Exhibit 10.11
SECURITY AGREEMENT
SECURITY AGREEMENT made by EVERCEL, INC. (the "Debtor") in favor of
ENERGY RESEARCH CORPORATION (the "Secured Party"). In consideration of the
agreement of Secured Party to extend credit or other financial accommodations to
the Debtor, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Debtor hereby agrees for the
benefit of Secured Party as follows:
1. GRANT OF SECURITY INTEREST. As collateral security for the payment
and performance when due of the Obligations (defined below), the Debtor hereby
collaterally assigns, mortgages, and pledges to Secured Party, and hereby grants
to Secured Party a security interest in, all of the Debtor's right, title and
interest in, to and under the Collateral (defined below).
"Collateral" means all the Debtor's present and future right, title and
interest in and to any of the following property, wherever located and
whether now owned or hereafter acquired: All of the Debtor's tangible
and intangible personal property, including without limitation, all
inventory, equipment and other goods, all accounts receivable, notes,
drafts, acceptances, instruments and documents, chattel paper, general
intangibles, deposit accounts, books and records, and all cash and
non-cash proceeds of the foregoing in whatever form received, including
without limitation insurance proceeds, but excluding rights (other than
payment rights) under agreements to the extent that the inclusion of
such rights would cause a default by the Borrower under the terms of
any agreement. Any of the foregoing terms which are specifically
defined in the Uniform Commercial Code as in effect in the State of
Connecticut shall have the meanings given therein.
"Obligations" means any and all payment and performance obligations of
the Debtor to Secured Party, now existing or hereafter arising, direct
or indirect, absolute or contingent, due or to become due, liquidated
or unliquidated, arising under that certain Loan Agreement between
Debtor and Secured Party dated as of the date hereof (the "Loan
Agreement"), and that certain $3,450,000.00 Line of Credit Note
executed by Debtor to the order of Secured Party in connection
therewith, and each other document executed and delivered to secure
such obligations.
2. SECURED PARTY'S RIGHTS AND OBLIGATIONS. Debtor shall remain liable
under all accounts receivable, instruments and documents and general
intangibles. Secured Party shall not have any obligation or liability under any
accounts receivable, instruments and documents or general intangibles by reason
of this Security Agreement or the exercise of Secured Party's rights and
remedies hereunder, nor shall Secured Party be required to perform the Debtor's
obligations pursuant thereto. Secured Party shall have no obligation to inquire
as to the sufficiency of any payment received by it on account of any of
Debtor's accounts receivable or to take any action to collect or enforce the
payment of any account receivable.
3. FURTHER ASSURANCES. Debtor will join with Secured Party in executing
such UCC financing statements as Secured Party may reasonably request. At
Secured Party's request from time to time, the Debtor will execute and deliver
any and all such further instruments and documents and take such further actions
as Secured Party may reasonably deem desirable in obtaining the full benefits of
this Security Agreement. The Debtor also hereby authorizes Secured Party to
execute on behalf of the Debtor and file UCC financing or continuation
statements with appropriate jurisdictions in order to perfect the security
interests granted herein.
4. EVENTS OF DEFAULT. The occurrence of any Event of Default as defined
in the Loan Agreement shall constitute an Event of Default hereunder.
5. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of any Event of Default, and subject to the terms of the Loan
Agreement:
(a) Secured Party may declare all Obligations secured hereby
immediately due and payable and shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as now in effect in the State of
Connecticut or under other applicable law.
(b) Secured Party may notify Debtor's account or contract debtors (or
other obligors whose obligations to Debtor secure this agreement) of Secured
Party's security interest and that such account or contract debtors are to make
payments directly to Secured Party. Secured Party may send this notice in
Debtor's name or in Secured Party's name, and at Secured Party's request Debtor
will join in Secured Party's notice, provide written confirmation of Secured
Party's security interest and request that payment be sent to Secured Party.
Secured Party may enforce this obligation by specific performance. Secured Party
may collect all amounts due on the accounts and accounts receivable. Upon and
after notification by Secured Party to Debtor, Debtor shall hold any proceeds
and collections of any of the collateral in trust for Secured Party and shall
not commingle such proceeds or collections with any other of Debtor's funds, and
Debtor shall deliver all such proceeds to Secured Party immediately upon
Debtor's receipt thereof in the identical form received and duly endorsed or
assigned to Secured Party.
(c) At the request of Secured Party, the Debtor shall cause the
Collateral, or such portion of the Collateral as Secured Party may direct, to be
assembled for Secured Party at such location (including, without limitation,
Debtor's business address) as Secured Party may request. Secured Party will give
to the Debtor reasonable notice of the time and place of any public sale of
Collateral or of the time after which any private sale or other intended
disposition thereof is to be made. Such requirement of reasonable notice shall
be met if such notice is delivered to the address of the Debtor set forth in
this Agreement at least ten (10) days before the time of the proposed sale or
disposition. Any such sale may take place from Debtor's location or such other
location as Secured Party may designate. Debtor shall remain liable for any
deficiency in payment of the Obligations after any such sale.
Debtor hereby irrevocably appoints Secured Party as its true and lawful
attorney-in-fact with full power of substitution to take any of the foregoing
actions in the name of the Debtor or Secured Party to carry out the terms of
this Agreement and to protect, enforce, preserve or perfect
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Secured Party's rights hereunder. Such power of attorney is irrevocable and
shall be deemed to be coupled with an interest.
6. MISCELLANEOUS. Expenses of enforcing Secured Party's rights
hereunder after and during the continuance of an Event of Default including, but
not limited to, preparation for sale, selling or the like and Secured Party's
reasonable attorneys' fees and other expenses shall be payable by Debtor and
shall be secured hereby. None of the terms or provisions of this Agreement may
be waived, altered, modified or amended except by an instrument in writing, duly
executed by Secured Party and Debtor. Secured Party's rights and remedies
hereunder or under any other agreement or instrument shall be cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law. This Agreement shall be binding on and inure to the
benefit of the respective successors and assigns of the Debtor and Secured
Party. This Agreement shall be governed by the laws of the State of Connecticut.
EXECUTED an instrument under seal as of February ___, 1999.
EVERCEL, INC.
By:
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Name:
Title:
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