Document:

f8k1209ex10iii_yesdtc.htm

    Exhibit
10.3

     

    NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

    

    
      	 
      	
              Right
      to Purchase ___________ shares of Common Stock of YesDTC, Inc. (subject to
      adjustment as provided herein)

            

    

    

    COMMON
STOCK PURCHASE WARRANT

     

    
      	No. __________    	 Issue Date:
      December___, 2009

    

                                          

    YESDTC,
INC., a corporation organized under the laws of the State of Delaware (the
“Company”), hereby
certifies that, for value received, __________________________ at
______________________, or its assigns (the “Holder”), is entitled, subject
to the terms set forth below, to purchase from the Company at any time after the
Issue Date until 5:00 p.m., E.S.T on the fifth (5th)
anniversary of the Issue Date (the “Expiration Date”), up to
__________ fully paid and non-assessable shares of Common Stock at a per share
purchase price of $0.10.  The aforedescribed purchase price per share,
as adjusted from time to time as herein provided, is referred to herein as the
“Purchase
Price."  The number and character of such shares of Common
Stock and the Purchase Price are subject to adjustment as provided
herein.  The Company may reduce the Purchase Price for some or all of
the Warrants, temporarily or permanently, provided such reduction is made as to
all outstanding Warrants for all Holders of such
Warrants.  Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in that certain Subscription Agreement (the
“Subscription
Agreement”), dated as of December ___, 2009, entered into by the Company,
the Holder and the other signatories thereto.

    

    As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:

     

    (a)           The
term “Company” shall
mean YesDTC, Inc., a Delaware corporation, and any corporation which shall
succeed or assume the obligations of YesDTC, Inc. hereunder.

     

    (b)           The
term “Common Stock”
includes (i) the Company's Common Stock, $0.0001 par value per share, as
authorized on the date of the Subscription Agreement, and (ii) any other
securities into which or for which any of the securities described in
(i) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.

     

    (c)           The
term “Other Securities”
refers to any stock (other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the
exercise of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.

     

    (d)           The
term “Warrant Shares”
shall mean the Common Stock issuable upon exercise of this Warrant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.           Exercise of
Warrant.

     

    1.1.           Number of Shares Issuable
upon Exercise.  From and after the Issue Date through and
including the Expiration Date, the Holder hereof shall be entitled to receive,
upon exercise of this Warrant in whole in accordance with the terms of Section 1.2 or
upon exercise of this Warrant in part in accordance with Section 1.3,
shares of Common Stock of the Company, subject to adjustment pursuant to Section 4 below
and Sections
11.4 and 12(b) of the
Subscription Agreement.

     

    1.2.           Full
Exercise.  This Warrant may be exercised in full by the Holder
hereof by delivery to the Company of an original or facsimile copy of the form
of subscription attached as Exhibit A hereto
(the “Subscription
Form”) duly executed by such Holder and delivery within two days
thereafter of payment, in cash, wire transfer or by certified or official bank
check payable to the order of the Company, in the amount obtained by multiplying
the number of shares of Common Stock for which this Warrant is then exercisable
by the Purchase Price then in effect.  The original Warrant is not
required to be surrendered to the Company until it has been fully
exercised.

     

    1.3.           Partial
Exercise.  This Warrant may be exercised in part (but not for a
fractional share) by delivery of a Subscription Form in the manner and at the
place provided in Section 1.2,
except that the amount payable by the Holder on such partial exercise shall be
the amount obtained by multiplying (a) the number of whole shares of Common
Stock designated by the Holder in the Subscription Form by (b) the Purchase
Price then in effect.  On any such partial exercise, provided the
Holder has surrendered the original Warrant, the Company, at its expense, will
forthwith issue and deliver to or upon the order of the Holder hereof a new
Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may request, the whole
number of shares of Common Stock for which such Warrant may still be
exercised.

     

    1.4.           Fair Market
Value.  For purposes of this Warrant, the Fair Market Value of a share
of Common Stock as of a particular date (the "Determination Date") shall
mean:

     

    (a)           If
the Company's Common Stock is traded on an exchange or is quoted on the NASDAQ
Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New
York Stock Exchange or the American Stock Exchange, LLC, then the average of the
closing sale prices of the Common Stock for the five (5) Trading Days
immediately prior to (but not including) the Determination Date;

     

    (b)           If
the Company's Common Stock is not traded on an exchange or on the NASDAQ Global
Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New York
Stock Exchange or the American Stock Exchange, Inc., but is traded on the OTC
Bulletin Board or in the over-the-counter market or Pink Sheets, then the
average of the closing bid and ask prices reported for the five (5) Trading Days
immediately prior to (but not including) the Determination Date;

     

    (c)           Except
as provided in clause (d) below and Section 3.1, if the
Company's Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of such an agreement, by arbitration in
accordance with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by
education and training to pass on the matter to be decided; or

     

    (d)           If
the Determination Date is the date of a liquidation, dissolution or winding up,
or any event deemed to be a liquidation, dissolution or winding up pursuant to
the Company's charter, then all amounts to be payable per share to holders of
the Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of all of the Warrants are outstanding at the
Determination Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.5.           Company
Acknowledgment.  The Company will, at the time of the exercise
of the Warrant, upon the request of the Holder hereof, acknowledge in writing
its continuing obligation to afford to such Holder any rights to which such
Holder shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such Holder any such rights.

     

    1.6.           Delivery of Stock
Certificates, etc. on Exercise. The Company agrees that, provided the
full purchase price listed in the Subscription Form is received as specified in
Section 1.2,
the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which delivery of a Subscription Form
shall have occurred and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter (“Warrant Share Delivery Date”),
the Company at its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the Holder
hereof, or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully
paid and non-assessable shares of Common Stock (or Other Securities) to which
such Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share of Common
Stock, together with any other stock or other securities and property (including
cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or
otherwise.  The Company understands that a delay in the delivery of
the Warrant Shares after the Warrant Share Delivery Date could result in
economic loss to the Holder.  As compensation to the Holder for such
loss, the Company agrees to pay (as liquidated damages and not as a penalty) to
the Holder for late issuance of Warrant Shares upon exercise of this Warrant the
proportionate amount of $100 per business day after the Warrant Share Delivery
Date for each $10,000 of Purchase Price of Warrant Shares for which this Warrant
is exercised which are not timely delivered.  The Company shall pay
any payments incurred under this Section in immediately available funds upon
demand.  Furthermore, in addition to any other remedies which may be
available to the Holder, in the event that the Company fails for any reason to
effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the
Holder may revoke all or part of the relevant Warrant exercise by delivery of a
notice to such effect to the Company, whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to the exercise
of the relevant portion of this Warrant, except that the liquidated damages
described above shall be payable through the date notice of revocation or
rescission is given to the Company.

     

    1.7.           Buy-In.   In
addition to any other rights available to the Holder, if the Company fails to
deliver to a Holder the Warrant Shares as required pursuant to this Warrant,
within seven (7) business days after the Warrant Share Delivery Date and the
Holder or a broker on the Holder’s behalf, purchases (in an open market
transaction or otherwise) shares of common stock to deliver in satisfaction of a
sale by such Holder of the Warrant Shares which the Holder was entitled to
receive from the Company (a "Buy-In"), then the Company
shall pay in cash to the Holder (in addition to any remedies available to or
elected by the Holder) the amount by which (A) the Holder's total purchase price
(including brokerage commissions, if any) for the shares of common stock so
purchased exceeds (B) the aggregate Purchase Price of the Warrant Shares
required to have been delivered together with interest thereon at a rate of 15%
per annum, accruing until such amount and any accrued interest thereon is paid
in full (which amount shall be paid as liquidated damages and not as a
penalty).  For example, if a Holder purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to
$10,000 of Purchase Price of Warrant Shares to have been received upon exercise
of this Warrant, the Company shall be required to pay the Holder $1,000, plus
interest. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.           Cashless
Exercise.

     

    (a)           Payment
upon exercise may be made at the option of the Holder either in (i) cash, wire
transfer or by certified or official bank check payable to the order of the
Company equal to the applicable aggregate Purchase Price, (ii) by delivery of
Common Stock issuable upon exercise of the Warrants in accordance with
Section (b) below or (iii) by a combination of any of the
foregoing methods, for the number of Common Stock specified in such form (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the holder per the terms of this
Warrant)(provided the “cashless” method of exercise provided in (ii) and (iii)
above shall only be available at any time after the twelve (12) months
anniversary of the date of this Agreement and if a registration statement is not
in effect or available for the Common Stock into which an exercise is sought
with the SEC with respect the shares of Common Stock at the time of exercise)
and the holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully-paid and non-assessable shares of Common Stock
(or Other Securities) determined as provided herein.

     

    (b)           Subject
to the provisions herein to the contrary, if the Fair Market Value of one share
of Common Stock is greater than the Purchase Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant for cash, the holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being cancelled) by delivery of a properly endorsed
Subscription Form delivered to the Company by any means described in Section 13, in which
event the Company shall issue to the holder a number of shares of Common Stock
computed using the following formula:

     

    X=Y (A-B)

              A

                             

    
      	
               
      Where   

            	
              X=  

            	the number of shares of Common Stock to be issued to the
  Holder

    

     

    
      	
               
      

            	
              Y=

            	
              the
      number of shares of Common Stock purchasable under the Warrant or, if only
      a portion of the Warrant is being exercised, the portion of the Warrant
      being exercised (at the date of such
  calculation)

            

    

     

    
      	
               
      

            	
              A=

            	
              Fair
      Market Value

            

    

     

    
      	
               
      

            	
              B=

            	
              Purchase
      Price (as adjusted to the date of such
  calculation)

            

    

     

    For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction in the manner described above shall be deemed to have been acquired
by the Holder, and the holding period for the Warrant Shares shall be deemed to
have commenced, on the date this Warrant was originally issued pursuant to the
Subscription Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.           Adjustment for
Reorganization, Consolidation, Merger, etc.

     

    3.1.           Fundamental Transaction. 
If, at any time while this Warrant is outstanding, (A) the Company 
effects any merger or  consolidation  of the Company with or into
another entity, (B) the Company effects any sale of all or
substantially all of its assets in one or
a series of related transactions,  (C)
any tender offer or exchange offer (whether by the
Company or another entity) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their
shares for other securities, cash or property, (D) the Company
consummates a stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, or spin-off) with one or
more persons or entities whereby such other persons or entities acquire more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by such other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to,
such stock purchase agreement or other business combination), (E) any "person"
or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of
the 1934 Act) is or shall become the "beneficial owner" (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate
Common Stock of the Company, or (F) the Company effects any
reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such
case, a "Fundamental 
Transaction"), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each Warrant Share that
would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder, (a) upon
exercise of this Warrant, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the "Alternate
Consideration") receivable upon or as a result of
such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is
acquired in (1) a transaction where the consideration paid to the holders
of the Common Stock consists solely of cash, (2) a “Rule 13e-3 transaction” as
defined in Rule 13e-3 under the 1934 Act, or (3) a transaction involving a
person or entity not traded on a national securities exchange, the Nasdaq Global
Select Market, the Nasdaq Global Market or the Nasdaq Capital
Market, cash equal to the Black-Scholes Value. 
For purposes of any such exercise, the determination of the
Purchase Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall
apportion the Purchase Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of
the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a
Fundamental Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction.  To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with
the foregoing provisions and evidencing the
Holder's right to exercise such warrant into Alternate
Consideration.  The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of
this Section
3.1 and insuring that this Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.  “Black-Scholes Value” shall be
determined in accordance with the Black-Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg L.P. using (i) a price per share of Common
Stock equal to the VWAP of the Common Stock for the Trading Day immediately
preceding the date of consummation of the applicable Fundamental Transaction,
(ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the remaining term of this Warrant as of the date of such
request and (iii) an expected volatility equal to the 100 day volatility
obtained from the HVT function on Bloomberg L.P. determined as of the Trading
Day immediately following the public announcement of the applicable Fundamental
Transaction.

    

    3.2.           Continuation of
Terms.  Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this Section 3, this
Warrant shall continue in full force and effect and the terms hereof shall be
applicable to the Other Securities and property receivable on the exercise of
this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any Other Securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.3           Share
Issuance.  Until the Expiration Date, if the Company shall
issue any Common Stock except for the Excepted Issuances (as defined in the
Subscription Agreement), prior to the complete exercise of this Warrant for a
consideration less than the Purchase Price that would be in effect at the time
of such issuance, then, and thereafter successively upon each such issuance, the
Purchase Price shall be reduced to such other lower price for then outstanding
Warrants.  For purposes of this adjustment, the issuance of any
security or debt instrument of the Company carrying the right to convert such
security or debt instrument into Common Stock or of any warrant, right or option
to purchase Common Stock shall result in an adjustment to the Purchase Price
upon the issuance of the above-described security, debt instrument, warrant,
right, or option if such issuance is at a price lower than the Purchase Price in
effect upon such issuance and again at any time upon any actual, permitted,
optional, or allowed issuances of shares of Common Stock upon any actual,
permitted, optional, or allowed exercise of such conversion or purchase rights
if such issuance is at a price lower than the Purchase Price in effect upon any
actual, permitted, optional, or allowed such issuance.  Common Stock
issued or issuable by the Company for no consideration will be deemed issuable
or to have been issued for $0.0001 per share of Common Stock.

     

    4.           Extraordinary Events
Regarding Common Stock.  In the event that the Company shall
(a) issue additional shares of Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of Common Stock, then, in each such event,
the Purchase Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 4. The
number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof, be entitled to receive shall be adjusted to
a number determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 4) be
issuable on such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of this Section 4) be in
effect, and (b) the denominator is the Purchase Price in effect on the date of
such exercise.

     

    5.           Certificate as to
Adjustments.  In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of the
Warrants, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail a
copy of each such certificate to the Holder of the Warrant and any Warrant Agent
of the Company (appointed pursuant to Section 11
hereof).

     

    6.           Reservation of Stock, etc.
Issuable on Exercise of Warrant; Financial
Statements.   The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant.  This Warrant entitles the
Holder hereof, upon written request, to receive copies of all financial and
other information distributed or required to be distributed to the holders of
the Company's Common Stock.

     

    7.           Assignment; Exchange of
Warrant.  Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a "Transferor"). On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B attached hereto (the “Transferor Endorsement Form")
and together with an opinion of counsel reasonably satisfactory to the Company
that the transfer of this Warrant will be in compliance with applicable
securities laws, the Company will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the
Transferor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.           Replacement of
Warrant.  On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.

     

    9.           Registration
Rights.  The Holder of this Warrant has been granted certain
registration rights by the Company.  These registration rights are set
forth in the Subscription Agreement.  The terms of the Subscription
Agreement are incorporated herein by this reference.

     

    10.           Maximum
Exercise.  The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of
Common Stock beneficially owned by the Holder and its affiliates on an exercise
date, and (ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to which the determination of this
limitation is being made on an exercise date, which would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock on such date.  For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the 1934 Act and Rule 13d-3
thereunder.  Subject to the foregoing, the Holder shall not be limited
to aggregate exercises which would result in the issuance of more than
4.99%.  The restriction described in this paragraph may be
waived, in whole or in part, upon sixty-one (61) days prior notice from the
Holder to the Company to increase such percentage to up to 9.99%, but not in
excess of 9.99%.  The Holder may decide whether to convert a
Convertible Note or exercise this Warrant to achieve an actual 4.99% or up to
9.99% ownership position as described above, but not in excess of
9.99%.

     

    11.           Warrant
Agent.  The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a “Warrant Agent”) for the
purpose of issuing Common Stock (or Other Securities) on the exercise of this
Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and
replacing this Warrant pursuant to Section 8, or
any of the foregoing, and thereafter any such issuance, exchange or replacement,
as the case may be, shall be made at such office by such Warrant
Agent.

     

    12.           Transfer on the Company's
Books.  Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the
contrary.

     

    13.           Notices.   All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:  if to the Company, to:
YesDTC, Inc., 1155C Arnold Drive, Suite 169, Martinez, CA 94553: (925) 922-2560,
with a copy by fax only to:  Harvey Kesner, Esq., Sichenzia Ross
Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006, facsimile:
(212) 930-9725, and (ii) if to the Holder, to the name, address and facsimile
number set forth on the front page of this Note, with a copy by fax only to
__________________________________, facsimile:
(   )    -

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    14.           Law Governing This
Warrant.  This Warrant shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws.  Any action brought by either party against the
other concerning the transactions contemplated by this Warrant shall be brought
only in the state courts of New York or in the federal courts located in the
state and county of New York.  The parties to this Warrant hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens.  The Company and Holder waive trial by
jury.  The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs.  In the event
that any provision of this Warrant or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.   Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or
any other Transaction Document by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law.

     

    

     

    [SIGNATURE
PAGE FOLLOWS]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

     

    
      	 
      	
              YESDTC,
      INC.

               

               

               

              By:                                                                                       

                     Name:  Joe
      Noel

                     Title:  Chief
      Executive Officer

               

               

               

               

            
	 
      	 
      	 
      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit A

    

    FORM OF
SUBSCRIPTION

    (to be
signed only on exercise of Warrant)

    TO:  ____________________.

    The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable
box):

    

    ___           ________
shares of the Common Stock covered by such Warrant; or

    
      	
              ___

            	
              the
      maximum number of shares of Common Stock covered by such Warrant pursuant
      to the cashless exercise procedure set forth in Section 2 of the
      Warrant.

            

    

    

    The
undersigned herewith makes payment of the full purchase price for such shares at
the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of (check applicable box or
boxes):

    

    ___           $__________
in lawful money of the United States; and/or

    
      	
              ___

            	
              the
      cancellation of such portion of the attached Warrant as is exercisable for
      a total of _______ shares of Common Stock (using a Fair Market Value of
      $_______ per share for purposes of this calculation);
    and/or

            

    

    

    
      	
              ___

            	
              the
      cancellation of such number of shares of Common Stock as is necessary, in
      accordance with the formula set forth in Section 2 of the Warrant, to
      exercise this Warrant with respect to the maximum number of shares of
      Common Stock purchasable pursuant to the cashless exercise procedure set
      forth in Section 2.

            

    

    

    The
undersigned requests that the certificates for such shares be issued in the name
of, and delivered to _____________________________________ whose address is
_____________________________________________________________________________ .

    

    The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the "Securities Act"), or pursuant to an exemption from registration
under the Securities Act.

    

    
      	
              Dated:___________________

            	
               

              
                
      

              (Signature
      must conform to name of holder as specified on the face of the
      Warrant)

              
                
      

              
                
      

              (Address)

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit B

    

    

    FORM OF
TRANSFEROR ENDORSEMENT

    (To be
signed only on transfer of Warrant)

     

    For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of ___________________ to which the within Warrant relates specified under
the headings "Percentage Transferred" and "Number Transferred," respectively,
opposite the name(s) of such person(s) and appoints each such person Attorney to
transfer its respective right on the books of _____________________ with full
power of substitution in the premises.

     

    

    
      	
              Transferees

            	
              Percentage Transferred

            	
              Number Transferred

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    

    

    
      	
              Dated:  __________________,
      _______

               

               

               

              Signed
      in the presence of:

               

              
                
      

              (Name)

               

               

              ACCEPTED
      AND AGREED:

              [TRANSFEREE]

               

               

              
                
      

              (Name)

               

            	
               

              (Signature
      must conform to name of holder as specified on the face of the
      warrant)

               

               

               

              
                
      

              
                
      

              (address)

               

              
                
      

              
                
      

              (address)f8k1209ex10iv_yesdtc.htm

    Exhibit 10.4

     

    SECURITY
AGREEMENT

    

    1.           Identification.

    

    This
Security Agreement (the “Agreement”), dated as of December 11, 2009, is entered
into by and between YesDTC, Inc., a Delaware corporation (“Debtor”), the lenders
set forth on Schedule
I hereto (the “Lenders”).

    

    2.           Recitals.

    

    2.1           At
or about the date hereof, the Lenders are making loans (the “Loan”) to Debtor.
It is beneficial to Debtor that the Loan is made.

     

    2.2           The
Loan will be evidenced by promissory notes (“Notes”) issued by Debtor on or
about the date of this Agreement pursuant to subscription agreement (the
“Subscription Agreement”) to which Debtor and Lenders are
parties.  The Notes are in the principal amount of $200,000 and were
or will be executed by Debtor as “Borrower” or “Debtor” for the benefit of each
Lender as the “Holder” or “Lender” thereof.

    

    2.3           In
consideration of the Loan made and to be made by Lenders to Debtor and for other
good and valuable consideration, and as security for the performance by Debtor
of its obligations under the Notes, and as security for the repayment of the
Loan and all other sums due from Debtor to Lenders arising under the Transaction
Documents (as defined in the Subscription Agreement) and any other agreement
between or among them (collectively, the “Obligations”), Debtor, for good and
valuable consideration, receipt of which is acknowledged, has agreed to grant to
the Lenders a security interest in the Collateral (as such term is hereinafter
defined), on the terms and conditions hereinafter set
forth.  Obligations include all future advances and loans by Lenders
to Debtor that may be made pursuant to the Subscription Agreement or any other
agreements.

    

    2.4           The
following defined terms which are defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof are used herein as so
defined:  Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Proceeds.  Other capitalized
terms employed herein shall have the meanings attributed to them in the
Subscription Agreement.

    

    3.           Grant of General Security
Interest in Collateral.

    

    3.1   As
security for the Obligations of Debtor, Debtor hereby grants the Lenders, a
security interest in the Collateral.

    

    3.2   “Collateral”
shall mean all of the following property of Debtor:

    

    (A)           All
now owned and hereafter acquired right, title and interest of Debtor in, to and
in respect of all Accounts, Goods, real or personal property, all present and
future books and records relating to the foregoing and all products and Proceeds
of the foregoing, and as set forth below:

    

    (i)           All
now owned and hereafter acquired right, title and interest of Debtor in, to and
in respect of all: Accounts, interests in goods represented by Accounts,
returned, reclaimed or repossessed goods with respect thereto and rights as an
unpaid vendor; contract rights; Chattel Paper; investment property; General
Intangibles (including but not limited to, tax and duty claims and refunds,
registered and unregistered patents, trademarks, service marks, certificates,
copyrights trade names, applications for the foregoing, trade secrets, goodwill,
processes, drawings, blueprints, customer lists, licenses, whether as licensor
or licensee, choses in action and other claims, and existing and future
leasehold interests and claims in and to equipment, real estate and fixtures);
Documents; Instruments; letters of credit, bankers’ acceptances or guaranties;
cash moneys, deposits; securities, bank accounts, deposit accounts, credits and
other property now or hereafter owned or held in any capacity by Debtor, as well
as agreements or property securing or relating to any of the items referred to
above;

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
 

                                                
   (ii)           Goods:  All
now owned and hereafter acquired right, title and interest of Debtor in, to and
in respect of goods, including, but not limited to:

    

    (a)           All
Inventory, wherever located, whether now owned or hereafter acquired, of
whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Debtor’s business; finished goods, timber cut or to be cut, oil, gas,
hydrocarbons, and minerals extracted or to be extracted, and all names or marks
affixed to or to be affixed thereto for purposes of selling same by the seller,
manufacturer, lessor or licensor thereof and all Inventory which may be returned
to Debtor by its customers or repossessed by Debtor and all of Debtors’ right,
title and interest in and to the foregoing (including all of Debtor’s rights as
a seller of goods);

    

    (b)           All
Equipment and fixtures, wherever located, whether now owned or hereafter
acquired, including, without limitation, all machinery, furniture and fixtures,
and any and all additions, substitutions, replacements (including spare parts),
and accessions thereof and thereto (including, but not limited to Debtor’s
rights to acquire any of the foregoing, whether by exercise of a purchase option
or otherwise);

    

    (iii)           Property:  All
now owned and hereafter acquired right, title and interests of Debtor in, to and
in respect of any other personal property in or upon which Debtor has or may
hereafter have a security interest, lien or right of setoff;

    

                                
   (iv)           Books and
Records:  All present and future books and records relating to
any of the above including, without limitation, all computer programs, printed
output and computer readable data in the possession or control of the Debtor,
any computer service bureau or other third party; and

    

                              
     (v)           Products and
Proceeds:  All products and Proceeds of the foregoing in
whatever form and wherever located, including, without limitation, all insurance
proceeds and all claims against third parties for loss or destruction of or
damage to any of the foregoing.

    

    (B)           All
now owned and hereafter acquired right, title and interest of Debtor in, to and
in respect of the following:

    

    (i)           all
shares of stock, partnership interests, member interests or other equity
interests from time to time acquired by Debtor, in any current Subsidiary or any
Subsidiary that is not a Subsidiary of the Debtor on the date hereof (“Future
Subsidiaries”), the certificates representing such shares, and other rights,
contractual or otherwise, in respect thereof and all dividends, distributions,
cash, instruments, investment property and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares, interests or equity; and

    

    (ii)           all
security entitlements of Debtor in, and all Proceeds of any and all of the
foregoing in each case, whether now owned or hereafter acquired by Debtor and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, lien, claim or otherwise).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    3.3           The
Lenders are hereby specifically authorized, after the Maturity Date (defined in
the Notes) accelerated or otherwise, and after the occurrence of an Event of
Default (as defined herein) and the expiration of any applicable cure period, to
transfer any Collateral into the name of the Lenders and to take any and all
action deemed advisable to the Lenders to remove any transfer restrictions
affecting the Collateral.

    

    4.           Perfection of Security
Interest.

    

    4.1           Debtor
shall prepare, execute and deliver to the Lenders UCC-1 Financing
Statements.  The Lenders are instructed to prepare and file at
Debtor’s cost and expense, financing statements in such jurisdictions deemed
advisable to Lenders, including but not limited to the State of
Delaware.

    

    4.2           All
other certificates and instruments constituting Collateral from time to time
required to be pledged to Lenders pursuant to the terms hereof (the “Additional
Collateral”) shall be delivered to Lenders promptly upon receipt thereof by or
on behalf of Debtor.  All such certificates and instruments shall be
held by or on behalf of Lenders pursuant hereto and shall be delivered in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment or undated stock powers executed in blank,
all in form and substance satisfactory to Lenders.  If any Collateral
consists of uncertificated securities, unless the immediately following sentence
is applicable thereto, Debtor shall cause Lenders (or its custodian, nominee or
other designee) to become the registered holder thereof, or cause each issuer of
such securities to agree that it will comply with instructions originated by
Lenders with respect to such securities without further consent by
Debtor.  If any Collateral consists of security entitlements, Debtor
shall transfer such security entitlements to Lenders (or its custodian, nominee
or other designee) or cause the applicable securities intermediary to agree that
it will comply with entitlement orders by Lenders without further consent by
Debtor.

    

    4.3           If
Debtor shall receive, by virtue of Debtor being or having been an owner of any
Collateral, any (i) stock certificate (including, without limitation, any
certificate representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise,
(iii) dividends payable in cash (except such dividends permitted to be retained
by Debtor pursuant to Section 5.2 hereof) or in securities or other property or
(iv) dividends or other distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, Debtor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust for
the benefit of Lenders, shall segregate it from Debtor’s other property and
shall deliver it forthwith to Lenders, in the exact form received, with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by Lenders as Collateral and as further collateral security for the
Obligations.

    

    5.           Distribution.

    

    5.1           So
long as an Event of Default does not exist, Debtor shall be entitled to exercise
all voting power pertaining to any of the Collateral, provided such exercise is
not contrary to the interests of the Lenders and does not impair the
Collateral.

    

    5.2.          At
any time an Event of Default exists or has occurred and is continuing, all
rights of Debtor, upon notice given by Lenders, to exercise the voting power and
receive payments, which it would otherwise be entitled to pursuant to Section
5.1, shall cease and all such rights shall thereupon become vested in Lenders,
which shall thereupon have the sole right to exercise such voting power and
receive such payments.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    5.3           All
dividends, distributions, interest and other payments which are received by
Debtor contrary to the provisions of Section 5.2 shall be received in trust for
the benefit of Lenders as security and Collateral for payment of the Obligation,
shall be segregated from other funds of Debtor, and shall be forthwith paid over
to Lenders as Collateral in the exact form received with any necessary
endorsement and/or appropriate stock powers duly executed in blank, to be held
by Lenders as Collateral and as further collateral security for the
Obligations.

    

    6.           Further Action By Debtor;
Covenants and Warranties.

    

    6.1           Subject
to the terms of this Agreement, Lenders at all times shall have a perfected
security interest in the Collateral. Debtor represents that, other than the
security interests described on Schedule 6.1, it has and will
continue to have full title to the Collateral free from any liens, leases,
encumbrances, judgments or other claims.  The Lenders’ security
interest in the Collateral constitutes and will continue to constitute a first,
prior and indefeasible security interest in favor of Lenders, subject only to
the security interests described on Schedule
6.1.  Debtor will do all acts and things, and will execute and
file all instruments (including, but not limited to, security agreements,
financing statements, continuation statements, etc.) reasonably requested by
Lenders to establish, maintain and continue the perfected security interest of
Lenders in the perfected Collateral, and will promptly on demand, pay all costs
and expenses of filing and recording, including the costs of any searches
reasonably deemed necessary by Lenders from time to time to establish and
determine the validity and the continuing priority of the security interest of
Lenders, and also pay all other claims and charges that, in the opinion of
Lenders are reasonably likely to materially prejudice, imperil or otherwise
affect the Collateral or Lenders’ security interests therein.

    

    6.2           Except
(i) in connection with sales of Collateral, in the ordinary course of business,
for fair value and in cash, and (ii) Collateral which is substituted by assets
of identical or greater value (subject to the consent of the Lenders) or which
is inconsequential in value, Debtor will not sell, transfer, assign or pledge
those items of Collateral (or allow any such items to be sold, transferred,
assigned or pledged), without the prior written consent of Lenders other than a
transfer of the Collateral to a wholly-owned United States formed and located
subsidiary on prior notice to Lenders, and provided the Collateral remains
subject to the security interest herein described.  Although Proceeds
of Collateral are covered by this Agreement, this shall not be construed to mean
that Lenders consent to any sale of the Collateral, except as provided
herein.  Sales of Collateral in the ordinary course of business and as
described above shall be free of the security interest of Lenders and Lenders
shall promptly execute such documents (including without limitation releases and
termination statements) as may be required by Debtor to evidence or effectuate
the same.

    

    6.3           Debtor
will, at all reasonable times during regular business hours and upon reasonable
notice, allow Lenders or their representatives free and complete access to the
Collateral and all of Debtor’s records that in any way relate to the Collateral,
for such inspection and examination as Lenders reasonably deem
necessary.

    

    6.4           Debtor,
at its sole cost and expense, will protect and defend this Security Agreement,
all of the rights of Lenders hereunder, and the Collateral against the claims
and demands of all other persons.

    

    6.5           Debtor
will promptly notify Lenders of any levy, distraint or other seizure by legal
process or otherwise of any part of the Collateral, and of any threatened or
filed claims or proceedings that are reasonably likely to affect or impair any
of the rights of Lenders under this Security Agreement in any material
respect.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    6.6           Debtor,
at its own expense, will obtain and maintain in force insurance policies
covering losses or damage to those items of Collateral which constitute physical
personal property, which insurance shall be of the types customarily insured
against by companies in the same or similar business, similarly situated, in
such amounts (with such deductible amounts) as is customary for such companies
under the same or similar circumstances, similarly situated.  Debtor
shall make the Lenders loss payee thereon to the extent of its interest in the
Collateral. Lenders are hereby irrevocably (until the Obligations are
indefeasibly paid in full) appointed Debtor’s attorney-in-fact to endorse any
check or draft that may be payable to Debtor so that Lenders may collect the
proceeds payable for any loss under such insurance.  The proceeds of
such insurance, less any costs and expenses incurred or paid by Lenders in the
collection thereof, shall be applied either toward the cost of the repair or
replacement of the items damaged or destroyed, or on account of any sums secured
hereby, whether or not then due or payable.

    

    6.7           In
order to protect the Collateral and Lenders’ interest therein, Lenders may, at
Lenders’ option, and without any obligation to do so, pay, perform and discharge
any and all amounts, costs, expenses and liabilities herein agreed to be paid or
performed by Debtor upon Debtor’s
failure to do so.  All amounts expended by Lenders in so doing shall
become part of the Obligations secured hereby, and shall be immediately due and
payable by Debtor to Lenders upon demand and shall bear interest at the lesser
of 15% per annum or the highest legal amount allowed from the dates of such
expenditures until paid.

    

    6.8           Upon
the request of Lenders, Debtor will furnish to Lenders within five (5) business
days thereafter, or to any proposed assignee of this Security Agreement, a
written statement in form reasonably satisfactory to Lenders, duly acknowledged,
certifying the amount of the principal and interest and any other sum then owing
under the Obligations, whether to its knowledge any claims, offsets or defenses
exist against the Obligations or against this Security Agreement, or any of the
terms and provisions of any other agreement of Debtor securing the
Obligations.  In connection with any assignment by Lenders of this
Security Agreement, Debtor hereby agrees to cause the insurance policies
required hereby to be carried by Debtor, if any, to be endorsed in form
satisfactory to Lenders or to such assignee, with loss payable clauses in favor
of such assignee, and to cause such endorsements to be delivered to Lenders
within ten (10) calendar days after request therefor by Lenders.

    

    6.9           Debtor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Lenders from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other reasonable
assurances or instruments and take further steps relating to the Collateral and
other property or rights covered by the security interest hereby granted, as the
Lenders may reasonably require to perfect their security interest
hereunder.

    

    6.10         Debtor
represents and warrants that they are the true and lawful exclusive owners of
the Collateral, free and clear of any liens, encumbrances and claims other than
those listed on Schedule
6.1.

    

    6.11         Debtor
hereby agrees not to divest itself of any right under the Collateral except as
permitted herein absent prior written approval of the Lenders, except to a
subsidiary organized and located in the United States on prior notice to Lenders
provided the Collateral remains subject to the security interest herein
described.

               

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    6.12         Debtor
shall cause each Subsidiary of Debtor in existence on the date hereof and each
Future Subsidiary to execute and deliver to Lenders promptly and in any event
within ten (10) days after the formation, acquisition or change in status
thereof (A) if requested by Lenders, a security and pledge agreement
substantially in the form of this Agreement together with (x) certificates
evidencing all of the capital stock of each Subsidiary of and any entity owned
by such Subsidiary, (y) undated stock powers executed in blank with signatures
guaranteed, and (z) such opinion of counsel and such approving certificate of
such Subsidiary as Lenders may reasonably request in respect of complying with
any legend on any such certificate or any other matter relating to such shares
and (B) such other agreements, instruments, approvals, legal opinions or other
documents reasonably requested by Lenders in order to create, perfect, establish
the first priority of or otherwise protect any lien purported to be covered by
any such pledge and security agreement or otherwise to effect the intent that
all property and assets of such Subsidiary shall become Collateral for the
Obligations.  For purposes of this Agreement, “Subsidiary” means,
with respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity, of which more than 30% of (A) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (B) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (C) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
entity.  Schedule
6.12 annexed hereto
contains a list of all Subsidiaries of the Debtor as of the date of this
Agreement.

    

    6.13         Debtor
will notify Lenders within ten days of the occurrence of any change of Debtor’s
name, domicile, address or jurisdiction of incorporation.  The timely
giving of this notice is a material obligation of Debtor.

    

    7.           Power of
Attorney.

    

    At any
time an Event of Default has occurred, and only after the applicable cure period
as set forth in this Agreement and the other Transaction Documents, and is
continuing, Debtor hereby irrevocably constitutes and appoints Lenders as the
true and lawful attorney of Debtor, with full power of substitution, in the
place and stead of Debtor and in the name of Debtor or otherwise, at any time or
times, in the discretion of the Lenders, to take any action and to execute any
instrument or document which the Lenders may deem necessary or advisable to
accomplish the purposes of this Agreement.  This power of attorney is
coupled with an interest and is irrevocable until the Obligations are
satisfied.

    

    8.           Performance By The
Lenders.

    

    If Debtor
fails to perform any material covenant, agreement, duty or obligation of Debtor
under this Agreement, Lenders may, after any applicable cure period, at any time
or times in its discretion, take action to effect performance of such
obligation.  All reasonable expenses of the Lenders incurred in
connection with the foregoing authorization shall be payable by Debtor as
provided in Paragraph
12.1 hereof.  No discretionary right, remedy or power granted
to the Lenders under any part of this Agreement shall be deemed to impose any
obligation whatsoever on the Lenders with respect thereto, such rights, remedies
and powers being solely for the protection of the Lenders.

    

    9.           Event of
Default.

    

    An event
of default (“Event of Default”) shall be deemed to have occurred hereunder upon
the occurrence of any event of default as defined and described in this
Agreement, in the Notes, the Subscription Agreement, Transaction Documents (as
defined in the Subscription Agreement), and any other agreement to which Debtor
and Lenders are parties.   Upon and after any Event of Default,
after the applicable cure period, if any, any or all of the Obligations shall
become immediately due and payable at the option of the Lenders, and the Lenders
may dispose of Collateral as provided below.  A default by Debtor of
any of its material obligations pursuant to this Agreement and any of the
Transaction Documents shall be an Event of Default hereunder and an “Event of
Default” as defined in the Notes, and Subscription Agreement.

    
 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    10.           Disposition of
Collateral.

    

    Upon and
after any Event of Default which is then continuing,

    

    10.1         The
Lenders may exercise their rights with respect to each and every component of
the Collateral, without regard to the existence of any other security or source
of payment for, in order to satisfy the Obligations.  In addition to
other rights and remedies provided for herein or otherwise available to it, the
Lenders shall have all of the rights and remedies of a lender on default under
the Uniform Commercial Code then in effect in the State of New
York.

    

    10.2         If
any notice to Debtor of the sale or other disposition of Collateral is required
by then applicable law, five (5) business days prior written notice (which
Debtor agrees is reasonable notice within the meaning of Section 9.612(a) of the
Uniform Commercial Code) shall be given to Debtor of the time and place of any
sale of Collateral which Debtor hereby agrees may be by private
sale.  The rights granted in this Section are in addition to any and
all rights available to Lenders under the Uniform Commercial Code.

    

    10.3         The
Lenders are authorized, at any such sale, if the Lenders deem it advisable to do
so, in order to comply with any applicable securities laws, to restrict the
prospective bidders or purchasers to persons who will represent and agree, among
other things, that they are purchasing the Collateral for their own account for
investment, and not with a view to the distribution or resale thereof, or
otherwise to restrict such sale in such other manner as the Lenders deem
advisable to ensure such compliance.  Sales made subject to such
restrictions shall be deemed to have been made in a commercially reasonable
manner.

    

    10.4         All
proceeds received by the Lenders in respect of any sale, collection or other
enforcement or disposition of Collateral, shall be applied (after deduction of
any amounts payable to the Lenders pursuant to Paragraph 12.1
hereof) against the Obligations.   Upon payment in full of all
Obligations, Debtor shall be entitled to the return of all Collateral, including
cash, which has not been used or applied toward the payment of Obligations or
used or applied to any and all costs or expenses of the Lenders incurred in
connection with the liquidation of the Collateral (unless another person is
legally entitled thereto).  Any assignment of Collateral by the
Lenders to Debtor shall be without representation or warranty of any nature
whatsoever and wholly without recourse.  To the extent allowed by law,
Lenders may purchase the Collateral and pay for such purchase by offsetting the
purchase price with sums owed to Lenders by Debtor arising under the Obligations
or any other source.

    

    10.5         Rights of Lenders to Appoint
Receiver.   Without limiting, and in addition to, any
other rights, options and remedies Lenders have under the Transaction Documents,
the UCC, at law or in equity, or otherwise, upon the occurrence and continuation
of an Event of Default, Lenders shall have the right to apply for and have a
receiver appointed by a court of competent jurisdiction.  Debtor
expressly agrees that such a receiver will be able to manage, protect and
preserve the Collateral and continue the operation of the business of Debtor to
the extent necessary to collect all revenues and profits thereof and to apply
the same to the payment of all expenses and other charges of such receivership,
including the compensation of the receiver, until a sale or other disposition of
such Collateral shall be finally made and consummated.  Debtor waives
any right to require a bond to be posted by or on behalf of any such
receiver.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    11.           Waiver of Automatic
Stay.   Debtor acknowledges and agrees that should a
proceeding under any bankruptcy or insolvency law be commenced by or against
Debtor, or if any of the Collateral should become the subject of any bankruptcy
or insolvency proceeding, then the Lenders should be entitled to, among other
relief to which the Lenders may be entitled under the Notes, Subscription
Agreement, Transaction Documents, and any other agreement to which the Debtor
and Lenders are parties (collectively “Loan Documents”) and/or applicable law,
an order from the court granting immediate relief from the automatic stay
pursuant to 11 U.S.C. Section 362 to permit the Lenders to exercise all of their
rights and remedies pursuant to the Loan Documents and/or applicable
law.  DEBTOR EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE, DEBTOR EXPRESSLY
ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION
OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN
ANY WAY THE ABILITY OF THE LENDERS TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES
UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.   Debtor
hereby consents to any motion for relief from stay which may be filed by the
Lenders in any bankruptcy or insolvency proceeding initiated by or against
Debtor, and further agrees not to file any opposition to any motion for relief
from stay filed by the Lenders.  Debtor represents, acknowledges and
agrees that this provision is a specific and material aspect of this Agreement,
and that the Lenders would not agree to the terms of this Agreement if this
waiver were not a part of this Agreement.  Debtor further represents,
acknowledges and agrees that this waiver is knowingly, intelligently and
voluntarily made, that neither the Lenders nor any person acting on behalf of
the Lenders has made any representations to induce this waiver, that Debtor has
been represented (or has had the opportunity to be represented) in the signing
of this Agreement and in the making of this waiver by independent legal counsel
selected by Debtor and that Debtor has had the opportunity to discuss this
waiver with counsel.   Debtor further agrees that any bankruptcy
or insolvency proceeding initiated by Debtor will only be brought in the Federal
Court within the Southern District of New York.

    

    12.           Miscellaneous.

    

    12.1         Expenses.  Debtor
shall pay to the Lenders, on demand, the amount of any and all reasonable
expenses, including, without limitation, attorneys’ fees, legal expenses and
brokers’ fees, which the Lenders may incur in connection with (a) sale,
collection or other enforcement or disposition of Collateral; (b) exercise or
enforcement of any the rights, remedies or powers of the Lenders hereunder or
with respect to any or all of the Obligations upon breach or threatened breach;
or (c) failure by Debtor to perform and observe any agreements of Debtor
contained herein which are performed by Lenders.

    

    12.2         Waivers, Amendment and
Remedies.  No course of dealing by the Lenders and no failure
by the Lenders to exercise, or delay by the Lenders in exercising, any right,
remedy or power hereunder shall operate as a waiver thereof, and no single or
partial exercise thereof shall preclude any other or further exercise thereof or
the exercise of any other right, remedy or power of the Lenders.  No
amendment, modification or waiver of any provision of this Agreement and no
consent to any departure by Debtor therefrom shall, in any event, be effective
unless contained in a writing signed by the Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. The rights, remedies and powers of the Lenders, not
only hereunder, but also under any instruments and agreements evidencing or
securing the Obligations and under applicable law are cumulative, and may be
exercised by the Lenders from time to time in such order as the Lenders may
elect.

    

    12.3         Notices.  All
notices or other communications given or made hereunder shall be in writing and
shall be personally delivered or deemed delivered the first business day after
being faxed (provided that a copy is delivered by first class mail) to the party
to receive the same at its address set forth below or to such other address as
either party shall hereafter give to the other by notice duly made under this
Section:

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
 

    To
Debtor:                                            
1155C Arnold Drive

    Suite 168, Martinez, CA
94553

    Attn: Joe Noel, CEO

    Fax: 925-922-2560)

    

    With a copy by fax only
to:               Harvey
Kesner

    Sichenzia Ross Friedman Ference
LLP

    61 Broadway, 32nd
Floor

    New York, NY 10006

    Fax: (212) 930-9725

    

    To
Lender:                                           
To the addresses set forth on Schedule I

    

    Any party
may change its address by written notice in accordance with this
paragraph.

    

    12.4         Term; Binding
Effect.  This Agreement shall (a) remain in full force and
effect until payment and satisfaction in full of all of the Obligations; (b) be
binding upon Debtor, and its successors and permitted assigns; and (c) inure to
the benefit of the Lenders and its successors and assigns.

    

    12.5         Captions.  The
captions of Paragraphs, Articles and Sections in this Agreement have been
included for convenience of reference only, and shall not define or limit the
provisions of this agreement and have no legal or other significance
whatsoever.

    

    12.6         Governing Law; Venue;
Severability.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws principles that would result in the application of the substantive
laws of another jurisdiction, except to the extent that the perfection of
the security interest granted hereby in respect of any item of Collateral may be
governed by the law of another jurisdiction.  Any legal action or
proceeding against Debtor with respect to this Agreement must be brought only in
the courts in the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, Debtor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Debtor hereby
irrevocably waives any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Agreement brought in the aforesaid courts and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.  If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid, such
invalidity shall not affect any other provisions which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable and the remaining, valid provisions shall remain of
full force and effect.

    

    12.7         Entire
Agreement.  This Agreement contains the entire agreement of the
parties and supersedes all other agreements and understandings, oral or written,
with respect to the matters contained herein.

    

    12.8         Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by electronic transmission.

    

    13.           Termination;
Release.  When the Obligations have been indefeasibly paid and
performed in full or all outstanding Notes have been converted to common stock
pursuant to the terms of the Notes and the Subscription Agreements, this
Agreement shall be terminated, and the Lenders, at the request and sole expense
of the Debtor, will execute and deliver to the Debtor the proper instruments
(including UCC termination statements) acknowledging the termination of the
Security Agreement, and duly assign, transfer and deliver to the Debtor, without
recourse, representation or warranty of any kind whatsoever, such of the
Collateral,  as may be in the possession of the Lenders.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    14.           Lenders
Powers.

    

    14.1         Lenders
Powers.  The powers conferred on the Lenders hereunder are
solely to protect Lenders’ interest in the Collateral and shall not impose any
duty on it to exercise any such powers.

    

    14.2         Reasonable
Care.  The Lenders are required to exercise reasonable care in
the custody and preservation of any Collateral in its possession; provided,
however, that the Lenders shall be deemed to have exercised reasonable care in
the custody and preservation of any of the Collateral if it takes such action
for that purposes as any owner thereof reasonably requests in writing at times
other than upon the occurrence and during the continuance of any Event of
Default, but failure of the Lenders to comply with any such request at any time
shall not in itself be deemed a failure to exercise reasonable
care.

    

    14.3         Majority in
Interest.   The rights of the Lenders hereunder, except as
otherwise set forth herein shall be exercised upon the approval of Lenders
holding 70% of the outstanding Obligations (“Majority in Interest”) at the time
such approval is sought or given.  Possession of any tangible or
physical Collateral shall be held by any Lender pursuant to this Agreement and
on behalf of all Lenders as to their respective rights.  The
Collateral, to the extent it may be transferred to Lenders, may be held in the
name of Lender or in “street name”.  Unless agreed to otherwise by a
Majority in Interest, Lender is authorized to act on behalf of all the Lenders
in connection with the Lenders rights under this Agreement.

    

    

    [THIS
SPACE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
 

    IN WITNESS WHEREOF, the
undersigned have executed and delivered this Security Agreement, as of the date
first written above.

    

    “DEBTOR”

    YESDTC,
INC.

    a
Delaware corporation

    

    

    By: /s/ Joe
Noel

    

    Its:
Chief Executive
Officer

    

    

    

    “LENDERS”

    

    

    

    

    _________________________________________

    

    

    /s/
Barry Honig

    _______________________________________

    GRQ
Consultants 401k Roth IRA fbo Barry Honig

    

    /s/
Peter Benz

    _________________________________________

    PETER
BENZ

    

    /s/
Harvey Kesner

    _________________________________________

    PARADOX
CAPITAL PARTNERS, LLC

    

    /s/
Arie Rabinowitz

    _________________________________________

    MOMONA
CAPITAL

    

    /s/
Andy Graves

    _________________________________________

    ANDY
GRAVES

    

    

    

    

    

    

    

    This
Security Agreement may be signed by facsimile signature and

    delivered
by confirmed facsimile transmission.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Schedule
I

    

    

    

    
      	
              SUBSCRIBER
      AND ADDRESS

            	
              PURCHASE
      PRICE

            	
              NOTE
      PRINCIPAL

            	
              WARRANT
      SHARES

            
	
              JOSEPH
      NOEL, OR DESIGNEE

            	
              $60,000.00

            	
              $60,000.00

            	
              15,000,000

            
	
              GRQ
      Consultants Inc 401K Roth FBO Barry Honig

              595
      S. Federal Highway, Suite 600

              Boca
      Raton, FL 33432

            	
              $88,000.00

            	
              $88,000.00

            	
              22,000,000

            
	
              PETER
      BENZ

            	
              $20,000.00

            	
              $20,000.00

            	
              5,000,000

            
	
              PARADOX
      CAPITAL PARTNERS, LLC

              65
      Mayhew Drive

              South
      Orange, NJ 07079

            	
              $16,000.00

            	
              $16,000.00

            	
              4,000,000

            
	
              MOMONA
      CAPITAL

            	
              $4,000.00

            	
              $4,000.00

            	
              1,000,000

            
	
              ANDY
      GRAVES

            	
              $12,000.00

            	
              $12,000.00

            	
              3,000,000

            

    

    

    

    12

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