Secured Party, endorse and assign
such Negotiable Collateral over to Secured Party and deliver actual physical
possession of the Negotiable Collateral to Secured Party.
6.2.10. After written notice by Secured Party to Debtor, and
automatically, without notice, after an Event of Default, Debtor shall not,
without the prior written consent of Secured Party in each instance, (a) grant
any extension of time for payment of any of the Accounts, (b) compromise or
settle any of the Accounts for less than the full amount thereof, (c) release in
whole or in part any Account Debtor, or (d) grant any credits, discounts,
allowances, deductions, return authorizations or the like with respect to any of
the Accounts.
6.2.11. From time to time as requested by Secured Party, at the sole
expense of Debtor, Secured Party or its designee shall have access, during
reasonable business hours if prior to an Event of Default and at any time if on
or after an Event of Default, to all premises where Collateral is located for
the purposes of inspecting (and removing, if after the occurrence of an Event of
Default) any of the Collateral, including Debtor's books and records, and Debtor
shall permit Secured Party or its designee to make copies of such books and
records or extracts therefrom as Secured Party may request. Without expense to
Secured Party, Secured Party may use any of Debtor's personnel, equipment,
including computer equipment, programs, printed output and computer readable
media, supplies and premises for the collection of accounts and realization on
other Collateral as Secured Party, in its sole discretion, deems appropriate.
Debtor hereby irrevocably authorizes all accountants and third parties to
disclose and deliver to Secured Party at Debtor's expense all financial
information, books and records, work papers, management reports and other
information in their possession relating to Debtor.
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6.2.12. Before sending any Invoice to an Account Debtor, Debtor
shall mark same with a notice of assignment as may be required by Secured Party.
6.3. Other.
6.3.1. Debtor shall pay when due all payroll and other taxes, and
shall provide proof thereof to Secured Party in such form as Secured Party shall
reasonably require.
6.3.2. Debtor shall deliver in kind to Secured Party on the next
banking day following the date of receipt by Debtor of the amount of any payment
on account of a Purchased Account.
7. Insurance.
7.1. Maintenance of Insurance. The Debtor will maintain with financially
sound and reputable insurers insurance with respect to its properties and
business against such casualties and contingencies as shall be in accordance
with general practices of businesses engaged in similar activities in similar
geographic areas. Such insurance shall be in such minimum amounts that the
Debtor will not be deemed a co-insurer under applicable insurance laws,
regulations, and policies and otherwise shall be in such amounts, contain such
terms, be in such forms and be for such periods as may be reasonably
satisfactory to the Secured Party. In addition, all such insurance shall be
payable to the Secured Party under a Secured Party Lender Loss Payable
Endorsement. Without limiting the foregoing, the Debtor will:
7.1.1. Keep all of its physical property insured with casualty or
physical hazard insurance on an "all risks" basis, with broad form flood and
earthquake coverage and electronic data processing coverage, with a full
replacement cost endorsement and an "agreed amount" clause in an amount equal to
100% of the full replacement cost of such property;
7.1.2. Maintain all such workers' compensation or similar insurance
as may be required by law;
7.1.3. Maintain, in amounts and with deductibles equal to those
generally maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of bodily
injury, death, or property damage occurring, on, in or about the properties of
the Debtor; business interruption insurance; and product liability insurance.
7.2. Insurance Proceeds.
7.2.1. The proceeds of any casualty insurance relating to the
Collateral shall be held by the Secured Party as cash collateral for the
Obligations.
7.2.2. The Secured Party may, at its sole option, disburse from time
to time all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Secured Party may reasonably prescribe, for direct
application by the Debtor solely to the repair or replacement of the Debtor's
property so damaged or destroyed, or the Secured Party may apply all or any part
of such proceeds to the Obligations.
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7.3. Notice of Cancellation. Policies of insurance shall provide for at
least thirty days prior written cancellation notice to the Secured Party. In the
event of failure by the Debtor to provide and maintain insurance as herein
provided, the Secured Party may, at its option, provide such insurance and
charge the amount thereof to the Debtor. The Debtor shall furnish the Secured
Party with certificates of insurance and policies evidencing compliance with the
foregoing insurance provision.
8. Collateral Protection Expenses; Preservation of Collateral.
8.1. Expenses Incurred by Secured Party. In its discretion, the Secured
Party may discharge taxes and other encumbrances at any time levied or placed on
any of the Collateral, make repairs thereto and pay any necessary filing fees.
The Debtor agrees to reimburse the Secured Party on demand for any and all
expenditures so made. The Secured Party shall have no obligation to the Debtor
to make any such expenditures, nor shall the making thereof relieve the Debtor
of any default.
8.2. Secured Party's Obligations and Duties. The Secured Party's sole duty
with respect to the custody, safe keeping, and physical preservation of the
Collateral in its possession, shall be to deal with such Collateral in the same
manner as the Secured Party deals with similar property for its own account.
8.3. Notification to Account Debtors and other Persons Obligated on
Collateral.
8.3.1. The Secured Party may at any time after and during the
continuance of an Event of Default notify Account Debtors and other persons
obligated on any of the Collateral of Secured Party's security interest in any
account, chattel paper, general intangible, instrument, or other Collateral and
that payment thereof is to be made directly to or as designated by the Secured
Party.
8.3.2. After the making of such a request or the giving of any such
notification, the Debtor shall hold any proceeds of collection of accounts,
chattel paper, general intangibles, instruments, and other Collateral received
by the Debtor as trustee for the Secured Party without commingling the same with
other funds of the Debtor and shall immediately turn the same over to the
Secured Party in the identical form received, together with any necessary
endorsements or assignments.
8.3.3. The Secured Party shall apply the proceeds of collection of
accounts, chattel paper, general intangibles, instruments, and other Collateral
received by the Secured Party to the Obligations, such proceeds to be
immediately entered after final payment in cash or other immediately available
funds of the items giving rise to them.
9. Authorization to Secured Party.
9.1. Appointment and Powers of Secured Party. The Debtor irrevocably
authorizes Secured Party to take any and all appropriate action and to execute
any and all documents and instruments, in the name of Debtor, that may be
necessary or desirable to accomplish the purposes of this Agreement including,
but not limited to:
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9.1.1. upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect
to, or otherwise deal with any of the Collateral in such manner as is consistent
with the UCC and as though the Secured Party were the absolute owner thereof,
and to do at the Debtor's expense, all acts which the Secured Party deems
necessary to protect, preserve, or realize upon the Collateral and the Secured
Party's security interest therein, in order to effect the intent of this
Agreement, including, without limitation:
9.1.1.1. the filing and prosecuting of registration and
transfer applications with the appropriate federal or local
agencies or authorities with respect to trademarks, copyrights
and patentable inventions and processes;
9.1.1.2. upon written notice to the Debtor, the exercise of
voting rights with respect to voting securities, which rights
may be exercised, if the Secured Party so elects, with a view
to causing the liquidation in a commercially reasonable manner
of assets of the issuer of any such securities;
9.1.1.3. the execution, delivery, and recording, in connection
with any sale or other disposition of any Collateral, of the
endorsements, assignments, or other instruments of conveyance
or transfer with respect to such Collateral; or
9.1.1.4. the filing on behalf of Debtor with such governmental
authorities as are appropriate such documents (including,
without limitation, applications, certificates, and tax
returns) as may be required for purposes of having Debtor
qualified to transact business in a particular state or
geographic location.
9.2. Ratification by Debtor. To the extent permitted by law, the Debtor
hereby ratifies all that said attorneys have lawfully done or cause to be done
by virtue hereof. This power of attorney is a power coupled with an interest and
shall be irrevocable.
10. Remedies. If an Event of Default shall have occurred and be continuing, in
addition to the rights granted to the Secured Party under the UCC:
10.1. The Secured Party may require the Debtor to deliver to any location
reasonably selected by Secured Party and assemble all or any part of the
Collateral;
10.2. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Secured
Party shall give to the Debtor at least five business days prior written notice
(which the Debtor agrees shall be reasonable notice) of the time and place of
any public sale of Collateral or of the time after which any private sale or any
other intended disposition is to be made.
10.3. The Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Secured Party's rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto.
11. Standards for Exercising Remedies.
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11.1. To the extent that applicable law imposes duties on the Secured
Party to exercise remedies in a commercially reasonable manner, the Debtor
acknowledges and agrees that it is not commercially unreasonable for the Secured
Party:
11.1.1. to not incur expenses to prepare Collateral for disposition
or otherwise to complete raw material or work in process into finished goods or
other finished products for disposition;
11.1.2. 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;
11.1.3. to fail to exercise collection remedies against Account
Debtors or other persons obligated on Collateral or to remove liens or
encumbrances on or any adverse claims against Collateral;
11.1.4. 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;
11.1.5. to advertise dispositions of Collateral through publications
or media of general circulation, whether or not the Collateral is of a
specialized nature;
11.1.6. to hire one or more professional auctioneers to assist in
the disposition of Collateral, whether or not the collateral is of a specialized
nature;
11.1.7. to dispose of Collateral by using 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;
11.1.8. to dispose of assets in wholesale rather than retail
markets;
11.1.9. to disclaim all disposition warranties; or
11.1.10. to purchase insurance or credit enhancements to insure the
Secured Party against risks of loss, collection or disposition of Collateral or
to provide to the Secured Party a guaranteed return from the collection or
disposition of Collateral.
11.2. The Debtor acknowledges that the purpose of this Section 11 is to
provide non-exhaustive indications of what actions or omissions by the Secured
Party would not be commercially unreasonable in the Secured Party's exercise of
remedies against the Collateral and that other actions or omissions by the
Secured Party shall not be deemed commercially unreasonable solely on account of
not being indicated in this Section. Without limitation upon the foregoing,
nothing contained herein shall be construed to grant any rights to the Debtor or
to impose any duties on the 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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12. No Waiver by Secured Party. No failure to exercise and no delay in
exercising any right, power, or remedy hereunder shall impair any right, power,
or remedy which Secured Party may have, nor shall any such delay be construed to
be a waiver of any of such rights, powers, or remedies, or any acquiescence in
any breach or default hereunder; nor shall any waiver by Secured Party of any
breach or default by Debtor hereunder be deemed a waiver of any default or
breach subsequently occurring. All rights and remedies granted to Secured Party
hereunder shall remain in full force and effect notwithstanding any single or
partial exercise of, or any discontinuance of action begun to enforce, any such
right or remedy. The rights and remedies specified herein are cumulative and not
exclusive of each other or of any rights or remedies that Secured Party would
otherwise have. Any waiver, permit, consent, or approval by Secured Party of any
breach or default hereunder must be in writing and shall be effective only to
the extent set forth in such writing and only as to that specific instance.
13. Proceeds and Expenses of Dispositions . The Debtor shall pay to the Secured
Party on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Secured Party in protecting, preserving,
or enforcing the Secured Party's rights under or in respect of any of the
Obligations or any of the Collateral. After deducting all of said expenses, the
residue of any proceeds of collection or sale of the Obligations or Collateral
shall, to the extent actually received in cash, be applied to the payment of the
Obligations in such order or preference as the Secured Party may determine,
notwithstanding contrary instructions received by Secured Party from the Debtor
or any other third party.
14. Amendment. Neither this Agreement nor any provisions hereof may be changed,
waived, discharged, or terminated, nor may any consent to the departure from the
terms hereof be given, orally (even if supported by new consideration), but only
by an instrument in writing signed by all parties to this Agreement. Any waiver
or consent so given shall be effective only in the specific instance and for the
specific purpose for which given.
15. Survival. All representations, warranties, and agreements herein contained
shall be effective so long as any portion of this Agreement remains executory.
16. No Lien Termination without Release. In recognition of the Secured Party's
right to have its attorneys' fees and other expenses incurred in connection with
this Agreement secured by the Collateral, notwithstanding payment in full of all
Obligations by Debtor, Secured Party shall not be required to terminate any
Uniform Commercial Code Financing Statements filed in its favor against the
Debtor relating to the Collateral unless and until Debtor and all entities which
are secondarily liable on the Obligations has each executed and delivered to
Secured Party a general release in the form of Exhibit A hereto, covering claims
both known and unknown. Debtor understands that this provision constitutes a
waiver of its rights under ss.9-513 of the UCC.
17. Bonus for Successful Liquidation. To induce Secured Party to dispose of
Collateral on a more than commercially reasonable manner, but without obligating
Secured Party to do so, Debtor agrees to pay a liquidation fee to Secured Party,
computed as 10% of the difference between (i) the amount realized by Secured
Party on the sale or other disposition of the Collateral, and (ii) the
Obligations.
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18. Severability. In the event any one or more of the provisions contained in
this Agreement is held to be invalid, illegal, or unenforceable in any respect,
then such provision shall be ineffective only to the extent of such prohibition
or invalidity, and the validity, legality, and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
19. Notice.
19.1. All notices required to be given to any party other than Secured
Party shall be deemed given upon the first to occur of (i) deposit thereof in a
receptacle under the control of the United States Postal Service, properly
addressed and postage prepaid; (ii) transmittal by electronic means to a
receiver under the control of such party; or (iii) actual receipt by such party
or an employee or agent of such party.
19.2. All notices to Secured Party hereunder shall be deemed given upon
actual receipt by a responsible officer of Secured Party.
19.3. For the purposes hereof, notices hereunder shall be sent to the
following addresses, or to such other addresses as each such party may in
writing hereafter indicate:
DEBTOR
Address: 500 Market Street, Suite 1-E
Portsmouth, NH 03801
Officer: Joseph E. Cresci, CEO
----------------------------
Fax Number: 603-431-2650
----------------------------
SECURED PARTY
Address: 900 Larkspur Landing Circle, Suite 230
Larkspur, CA 94939
Officer: Mr. Robert Weisberg, President
Fax Number: 415-925-9825
20. Venue; Jurisdiction. The parties agree that any suit, action or proceeding
arising out of the subject matter hereof, or the interpretation, performance or
breach of this Agreement, shall, if Secured Party so elects, be instituted in
any court sitting in San Francisco, California (the "Acceptable Forums"). Debtor
agrees that the Acceptable Forums are convenient to it, and irrevocably submits
to the jurisdiction of the Acceptable Forums, irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement, and waives any
and all objections to jurisdiction or venue that it may have under the laws of
the State of California or otherwise in those courts in any such suit, action or
proceeding. Should such proceeding be initiated in any other forum, Debtor
waives any right to oppose any motion or application made by Secured Party as a
consequence of such proceeding having been commenced in a forum other than an
Acceptable Forum.
Page 12 of 15
21. Attorneys Fees. Debtor agrees to reimburse Secured Party on demand for:
21.1. the actual amount of all costs and expenses, including reasonable
attorneys' fees, which Secured Party has incurred or may incur in:
21.1.1. negotiating, preparing, or administering this Agreement and
any documents prepared in connection herewith, all of which shall be paid out of
the principal advanced with the execution hereof;
21.1.2. any way arising out of this Agreement; and
21.1.3. protecting, preserving or enforcing any lien, security
interest, or other right granted by Debtor to Secured Party or arising under
applicable law, whether or not suit is brought, including but not limited to the
defense of any claim that any payment received by Debtor from or for the account
of an Account Debtor is avoidable under the Bankruptcy Code or any other debtor
relief statute; and
21.2. the actual costs, including photocopying (which, if performed by
Secured Party's employees, shall be at the rate of $.10/page), travel, and
attorneys' fees and expenses incurred in complying with any subpoena or other
legal process attendant to any litigation in which Debtor is a party.
IN WITNESS WHEREOF, intending to be legally bound, the Debtor and the
Secured Party have caused this agreement to be duly executed as of the date
first above written.
DEBTOR: ENVIRONMENTAL POWER CORPORATION
By: /s/ Joseph E. Cresci
------------------------------------
Name: Joseph E. Cresci
----------------------------------
Title: CEO
---------------------------------
Page 13 of 15
EXHIBIT 1.2.7
PERMITTED LIENS
None.
Page 14 of 15
EXHIBIT A
GENERAL RELEASE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, the undersigned and each of them (collectively "Releasor")
hereby forever releases, discharges and acquits _ . ("Releasee"), its parent,
directors, shareholders, agents and employees, of and from any and all claims of
every type, kind, nature, description or character, and irrespective of how,
why, or by reason of what facts, whether heretofore existing, now existing or
hereafter arising, or which could, might, or may be claimed to exist, of
whatever kind or name, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, each as though fully set forth herein at length, to
the extent that they arise out of or are in way connected to or are related to
that certain Security Agreement dated 9/14/01.
Releasor agrees that the matters released herein are not limited to
matters which are known or disclosed.
Releasor acknowledges that factual matters now unknown to it may have
given or may hereafter give rise to Claims which are presently unknown,
unanticipated and unsuspected, and it acknowledges that this Release has been
negotiated and agreed upon in light of that realization and that it nevertheless
hereby intends to release, discharge and acquit the Releasee from any such
unknown Claims.
Acceptance of this Release shall not be deemed or construed as an
admission of liability by any party released.
Releasor acknowledges that either (a) it has had advice of counsel of its
own choosing in negotiations for and the preparation of this release, or (b) it
has knowingly determined that such advise is not needed.
DATED: 9/14/01
Individual Releasor: ________________________________________
[Name of individual], individually
Entity Releasor: ENVIRONMENTAL POWER CORP.
By: /s/
_____________________________________
Name: Joseph E. Cresci
-----------------------------------
Title: CEO
__________________________________
Page 15 of 15