Document:

Exhibit
4.4

 

THIS
NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

 

	
  No. 1

  	
   

  	
  Original Issue
  Date: July 24, 2006

  
	
  Holder:

  	
   

  	
  John Fife

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  303 East Wacker Drive

  
	
   

  	
   

  	
  Suite 301

  
	
   

  	
   

  	
  Chicago, IL 60601

  

 

ORIGINAL
ISSUE DISCOUNT SECURED NOTE

 

THIS Note is one
of a duly authorized issue of Notes of NATIONAL STORM MANAGEMENT, INC., a
Nevada corporation, having a principal place of business at 999 North Main
Street, Suite 202, Glen Ellyn, IL 60137 (the “Company”), designated as
its Note (the “Note”) in an aggregate face amount of up to One Million
Six Hundred and Fifty Thousand and 00/100 Dollars ($1,650,000.00), as adjusted
pursuant to Schedule A hereto (the “Maturity Amount”).  The Note shall be due upon the earlier of (i)
the effective date of a Company registration statement on Form SB-2; (ii)
February 14, 2007, or (iii) an event of default, as defined below, but in no
event other than an event of default shall the Note be due prior to October 31,
2006 (“Maturity Date”).

 

FOR VALUE
RECEIVED, the Company promises to pay the Maturity Amount to the Holder or
registered assigns on the Maturity Date. Upon an event of default the Maturity
Amount, as determined as of the date of payment by Schedule A hereto, shall
bear interest at the rate of 18% per annum from the day such interest is due
hereunder through and including the date of payment. The principal of, and
interest on, this Note are payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, at the address of the Holder last appearing on the
Note Register.

 

This Note is
subject to the following additional provisions:

 

Section 1.                                            The Notes are exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same but shall not be issuable in
denominations of less than integral multiples of Twenty Thousand Dollars
($20,000) unless such amount represents the full principal balance of Notes
outstanding to such Holder.  No service
charge will be made for such registration of transfer or exchange.

 

Section 2.                                            Transfer of Note.

 

(a)                                  The Holder, by acceptance hereof, agrees
to give written notice to the Company before transferring this Note; such
notice will describe briefly the proposed transfer and will give the Company
the name, address, and tax identification number of the proposed transferee,
and will further provide the Company with an opinion of the Holder’s counsel
that such transfer can be accomplished in accordance with federal and
applicable state securities laws (unless such transaction is permitted by the
plan of distribution in an effective Registration Statement).  Promptly upon receiving such written notice,
the Company shall present copies thereof to the Company’s counsel.

 

 

(i)                                     If in the opinion of such counsel the
proposed transfer may be effected without registration or qualification (under
any federal or state securities laws), the Company, as promptly as practicable,
shall notify the Holder of such opinion, whereupon the Holder shall be entitled
to transfer this Note or to dispose of Underlying Shares received upon the
previous conversion of this Note, all in accordance with the terms of the
notice delivered by the Holder to the Company; provided that an appropriate
legend may be endorsed on this Note respecting restrictions upon transfer
thereof necessary or advisable in the opinion of counsel and satisfactory to
the Company to prevent further transfers which would be in violation of Section
5 of the Securities Act and applicable state securities laws; and provided
further that the prospective transferee or purchaser shall execute such
documents and make such representations, warranties, and agreements as may be
required solely to comply with the exemptions relied upon by the Company for
the transfer or disposition of the Note.

 

(ii)                                  If in the opinion of the counsel referred
to in this Section 2, the proposed transfer or disposition of this Note
described in the written notice given pursuant to this Section 2 may not be
effected without registration or qualification of this Note, the Company shall
promptly give written notice thereof to the Holder, and the Holder will limit
its activities in respect to such as, in the opinion of such counsel, are
permitted by law.

 

(b)                                 Prior to transfer of this Note in
compliance with this Section 2, the Company and any agent of the Company may
treat the person in whose name this Note is duly registered on the Note
Register as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Note is overdue, and
neither the Company nor any such agent shall be affected by notice to the
contrary.

 

Section 3.                                            Events of Default.

 

“Event of
Default” wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative or governmental
body):

 

(i)                                     any default in the payment of the
principal of, interest on, or other obligations in respect of, this Note, free
of any claim of subordination, as and when the same shall become due and
payable, (whether on the Maturity Date or by acceleration or otherwise), and
said default in payment is not cured within five (5) business days; or

 

(ii)                                  the Company or any Pledgor shall fail to
observe or perform any other covenant, agreement or warranty contained in, or
otherwise commit any breach of, this Note or the Stock Pledge Agreement,
including but not limited to the obligation of the Pledgor to issue additional
Collateral, and such failure or breach shall not have been remedied within 10
days after the date on which notice of such failure or breach shall have been
given; or

 

(iii)                               the Company shall commence a voluntary
case under the United States Bankruptcy Code or insolvency laws as now or
hereafter in effect or any successor thereto (the “Bankruptcy Code”); or
an involuntary case is commenced against the Company under the Bankruptcy Code
and the petition is not controverted within 30 days, or is not dismissed within
60 days, after commencement of such involuntary case; or a “custodian” (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
any substantial part of the property of the Company or the Company commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or
there is commenced against the Company any such proceeding which remains
undismissed for a period of 60 days; or the Company is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any 

 

such case or
proceeding is entered; or the Company suffers any appointment of any custodian
or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or the Company makes a
general assignment for the benefit of creditors; or the Company shall fail to
pay, or shall state that it is unable to pay its debts generally as they become
due; the Company shall call a meeting of all of its creditors with a view to
arranging a composition or adjustment of its debts; or the Company shall by any
act or failure to act indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate or other action is taken by the Company
for the purpose of effecting any of the foregoing; or

 

(iv)                              the Company shall default in any of its
obligations under any mortgage, credit agreement or other facility, indenture,
agreement or other instrument under which there may be issued, or by which
there may be secured or evidenced any indebtedness of the Company in an amount
exceeding $750,000.00, whether such indebtedness now exists or shall hereafter
be created and such default shall result in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable; or

 

(v)                                 the Company shall be a party to any
Change of Control Transaction (as defined in Section 6), shall sell or dispose
of all or in excess of 49% of its assets (based on book value calculation as
reflected in the Company’s most recent financial statements) in one or more
transactions (whether or not such sale would constitute a Change of Control
Transaction); or

 

(vi)                              the Company shall have its Common Stock
suspended or delisted from trading for in excess of three (3) Trading Days; or

 

(vii)                           the Company shall fail to become required
to file periodic reports pursuant to Section 13 or 15(d) Securities Exchange
Act of 1934 by October 15, 2006, and shall thereafter fail to file any reports
required by Section 13 or 15(d) of the Exchange Act in a timely manner; or

 

(viii)                        a determination by the U.S. Securities
and Exchange Commission or National Association of Securities Dealers that the
Company has violated U.S. Securities Laws; or

 

(ix)                                the representations and warranties of the
Company and Guarantor are not true and correct in all material respects as of
the date when made and as of the Closing Date as though made at that time,
except for representations and warranties that are expressly made as of a
particular date, which shall be true and correct in all material respects as of
such date; or

 

(x)                                   an action, suit or proceeding in the
ordinary course of business is commenced against the Company seeking damages in
an amount against which the Company is not insured exceeding $500,000.

 

(xi)                                an action, suit or proceeding not in the
ordinary course of business is commenced against the Company seeking damages in
an amount against which the Company is not insured exceeding $500,000.

 

Section 4.                                            Interest Rate Limitation. The parties intend to conform strictly
to the applicable usury laws in effect from time to time during the term of the
Loan. Accordingly, if any transaction contemplated hereby would be usurious
under such laws, then notwithstanding any other provision hereof: (i) the
aggregate of all interest that is contracted for, charged, or received under
this Agreement or under any other Loan Document shall not exceed the maximum
amount of interest allowed by applicable law (the “Highest Lawful Rate”), and
any excess shall be promptly credited to Borrower by Lender (or, to the extent
that such consideration shall have been paid, such excess shall be promptly
refunded to Borrower by Lender); (ii) neither Borrower nor any other Person now
or hereafter liable hereunder shall be obligated to pay the 

 

 

amount of such
interest to the extent that it is in excess of the Highest Lawful Rate; and
(iii) the effective rate of interest shall be reduced to the Highest Lawful
Rate. All sums paid, or agreed to be paid, to Lender for the use, forbearance,
and detention of the debt of Borrower to Lender shall, to the extent permitted
by applicable law, be allocated throughout the full term of the Note until
payment is made in full so that the actual rate of interest does not exceed the
Highest Lawful Rate in effect at any particular time during the full term
thereof. If at any time the rate of interest under the Note exceeds the Highest
Lawful Rate, the rate of interest to accrue pursuant to this Agreement shall be
limited, notwithstanding anything to the contrary in this Agreement, to the
Highest Lawful Rate, but any subsequent reductions in the Base Rate shall not
reduce the interest to accrue pursuant to this Agreement below the Highest
Lawful Rate until the total amount of interest accrued equals the amount of
interest that would have accrued if a varying rate per annum equal to the
interest rate under the Note had at all times been in effect. If the total
amount of interest paid or accrued pursuant to this Agreement under the
foregoing provisions is less than the total amount of interest that would have
accrued if a varying rate per annum equal to the interest rate under the Note
had been in effect, then Borrower agrees to pay to Lender an amount equal to
the difference between (x) the lesser of (A) the amount of interest that would
have accrued if the Highest Lawful Rate had at all times been in effect, or (B)
the amount of interest that would have accrued if a varying rate per annum
equal to the interest rate under the Note had at all times been in effect, and
(y) the amount of interest accrued in accordance with the other provisions of
this Agreement.

 

Section 5.                                            Prepayment.

 

(a)                                  The Company shall have the right to
prepay this Note in whole or in part thereon prior to the Maturity Date.

 

(b)                                 The Company shall give at least five
(5)  business days, but not more than ten
(10) business days, written notice of any intention to prepay this Note prior
to the Maturity Date to the Holder which notice shall specify the “Prepayment Date”.

 

Section 6.                                            Definitions. 
For the purposes hereof, the following terms shall have the following
meanings:

 

“Business Day”
means any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other government action to close.

 

“Change of
Control Transaction” means the occurrence of any of (i) an acquisition
after the date hereof by an individual or legal entity or “group” (as described
in Rule 13d-5(b)(1) promulgated under the Exchange Act) of in excess of 49% of
the voting securities of the Company coupled with a replacement of more than
one-half of the members of the Company’s board of directors which is not
approved by those individuals who are members of the board of directors on the
date hereof in one or a series of related transactions, or (ii) the merger of
the Company with or into another entity, consolidation or sale of all or
substantially all of the assets of the Company in one or a series of related
transactions, unless following such transaction, the holders of the Company’s
securities continue to hold at least 40% of such securities following such
transaction. The execution by the Company of an agreement to which the Company
is a party or by which it is bound providing for any of the events set forth
above in (i) or (ii) does not constitute the occurrence of the event until
after the event in fact occurs.

 

Section 7.                                            Except as expressly provided herein, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, interest and
liquidated damages (if any) on, this Note at the time, place, and rate, and in
the coin or  currency, herein
prescribed.  This Note is a direct
obligation of the Company.

 

 

Section 8.               If
this Note shall be mutilated, lost, stolen or destroyed, the Company shall
execute and deliver, in exchange and substitution for and upon cancellation of
a mutilated Note, or in lieu of or in substitution for a lost, stolen or
destroyed Note, a new Note for the principal amount of this Note so mutilated,
lost, stolen or destroyed but only upon receipt of evidence of such loss, theft
or destruction of such Note, and of the ownership hereof, and indemnity, if
requested, all reasonably satisfactory to the Company.

 

Section 9.                                            Choice of Law and Venue; Submission to
Jurisdiction; Service of Process.

 

(a)                                  THE VALIDITY OF THIS NOTE, 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 NEW YORK (WITHOUT REFERENCE TO THE CHOICE OF LAW
PRINCIPLES THEREOF). THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS NOTE SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK OR, AT THE
SOLE OPTION OF HOLDER, IN ANY OTHER COURT IN WHICH HOLDER SHALL INITIATE LEGAL
OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY.

 

(b)                                 COMPANY HEREBY SUBMITS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, TO THE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT IT 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)                                  COMPANY 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 COMPANY.

 

(d)                                 NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO AFFECT THE RIGHT OF  HOLDER
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY HOLDER 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.

 

(e)                                To the extent determined by such court,
the Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Holder in enforcement of or protection of any of
its rights under any of this Note.

 

Section 10.                                      Any waiver by the Company or the Holder
of a breach of any provision of this Note shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any
other provision of this Note.  The
failure of the Company or the Holder to insist upon strict adherence to any
term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Note.  Any waiver must be in writing.

 

Section 11.                                       If any provision of this Note is
invalid, illegal or unenforceable, the balance of this Note shall remain in
effect, and if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances.

 

 

Section 12.                                      Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next calendar month, the preceding Business Day in
the appropriate calendar month).

 

Section 13.                                      Security.  The
obligation of the Company for payment of principal, interest and all other sums
hereunder, in the event of a default and failure of the Company to perform
hereunder, is secured by the pledge of certain securities (the “Pledged
Shares”) by Terry Kiefer as Pledgor under the terms and conditions of a
Stock Pledge Agreement, and a Guaranty executed and delivered by such Pledgor.

 

Section 14.                                      Lock-Up. Except as provided below, as long as any portion of
the Note remains outstanding, the Company’s Chief Executive Officer, Terry
Kiefer, shall not sell, pledge, hypothecate, transfer or otherwise dispose of
or encumber any portion of the Company’s common stock owned by him, or engage
in any short sale or other derivative or hedging transaction with respect to
the Company’s common stock. Notwithstanding the foregoing, Mr. Kiefer may sell
(i) up to one (1%) percent of the total number of the outstanding shares of the
Company’s common stock during every ninety (90) day period commencing on the
effective date of a registration statement, and (ii) up to four (4%) percent of
the total number of the outstanding shares of the Company’s common stock during
each such ninety (90) day period at a price equal to or greater than fifty
($0.50) cents per share.

 

Terry Kiefer has pledged 2,000,000 shares of the Borrower’s common
stock to secure a note issued by the Borrower 
to Equities First Holdings, LLC on April 4, 2006.  The Holder hereby acknowledges having
received a copy of said note and any related documents.

 

Section 15.                                      Payment of Legal Fees. The Company shall pay legal fees and expenses
incurred by the Holder in connection with negotiating and entering into the
Note in an amount not to exceed Six Thousand ($6,000) Dollars.

 

Section 16.                                      Waiver of Jury Trial.

 

THE COMPANY HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS NOTE . COMPANY REPRESENTS THAT EACH HAS
REVIEWED THIS WAIVER AND KNOWINGLY AND VOLUNTARILY WAIVES ITS 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.

 

IN
WITNESS WHEREOF,
the Company has caused this instrument to be duly executed by an officer duly
authorized for such purpose, as of the date first above indicated.

 

 

	
   

  	
  NATIONAL STORM
  MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terry Kiefer

  	
   

  
	
   

  	
  Name:

  	
  Terry Kiefer

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark Noffke

  	
   

  	
   

  	
   

  	
   

  
	
  Name: Mark Noffke

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE
A

 

	
  Registration Statement Effective Date

  	
   

  	
  Maturity Amount

  	
   

  	
  Original Issue Discount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prior to October 31, 2006

  	
   

  	
  $

  	
  1,350,000

  	
   

  	
  25.92

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Following
  October 31, 2006 but on or prior to November 15, 2006

  	
   

  	
  $

  	
  1,400,000

  	
   

  	
  28.57

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Following
  November 15, 2006 but on or prior to November 30, 2006

  	
   

  	
  $

  	
  1,450,000

  	
   

  	
  31.03

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Following
  November 30, 2006 but on or prior to December 15, 2006

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
  33.33

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Following
  December 15, 2006 but on or prior to January 15, 2007

  	
   

  	
  $

  	
  1,550,000

  	
   

  	
  35.45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Following
  January 15, 2007 but on or prior to February 15, 2007

  	
   

  	
  $

  	
  1,600,000

  	
   

  	
  37.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Following February 15, 2007

  	
   

  	
  $

  	
  1,650,000

  	
   

  	
  39.39

  	
  %Exhibit 4.5

 

GUARANTY

 

GUARANTY
dated as of July 24th, 2006 (“Guaranty”) made by Terry Kiefer, an
individual residing in the State of Texas (“Guarantor”), in favor of John Fife
(“Lender”).

 

W  I  T  N  E
S  S  E  T  H

 

WHEREAS,
National Storm Management, Inc., a Nevada corporation (the “Borrower”),
and the Lender are parties to a Note, dated as of July 24th, 2006 (such
agreement, as amended, restated, supplemented or otherwise modified from time
to time, being hereinafter referred to as the “Note”);

 

WHEREAS,
pursuant to the Note, the Guarantor is required to execute and deliver to the
Lender a guaranty guaranteeing the Note and all other obligations under the
Note and the other Loan Documents; and

 

WHEREAS,
the Guarantor has determined that (i) it will derive substantial benefit
and advantage from the Loan and other financial accommodations made available
to the Borrower under the Note and the other Loan Documents and (ii) its
execution, delivery and performance of this Guaranty directly benefit, and are
within the best interests of, the Guarantor;

 

NOW,
THEREFORE, in consideration of $1,000 receipt of which is hereby acknowledged,
the premises, the agreements herein and in order to induce the Lender to make
and maintain the Loan pursuant to the Note, the Guarantor hereby agrees with
the Lender, as follows:

 

Section 1.                                            Definitions.
Reference is hereby made to the Note for a statement of the terms thereof.  All terms used in this Guaranty which are
defined in the Note and not otherwise defined herein shall have the same
meanings herein as set forth therein.  As
used in this Guaranty, the following terms have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):

 

“Borrower”
has the meaning specified in the preamble above.

 

“Guaranty”
means this Guaranty.

 

“Guaranty
Documents” means the Loan Documents and any document or agreement evidencing,
related to or delivered in connection with any or all of the Guaranteed
Obligations.

 

“Guaranteed
Obligations” means any and all present and future liabilities and obligations
of Borrower and Guarantor to Lender incurred by Borrower and Guarantor under
the Loan Documents, and whether due or to become due, secured or unsecured,
absolute or contingent, joint or several, direct or indirect, acquired
outright, conditionally or as collateral security by Lender from another,
liquidated or unliquidated, arising by operation of law or otherwise, together
with all fees and expenses incurred in collecting any or all of the items specified
in this definition or enforcing any rights under any of the Guaranty Documents,
including all fees and expenses of Lender’s counsel and of any experts and
agents which may be paid or incurred by Lender in collecting any such items or
enforcing any such rights.

 

Section 2.                                            Rules of
Interpretation. When used in this Guaranty: (1) “or” is not exclusive,
(2) a reference to a law includes any amendment or modification to such
law, and (3) a reference to an agreement, instrument or document includes
any amendment or modification of such agreement, instrument or document.

 

 

Section 3.                                            Guaranty.
Guarantor hereby guarantees to Lender and its successors, endorsees,
transferees and assigns the prompt and complete payment, as and when due and
payable (whether at stated maturity or by required prepayment, acceleration,
demand or otherwise), of all of the Guaranteed Obligations now existing or
hereafter incurred will be paid strictly in accordance with their terms.

 

Section 4.                                            Limitation
of Liability.  The obligation of
Guarantor under this Guaranty shall be limited to an aggregate amount equal to
the largest amount that would not render the obligation of Guarantor under this
Guaranty subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provision of any applicable state law.

 

Section 5.                                            Type
of Guaranty. This Guaranty is absolute and unconditional and as such is not
subject to any conditions and Guarantor is fully liable to perform all of its
duties and obligations under this Guaranty as of the date of execution of this
Guaranty. This Guaranty is a continuing guaranty and applies to all future
Guaranteed Obligations. In addition, this Guaranty shall remain in full force
and effect even if at any time there are no outstanding Guaranteed Obligations.
This Guaranty is a guaranty of payment and not of collection. The obligations
and liabilities of Guarantor under this Guaranty shall not be conditioned or
contingent upon the pursuit by Lender of any right or remedy against Borrower,
Guarantor or any other person which may be or become liable in respect of all
or any part of the Guaranteed Obligations, or against any assets securing the
payment of the Guaranteed Obligations or guarantee for such Guaranteed
Obligations or right of setoff with respect to such Guaranteed Obligations.
This Guaranty is irrevocable and as such cannot be cancelled, terminated or
revoked by Guarantor.

 

Section 6.                                            Reinstatement
of Guaranty. This Guaranty shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment, or any part
thereof, of any of the Guaranteed Obligations are rescinded or must otherwise
be returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of Borrower, Guarantor or otherwise, all as though such
payment had not been made.

 

Guarantor
hereby consents that, without the necessity of any reservation of rights
against Guarantor and without notice to or further assent by Guarantor, any
demand for payment of any of the Guaranteed Obligations made by Lender may be
rescinded by Lender and any of such Guaranteed Obligations continued after such
rescission.

 

Section 7.                                            Security
Interest. To secure the payment of the obligations of Guarantor under this
Guaranty, Guarantor has contemporaneously executed a Stock Pledge Agreement in
favor of, and grants Lender a pledge and security interest in the Pledged
Shares listed in Schedule 1 to the Stock Pledge Agreement.

 

Section 8.                                            Waiver
of Notices. Guarantor hereby waives any and all notices including (1) notice
of or proof of reliance by Lender upon this Guaranty or acceptance of this
Guaranty, (2) notice of the incurrence of any Guaranteed Obligations or
the renewal, extension or accrual of any such Guaranteed Obligations, (3) notice
of any actions taken by Lender, Borrower, Guarantor or any other person under
any Guaranty Document, and (4) notices of nonpayment or nonperformance,
protest, notices of protest and notices of dishonor.

 

Section 9.                                            Waiver
of Defenses. Guarantor hereby waives any and all defenses to the
performance by Guarantor of its duties and obligations under this Guaranty,
including any defense based on any of the following:

 

(1)                                  any
failure of Lender to disclose to Guarantor any information relating to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any party obligated to make payment on any and all
Guaranteed Obligations, whether as principal or guarantor, now or hereafter
known to Lender,

 

2

 

(2)                                  any
defense to the payment of any or all the Guaranteed Obligations, including lack
of validity or enforceability of any of the Guaranteed Obligations or any
Guaranty Documents, 

 

(3)                                  any
change in the time, manner or place of payment of, or in any other term in
respect of, all or any of the Guaranteed Obligations, or any other amendment or
waiver of or consent to any departure from any Guaranty Document,

 

(4)                                  any
exchange or release of, or non-perfection of any security interest on or in any
assets securing the payment of the Guaranteed Obligations, 

 

(5)                                  any
failure to execute any other guaranty for all or any part of the Guaranteed
Obligations, or any release or amendment or waiver of, or consent to any
departure from, any other guaranty for any or all of the Guaranteed
Obligations, 

 

(6)                                  any
subordination of any or all of the Guaranteed Obligations, 

 

(7)                                  any
act or omission of Lender in connection with the enforcement of, or the
exercise of rights and remedies, including any election of, or the order of
exercising any, remedies, with respect to (a) the Guaranteed Obligations, (b) any
other guarantor of the Guaranteed Obligations, or (c) any assets securing
the payment of the Guaranteed Obligations, 

 

(8)                                  any
manner of application of any funds received by Lender to Guaranteed Obligations
or any other obligations owed to Lender, whether from the sale or disposition
of any assets securing the Guaranteed Obligations, from another guarantor of
the Guaranteed Obligations or otherwise, and 

 

(9)                                  any
failure to give or provide any notices, demands or protests, including those
specified under Section 8 herein, entitled “Waiver of Notices”.

 

Section 10.                                      Subrogation.
Guarantor may not exercise any rights which Guarantor may acquire by way of
subrogation or contribution, whether acquired by any payment made under this
Guaranty, by any setoff or application of funds of Borrower, by Lender or
otherwise, until (1) the payment in full of the Guaranteed Obligations
(after Lender no longer has any obligation or arrangement to provide credit to
Borrower, including under or pursuant to a line of credit), and (2) the
payment of all fees and expenses to be paid by Guarantor pursuant to this
Guaranty.  If any amount shall be paid to
Guarantor on account of such subrogation or contribution rights at any time
when all of the Guaranteed Obligations and all such other expenses shall not
have been paid in full (after Lender no longer has any obligation or
arrangement to provide credit to Borrower, including under or pursuant to a
line of credit), such amount shall be held in trust for the benefit of Lender,
shall be segregated from the other funds of Guarantor and shall forthwith be
paid over to Lender to be credited and applied in whole or in part by Lender
against the Guaranteed Obligations, whether matured or unmatured, and all such
other fees and expenses in accordance with the terms of the Guaranty Documents.

 

Section 11.                                      Representations.
At the time of execution of this Guaranty and each time Lender provides credit
as noted above, Guarantor represents and warrants to Lender as follows:

 

(1)                                  Name.  The exact legal name of the Guarantor is the
name specified in the preamble to this Guaranty.  The Guarantor has not been known by any other
name during the five (5) years prior to the date of the Guaranty.

 

(2)                                  Location.  The principal residence of the Guarantor
is  2062 Azalea, Irving, TX 75063.

 

3

 

(3)                                  No
Contravention.  The execution,
delivery and performance by Guarantor of this Guaranty do not and will not (a) violate
any provision of any law, order, writ, judgment, injunction, decree,
determination, or award presently in effect applicable to Guarantor, (b) result
in a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease, or instrument to which Guarantor is a
party or by which Guarantor or its properties may be bound or affected, or (c) result
in, or require, the creation or imposition of any lien upon or with respect to
any of the properties now owned or hereafter acquired by Guarantor.

 

(4)                                  Governmental
Authority.  No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority is required for the due execution, delivery and performance by
Guarantor of this Guaranty.

 

(5)                                  Legally
Enforceable Guaranty.  This Guaranty
is the legal, valid and binding obligation of Guarantor, enforceable against
Guarantor in accordance with its terms, except to the extent that such
enforcement may be limited by (a) applicable bankruptcy, insolvency, and
other similar laws affecting creditors’ rights generally, or (b) general
equitable principles, regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law.

 

Section 12.                                      Remedies.  Lender shall not, by any act, delay, omission
or otherwise, be deemed to have waived any of its rights or remedies under this
Guaranty or otherwise. A waiver by Lender of any right or remedy hereunder on
any one occasion, shall not be construed as a ban or waiver of any such right
or remedy which Lender would have had on any future occasion, nor shall Lender
be liable for exercising or failing to exercise any such right or remedy. The
rights and remedies of Lender under this Guaranty are cumulative and, as such,
are in addition to any other rights and remedies available to Lender under law
or any other agreements.

 

Section 13.                                      Appointment
as Attorney-in-Fact.  Guarantor
hereby appoints Lender as the attorney-in-fact for Guarantor, with full
authority in the place and stead of Guarantor and in the name of Guarantor or
otherwise, to exercise all rights and remedies granted to Lender under this
Guaranty and to take any action and to execute any instrument which Lender may deem
necessary or advisable to accomplish the purposes of this Guaranty.

 

Section 14.                                      Indemnity
and Expenses. Guarantor hereby indemnifies Lender from and against any and
all claims, losses, damages and liabilities growing out of or resulting from
this Guaranty (including, without limitation, enforcement of this Guaranty),
except claims, losses, damages or liabilities resulting from Lender’s gross
negligence and willful misconduct.  

 

Guarantor
will upon demand pay to Lender the amount of any and all expenses, including
the fees and expenses of its counsel and of any experts and agents, which
Lender may incur in connection with (1) any amendment to this Guaranty, (2) the
administration of this Guaranty, (3) the exercise or enforcement of any of
the rights of Lender under this Guaranty, or (4) the failure by Guarantor
to perform or observe any of the provisions of this Guaranty.

 

Section 15.                                      Amendments.  No amendment or waiver of any provision of
this Guaranty, nor consent to any departure by Guarantor from this Guaranty,
shall in any event be effective unless the same shall be in writing and signed
by Guarantor and Lender, and then such amendment or waiver shall be effective
only in the specific instance and for the specific purpose for which given.

 

Section 16.                                      Addresses
for Notices. All notices and other communications provided for under this
Guaranty shall be in writing and, mailed or delivered by messenger or overnight
delivery service, addressed, in the case of Guarantor at its address specified
below its signature, and in the case of Lender at 

 

4

 

the address specified below, or as to any such party at such other
address as shall be designated by such party in a written notice to the other
party complying as to delivery with the terms of this Section.

 

If to
Lender:

 

John
Fife

303
East Wacker Drive

Suite 301

Chicago,
IL 60601

 

If to
Guarantor:

 

Terry
Kiefer

202
Azalea

Irving,
TX 75063

 

With
Copies to:

 

Darrin
Ocasio, Esq.

Sichenzia
Ross Friedman Ference LLP

1065
Avenue of the Americas, 21st Floor

New
York, NY 10018

Fax:
(212) 930-9725

 

All
such notices and other communications shall, when mailed, be effective three (3) days
after being placed in the mails, or when delivered to a messenger or overnight
delivery service, be effective one (1) day after being delivered to the
messenger or overnight delivery service, in each case, addressed as specified
above.

 

Section 17.                                      Assignment
and Transfer of Obligations. This Guaranty will bind the estate of
Guarantor as to Guaranteed Obligations created or incurred both before and
after the death or incapacity of Guarantor, whether or not Lender receives
notice of such death or incapacity. This Guaranty shall inure to the benefit of
Lender and its successors, transferees and assigns. Guarantor may not transfer
or assign its obligations under this Guaranty. Lender may assign or otherwise
transfer all or a portion of its rights or obligations with respect to the
Guaranteed Obligations to any other party, and such other party shall then
become vested with all the benefits in respect of such transferred Guaranteed
Obligations granted to Lender in this Guaranty or otherwise. Guarantor agrees
that Lender can provide information regarding Guarantor to any prospective or
actual successor, transferee or assign.

 

Section 18.                                      Setoff.
Guarantor agrees that, in addition to, and without limiting, any right of
setoff, Lender’s lien or counterclaim Lender may otherwise have, Lender shall
be entitled, at its option, to offset balances (general or special, time or
demand, provisional or final) held by it for the account of Guarantor, at any
of the offices of Lender, in Dollars or any other currency, against any amount
payable by Guarantor to Lender under this Guaranty which is not paid when demanded
(regardless of whether such balances are then due to Guarantor), in which case
Lender shall promptly notify Guarantor, provided that Lender’s failure to give
such notice shall not affect the validity of such offset.

 

Section 19.                                      Submission
to Jurisdiction. Guarantor hereby irrevocably submits to the jurisdiction
of any federal or state court sitting in Cook County in the State of Illinois
over any action or proceeding arising out of or related to this Guaranty and
agrees with Lender that personal jurisdiction over Guarantor rests with such
courts for purposes of any action on or related to this Guaranty. Guarantor
hereby waives personal service by manual delivery and agrees that service of
process may be made by prepaid 

 

5

 

certified mail directed to Guarantor at the address of Guarantor for
notices under this Guaranty or at such other address as may be designated in
writing by Guarantor to Lender, and that upon mailing of such process such
service will be effective as if Guarantor was personally served. Guarantor
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any manner provided by law. Guarantor further waives any objection to
venue in any such action or proceeding on the basis of inconvenient forum.
Guarantor agrees that any action on or proceeding brought against Lender shall
only be brought in such courts.

 

Section 20.                                      Governing
Law.  This Guaranty shall be governed
by and construed in accordance with the laws of the State of Illinois without
regard to its principles of conflicts of law.

 

Section 21.                                      Subordination.
Once a demand for payment is made on the Guarantor under this Guaranty,
Guarantor will not (1) make any demand for payment of, or take any action
to accelerate, any obligation owed to Guarantor by Borrower, (2) seek to
collect payment of, or enforce any right or remedies against Borrower, of any
of the obligations owed to Guarantor by Borrower or any guarantees, credit
supports, collateral or other security related to or supporting any of such
obligations, or (3) commence, or join with any other creditor in
commencing, any bankruptcy or similar proceeding against Borrower. Guarantor
also agrees that the payment of all obligations of Borrower to Guarantor shall
be subordinate and junior in time and right of payment in accordance with the
terms of this Section to the prior payment in full (in cash) of the
Guaranteed Obligations. In furtherance of such subordination, (1) to the
extent possible, Guarantor will not take or receive from Borrower any payments,
in cash or any other property, by setoff or any other means, of any or all of
the obligations owed to Guarantor by Borrower, or purchase, redeem, or
otherwise acquire any of such obligations, or change the terms or provisions of
any such obligations and (2) if for any reason and under any circumstance
Guarantor receives a payment on such obligation, whether in a bankruptcy or
similar proceeding or otherwise, all such payments or distributions upon or
with respect to such obligations shall be received in trust for the benefit of
Lender, shall be segregated from other funds and property held by Guarantor and
shall be forthwith paid over to Lender in the same form as so received (with
any necessary endorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of securities or other non-cash property) for, the
payment or prepayment of the Guaranteed Obligations. Guarantor agrees that any
subrogation rights Guarantor may acquire as a result of a payment under this Section may
not be exercised until (1) the payment in full of the Guaranteed
Obligations (after Lender no longer has any obligation or arrangement to
provide credit to Borrower, including under or pursuant to a line of credit),
and (2) the payment of all fees and expenses to be paid by Guarantor
pursuant to this Guaranty. Notwithstanding the foregoing, once a demand for
payment is made on the Guarantor under this Guaranty, Guarantor shall continue
to receive a salary that is reasonable and customary for the chief executive of
a publicly traded company.

 

Section 22.                                      Miscellaneous.  This Guaranty is in addition to and not in
limitation of any other rights and remedies Lender may have by virtue of any
other instrument or agreement previously, contemporaneously or hereafter
executed by Guarantor or any other party or by law or otherwise. If any
provision of this Guaranty is contrary to applicable law, such provision shall
be deemed ineffective without invalidating the remaining provisions of this
Guaranty. Titles in this Guaranty are for convenience of reference only and
shall not affect the interpretation or construction of this Guaranty. This
Guaranty constitutes the entire agreement between Guarantor and Lender with
respect to the matters covered by this Guaranty and supercedes all written or
oral agreements with respect to such matters.

 

Section 23.                                      WAIVER
OF JURY TRIAL. GUARANTOR EXPRESSLY WAIVES ANY AND EVERY RIGHT TO A TRIAL BY
JURY IN ANY ACTION ON OR RELATED TO THIS GUARANTY.

 

IN
WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty as of
the date of this Guaranty.

 

6

 

	
   

  	
  By:

  	
  /s/ TERRY KIEFER

  	
   

  
	
   

  	
  Name:  Terry Kiefer

  

 

 

Attest:

 

	
  By:

  	
  /s/ Mark Noffke

  	
   

  
	
  Name: Mark
  Noffke

  	
   

  

 

7

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