Document:

Exhibit
10.7

 

THIS
OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HAVE NOT BEEN
REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY OTHER STATE.  SALE,
TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS OPTION AND THE
SHARES ISSUABLE UPON EXERCISE HEREOF ARE RESTRICTED AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS REGISTERED OR EXEMPT FROM SUCH REGISTRATION.

 

OPTION AGREEMENT

 

                THIS OPTION AGREEMENT (“Agreement”) is entered into this 24th
day of February 2005, by and between Shocker 100 Index, LP, (the “Holder”), and
National Storm Management, Inc, a Nevada Corporation (the “Company”).

 

                WHEREAS, the Company proposes to issue to Holder an option
to purchase shares of its common stock (the “Common Stock”);

 

                WHEREAS, the Company hereby grants Holder an option to
purchase shares of the Company’s Common Stock subject to the terms and
conditions set forth below.

 

                NOW, THEREFORE, for and in consideration of the mutual
promises herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the terms and
conditions set forth below, Holder and the Company agree as follows:

 

1.                                      The Option

 

The Company hereby grants to Holder an option (the “Option”)
to acquire Two Million (2,000,000) shares of the Company’s Common Stock, (such
shares of Common Stock are hereinafter referred to as the “Option Shares”), at
a purchase price of Seventy Five Cents ($0.75) per share (“Option Price”).  The Option Price can be adjusted, increased
or decreased, by mutual written consent.

 

2.              Term and Exercise of
Option

 

A.                                    Term of Option. 
Subject to the terms of this agreement, Holder shall have the right to
exercise the Option in whole or in part, commencing the date hereof through the
close of Three (3) years after the date above.

 

B.                                    Exercise of the Option. 
The Option may be exercised upon written notice to the Company at its
principal office setting out the number of Option Shares to be purchased,
together with payment of the Option Price.

 

C.            Issuance of Option Shares. 
Upon such notice of exercise and payment of the Option Price, the
Company shall issue and cause to be delivered within five (5) business days
following the written order of Holder, a certificate or certificates for the
number of Option Shares so purchased. 
The rights of purchased represented by the Option shall be exercisable,
at the election of the Holder thereof, either in 

 

 

 

full or from time to time in part, and in the event
the Option is exercised in respect of less than all of the Option Shares
purchasable on such exercise at any time prior to the date of expiration
hereof, the remaining Option Shares shall continue to be subject to the time
constraints set forth above in paragraph 2 hereof.

 

3.                                      Reservation of Option Shares

 

The Company shall at all times keep reserved and
available, out of its authorized Common stock, such number of shares of Common
Stock as shall be sufficient to provide for the exercise of the rights
represented by the Agreement.  The
transfer agent for any shares of the Company’s capital stock issuable upon the
exercise of any of such rights of purchase, will be irrevocably authorized and
directed at all times to reserve such number of shares as shall be requisite for
such purpose.  The company will cause a
copy of this agreement to be kept on file with the transfer agent or its
successors.

 

4.                                      Representations of Holder

 

Holder represents and warrants to the Company that
Holder is acquiring this Option (and upon exercise of this Option, the Option
Shares ) for its own account, for investment and not with a view to
distribution thereof and that the Holder is an “accredited investor” as such
term is defined in Securities and Exchange Commission (“SEC”) rules and regulations.  Holder acknowledges that this Option, and the
Option Shares are “restricted securities” as such term is defined under SEC
Rule 144, and consequently neither this Option, nor any of the Option Shares
may be sold or transferred unless they are registered under the Securities Act
of 1933, or an exemption from such registration is available and Holder
provides and opinion of counsel satisfactory to Company that this Option and
the Option Shares may be transferred or sold without registration.  Holder acknowledges that upon exercise
hereof, certificates representing the Option Shares shall bear a legend
restricting transfer, and the Company shall issue stop transfer orders to its
transfer agent restricting any transfer.

 

5.                                      Assignment

 

The Option represented by this Agreement may be
assigned or transferred by Holder to an Affiliate or subsidiary, or subject to
the requirements of Section 4 of this Option, as the result of a corporate
reorganization or recapitalization or to any other entity or person.  For the purpose of the Option, the term “Affiliate”
shall be defined as a person or enterprise that directly, or indirectly though
one or more intermediaries, controls, or is controlled by, or is under common
control with the Company otherwise, this Agreement and the rights hereunder
shall not be assigned by either party hereto.

 

6.                                      Counterparts

 

A facsimile, telecopy or other reproduction of this
instrument may be executed by one or more parties hereto and such executed copy
may be delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on 

 

2

 

behalf of such party can be seen, and such execution
and delivery shall be considered valid, binding and effective for all
purposes.  At the request of any party
hereto, all parties agree to execute an original of this instrument as well as
any facsimile, telecopy or other reproduction hereof.

 

7.                                      Further Documentation

 

Each party hereto agrees to execute such additional
instruments and take such action as may be reasonably requested by the other
party to effect the transaction, or otherwise to carry out the intent and
purposes of this Agreement.

 

8.                                      Notices

 

All notices and other communications hereunder shall
be in writing and shall be sent by prepaid first class mail to the parties at
the following addresses, and amended by the parties with written notice to the
other:

 

	
  To:

  	
   

  	
  Shocker 100 Index, LP

  
	
   

  	
   

  	
  C/O Interim Capital Corp, GP

  
	
   

  	
   

  	
  3960 Howard Hughes Parkway, Suite 500

  
	
   

  	
   

  	
  Las Vegas, Nevada 89109

  
	
   

  	
   

  	
   

  
	
  To the Company:

  	
   

  	
  National Storm Management, Inc.

  
	
   

  	
   

  	
  Mark V. Noffke

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
  999 North Main Street, Suite 202

  
	
   

  	
   

  	
  Glen Ellyn, Illinois 60137

  

 

9.                                      Governing Law

 

This Agreement was negotiated, and shall be governed
by the laws of Nevada notwithstanding any conflict-of-law provision to the
contrary.

 

10.                               Entire Agreement

 

This Agreement sets forth the entire understanding
between the parties hereto and no other prior written or oral statement or
agreement shall be recognized or enforced.

 

11.                               Severability

 

If a court of competent jurisdiction determines that
any clause or provision of the Agreement is invalid, illegal or unenforceable,
the other clauses and provisions of the Agreement shall remain in full force
and effect and the clauses and provisions which are determined to be void,
illegal or unenforceable shall be limited so that they shall remain in effect
to the extent permissible by law.

 

3

 

12.                               Amendment or Waiver

 

Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and may be enforced concurrently herewith, and no waiver by any
party of the performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or thereafter
occurring or existing.  This Agreement
may be amended by a writing signed by all parties hereto.

 

13.                               Headings

 

The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.

 

The rest
of this page intentionally left blank

 

4

 

IN WHITNESS WHEREOF, the parties have executed this
Agreement the day and year first written above

 

 

	
   

  	
   

  	
  National Storm Management, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mark V. Noffke

  
	
   

  	
   

  	
   

  	
   

  	
  Mark V. Noffke

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Shocker 100 Index, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mark Lindberg

  
	
   

  	
   

  	
   

  	
   

  	
  Interim Capital Corp, as General Partner

  
	
   

  	
   

  	
   

  	
   

  	
  Mark Lindberg, as President

  

 

 

 

 

5Exhibit 10.8

 

WARRANT TO PURCHASE COMMON STOCK

THIS WARRANT AND THE
SHARES ISSUABLE HEREUNDER HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT FOR
DISTRIBUTION, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  NEITHER THE WARRANT NOR THE
SHARES MAY BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

Issuer:
National Storm Management, Inc.

Class
of Stock: Common

Issue
Date: May 19, 2006

Expiration
Date: May 18, 2009

National Storm
Management, Inc., a Nevada corporation (the “Company”) hereby grants to La
Jolla Cove Investors, Inc. (“Holder”) the right to purchase up to 20,000,000
shares of the Company’s Common Stock (the “Warrant Shares”).  On the Issue Date, $500,000 shall be wired to
the Company by Holder, representing the premium to be paid for the warrants
(the “Premium”). This Warrant shall expire and Holder shall no longer be able
to purchase the Warrant Shares on the Expiration Date.

ARTICLE
1

EXERCISE

1.1           Method of Exercise.  Holder may exercise this Warrant by
delivering a duly executed Notice of Exercise in substantially the form
attached as Appendix 1 to the principal office of the Company, along
with a check payable to the Company for the aggregate Exercise Price for the
Warrant Shares being purchased and the surrender of this Warrant.

1.2           Delivery of Certificate and New
Warrant Delivery.  As promptly as
practicable after the receipt of the Notice of Exercise, but in any event not
more than three (3) Business Days  after
the Company’s receipt of the Notice of Exercise, the Company shall issue the
Shares and cause to be mailed for delivery by overnight courier, or if a
Registration Statement covering the Shares has been declared effective by the
SEC, cause to be electronically transferred, to Holder a certificate
representing the Warrant Shares acquired and, if this Warrant has not been
fully exercised and has not expired, a new Warrant substantially in the form of
this Warrant representing the right to acquire the portion of the Warrant
Shares not so acquired.

1.3           Replacement of Warrants.  On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this warrant,
the Company at its expense shall execute and deliver, in lieu of this warrant,
a new warrant of like tenor.

1

 

1.4           Exercise Price.  The Exercise Price for the Warrant Shares
shall be the greater of: (a) $0.0001 per share, or (b) 80% of the average of
the five lowest volume weighted average prices of the Company’s Common Stock
during the twenty trading days prior to the date of exercise, as quoted by the
Pink Sheets quotation service or on the Nasdaq National Market or on any
exchange on which the Common Stock is listed, whichever is applicable, as
published in The Wall Street Journal,
or, if there is no public market for the Company’s Common Stock, as determined
in good faith by the Company’s board of directors Upon the exercise of the
Warrant Shares, the Exercise Price shall be reduced pro rata to permit the
Holder to recapture the Premium.

1.5           Cashless Exercise.  Notwithstanding anything to the contrary
contained in this Warrant, upon the expiration of one year from the Issue Date,
this Warrant may be exercised by presentation and surrender of this Warrant to
the Company at its principal executive offices with a written notice of Holder’s
intention to effect a cashless exercise, including a calculation of the number
of shares of Common Stock to be issued upon such exercise in accordance with
the terms hereof ( a “Cashless Exercise”). In the event of a Cashless Exercise,
in lieu of paying the Exercise Price in cash, Holder shall surrender this
Warrant for that number of shares of Common Stock determined by multiplying the
number of Warrant Shares to which it otherwise would be entitled by a fraction,
the numerator of which shall be the difference between the then current market
price per share of the Common Stock and the Exercise Price, and the denominator
or which shall be the then current market price per share of Common Stock.

ARTICLE
2

ADJUSTMENT TO THE WARRANT SHARES

The number of Warrant
Shares purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment form time to time upon the occurrence of certain
events, as follows:

2.1           Reclassification.  In case of any reclassification or change of
outstanding securities of the class issuable upon exercise of this Warrant
then, and in any such case, the Holder, upon the exercise hereof at any time
after the consummation of such reclassification or change, shall be entitled to
receive in lieu of each Warrant Share theretofore issuable upon exercise of
this Warrant, the kind and amount of shares of stock, other securities, money
and/or property received upon such reclassification or change by a holder of
one share.  The provisions of this
Section 2.1 shall similarly apply to successive reclassifications or changes.

2.2           Subdivision or Combination of
Shares.  If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its shares, the Exercise Price shall be proportionately decreased in the case
of a subdivision or increased in the case of a combination.

2.3           Stock Dividends.  If the Company, at any time while this
Warrant is outstanding shall pay a dividend with respect to its shares payable
in shares, or make any other distribution of shares with respect to shares
(except any distribution provided for in Section 2.1 and Section 2.2 above),
then the Exercise Price shall be adjusted, effective from and after the date of
determination of shareholders entitled to received such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect 

 

2

 

immediately prior to such
date of determination by a fraction, (a) the numerator of which shall be the
total number of shares outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares outstanding immediately after such dividend or distribution.

2.4           Non-Cash Dividends.  If the Company at any time while this Warrant
is outstanding shall pay a dividend with respect to shares payable in
securities other than shares or other non-cash property, or make any other
distribution of such securities or property with respect to shares (except any
distribution specifically provided for in Section 2.1 and Section 2.2 above),
then this Warrant shall represent the right to acquire upon exercise of this
Warrant such securities or property which a holder of shares would have been
entitled to receive upon such dividend or distribution, without the payment by
Holder of any additional consideration for such securities or property.

2.5           Effect of Reorganization and Asset
Sales.  If any (i) reorganization or
reclassification of the Common Stock, (ii) consolidation or merger of the
Company with or into another corporation, or (iii) sale of all or substantially
all of the Company’s operating assets to another corporation followed by a
liquidation of the Company (any such transaction shall be referred to herein as
an “Event”), is effected in such a way that holders of Common Stock are
entitled to receive securities and/or assets as a result of their Common Stock
ownership, Holder, upon exercise of this Warrant, shall be entitled to receive
such shares of stock, securities or assets which Holder would have received had
it fully exercised this Warrant on or prior the record date for such
Event.  The Company shall not merge into
or consolidate with another corporation or sell all of its assets to another
corporation for a consideration consisting primarily of securities of such
corporation, unless the successor or acquiring corporation, as the case may be,
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this warrant to be performed or observed by
the Company and all of the obligations and liabilities hereunder, subject to
such modification as shall be necessary to provide for adjustments which shall
be as nearly equivalent as practicable to the adjustments provided for in this
Section 2.  The foregoing provisions
shall similarly apply to successive mergers, consolidations or sales of assets.

2.6           Adjustment of Number of Shares.  Upon each adjustment in the Exercise Price,
the number of Shares shall be adjusted, to the nearest whole share, to the product
obtained by multiplying the number of Shares purchasable immediately prior to
such adjustment by a fraction (a) the numerator of which shall be the Exercise
Price prior to the adjustment and (b) the denominator of which shall be the
Exercise Price immediately thereafter.

2.7           No Impairment.  The Company shall not, by amendment of its
charter documents or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions
of this Warrant and in taking all such action as may be reasonably necessary or
appropriate to protect Holder’s rights hereunder against impairment.  If the Company takes any action affecting its
Common Stock other than as described above that adversely affects Holder’s
rights under this Warrant, the Exercise Price shall be adjusted downward and
the number of Warrant Shares issuable upon exercise of this Warrant shall be
adjusted upward in such a manner that the aggregate Exercise Price of this
Warrant is unchanged.

 

3

 

2.8           Fractional Shares.  No fractional Warrant Shares shall be
issuable upon the exercise of this Warrant, and the number of Warrant Shares to
be issued shall be rounded down to the nearest whole Share.

2.9           Certificate as to Adjustments.  Upon any adjustment of the Exercise Price,
the Company, at its expense, shall compute such adjustment and furnish Holder
with a certificate of its Chief Financial Officer setting forth such adjustment
and the facts upon which such adjustment is based.  The Company shall, upon written request,
furnish Holder a certificate setting forth the Exercise Price in effect upon
the date thereof and the series of adjustments leading to such Exercise Price.

2.10         No Rights of Shareholders.  This Warrant does not entitle Holder to any
voting rights or any other rights as a shareholder of the Company prior to the
exercise of Holder’s right to purchase Warrant Shares as provided herein.

ARTICLE
3

REPRESENTATIONS AND COVENANTS OF THE COMPANY

3.1           Representations and Warranties.
 The Company hereby represents and
warrants to Holder that all Warrant Shares which may be issued upon the
exercise of the purchase right represented by this Warrant, shall, upon
issuance, be duly authorized, validly issued, fully paid and nonasessable, and
free of any liens and encumbrances except for restrictions on transfer provided
for herein or under applicable federal and state securities laws.

3.2           Notice of Certain Events.  If the Company proposes at any time (a) to
declare any dividend or distribution upon its Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other fights; (c) to effect any reclassification or recapitalization of Common
Stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the Company’s
securities for cash, then, in connection with each such event, the Company
shall give Holder (1) at least 20 days prior written notice of the date on
which a record will be taken for such dividend, distribution, or subscription
rights (and specifying the date on which the holders of Common Stock will be
entitled thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (c) and (d) above; (2) in the case of the matters
referred to in (c) and (d) above at least 20 days prior written notice of the
date when the same will take place (and specifying the date on which the
holders of Common Stock will be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event);
and (3) in the case of the matter referred to in (e) above, the same notice as
is given to the holders of such registration rights.

3.3           Information Rights.  So long as Holder holds this Warrant, the
Company shall deliver to Holder (a) promptly after mailing, copies of all
notices or other written communications to the shareholders of the Company, and
(b) promptly upon their availability, all publicly available filings made by
the Company with the Securities Exchange Commission.

 

4

 

3.4           Reservation of Warrant Shares.  The Company has reserved and will keep
available, out of the authorized and unissued shares of Common Stock, the full
number of shares sufficient to provide for the exercise of the rights of
purchase represented by this Warrant.

ARTICLE
4

REPRESENTATIONS AND COVENANTS OF THE HOLDER

4.1           Private Issue.  Holder understands (i) that the Shares
issuable upon exercise of Holder’s rights contained in the Warrant are not
registered under the Act or qualified under applicable state securities laws on
the ground that the issuance contemplated by the Warrant will be exempt from
the registration and qualifications requirements thereof, and (ii) that the
Company’s reliance on such exemption is predicated on Holder’s representations
set forth in this Article 4.

4.2           Financial Risk.  Holder has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment and has the ability to bear the economic risks of its investment.

4.3           Accredited Investor.  Holder is an “accredited investor,” as such
term is defined in Regulation D promulgated pursuant to the Securities Act of
1933, as amended.

4.4           No View to Distribution.  The Shares issuable upon exercise of Holder’s
rights contained in the Warrant will be acquired by Holder for its own account with the present intention
of holding such securities for investment purposes and not with a view to or
for sale in connection with any public distribution of such securities in
violation of any federal or state securities laws.

ARTICLE
5

MISCELLANEOUS

5.1           Transfer Procedure.  Holder shall have the right without the
consent of the Company to transfer or assign in whole or in part this Warrant
and the Shares issuable upon exercise of this Warrant. Holder agrees that
unless there is in effect a registration statement under the Securities Act
covering the proposed transfer of all or part of this Warrant, prior to any
such proposed transfer the Holder shall give written notice thereof to the
Company (a “Transfer Notice”).  Each
Transfer Notice shall describe the manner and circumstances of the proposed
transfer in reasonable detail and, if the company so requests, shall be
accompanied by an opinion of legal counsel, in a form reasonably satisfactory
to the Company, to the effect that the proposed transfer may be effected
without registration under the Act; provided that the Company will not require
opinions of counsel for transactions involving transfers to affiliates or
pursuant to Rule 144 promulgated by the Securities and Exchange Commission
under the act, except in unusual circumstances.

5.2           Notices, etc.  All notices and other communications required
or permitted hereunder shall be in writing and shall be delivered personally,
or sent by telecopier machine or by a nationally recognized overnight courier
service, and shall be deemed given when so delivered personally, or by
telecopier machine or overnight courier service as follows:

5

 

To the Company:

 

National Storm
Management, Inc.

999 N. Main
Street, Suite 202

Glen Ellyn,
Illinois 60137

Telephone:
630-469-7683

Facsimile:
630-446-4400

 

To the Holder:

 

La Jolla Cove
Investors, Inc.

7817 Herschel
Avenue, Suite 200

La Jolla, CA 92037

Telephone:
858-551-8789

Facsimile:
858-551-8779

The Company or the Holder
may change the foregoing address by notice given pursuant to this Section.

5.3           Waiver.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.

5.4           Attorneys Fees.  In the event of any dispute between the
parties concerning the terms and provisions of this warrant, the party
prevailing in such dispute shall be entitled to collect from the other party
all costs incurred in such dispute, including reasonable attorneys fees.

5.5           Governing Law; Jurisdiction.  This warrant shall be governed by and
construed in accordance with the laws of the State of California, without
giving effect to its principles regarding conflicts of law. Each of the parties
consents to the jurisdiction of the federal courts whose districts encompass
any part of the City of San Diego or the state courts of the State of
California sitting in the City of San Diego in connection with any dispute
arising under this Warrant and hereby waives, to the maximum extent permitted
by law, any objection including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions.

5.6           Remedies.  The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Holder, by
vitiating the intent and purpose of the transactions hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Warrant will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Warrant, that the
Holder shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Warrant and
to enforce specifically the terms and provisions hereof, without the necessity
of showing economic loss and without any bond or other security being required.

 

5.7           Legend.  Each certificate for shares of Common Stock issued upon exercise of
this Warrant, unless at the time of exercise such shares are registered under
the Acts, shall bear substantially the following legend (and any additional
legend required under said Acts or otherwise):

 

6

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), AND ARE “RESTRICTED
SECURITIES” AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT.  THE SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED EXCEPT
(i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE ACT, (ii) IN COMPLIANCE WITH RULE 144 OR (iii) PURSUANT TO
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION OR
COMPLIANCE IS NOT REQUIRED.

Any certificate issued at
any time in exchange or substitution for any certificate bearing such legend
(except a new certificate issued upon completion of a public distribution
pursuant to a registration statement under the Act of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the Company, the securities represented thereby need no longer be
subject to the transfer restrictions contained in this Warrant.  The exercise and transfer restriction
provisions of this Warrant shall be binding upon all subsequent Holders of the
Warrant.

 

	
  National Storm
  Management, Inc.

  	
   

  	
  La Jolla Cove
  Investors, Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Terry Kiefer

  	
   

  	
  By:

  	
   

  	
  /s/ Travis W.
  Huff

  
	
   

  	
   

  	
   

  
	
  Title: President

  	
   

  	
  Title: Portfolio
  Manager

  
							

 

 

 

7

 

 

APPENDIX 1

NOTICE OF EXERCISE

1.             The undersigned hereby
elects to purchase _____ shares of the Common Stock of National Storm
Management, Inc. pursuant to the terms of the Warrant to Purchase Common Stock
issued on May ___, 2006 in favor of La Jolla Cove Investors, Inc., and tenders
herewith payment of the purchase price of such shares in full.

2.             Please issue a
certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

(Name and Address)

 

 

3.             The undersigned
makes the representations and covenants set forth in Article 4 of the Warrant
to Purchase Common Stock.

 

	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  
			

 

 

8

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