Document:

helix_8k-ex1008.htm

    
      

    
Exhibit 10.8

    IRREVOCABLE
INSTRUCTIONS TO TRANSFER AGENT

    

    

    Date:  March
30, 2010

    

    Island
Stock Transfer

    Attn:
Robert Thompson or Olessia Kritskaia

    100
2nd
Avenue, South, Suite 705 S

    St.
Petersburg, Florida 33701

    

    Re:           Instruction to Transfer
Shares

    

    Ladies
and Gentlemen:

    

    Reference
is made to that certain Convertible Secured Promissory Note dated as of March
30, 2010 (the “Initial
Note”), made by Helix Wind, Corp., a Nevada corporation (the “Maker”), pursuant to
which the Maker agreed to pay to St. George Investments, LLC, an Illinois
limited liability company, its successors and/or assigns (the “Holder”), the sum of
Seven Hundred Seventy Nine Thousand and 00/100 Dollars
($779,500.00).  The Initial Note was issued pursuant to that certain
Note and Warrant Purchase Agreement dated as of the date of the Initial Note by
and between Maker and the Holder (the “Purchase
Agreement”).  Pursuant to the terms and conditions of the
Purchase Agreement, the Holder may purchase up to four (4) additional
Convertible Secured Promissory Notes from the Maker, pursuant to which the Maker
will agree to pay the Holder the sum of One Hundred Thirty Thousand and 00/100
Dollars ($130,000.00) in each instance (collectively, the “Additional
Notes”).  The Initial Note, together with each of the
Additional Notes, shall be referred to individually as a “Note” and
collectively as the “Notes.”  Pursuant
to the terms of the Notes, at the option of the Holder, the Notes may be
converted into shares of the common stock, par value $0.0001 per share, of the
Maker (the “Common
Stock”) (the shares of Common Stock issuable upon conversion, the “Conversion
Shares”).  All of the Notes are or will be secured by that
certain Stock Pledge Agreement (the “Pledge Agreement”)
executed by Kenneth O. Morgan, an individual (the “Pledgor”), and
4,800,000 shares of Common Stock (the “Pledged Shares”)
represented by Certificates Nos. 3190 and 3191, each for 2,400,000 shares, and
dated March 31st,
2010 (the “Certificates”).

    

    Reference
is also made to that certain Warrant to Purchase Shares of Common Stock dated as
of the date of the Initial Note (the “Initial Warrant”),
made by Maker, pursuant to which the Holder may purchase 2,500,000 shares of
Common Stock.  Pursuant to the terms and conditions of the Purchase
Agreement, the Holder may purchase up to four (4) additional Warrants to
Purchase Shares of Common Stock from the Maker, pursuant to which the Holder may
purchase 250,000 shares of Common Stock in each instance (collectively, the
“Additional
Warrants”).  The Initial Warrant, together with each of the
Additional Warrants, shall be referred to individually as a “Warrant” and
collectively as the “Warrants.”  All
shares of Common Stock that may be purchased under the Initial Warrant and all
of the other Warrants shall be referred to herein as the “Warrant
Shares.”  The Conversion Shares, together with the Pledged
Shares and Warrant Shares are hereinafter referred to as the “Shares.”

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    This
irrevocable letter of instructions shall serve as the authorization and
direction of the Maker and the Pledgor (collectively, the “Undersigned”) to
Island Capital Management, LLC, d.b.a. Island Stock Transfer, (“you” or “your” or “Island Stock
Transfer”) (provided that you are the transfer agent of the Maker at such
time) to issue shares of Common Stock to the Holder, upon the order of the
Holder, (i) upon conversion of any of the Notes, (ii) following occurrence of an
Event of Default or a Liquidity Default (each as defined in the relevant Note)
under any of the Notes, or (iii) upon exercise of any of the Warrants, as
follows:

    

    1.           You
shall issue the Conversion Shares free of any restrictive legend to or at the
direction of the Maker upon conversion of all or a portion of a Note, upon
delivery to you of (a) a properly completed and duly executed Notice of
Conversion (the “Notice of
Conversion”) in the form attached hereto as Exhibit A, and (b) a
legal opinion as to the free transferability of the Shares from counsel, dated
within 90 days from the date of conversion, to either the Holder or the Maker;
provided, however, that in the event
the legal opinion is not provided as described above, you will issue the
Conversion Shares subject to the a restrictive legend.

    

    2.           You
shall issue the Pledged Shares free of any restrictive legend to the Holder upon
delivery to you of (a) a properly completed and duly executed Default Notice
(the “Default
Notice”) in the form attached hereto as Exhibit B, together
with the attachments referenced therein, and (b) a legal opinion as to the free
transferability of the Shares from counsel, dated within 90 days from the date
of conversion, to either the Holder or the Maker; provided, however, that in the event
the legal opinion is not provided as described above, you will issue the
Conversion Shares subject to the a restrictive legend.

    

    3.           You
shall issue the Warrant Shares to or at the direction of the Maker upon exercise
of all or a portion of a Warrant, upon delivery to you of (a) a properly
completed and duly executed Notice of Exercise (the “Notice of Exercise”)
in the form attached hereto as Exhibit C, and (b) a
legal opinion as to the free transferability of the Shares from counsel dated
within 90 days from the date of conversion, to either the Holder or the Maker;
provided, however, that in the event
the legal opinion is not provided as described above, you will issue the
Conversion Shares subject to the a restrictive legend.

    

    4.           In
the case of a request for shares of Common Stock pursuant to Paragraphs 1, 2 or
3 above, you shall, within three (3) Trading Days (as defined below) thereafter,
(a) issue and deliver to the Holder, via a common carrier for overnight
delivery, to the address as specified in the Notice of Conversion, the Default
Notice or the Notice of Exercise, as the case may be, a certificate or
certificates, registered in the name of the Holder or its designees, for such
number of shares of Common Stock as may be requested by the Holder to be
transferred as set forth in the Notice of Conversion,  Default Notice
or Notice of Exercise, as applicable, up to the number of shares evidenced by
the Certificates, or (b) provided that you are participating in the Depository
Trust Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such
aggregate number of shares of the Common Stock to the Holder’s or its designees’
balance account with DTC through the Deposit Withdrawal at Custodian (“DWAC”) system,
provided the Holder causes its bank or broker to initiate the DWAC
transaction.  For purposes hereof, “Trading Day” shall
mean any day on which the New York Stock Exchange is open for customary
trading.  The Maker and Holder understand that Island Stock Transfer
shall not be required to perform any issuances or transfers or shares if (a) the
Maker or Holder violate, or be in violation of, any terms of the Transfer Agent
Agreement, (b) such an issuance or transfer of shares be in violation of any
state or federal securities laws or regulations, or (c) the issuances or
transfer of shares be prohibited or stopped as required or directed by a court
order.

    

    
      
         

      

      
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    5.           You
understand that a delay in the delivery of certificates or the crediting of
shares of Common Stock hereunder, as the case may be, could result in economic
loss to the Holder and that time is of the essence in your processing of a
Notice of Conversion, Default Notice or Notice of Exercise.

    

    6.           By
executing this letter in the space set forth at the bottom hereof you agree on
behalf of Island Stock Transfer that, to the extent the applicable shares of
Common Stock being issued will be certificated:

    

    
      	
               
      

            	
              (a)

            	
              the
      certificates representing the Conversion Shares to be issued pursuant to
      Paragraph 1 above, if the date on which the Notice of Conversion is
      submitted to you is (i) more than twelve (12) months following the date of
      issuance of the applicable Note, or (ii) more than six (6) months
      following the date of issuance of the applicable Note and the Maker is
      subject to the reporting requirements of Section 13 or 15(d) of the
      Securities Exchange Act of 1934, as amended,
and

            

    

    
      	
               
      

            	
              (b)

            	
              in
      all cases the certificates representing the Pledged Shares to be issued
      pursuant to Paragraph 2 above, and

            

    

    
      	
               
      

            	
              (c)

            	
              the
      certificates representing the Warrant Shares to be issued pursuant to
      Paragraph 3 above, if the date on which the Notice of Exercise is
      submitted to you is (i) more than twelve (12) months following the date of
      issuance of the applicable Warrant, or (ii) more than six (6) months
      following the date of issuance of the applicable Warrant and the Maker is
      subject to the reporting requirements of Section 13 or 15(d) of the
      Securities Exchange Act of 1934, as
amended,

            

    

    

    (i) shall
be in the name of the Holder; (ii) shall not bear any legend restricting
transfer and should not be subject to any stop-transfer restrictions, and shall
otherwise be freely transferable on the books and records of the Maker, pursuant
to the opinion of counsel to the Maker or the opinion of counsel to the Holder;
(iii) you will accept such opinion of counsel provided that it opines that the
certificates may be issued without restrictive legend in accordance with the
applicable securities laws of the United States; and (iv) the Maker and Holder
understands that Island Stock Transfer shall not be required to perform any
issuances or transfers or shares if (a) the Maker or Holder violate, or be in
violation of, any terms of the Transfer Agent Agreement, (b) such an issuance or
transfer of shares be in violation of any state or federal securities laws or
regulations, or (c) the issuances or transfer of shares be prohibited or stopped
as required or directed by a court order.

    

    7.             You
shall rely exclusively on the Notice of Conversion, Default Notice or Notice of
Exercise, as applicable, and shall have no liability for relying on such
instructions.  Any Notice of Conversion, Default Notice or Notice of
Exercise delivered hereunder shall constitute an irrevocable instruction to you
to process such notice or notices in accordance with the terms
thereof.  Such notice or notices may be transmitted to you by fax or
any commercially reasonable method.

    

    
      
         

      

      
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    8.       
    The Undersigned hereby confirm to you and to the Holder
that no instruction other than as contemplated herein will be given to you by
the Undersigned with respect to the matters referenced herein.  The
Undersigned hereby authorize you, and you shall be obligated, to disregard any
contrary instruction received by or on behalf of the Undersigned or any other
person purporting to represent the Maker or Pledgor.

    

    9.        
   The Undersigned hereby agree to notify the Holder in the event
of any replacement of Island Stock Transfer as the Maker’s transfer agent and
that no such replacement shall be effective without the agreement of such
successor transfer agent to be bound by the provisions of this
letter.

    

    10.           The
Undersigned acknowledge that the Holder is relying on the representations and
covenants made by the Undersigned in this irrevocable letter of instructions and
that the representations and covenants contained in this letter constitute a
material inducement to the Holder to make the any loans evidenced by the
Notes.  The Undersigned further acknowledge that without such
representations and covenants of the Undersigned made in this letter, the Holder
would not have made any of the loans to the Maker evidenced by the
Notes.

    

    11.           The
parties hereto specifically acknowledge and agree that in the event of a breach
or threatened breach by a party hereto of any provision hereof, the Holder will
be irreparably damaged, and that damages at law would be an inadequate remedy if
this irrevocable letter of instructions were not specifically
enforced.  Therefore, in the event of a breach or threatened breach by
a party hereto, the Holder shall be entitled, in addition to all other rights or
remedies, to an injunction restraining such breach, without being required to
show any actual damage or to post any bond or other security, and/or to a decree
for a specific performance of the provisions of this letter.

    

    12.           By
signing below, each individual executing this letter on behalf of an entity
represents and warrants that he or she has authority to so execute this letter
on behalf of such entity and thereby bind such entity to the terms and
conditions hereof.

     

    
      
         

      

      
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    13.           The
Maker and Holder agree to indemnify you and your officers, directors,
principals, partners, agents and representatives, and hold each of them harmless
from and against any and all loss, liability, damage, claim or expense
(including the reasonable fees and disbursements of its attorneys) incurred by
or asserted against you or any of them arising out of or in connection
the  instructions set forth herein, the performance of your duties
hereunder and otherwise in respect hereof, including the costs and expenses of
defending yourself or themselves against any claim or liability hereunder,
except that the Company or the Holder shall not be liable hereunder as to
matters in respect of which it is determined that you have acted with gross
negligence or in bad faith. You shall have no liability to the Company or the
Holder in respect to any action taken or any failure to act in respect of this
if such action was taken or omitted to be taken in good faith, and you shall be
entitled to rely in this regard on the advice of counsel.

    

    

    [SIGNATURE
PAGE FOLLOWS]

     

     

    
      
         

      

      
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                Very
      truly yours,

              	 
	 	 	 
	 	HELIX
      WIND, CORP	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Scott
      Weinbrandt 	 
	 	 	Name:
      Scott Weinbrandt	 
	 	 	
                Title:
      Chief Executive Officer

              	 
	 	 	 	 
	 	 	 	 
	 	 	
                /s/ Kenneth O. Morgan

              	 
	 	 	
                Kenneth
      O. Morgan, an individual

              	 

      

    ACKNOWLEDGED
AND AGREED:

     

    

    
      
        	ISLAND STOCK TRANSFER, a division of
      

                
                  ISLAND
      CAPITAL MANAGEMENT, LLC

                

              	 
	 	 	 
	
                By:
      

              	/s/ David
      Lopez	 
	 	Name: 
      David Lopez 	 
	 	
                Title:   
      CCO

              	 
	 	 	 

      

    

    

     

    

    Attachments:

    

    Exhibit A
– Form of Notice of Conversion

    Exhibit B
- Form of Default Notice

    Exhibit C
– Form of Notice of Exercisehelix_8k-ex1009.htm

    
      

    
Exhibit 10.9

    

    STOCK
PLEDGE AGREEMENT

    

    This STOCK PLEDGE AGREEMENT (“Agreement”)
is entered into as of the 30th day
of March, 2010 by and between St. George Investments, LLC, an Illinois limited
liability company, its successors or assigns (the “Secured
Party”), with its principal executive office at 303 East Wacker Drive,
Suite 311, Chicago, Illinois 60601, and Kenneth O. Morgan, an individual
residing at 209 South Stephanie Street, Suite B221, Henderson, Nevada 89012 (the
“Pledgor”).

    

    A.           Effective
as of the date hereof, Secured Party loaned to Helix Wind, Corp, a Nevada
corporation (the “Maker”),
certain funds (the “Loan”)
evidenced by a Convertible Secured Promissory Note of even date herewith in the
principal amount of $779,500.00 made by the Maker in favor of the Secured Party
substantially in the form attached hereto as Exhibit
A (the “First
Note”).

    

    B.           The
Loan was made and the First Note was issued in connection with that certain Note
and Warrant Purchase Agreement of even date herewith by and between the Maker
and the Secured Party (the “Purchase
Agreement”).

    

    C.           Subject
and pursuant to the terms and conditions of the Purchase Agreement, the Secured
Party anticipates making four additional loans to the Maker (the “Additional
Loans”) on each monthly anniversary of the issuance of the First Note for
the four calendar months immediately following such issuance, each of which
shall be evidenced by additional Convertible Secured Promissory Notes designated
as the Second Note, Third Note, Fourth Note and Fifth Note, respectively, in the
Purchase Agreement, each in the principal amount of $130,000.00 made by the
Maker in favor of the Secured Party substantially in the form attached hereto as
Exhibit
B (each, an “Additional
Note” and, together with the First Note collectively, the “Notes” and
individually, a “Note”).

    

    D.           The
Pledgor is a primary and significant stockholder of the Maker and shall
materially benefit from the Loan and Additional Loans and other financial
accommodations granted to the Maker pursuant to the Notes.

    

    E.           The
Pledgor has agreed to pledge certain securities of the Maker to secure the
Maker’s performance of its obligations under all of the Notes.

    

    F.           The
Secured Party is willing to accept the First Note and all the other Notes only
upon receiving the Pledgor’s pledge of certain stock as set forth in this
Agreement.

    

    NOW, THEREFORE, in consideration of
$10.00, the premises, the mutual covenants and conditions contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as
follows:

    

    1.           Grant of Security
Interest.  The Pledgor hereby pledges to the Secured Party as
collateral and security for the Secured Obligations (as defined in Section 2) the
securities initially set forth on the attached Schedule 1 of this Agreement,
signed in blank and together with medallion guaranteed stock powers and an
irrevocable instruction letter to the transfer agent (the “Transfer
Agent”) substantially in the form attached hereto to as Exhibit
C (the “Instruction
Letter”) of the Maker’s common stock (the “Pledged
Shares”).  The Secured Party shall have the right to exercise
the rights and remedies set forth herein and in the Notes if an Event of Default
or a Liquidity Default (each as defined in the Notes) shall
occur.  The Pledgor is the beneficial and record owner of the Pledged
Shares set forth on such Schedule.  Such Pledged Shares, together with
any additions, replacements, accessions or substitutes therefor or proceeds
thereof, are hereinafter referred to collectively as the “Collateral.”
For purposes of this Section 1, the
market value of the Collateral shall be the Conversion Price (as defined in
the applicable Note).

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.           Secured
Obligations.  During the term hereof, the Collateral shall
secure the performance by the Maker of all of its obligations under each and
every one of the Notes (the “Secured
Obligations”).

    

    3.           Perfection of Security
Interests.

    

    (a)  Upon execution of this
Agreement, the Pledgor shall deliver the Pledged Shares, together with stock
powers (signed in blank and with Medallion Guarantees annexed), to the Secured
Party.

    

    (b)           The
Pledgor will, at his own expense, cause to be searched the public records with
respect to the Collateral and will execute, deliver, file and record (in such
manner and form as the Secured Party may require), or permit the Secured Party
to file and record, as the Pledgor’s attorney-in-fact, any financing statements,
any carbon, photographic or other reproduction of a financing statement or this
Agreement (which shall be sufficient as a financing statement hereunder), any
specific assignments or other paper that may be reasonably necessary or
desirable, or that the Secured Party may request, in order to create, preserve,
perfect or validate any security interest or to enable the Secured Party to
exercise and enforce its rights hereunder with respect to any of the
Collateral.  The Pledgor hereby appoints the Secured Party as the
Pledgor’s attorney-in-fact to execute in the name and behalf of the Pledgor such
additional financing statements as the Secured Party may request.

    

    4.           Assignment.  In
connection with the transfer of a Note in accordance with its terms, the Secured
Party may assign or transfer the whole or any part of its security interest
granted hereunder, and may transfer as collateral security the whole or any part
of its security interest in the Collateral.  Any transferee of the
Collateral shall be vested with all of the rights and powers of the Secured
Party hereunder with respect to the Collateral.

    

    5.           Representations and
Warranties of the Pledgor.

    

    (a)           Title. The Pledgor
represents and warrants hereby to the Secured Party as follows with respect to
the Pledged Shares:

    

    (i)         
   The Collateral is free and clear of any encumbrances of every
nature whatsoever, and the Pledgor is the sole owner of the Pledged
Shares;

    

    (ii)         
  The Pledgor further agrees not to grant or create any security
interest, claim, lien, pledge or other encumbrance with respect to such
Collateral or attempt to sell, transfer or otherwise dispose of the Collateral,
until the Secured Obligations have been paid in full or this Agreement
terminates; and

    

    (iii)           This
Agreement constitutes a legal, valid and binding obligation of the Pledgor
enforceable in accordance with its terms (except as the enforcement thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and similar laws now or hereafter in effect).

    

    
      
         

      

      
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    (b)           Other.

    

    (i)          
  The Pledgor has made necessary inquiries of the Maker and believes
that the Maker fully intends to fulfill and has the capability of fulfilling the
Secured Obligations to be performed by the Maker in accordance with the terms of
the Notes.

    

    (ii)         
  The Pledgor is not acting, and has not agreed to act, in any plan to
sell or dispose of any Pledged Shares in a manner intended to circumvent the
registration requirements of the Securities Act of 1933, as amended, or any
applicable state law.

    

    (iii)           The
Pledgor has been advised by counsel of the elements of a bona-fide pledge for
purposes of Rule 144(d)(3)(iv) under the Securities Act of 1933, as amended,
including the relevant U.S. Securities and Exchange Commission interpretations,
and affirms that the pledge of shares by the undersigned pursuant to this
Agreement will constitute a bona-fide pledge of such shares for purposes of such
Rule.

    

    6.       
     Collection of Dividends and
Interest.  During the term of this Agreement and so long as the
Pledgor is not in default under any of the Notes, the Pledgor is authorized to
collect all dividends, distributions, interest payments, and other amounts that
may be, or may become, due on any of the Collateral.

    

    7.      
      Voting
Rights.  During the term of this Agreement and until such time
as this Agreement has terminated or the Secured Party has exercised its rights
under this Agreement to foreclose its security interest in the Collateral, the
Pledgor shall have the right to exercise any voting rights evidenced by, or
relating to, the Collateral.

    

    8.          
  Warrants
and Options.  In the event that, during the term of this
Agreement, subscription, spin-off, warrants, dividends, or any other rights or
option shall be issued in connection with the Collateral, such warrants,
dividends, rights and options shall be immediately delivered to the Secured
Party to be held under the terms hereof in the same manner as the
Collateral.

    

    9.          
  Preservation of the Value of
the Collateral.  The Pledgor shall pay all taxes, charges, and
assessments against the Collateral and do all acts necessary to preserve and
maintain the value thereof.

    

    10.           The Secured Party as the
Pledgor’s Attorney-in-Fact.

    

    (a)           The
Pledgor hereby irrevocably appoints the Secured Party as the Pledgor’s
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor, the Secured Party or otherwise, from time to time at
the Secured Party’s discretion, to take any action and to execute any instrument
that the Secured Party may reasonably deem necessary or advisable to accomplish
the purposes of this Agreement, including:  (i) upon the occurrence
and during the continuance of an Event of Default (as defined below), to
receive, endorse, and collect all instruments made payable to the Pledgor
representing any dividend, interest payment or other distribution in respect of
the Collateral or any part thereof to the extent permitted hereunder and to give
full discharge for the same and to execute and file governmental notifications
and reporting forms; and (ii) to arrange for the transfer of the Collateral on
the books of the Maker or any other person to the name of the Secured Party or
to the name of the Secured Party’s nominee.

    

    
      
         

      

      
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    (b)           In
addition to the designation of the Secured Party as the Pledgor’s
attorney-in-fact in subsection (a), the Pledgor hereby irrevocably appoints the
Secured Party as the Pledgor’s agent and attorney-in-fact to make, execute and
deliver any and all documents and writings which may be necessary or appropriate
for approval of, or be required by, any regulatory authority located in any
city, county, state or country where the Pledgor or the Maker engages in
business, in order to transfer or to more effectively transfer any of the
Pledged Shares or otherwise enforce the Secured Party’s rights
hereunder.

    

    11.           Remedies upon
Default.  Upon the occurrence and during the continuance of an
Event of Default under any of the Notes (“Event of
Default”):

    

    (a)           The
Secured Party may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it, all the
rights and remedies of a Secured Party on default under applicable law
(irrespective of whether such applies to the affected items of Collateral), and
the Secured Party may also without notice (except as specified below) sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker’s board or at any of the Secured Party’s offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as the Secured Party may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Collateral.  To the maximum extent permitted by
applicable law, the Secured Party may be the purchaser of any or all of the
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply all or any part of
the Secured Obligations as a credit on account of the purchase price of any
Collateral payable at such sale.  Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part
of the Pledgor, and the Pledgor hereby waives (to the extent permitted by law)
all rights of redemption, stay, or appraisal that he now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted.  The Pledgor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) calendar days notice to the Pledgor of the
time and place of any public sale or the time after which a private sale is to
be made shall constitute reasonable notification.  The Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given.  The Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.  To the maximum extent permitted
by law, the Pledgor hereby waives any claims against the Secured Party arising
because the price at which any Collateral may have been sold at such a private
sale was less than the price that might have been obtained at a public sale,
even if the Secured Party accepts the first offer received and does not offer
such Collateral to more than one offeree. Notwithstanding anything contained
herein, in the Event of Default, the sole recourse of Secured Party against
Pledgor under the Loan, this Agreement and the financing transactions described
herein shall be limited to Secured Party’s rights with respect to the Pledged
Shares as described in this Agreement, and Pledgor shall have no liability or
obligations whatsoever with respect to any deficiencies.

    

    (b)           The
Pledgor hereby agrees that any sale or other disposition of the Collateral
conducted in conformity with reasonable commercial practices of banks, insurance
companies, or other financial institutions in the city and state where the
Secured Party is located in disposing of property similar to the Collateral
shall be deemed to be commercially reasonable.

    

    
      
         

      

      
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    (c)           The
Pledgor hereby acknowledges that the sale by the Secured Party of any Collateral
pursuant to the terms hereof in compliance with the Securities Act of 1933, as
amended, as now in effect or as hereafter amended, or any similar statute
hereafter adopted with similar purpose or effect (the “Securities
Act”), as well as applicable “Blue Sky” or other state securities laws,
may require strict limitations as to the manner in which the Secured Party or
any subsequent transferee of the Collateral may dispose thereof.  The
Pledgor acknowledges and agrees that in order to protect the Secured Party’s
interest it may be necessary to sell the Collateral at a price less than the
maximum price attainable if a sale were delayed or were made in another manner,
such as a public offering under the Securities Act.  The Pledgor has
no objection to a sale in such a manner and agrees that the Secured Party shall
have no obligation to obtain the maximum possible price for the
Collateral.  Without limiting the generality of the foregoing, the
Pledgor agrees that, upon the occurrence and during the continuation of an Event
of Default, the Secured Party may, subject to applicable law, from time to time
attempt to sell all or any part of the Collateral by a private placement,
restricting the bidders and prospective purchasers to those who will represent
and agree that they are purchasing for investment only and not for
distribution.  In so doing, the Secured Party may solicit offers to
buy the Collateral or any part thereof for cash, from a limited number of
investors reasonably believed by the Secured Party to be institutional investors
or other accredited investors who might be interested in purchasing the
Collateral.  If the Secured Party shall solicit such offers, then the
acceptance by the Secured Party of one of the offers shall be deemed to be a
commercially reasonable method of disposition of the Collateral.

    

    (d)           If
the Secured Party shall determine to exercise its right to sell all or any
portion of the Collateral pursuant to this Section, then the Pledgor agrees
that, upon request of the Secured Party, the Pledgor, at his own expense,
shall:

    

     (i)           
 execute and deliver, or cause the officers and directors of the Maker to
execute and deliver, to any person, entity or governmental authority as the
Secured Party may choose, any and all documents and writings which, in the
Secured Party’s reasonable judgment, may be necessary or appropriate for
approval, or be required by, any regulatory authority located in any city,
county, state or country where the Pledgor or the Maker engage in business, in
order to transfer or to more effectively transfer the Collateral or otherwise
enforce the Secured Party’s rights hereunder;

    

     (ii)        
   do or cause to be done all such other acts and things as may
be necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law; and

    

     (iii)           cause
the Maker to timely file all periodic reports required to be filed by the Maker
under the Securities Exchange Act of 1934, as amended.

    

    The
Pledgor acknowledges that there is no adequate remedy at law for failure by him
to comply with the provisions of this Section 11 and that
such failure would not be adequately compensable in damages, and therefore
agrees that his agreements contained in this Section 11 may be
specifically enforced.

    

    (e)           THE
PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW:  (i)
ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME THE
SECURED PARTY DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS
SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT HE NOW HAS OR
MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING
OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS
SECTION 11, ANY
REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    12.           
(a)           Term of
Agreement.  This Agreement shall continue in full force and
effect until payment in full of all of the Notes.  Upon payment in
full of all of the Notes, the security interests in the relevant Collateral
shall be deemed released, and any portion of the Collateral not transferred to
or sold by the Secured Party shall be returned to the Pledgor.  Upon
termination of this Agreement, the relevant Collateral shall be returned within
five (5) trading days to the Pledgor, as contemplated above.

    

    (b)           Application of
Proceeds.  Upon the occurrence and during the continuance of an
Event of Default, any cash held by the Secured Party as Collateral and all cash
proceeds received by the Secured Party in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral pursuant to
the exercise by the Secured Party of its remedies as a secured creditor as
provided in Section
11 shall be applied from time to time by the Secured Party as provided in
the Notes.

    

    13.           Indemnity and
Expenses.  The Pledgor agrees:

    

    (a)           To
indemnify and hold harmless the Secured Party and each of its agents and
affiliates from and against any and all claims, damages, demands, losses,
obligations, judgments and liabilities (including, without limitation,
reasonable attorneys’ fees and expenses) in any way arising out of or in
connection with this Agreement or the Secured Obligations, except to the extent
the same shall arise as a result of the gross negligence or willful misconduct
of the party seeking to be indemnified; and

    

    (b)           To
pay and reimburse the Secured Party upon demand for all reasonable costs and
expenses (including, without limitation, reasonable attorneys’ fees and
expenses) that the Secured Party may incur in connection with (i) the custody,
use or preservation of, or the sale of, collection from or other realization
upon, any of the Collateral, including the reasonable expenses of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, (ii) the exercise or enforcement of any rights or
remedies granted hereunder, under any of the Notes or otherwise available to it
(whether at law, in equity or otherwise), or (iii) the failure by the Pledgor to
perform or observe any of the provisions hereof.  The provisions of
this Section 13
shall survive the execution and delivery of this Agreement, the repayment of any
of the Secured Obligations, the termination of the commitments of the Secured
Party under the Notes and the termination of this Agreement.

    

    14.           Duties of the Secured
Party.  The powers conferred upon the Secured Party hereunder
are solely to protect its interests in the Collateral and shall not impose on it
any duty to exercise such powers.  Except as provided in Section 9-207
of the Uniform Commercial Code of the State of Illinois, the Secured Party shall
have no duty with respect to the Collateral or any responsibility for taking any
necessary steps to preserve rights against any persons with respect to any
Collateral.

    

    15.           Choice of Law and Venue;
Submission to Jurisdiction; Service of Process.

    

    (a)           THE
VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT,
AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS (WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF).  THE PARTIES AGREE
THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL
BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF COOK, STATE OF ILLINOIS OR, AT THE SOLE OPTION OF THE SECURED PARTY,
IN ANY OTHER COURT IN WHICH THE SECURED PARTY SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (b)           THE
PLEDGOR HEREBY SUBMITS FOR HIMSELF AND IN RESPECT OF HIS PROPERTY, GENERALLY AND
UNCONDITIONALLY, TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT HE MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.

    

    (c)           THE
PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, OR OTHER
PROCESS ISSUED IN ANY ACTION OR PROCEEDING AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT, OR OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE PLEDGOR AT HIS ADDRESS FOR NOTICES IN ACCORDANCE WITH THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
THE PLEDGOR’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID.

    

    (d)           NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF THE SECURED
PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO
PRECLUDE THE ENFORCEMENT BY THE SECURED PARTY OF ANY JUDGMENT OR ORDER OBTAINED
IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME
IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

    

    16.           Amendments;
etc.  No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Pledgor herefrom shall in any event be effective
unless the same shall be in writing and signed by the Secured Party, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.  No failure on the part of the
Secured Party to exercise, and no delay in exercising any right under this
Agreement, any other document or documents delivered in connection with the
transactions contemplated by the Notes, this Agreement or any other agreement
entered into in conjunction herewith or therewith (all such documents are
hereinafter referred to collectively as the “Loan
Documents”, and each individually as a “Loan
Document”), or otherwise with respect to any of the Secured Obligations,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right under this Agreement, any other Loan Document, or otherwise with
respect to any of the Secured Obligations preclude any other or further exercise
thereof or the exercise of any other right.  The remedies provided for
in this Agreement or otherwise with respect to any of the Secured Obligations
are cumulative and not exclusive of any remedies provided by law.

    

    17.           Notices.  Unless
otherwise specifically provided herein, all notices shall be in writing
addressed to the respective party as set forth below and may be personally
served, faxed, telecopied or sent by overnight courier service or United States
mail:

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    
      	 
      	
              If
      to the Pledgor:

            
	 
      	 
      	 
      
	 
      	 
      	
              Kenneth
      O. Morgan

            
	 
      	 
      	
              209
      South Stephanie Street, Suite B221

            
	 
      	 
      	
              Henderson,
      Nevada  89012

            
	 
      	 
      	 
      
	 
      	
              If
      to the Secured Party:

            
	 
      	 
      	 
      
	 
      	 
      	
              St.
      George Investments, LLC

            
	 
      	 
      	
              Attn:
      John M. Fife

            
	 
      	 
      	
              303
      East Wacker Drive, Suite 301

            
	 
      	 
      	
              Chicago,
      Illinois  60601

            
	 
      	 
      	 
      
	 
      	
              with
      a copy to (which shall not constitute notice):

            
	 
      	 
      	 
      
	 
      	 
      	
              Bennett
      Tueller Johnson & Deere, P.C.

            
	 
      	 
      	
              Attn:
      Jonathan K. Hansen

            
	 
      	 
      	
              3165
      East Millrock Drive, Suite 500

            
	 
      	 
      	
              Salt
      Lake City, Utah 84121

            

    

    

    Any
notice given pursuant to this Section 17 shall be
deemed to have been given:  (a) if delivered in person, when
delivered; (b) if delivered by fax, on the date of transmission if transmitted
on a business day before 4:00 p.m. at the place of receipt or, if not, on the
next succeeding business day; (c) if delivered by overnight courier, two (2)
days after delivery to such courier properly addressed; or (d) if by United
States mail, four (4) business days after deposit in the United States mail,
with postage prepaid and properly addressed.  Any party hereto may
change the address or fax number at which he or it is to receive notices
hereunder by notice to the other party in writing in the foregoing
manner.

    

    18.           Continuing Security
Interest.  This Agreement shall create a continuing security
interest in the Collateral and shall:  (a) remain in full force and
effect until the indefeasible payment in full of the Secured Obligations,
including the cash collateralization, expiration, or cancellation of all Secured
Obligations, if any, consisting of letters of credit, and the full and final
termination of any commitment to extend any financial accommodations under each
of the Notes; (b) be binding upon the Pledgor and his successors and assigns;
and (c) inure to the benefit of the Secured Party and its successors,
transferees, and assigns.  Upon the indefeasible payment in full of
the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under each of the Notes, the security interests granted
herein shall automatically terminate and all rights to the Collateral shall
revert to the Pledgor.  Upon any such termination, the Secured Party,
at the Pledgor’s expense, shall execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to evidence such
termination.  Such documents shall be prepared by the Pledgor and
shall be in form and substance reasonably satisfactory to the Secured
Party.

    

    19.           Security Interest
Absolute.  To the maximum extent permitted by law, all rights of the
Secured Party, all security interests hereunder, and all obligations of the
Pledgor hereunder, shall be absolute and unconditional irrespective
of:

    

    (a)           any
lack of validity or enforceability of any of the Secured Obligations or any
other agreement or instrument relating thereto, including any of the Loan
Documents;

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (b)           any
change in the time, manner, or place of payment of, or in any other term of, all
or any of the Secured Obligations, or any other amendment or waiver of or any
consent to any departure from any of the Loan Documents, or any other agreement
or instrument relating thereto;

    

    (c)           any
exchange, release, or non-perfection of any other collateral, or any release or
amendment or waiver of or consent to departure from any guaranty for all or any
of the Secured Obligations; or

    

    (d)           any
other circumstances that might otherwise constitute a defense available to, or a
discharge of, the Pledgor.

    

    20.           Headings. 
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
or be given any substantive effect.

    

    21.           Severability.  If
any part of this Agreement is construed to be in violation of any law, such part
shall be modified to achieve the objective of the parties to the fullest extent
permitted by law and the balance of this Agreement shall remain in full force
and effect.

    

    22.           Counterparts; Telefacsimile
Execution.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement.  Delivery of an
executed counterpart of this Agreement by facsimile or email shall be equally as
effective as delivery of an original executed counterpart of this
Agreement.  Any party delivering an executed counterpart of this
Agreement by facsimile or email also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, or binding effect
hereof.

    

    23.           Waiver of
Marshaling.  Each of the Pledgor and the Secured Party
acknowledges and agrees that in exercising any rights under or with respect to
the Collateral:  (a) the Secured Party is under no obligation to
marshal any Collateral; (b) may, in its absolute discretion, realize upon the
Collateral in any order and in any manner it so elects; and (c) may, in its
absolute discretion, apply the proceeds of any or all of the Collateral to the
Secured Obligations in any order and in any manner it so elects.  The
Pledgor and the Secured Party waive any right to require the marshaling of any
of the Collateral.

    

    24.           Waiver of Jury
Trial.  THE PLEDGOR AND THE SECURED PARTY HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS.  THE PLEDGOR AND THE SECURED PARTY
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS OR HIS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
 

    25.           Ownership Limitation.
Notwithstanding the provisions of this Agreement, in no event shall the Secured
Party own Collateral to the extent that, after taking into account the Common
Stock of the Maker then owned by the Secured Party and its affiliates, would
result in the beneficial ownership by the Secured Party and its affiliates of
more than 9.99% of the outstanding Common Stock of the Maker.  For
purposes of this Section, beneficial ownership shall be determined in accordance
with Section 13(d) of the Exchange Act of 1934, as amended.

    

    

    

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        10

        
          

        

      

      
         

      

    

     

     

    IN WITNESS WHEREOF, the Pledgor and the
Secured Party have caused this Agreement to be duly executed and delivered by
their officers thereunto, as applicable, duly authorized as of the date first
written above.

    

     

    
      
        	 	
                THE
      PLEDGOR:

              	 
	 	 	 
	 	/s/
      Kenneth O. Morgan	 
	 	Kenneth
      O. Morgan, an individual	 
	 	 	 
	 	 	 
	 	
                
                  THE
      SECURED PARTY:

                

              	 
	 	 	 
	 	
                ST. GEORGE INVESTMENTS,
      LLC,

                an
      Illinois limited liability company

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ John
      M. Fife	 
	 	 	Name:
      John M. Fife 	 
	 	 	Title:  
      Manager

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