f10sbex10iii_dibz.htm


    SECURITY
      AGREEMENT

     

    SECURITY
      AGREEMENT (this “Agreement”), dated as of January 23, 2007, by and among
      Haystar Services and Technology, Inc., a Nevada corporation ("Company"),
      and the secured parties signatory hereto and their respective endorsees,
      transferees and assigns (collectively, the "Secured Party").

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      pursuant to a Securities Purchase Agreement, dated the date hereof between
      Company and the Secured Party (the “Purchase Agreement”), Company has
      agreed to issue to the Secured Party and the Secured Party has agreed to
      purchase from Company certain of Company’s 6% Secured Convertible Notes, due
      three years from the date of issue (the “Notes”), which are convertible
      into shares of Company’s Common Stock, no par value (the “Common
      Stock”).  In connection therewith, Company shall issue the Secured
      Party certain Common Stock purchase warrants dated as of the date hereof to
      purchase the number of shares of Common Stock indicated below each Secured
      Party’s name on the Purchase Agreement (the “Warrants”); and

     

    WHEREAS,
      in order to induce the Secured Party to purchase the Notes, Company has agreed
      to execute and deliver to the Secured Party this Agreement for the benefit
      of
      the Secured Party and to grant to it a first priority security interest in
      certain property of Company to secure the prompt payment, performance and
      discharge in full of all of Company’s obligations under the Notes.

     

    NOW,
      THEREFORE, in consideration of the agreements herein contained and for other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    1.  Certain
      Definitions.  As used in this Agreement, the following terms shall
      have the meanings set forth in this Section 1.  Terms used but not
      otherwise defined in this Agreement that are defined in Article 9 of the UCC
      (such as “general intangibles” and “proceeds”) shall have the
      respective meanings given such terms in Article 9 of the UCC.

     

    (a)  “Collateral”
      means the collateral in which the Secured Party is granted a security interest
      by this Agreement and which shall include the following, whether presently
      owned
      or existing or hereafter acquired or coming into existence, and all additions
      and accessions thereto and all substitutions and replacements thereof, and
      all
      proceeds, products and accounts thereof, including, without limitation, all
      proceeds from the sale or transfer of the Collateral and of insurance covering
      the same and of any tort claims in connection therewith:

     

    (i)  All
      Goods
      of the Company, including, without limitations, all machinery, equipment,
      computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
      special and general tools, fixtures, test and quality control devices and other
      equipment of every kind and nature and wherever situated, together with all
      documents of title and documents representing the same, all additions and
      accessions thereto, replacements therefor, all parts therefor, and all
      substitutes for any of the foregoing and all other items used and useful in
      connection with the Company’s businesses and all improvements thereto
      (collectively, the "Equipment"); and

     

     

    
      
         

      

      
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    (ii)  All
      Inventory of the Company; and

     

    (iii)  All
      of
      the Company’s contract rights and general intangibles, including, without
      limitation, all partnership interests, stock or other securities, licenses,
      distribution and other agreements, computer software development rights, leases,
      franchises, customer lists, quality control procedures, grants and rights,
      goodwill, trademarks, service marks, trade styles, trade names, patents, patent
      applications, copyrights, deposit accounts, and income tax refunds
      (collectively, the "General Intangibles"); and

     

    (iv)  All
      Receivables of the Company including all insurance proceeds, and rights to
      refunds or indemnification whatsoever owing, together with all instruments,
      all
      documents of title representing any of the foregoing, all rights in any
      merchandising, goods, equipment, motor vehicles and trucks which any of the
      same
      may represent, and all right, title, security and guaranties with respect to
      each Receivable, including any right of stoppage in transit; and

     

    (v)  All
      of
      the Company’s documents, instruments and chattel paper, files, records, books of
      account, business papers, computer programs and the products and proceeds of
      all
      of the foregoing Collateral set forth in clauses (i)-(iv) above.

     

    (b)  “Company”
      shall mean, collectively, Company and all of the subsidiaries of Company, a
      list
      of which is contained in Schedule A, attached hereto.

     

    (c)  “Obligations”
      means all of the Company’s obligations under this Agreement and the Notes, in
      each case, whether now or hereafter existing, voluntary or involuntary, direct
      or indirect, absolute or contingent, liquidated or unliquidated, whether or
      not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later decreased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from the Secured
      Party as a preference, fraudulent transfer or otherwise as such obligations
      may
      be amended, supplemented, converted, extended or modified from time to
      time.

     

    (d)  “UCC”
      means the Uniform Commercial Code, as currently in effect in the State of New
      York.

     

    2.  Grant
      of Security Interest.  As an inducement for the Secured Party to
      purchase the Notes and to secure the complete and timely payment, performance
      and discharge in full, as the case may be, of all of the Obligations, the
      Company hereby, unconditionally and irrevocably, pledges, grants and
      hypothecates to the Secured Party, a continuing security interest in, a
      continuing first lien upon, an unqualified right to possession and disposition
      of and a right of set-off against, in each case to the fullest extent permitted
      by law, all of the Company's right, title and interest of whatsoever kind and
      nature in and to the Collateral (the "Security Interest").

     

     

    
      
         

      

      
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    3.  Representations,
      Warranties, Covenants and Agreements of the Company.  The Company
      represents and warrants to, and covenants and agrees with, the Secured Party
      as
      follows:

     

    (a)  The
      Company has the requisite corporate power and authority to enter into this
      Agreement and otherwise to carry out its obligations thereunder.  The
      execution, delivery and performance by the Company of this Agreement and the
      filings contemplated therein have been duly authorized by all necessary action
      on the part of the Company and no further action is required by the
      Company.  This Agreement constitutes a legal, valid and binding
      obligation of the Company enforceable in accordance with its terms, except
      as
      enforceability may be limited by bankruptcy, insolvency, reorganization,
      moratorium or similar laws affecting the enforcement of creidtor’s rights
      generally.

     

    (b)  The
      Company represents and warrants that it has no place of business or offices
      where its respective books of account and records are kept (other than
      temporarily at the offices of its attorneys or accountants) or places where
      Collateral is stored or located, except as set forth on Schedule A
      attached hereto;

     

    (c)  Except
      as
      set forth on Schedule C, the Company is the sole owner of the Collateral
      (except for non-exclusive licenses granted by the Company in the ordinary course
      of business), free and clear of any liens, security interests, encumbrances,
      rights or claims, and is fully authorized to grant the Security Interest in
      and
      to pledge the Collateral.  Except as set forth on Schedule C,
      there is not on file in any governmental or regulatory authority, agency or
      recording office an effective financing statement, security agreement, license
      or transfer or any notice of any of the foregoing (other than those that have
      been filed in favor of the Secured Party pursuant to this Agreement or a
      security agreement executed prior to the date hereof) covering or affecting
      any
      of the Collateral.  Except as set forth in Schedule C, so long
      as this Agreement shall be in effect, the Company shall not execute and shall
      not knowingly permit to be on file in any such office or agency any such
      financing statement or other document or instrument (except to the extent filed
      or recorded in favor of the Secured Party pursuant to the terms of this
      Agreement or a security agreement executed prior to the date
      hereof).

     

    (d)  No
      part
      of the Collateral has been judged invalid or unenforceable.  No
      written claim has been received that any Collateral or the Company’s use of any
      Collateral violates the rights of any third party. There has been no adverse
      decision to the Company’s claim of ownership rights in or exclusive rights to
      use the Collateral in any jurisdiction or to the Company's right to keep and
      maintain such Collateral in full force and effect, and there is no proceeding
      involving said rights pending or, to the best knowledge of the Company,
      threatened before any court, judicial body, administrative or regulatory agency,
      arbitrator or other governmental authority.

     

     

    
      
         

      

      
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    (e)  The
      Company shall at all times maintain its books of account and records relating
      to
      the Collateral at its principal place of business and its Collateral at the
      locations set forth on Schedule A attached hereto and may not relocate
      such books of account and records or tangible Collateral unless it delivers
      to
      the Secured Party at least 30 days prior to such relocation (i) written notice
      of such relocation and the new location thereof (which must be within the United
      States) and (ii) evidence that appropriate financing statements and other
      necessary documents have been filed and recorded and other steps have been
      taken
      to perfect the Security Interest to create in favor of the Secured Party valid,
      perfected and continuing first priority liens in the Collateral.

     

    (f)  This
      Agreement creates in favor of the Secured Party a valid security interest in
      the
      Collateral securing the payment and performance of the Obligations and, upon
      making the filings described in the immediately following sentence, a perfected
      first priority security interest in such Collateral.  Except for the
      filing of financing statements on Form-1 under the UCC with  the
      jurisdictions indicated on Schedule B, attached hereto, no authorization
      or approval of or filing with or notice to any governmental authority or
      regulatory body is required either (i) for the grant by the Company of, or
      the
      effectiveness of, the Security Interest granted hereby or for the execution,
      delivery and performance of this Agreement by the Company or (ii) for the
      perfection of or exercise by the Secured Party of its rights and remedies
      hereunder.

     

    (g)  On
      the
      date of execution of this Agreement, the Company will deliver to the Secured
      Party one or more executed UCC financing statements on Form-1 with respect
      to
      the Security Interest for filing with  the jurisdictions indicated on
Schedule B, attached hereto and in such other jurisdictions as may be
      requested by the Secured Party.

     

    (h)  The
      execution, delivery and performance of this Agreement does not conflict with
      or
      cause a breach or default, or an event that with or without the passage of
      time
      or notice, shall constitute a breach or default, under any agreement to which
      the Company is a party or by which the Company is bound.  No consent
      (including, without limitation, from stock holders or creditors of the Company)
      is required for the Company to enter into and perform its obligations
      hereunder.

     

    (i)  The
      Company shall at all times maintain the liens and Security Interest provided
      for
      hereunder as valid and perfected first priority liens and security interests
      in
      the Collateral in favor of the Secured Party until this Agreement and the
      Security Interest hereunder shall terminate pursuant to Section
      11.   The Company hereby agrees to defend the same against any
      and all persons.  The Company shall safeguard and protect all
      Collateral for the account of the Secured Party.  At the request of
      the Secured Party, the Company will sign and deliver to the Secured Party at
      any
      time or from time to time one or more financing statements pursuant to the
      UCC
      (or any other applicable statute) in form reasonably satisfactory to the Secured
      Party and will pay the cost of filing the same in all public offices wherever
      filing is, or is deemed by the Secured Party to be, necessary or desirable
      to
      effect the rights and obligations provided for herein. Without limiting the
      generality of the foregoing, the Company shall pay all fees, taxes and other
      amounts necessary to maintain the Collateral and the Security Interest
      hereunder, and the Company shall obtain and furnish to the Secured Party from
      time to time, upon demand, such releases and/or subordinations of claims and
      liens which may be required to maintain the priority of the Security Interest
      hereunder.

     

     

    
      
         

      

      
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    (j)  The
      Company will not transfer, pledge, hypothecate, encumber, license (except for
      non-exclusive licenses granted by the Company in the ordinary course of
      business), sell or otherwise dispose of any of the Collateral without the prior
      written consent of the Secured Party.

     

    (k)  The
      Company shall keep and preserve its Equipment, Inventory and other tangible
      Collateral in good condition, repair and order and shall not operate or locate
      any such Collateral (or cause to be operated or located) in any area excluded
      from insurance coverage.

     

    (l)  The
      Company shall, within ten (10) days of obtaining knowledge thereof, advise
      the
      Secured Party promptly, in sufficient detail, of any substantial change in
      the
      Collateral, and of the occurrence of any event which would have a material
      adverse effect on the value of the Collateral or on the Secured Party's security
      interest therein.

     

    (m)  The
      Company shall promptly execute and deliver to the Secured Party such further
      deeds, mortgages, assignments, security agreements, financing statements or
      other instruments, documents, certificates and assurances and take such further
      action as the Secured Party may from time to time request and may in its sole
      discretion deem necessary to perfect, protect or enforce its security interest
      in the Collateral including, without limitation, the execution and delivery
      of a
      separate security agreement with respect to the Company’s intellectual property
      ("Intellectual Property Security Agreement") in which the Secured Party
      has been granted a security interest hereunder, substantially in a form
      acceptable to the Secured Party, which Intellectual Property Security Agreement,
      other than as stated therein, shall be subject to all of the terms and
      conditions hereof.

     

    (n)  The
      Company shall permit the Secured Party and its representatives and agents to
      inspect the Collateral at any time, and to make copies of records pertaining
      to
      the Collateral as may be requested by the Secured Party from time to
      time.

     

    (o)  The
      Company will take all steps reasonably necessary to diligently pursue and seek
      to preserve, enforce and collect any rights, claims, causes of action and
      accounts receivable in respect of the Collateral.

     

    (p)  The
      Company shall promptly notify the Secured Party in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal process
      levied against any Collateral and of any other information received by the
      Company that may materially affect the value of the Collateral, the Security
      Interest or the rights and remedies of the Secured Party hereunder.

     

    (q)  All
      information heretofore, herein or hereafter supplied to the Secured Party by
      or
      on behalf of the Company with respect to the Collateral is accurate and complete
      in all material respects as of the date furnished.

     

    (r)  Schedule
      A attached hereto contains a list of all of the subsidiaries of
      Company.

     

     

    
      
         

      

      
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    4.  Defaults.  The
      following events shall be "Events of Default":

     

    (a)  The
      occurrence of an Event of Default (as defined in the Notes) under the
      Notes;

     

    (b)  Any
      representation or warranty of the Company in this Agreement or in the
      Intellectual Property Security Agreement shall prove to have been incorrect
      in
      any material respect when made; and

     

    (c)  The
      failure by the Company to observe or perform any of its obligations hereunder
      or
      in the Intellectual Property Security Agreement for ten (10) days after receipt
      by the Company of notice of such failure from the Secured Party.

     

    5.  Duty
      To Hold In Trust.  Upon the occurrence of any Event of Default and
      at any time thereafter, the Company shall, upon receipt by it of any revenue,
      income or other sums subject to the Security Interest, whether payable pursuant
      to the Notes or otherwise, or of any check, draft, note, trade acceptance or
      other instrument evidencing an obligation to pay any such sum, hold the same
      in
      trust for the Secured Party and shall forthwith endorse and transfer any such
      sums or instruments, or both, to the Secured Party for application to the
      satisfaction of the Obligations.

     

    6.  Rights
      and Remedies Upon Default.  Upon occurrence of any Event of
      Default and at any time thereafter, the Secured Party shall have the right
      to
      exercise all of the remedies conferred hereunder and under the Notes, and the
      Secured Party shall have all the rights and remedies of a secured party under
      the UCC and/or any other applicable law (including the Uniform Commercial Code
      of any jurisdiction in which any Collateral is then located).  Without
      limitation, the Secured Party shall have the following rights and
      powers:

     

    (a)  The
      Secured Party shall have the right to take possession of the Collateral and,
      for
      that purpose, enter, with the aid and assistance of any person, any premises
      where the Collateral, or any part thereof, is or may be placed and remove the
      same, and the Company shall assemble the Collateral and make it available to
      the
      Secured Party at places which the Secured Party shall reasonably select, whether
      at the Company's premises or elsewhere, and make available to the Secured Party,
      without rent, all of the Company’s respective premises and facilities for the
      purpose of the Secured Party taking possession of, removing or putting the
      Collateral in saleable or disposable form.

     

    (b)  The
      Secured Party shall have the right to operate the business of the Company using
      the Collateral and shall have the right to assign, sell, lease or otherwise
      dispose of and deliver all or any part of the Collateral, at public or private
      sale or otherwise, either with or without special conditions or stipulations,
      for cash or on credit or for future delivery, in such parcel or parcels and
      at
      such time or times and at such place or places, and upon such terms and
      conditions as the Secured Party may deem commercially reasonable, all without
      (except as shall be required by applicable statute and cannot be waived)
      advertisement or demand upon or notice to the Company or right of redemption
      of
      the Company, which are hereby expressly waived.  Upon each such sale,
      lease, assignment or other transfer of Collateral, the Secured Party may, unless
      prohibited by applicable law which cannot be waived, purchase all or any part
      of
      the Collateral being sold, free from and discharged of all trusts, claims,
      right
      of redemption and equities of the Company, which are hereby waived and
      released.

     

     

    
      
         

      

      
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    7.  Applications
      of Proceeds.  The proceeds of any such sale, lease or other
      disposition of the Collateral hereunder shall be applied first, to the expenses
      of retaking, holding, storing, processing and preparing for sale, selling,
      and
      the like (including, without limitation, any taxes, fees and other costs
      incurred in connection therewith) of the Collateral, to the reasonable
      attorneys' fees and expenses incurred by the Secured Party in enforcing its
      rights hereunder and in connection with collecting, storing and disposing of
      the
      Collateral, and then to satisfaction of the Obligations, and to the payment
      of
      any other amounts required by applicable law, after which the Secured Party
      shall pay to the Company any surplus proceeds.  If, upon the sale,
      license or other disposition of the Collateral, the proceeds thereof are
      insufficient to pay all amounts to which the Secured Party is legally entitled,
      the Company will be liable for the deficiency, together with interest thereon,
      at the rate of 15% per annum (the "Default Rate"), and the reasonable
      fees of any attorneys employed by the Secured Party to collect such
      deficiency.  To the extent permitted by applicable law, the Company
      waives all claims, damages and demands against the Secured Party arising out
      of
      the repossession, removal, retention or sale of the Collateral, unless due
      to
      the gross negligence or willful misconduct of the Secured Party.

     

    8.  Costs
      and Expenses.    The Company agrees to pay all
      out-of-pocket fees, costs and expenses incurred in connection with any filing
      required hereunder, including without limitation, any financing statements,
      continuation statements, partial releases and/or termination statements related
      thereto or any expenses of any searches reasonably required by the Secured
      Party.  The Company shall also pay all other claims and charges which
      in the reasonable opinion of the Secured Party might prejudice, imperil or
      otherwise affect the Collateral or the Security Interest therein.  The
      Company will also, upon demand, pay to the Secured Party the amount of any
      and
      all reasonable expenses, including the reasonable fees and expenses of its
      counsel and of any experts and agents, which the Secured Party may incur in
      connection with (i) the enforcement of this Agreement, (ii) the custody or
      preservation of, or the sale of, collection from, or other realization upon,
      any
      of the Collateral, or (iii) the exercise or enforcement of any of the rights
      of
      the Secured Party under the Notes. Until so paid, any fees payable hereunder
      shall be added to the principal amount of the Notes and shall bear interest
      at
      the Default Rate.

     

    9.  Responsibility
      for Collateral.  The Company assumes all liabilities and
      responsibility in connection with all Collateral, and the obligations of the
      Company hereunder or under the Notes shall in no way be affected or diminished
      by reason of the loss, destruction, damage or theft of any of the Collateral
      or
      its unavailability for any reason.

     

    10.  Security
      Interest Absolute.  All rights of the Secured Party and all
      Obligations of the Company hereunder, shall be absolute and unconditional,
      irrespective of: (a) any lack of validity or enforceability of this Agreement,
      the Notes or any agreement entered into in connection with the foregoing, or
      any
      portion hereof or thereof; (b) any change in the time, manner or place of
      payment or performance of, or in any other term of, all or any of the
      Obligations, or any other amendment or waiver of or any consent to any departure
      from the Notes or any other agreement entered into in connection with the
      foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
      or any release or amendment or waiver of or consent to departure from any other
      collateral for, or any guaranty, or any other security, for all or any of the
      Obligations; (d) any action by the Secured Party to obtain, adjust, settle
      and
      cancel in its sole discretion any insurance claims or matters made or arising
      in
      connection with the Collateral; or (e) any other circumstance which might
      otherwise constitute any legal or equitable defense available to the Company,
      or
      a discharge of all or any part of the Security Interest granted
      hereby.  

     

     

    
      
         

      

      
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    Until
      the
      Obligations shall have been paid and performed in full, the rights of the
      Secured Party shall continue even if the Obligations are barred for any reason,
      including, without limitation, the running of the statute of limitations or
      bankruptcy.  The Company expressly waives presentment, protest, notice
      of protest, demand, notice of nonpayment and demand for performance. In the
      event that at any time any transfer of any Collateral or any payment received
      by
      the Secured Party hereunder shall be deemed by final order of a court of
      competent jurisdiction to have been a voidable preference or fraudulent
      conveyance under the bankruptcy or insolvency laws of the United States, or
      shall be deemed to be otherwise due to any party other than the Secured Party,
      then, in any such event, the Company's obligations hereunder shall survive
      cancellation of this Agreement, and shall not be discharged or satisfied by
      any
      prior payment thereof and/or cancellation of this Agreement, but shall remain
      a
      valid and binding obligation enforceable in accordance with the terms and
      provisions hereof.  The Company waives all right to require the
      Secured Party to proceed against any other person or to apply any Collateral
      which the Secured Party may hold at any time, or to marshal assets, or to pursue
      any other remedy.  The Company waives any defense arising by reason of
      the application of the statute of limitations to any obligation secured
      hereby.

     

    11.  Term
      of Agreement.  This Agreement and the Security Interest shall
      terminate on the date on which all payments under the Notes have been made
      in
      full and all other Obligations have been paid or discharged.  Upon
      such termination, the Secured Party, at the request and at the expense of the
      Company, will join in executing any termination statement with respect to any
      financing statement executed and filed pursuant to this Agreement.

     

    12.  Power
      of Attorney; Further Assurances.

     

    (a)  The
      Company authorizes the Secured Party, and does hereby make, constitute and
      appoint it, and its respective officers, agents, successors or assigns with
      full
      power of substitution, as the Company's true and lawful attorney-in-fact, with
      power, in its own name or in the name of the Company, to, after the occurrence
      and during the continuance of an Event of Default, (i) endorse any notes,
      checks, drafts, money orders, or other instruments of payment (including
      payments payable under or in respect of any policy of insurance) in respect
      of
      the Collateral that may come into possession of the Secured Party; (ii) to
      sign
      and endorse any UCC financing statement or any invoice, freight or express
      bill,
      bill of lading, storage or warehouse receipts, drafts against debtors,
      assignments, verifications and notices in connection with accounts, and other
      documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
      security interests or other encumbrances at any time levied or placed on or
      threatened against the Collateral; (iv) to demand, collect, receipt for,
      compromise, settle and sue for monies due in respect of the Collateral; and
      (v)
      generally, to do, at the option of the Secured Party, and at the Company's
      expense, at any time, or from time to time, all acts and things which the
      Secured Party deems necessary to protect, preserve and realize upon the
      Collateral and the Security Interest granted therein in order to effect the
      intent of this Agreement and the Notes, all as fully and effectually as the
      Company might or could do; and the Company hereby ratifies all that said
      attorney shall lawfully do or cause to be done by virtue
      hereof.  

     

     

    
      
         

      

      
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    This
      power of attorney is coupled with an interest and shall be irrevocable for
      the
      term of this Agreement and thereafter as long as any of the Obligations shall
      be
      outstanding.

     

    (b)  On
      a
      continuing basis, the Company will make, execute, acknowledge, deliver, file
      and
      record, as the case may be, in the proper filing and recording places in any
      jurisdiction, including, without limitation, the jurisdictions indicated on
      Schedule B, attached hereto, all such instruments, and take all such
      action as may reasonably be deemed necessary or advisable, or as reasonably
      requested by the Secured Party, to perfect the Security Interest granted
      hereunder and otherwise to carry out the intent and purposes of this Agreement,
      or for assuring and confirming to the Secured Party the grant or perfection
      of a
      security interest in all the Collateral.

     

    (c)  The
      Company hereby irrevocably appoints the Secured Party as the Company's
      attorney-in-fact, with full authority in the place and stead of the Company
      and
      in the name of the Company, from time to time in the Secured Party's discretion,
      to take any action and to execute any instrument which the Secured Party may
      deem necessary or advisable to accomplish the purposes of this Agreement,
      including the filing, in its sole discretion, of one or more financing or
      continuation statements and amendments thereto, relative to any of the
      Collateral without the signature of the Company where permitted by
      law.

     

    13.  Notices.  All
      notices, requests, demands and other communications hereunder shall be in
      writing, with copies to all the other parties hereto, and shall be deemed to
      have been duly given when (i) if delivered by hand, upon receipt, (ii) if sent
      by facsimile, upon receipt of proof of sending thereof, (iii) if sent by
      nationally recognized overnight delivery service (receipt requested), the next
      business day or (iv) if mailed by first-class registered or certified mail,
      return receipt requested, postage prepaid, four days after posting in the U.S.
      mails, in each case if delivered to the following addresses:

     

     

    
      	If
              to the Company:	
              Haystar
                Services and Technology, Inc.

            


      	
               

            	
              4741
                Central, #3

            


    

    
      	
               

            	
              Kansas
                City, Missouri 46112

            


    

    
      	
               

            	
              Attention:
                Chief Executive Officer

            


      	 	
              Facsimile:  [                                     
                ]

            


    

     

     

    
      	
              With
                copies to:

            	
              Sichenzia
                Ross Friedman Ference LLP

            


    

    
      	
               

            	
              1065
                Avenue of the Americas

            


    

    
      	
               

            	
              New
                York, NY 10018

            


    

    
      	
               

            	
              Attention:  Gregory
                Sichenzia, Esq.

            


    

    
      	
               

            	
              Telephone:  (212)
                930-9700

            


    

    
      	
               

            	
              Facsimile:   (212)
                930-9725

            


    

    


    


     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
 

    
      	If
              to the Secured Party:	
              AJW
                Partners, LLC

            


      	
               

            	
              New
                Millennium Capital Partners II, LLC

            


    

    
      	
               

            	
              AJW
                Offshore, Ltd.

            


    

    
      	
               

            	
              AJW
                Qualified Partners, LLC

            


    

    
      	
               

            	
              155
                First Street, Suite B

            


    

    
      	
               

            	
              Mineola,
                New York 11501

            


    

    
      	
               

            	
              Attention:
                Corey Ribotsky

            


    

    
      	
               

            	
              Facsimile:
                516-739-7115

            


    

     

    With
      copies to:

     

    Ballard
      Spahr Andrews & Ingersoll, LLP

    1735
      Market Street, 51st Floor

    Philadelphia,
      Pennsylvania  19103

    Attention:  Gerald
      J. Guarcini, Esq.

     

    Facsimile:  215-864-8999

     

    14.  Other
      Security.  To the extent that the Obligations are now or hereafter
      secured by property other than the Collateral or by the guarantee, endorsement
      or property of any other person, firm, corporation or other entity, then the
      Secured Party shall have the right, in its sole discretion, to pursue,
      relinquish, subordinate, modify or take any other action with respect thereto,
      without in any way modifying or affecting any of the Secured Party’s rights and
      remedies hereunder.

     

    15.  Miscellaneous.

     

    (a)  No
      course
      of dealing between the Company and the Secured Party, nor any failure to
      exercise, nor any delay in exercising, on the part of the Secured Party, any
      right, power or privilege hereunder or under the Notes shall operate as a waiver
      thereof; nor shall any single or partial exercise of any right, power or
      privilege hereunder or thereunder preclude any other or further exercise thereof
      or the exercise of any other right, power or privilege.

     

    (b)  All
      of
      the rights and remedies of the Secured Party with respect to the Collateral,
      whether established hereby or by the Notes or by any other agreements,
      instruments or documents or by law shall be cumulative and may be exercised
      singly or concurrently.

     

    (c)  This
      Agreement constitutes the entire agreement of the parties with respect to the
      subject matter hereof and is intended to supersede all prior negotiations,
      understandings and agreements with respect thereto.  Except as
      specifically set forth in this Agreement, no provision of this Agreement may
      be
      modified or amended except by a written agreement specifically referring to
      this
      Agreement and signed by the parties hereto.

     

    (d)  In
      the
      event that any provision of this Agreement is held to be invalid, prohibited
      or
      unenforceable in any jurisdiction for any reason, unless such provision is
      narrowed by judicial construction, this Agreement shall, as to such
      jurisdiction, be construed as if such invalid, prohibited or unenforceable
      provision had been more narrowly drawn so as not to be invalid, prohibited
      or
      unenforceable.  

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

     

    If,
      notwithstanding the foregoing, any provision of this Agreement is held to be
      invalid, prohibited or unenforceable in any jurisdiction, such provision, as
      to
      such jurisdiction, shall be ineffective to the extent of such invalidity,
      prohibition or unenforceability without invalidating the remaining portion
      of
      such provision or the other provisions of this Agreement and without affecting
      the validity or enforceability of such provision or the other provisions of
      this
      Agreement in any other jurisdiction.

     

    (e)  No
      waiver
      of any breach or default or any right under this Agreement shall be considered
      valid unless in writing and signed by the party giving such waiver, and no
      such
      waiver shall be deemed a waiver of any subsequent breach or default or right,
      whether of the same or similar nature or otherwise.

     

    (f)  This
      Agreement shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns.

     

    (g)  Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

     

    (h)  This
      Agreement shall be construed in accordance with the laws of the State of New
      York, except to the extent the validity, perfection or enforcement of a security
      interest hereunder in respect of any particular Collateral which are governed
      by
      a jurisdiction other than the State of New York in which case such law shall
      govern.  Each of the parties hereto irrevocably submit to the
      exclusive jurisdiction of any New York State or United States Federal court
      sitting in Manhattan county over any action or proceeding arising out of or
      relating to this Agreement, and the parties hereto hereby irrevocably agree
      that
      all claims in respect of such action or proceeding may be heard and determined
      in such New York State or Federal court.  The parties hereto agree
      that a final judgment in any such action or proceeding shall be conclusive
      and
      may be enforced in other jurisdictions by suit on the judgment or in any other
      manner provided by law.  The parties hereto further waive any
      objection to venue in the State of New York and any objection to an action
      or
      proceeding in the State of New York on the basis of forum non
      conveniens.

     

    (i)  EACH
      PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF
      ANY
      CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
      AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
      ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE
      TO
      THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
      CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
      STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS
      A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP,
      THAT
      EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT
      AND
      THAT EACH PARTY WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
      DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
      WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY
      WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING SUCH
      CONSULTATION.  

     

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

     

    THIS
      WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE
      CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
      SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR
      MODIFICATIONS TO THIS AGREEMENT.  IN THE EVENT OF A LITIGATION, THIS
      AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
      COURT.

     

    (j)  This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement.  In the event that any
      signature is delivered by facsimile transmission, such signature shall create
      a
      valid binding obligation of the party executing (or on whose behalf such
      signature is executed) the same with the same force and effect as if such
      facsimile signature were the original thereof.

     

    


     

    


     

    


     

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        12

        
          

        

      

      
         

      

    

     

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
      be
      duly executed on the day and year first above written.

     

    
      
        	
                HAYSTAR
                  SERVICES AND TECHNOLOGY, INC.

              
	 
	
                By:  _____________________________________

              
	
                Mark
                  Wood

                Chief
                  Executive Officer

              
	 
	
                AJW
                  PARTNERS, LLC

                By:
                  SMS Group, LLC

              
	 
	
                By:  _____________________________________

                Corey
                  S. Ribotsky

                Manager

              
	 
	
                NEW
                  MILLENNIUM CAPITAL PARTNERS II, LLC

                By:
                  First Street Manager II, LLC

              
	 
	 
	
                By:  _____________________________________

                Corey
                  S. Ribotsky

                Manager

              
	 
	
                AJW
                  OFFSHORE, LTD.

                By:  First
                  Street Manager II, LLC

              
	 
	
                ________________________________________

              
	
                Corey
                  S. Ribotsky

              
	
                Manager

              
	 
	 
	
                AJW
                  QUALIFIED PARTNERS, LLC

                By:  AJW
                  Manager, LLC

              
	 
	 
	
                ________________________________________

                Corey
                  S. Ribotsky

                Manager

              


      

    

     

    


    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    SCHEDULE
      A

     

    Principal
      Place of Business of the Company:

     

    


    


    Locations
      Where Collateral is Located or Stored:

     

    


    


    


    List
      of Subsidiaries of the Company:

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

     

     

    SCHEDULE
      B

    Jurisdictions:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

     

     

    
      SCHEDULE
        C