Document:

REGISTRATION
RIGHTS AGREEMENT

     

    This
REGISTRATION RIGHTS AGREEMENT
(the “Agreement”),
dated as of November 24, 2009, is by and among NACEL Energy Corporation,
a Wyoming corporation with offices located at 9375 E. Shea Blvd., Suite 100,
Scottsdale, Arizona 85260 (the “Company”),
and the undersigned buyers (each, a “Buyer,” and collectively, the “Buyers”).

     

    RECITALS

     

    A.           In
connection with the Securities Purchase Agreement by and among the parties
hereto, dated as of November 23, 2009 (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions of
the Securities Purchase Agreement, to issue and sell to each Buyer (i) the Notes
(as defined in the Securities Purchase Agreement) which will be convertible into
Conversion Shares (as defined in the Securities Purchase Agreement) in
accordance with the terms of the Notes and (ii) the Warrants (as defined in the
Securities Purchase Agreement) which will be exercisable to purchase Warrant
Shares (as defined in the Securities Purchase Agreement) in accordance with the
terms of the Warrants.

     

    B.           To
induce the Buyers to consummate the transactions contemplated by the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities
laws.

     

    AGREEMENT

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:

     

    1.           Definitions.

     

    Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

     

    (a)           “Business Day” means any day other than Saturday,
Sunday or any other day on which commercial banks in New York, New York are
authorized or required by law to remain closed.

     

    (b)           “Closing Date” shall have the meaning set forth in
the Securities Purchase Agreement.

     

    (c)           “Effective Date” means the date that the applicable
Registration Statement has been declared effective by the SEC.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           “Effectiveness Deadline” means (i) with respect to the
initial Registration Statement required to be filed to pursuant to Section 2(a),
the earlier of the (A) 90th
calendar day after the Closing Date (or the 120th
calendar day after the Closing Date in the event that such Registration
Statement is subject to review by the SEC) and (B) 5th
Business Day after the date the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be
reviewed or will not be subject to further review and (ii) with respect to any
additional Registration Statements that may be required to be filed by the
Company pursuant to this Agreement, the earlier of the (A) 90th
calendar day following the date on which the Company was required to file such
additional Registration Statement (or the 120th
calendar day after such date in the event that such Registration
Statement is subject to review by the SEC) and (B) 5th
Business Day after the date the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be
reviewed or will not be subject to further review.

     

    (e)           “Filing Deadline” means (i) with respect to the
initial Registration Statement required to be filed to pursuant to Section 2(a),
December 31, 2009, and (ii) with respect to any additional Registration
Statements that may be required to be filed by the Company pursuant to this
Agreement, the date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this Agreement.

     

    (f)           “Investor” means a Buyer or any transferee or
assignee of any Registrable Securities, Notes or Warrants, as applicable, to
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee of any
Registrable Securities, Notes or Warrants, as applicable, assigns its rights
under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.

     

    (g)           “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization or a government or any department or agency
thereof.

     

    (h)           “register,” “registered,” and “registration” refer to a registration effected by
preparing and filing one or more Registration Statements in compliance with the
1933 Act and pursuant to Rule 415 and the declaration of effectiveness of such
Registration Statement(s) by the SEC.

     

    (i)           “Registrable Securities” means (i) the Conversion Shares,
(ii) the Warrant Shares and (iii) any capital stock of the Company issued or
issuable with respect to the Conversion Shares, the Warrant Shares, the Notes or
the Warrants, including, without limitation, (1) as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise and (2)
shares of capital stock of the Company into which the shares of Common Stock are
converted or exchanged and shares of capital stock of a Successor Entity (as
defined in the Warrants) into which the shares of Common Stock are converted or
exchanged, in each case, without regard to any limitations on conversion of the
Notes or exercise of the Warrants.

     

    (j)           “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities.

    
      
         

      

      
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    (k)           “Required Registration Amount” means 133% of the sum of (i) the
maximum number of Conversion Shares issued and issuable pursuant to the Notes
and (ii) the maximum number of Warrant Shares issued and issuable pursuant to
the Warrants, in each case, as of the Trading Day (as defined in the Warrants)
immediately preceding the applicable date of determination (without taking into
account any limitations on the conversion of the Notes or the exercise of the
Warrants set forth therein), all subject to adjustment as provided in Section
2(d).

     

    (1)           “Rule 144” means Rule 144 promulgated by the
SEC under the 1933 Act, as such rule may be amended from time to time, or any
other similar or successor rule or regulation of the SEC that may at any time
permit the Investors to sell securities of the Company to the public without
registration.

     

    (m)           “Rule 415” means Rule 415 promulgated by the
SEC under the 1933 Act, as such rule may be amended from time to time, or any
other similar or successor rule or regulation of the SEC providing for offering
securities on a continuous or delayed basis.

     

    (n)           “SEC” means the United States Securities
and Exchange Commission or any successor thereto.

     

    2.           Registration.

     

    (a)           Mandatory
Registration. The Company shall prepare and, as soon as practicable, but
in no event later than the Filing Deadline, file with the SEC an initial
Registration Statement on Form S-l covering the resale of all of the Registrable
Securities, provided that such initial Registration Statement shall register for
resale at least the number of shares of Common Stock equal to the Required
Registration Amount as of the date such Registration Statement is initially
filed with the SEC. Such initial Registration Statement, and each other
Registration Statement required to filed pursuant to the terms of this
Agreement, shall contain (except if otherwise directed by each of the Investors)
the “Selling
Stockholders” and “Plan of Distribution”
sections in substantially the form attached hereto as Exhibit
B. The Company shall use its best
efforts to have such initial Registration Statement, and each other Registration
Statement required to filed pursuant to the terms of this Agreement, declared
effective by the SEC as soon as practicable, but in no event later than the
applicable Effectiveness Deadline for such Registration Statement.

     

    (b)           Legal Counsel.
Subject to Section 5 hereof, Iroquois Master Fund Ltd. (“Iroquois”) shall have the right to select one
(1) legal counsel to review and oversee, solely on its behalf, any registration
pursuant to this Section 2 (“Legal Counsel”), which shall be Greenberg Traurig,
LLP or such other counsel as thereafter designated by Iroquois.

     

    (c)           Use of Form S-3. The
Company shall undertake to register the resale of all the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall
maintain the effectiveness of all Registration Statements then in effect until
such time as a Registration Statement on Form S-3 covering the resale of all the
Registrable Securities has been declared effective by the SEC and the prospectus
contained therein is available for use.

    
      
         

      

      
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    (d)           Sufficient Number of Shares
Registered. In the event the number of shares available under any
Registration Statement is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an
Investor’s allocated portion of the Registrable Securities pursuant to Section
2(h), the Company shall amend such Registration Statement (if permissible), or
file with the SEC a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover at least the Required
Registration Amount as of the Trading Day immediately preceding the date of the
filing of such amendment or new Registration Statement, in each case, as soon as
practicable, but in any event not later than fifteen (15) days after the
necessity therefor arises (but taking account of any Staff position with respect
to the date on which the Staff will permit such amendment to the Registration
Statement and/or such new Registration Statement (as the case may be) to be
filed with the SEC). The Company shall use its best efforts to cause such
amendment to such Registration Statement and/or such new Registration Statement
(as the case may be) to become effective as soon as practicable following the
filing thereof with the SEC, but in no event later than the applicable
Effectiveness Deadline for such Registration Statement. For purposes of the
foregoing provision, the number of shares available under a Registration
Statement shall be deemed “insufficient to cover all of the Registrable
Securities” if at any time the number of shares of Common Stock available for
resale under the applicable Registration Statement is less than the product
determined by multiplying (i) the Required Registration Amount as of such time
by (ii) 0.90. The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on (i) conversion of the Notes (and such
calculation shall assume that the Notes are then fully convertible into shares
of Common Stock at the then-prevailing applicable Conversion Price) and (ii)
exercise of the Warrants (and such calculation shall assume that the Warrants
are then fully exercisable for shares of Common Stock at the then-prevailing
applicable Exercise Price).

    
      
         

      

      
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    (e)           Effect of Failure to File
and Obtain and Maintain Effectiveness of any Registration Statement. If
(i) a Registration Statement covering the resale of all of the Registrable
Securities required to be covered thereby (disregarding any reduction pursuant
to Section 2(f)) and required to be filed by the Company pursuant to this
Agreement is (A) not filed with the SEC on or before the Filing Deadline for
such Registration Statement (a “Filing Failure”)
(it being understood that if the Company files a Registration Statement
without affording each Investor the opportunity to review and comment on the
same as required by Section 3(c) hereof, the Company shall be deemed to not have
satisfied this clause (i)(A) and such event shall be deemed to be a Filing
Failure) or (B) not declared effective by the SEC on or before the Effectiveness
Deadline for such Registration Statement (an “Effectiveness Failure”)
(it being understood that if on the Business Day immediately following
the Effective Date for such Registration Statement the Company shall not have
filed a “final” prospectus for such Registration Statement with the SEC under
Rule 424(b) in accordance with Section 3(b) (whether or not such a prospectus is
technically required by such rule), the Company shall be deemed to not have
satisfied this clause (i)(B) and such event shall be deemed to be an
Effectiveness Failure), (ii) other than during an Allowable Grace Period (as
defined below), on any day after the Effective Date of a Registration Statement
sales of all of the Registrable Securities required to be included on such
Registration Statement (disregarding any reduction pursuant to Section 2(f))
cannot be made pursuant to such Registration Statement (including, without
limitation, because of a failure to keep such Registration Statement effective,
a failure to disclose such information as is necessary for sales to be made
pursuant to such Registration Statement, a suspension or delisting of (or a
failure to timely list) the shares of Common Stock on its principal trading
market or exchange, or a failure to register a sufficient number of shares of
Common Stock or by reason of a stop order) or the prospectus contained therein
is not available for use for any reason (a “Maintenance Failure”),
or (iii) if a Registration Statement is not effective for any reason or
the prospectus contained therein is not available for use for any reason, the
Company fails to file with the SEC any required reports under Section 13 or
15(d) of the 1934 Act such that it is not in compliance with Rule 144(c)(1) (or
Rule 144(i)(2), if applicable) (a “Current Public Information Default”)
as a result of which any of the Investors are unable to sell Registrable
Securities without restriction under Rule 144 (including, without limitation,
volume restrictions), then, as partial relief for the damages to any holder by
reason of any such delay in, or reduction of, its ability to sell the underlying
shares of Common Stock (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each holder of
Registrable Securities relating to such Registration Statement an amount in cash
equal to two percent (2%) (or, solely in the case of an Effectiveness Failure
that is cured prior to the one hundred fiftieth (150th)
calendar day following the Closing Date, one percent (1%)) of such Investor’s
original principal amount stated in such Investor’s Note on the Closing Date (1)
on the date of such Filing Failure, Effectiveness Failure, Maintenance Failure
or Current Public Information Default, as applicable, and (2) on every thirty
(30) day anniversary of (I) a Filing Failure until such Filing Failure is cured;
(II) an Effectiveness Failure until such Effectiveness Failure is cured; (III) a
Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current
Public Information Default until the earlier of (i) the date such Current Public
Information Default is cured and (ii) such time that such public information is
no longer required pursuant to Rule 144 (in each case, pro rated for periods
totaling less than thirty (30) days). The payments to which a holder of
Registrable Securities shall be entitled pursuant to this Section 2(e) are
referred to herein as “Registration Delay Payments.” Following the initial Registration
Delay Payment for any particular event or failure (which shall be paid on the
date of such event or failure, as set forth above), without limiting the
foregoing, if an event or failure giving rise to the Registration Delay Payments
is cured prior to any thirty (30) day anniversary of such event or failure, then
such Registration Delay Payment shall be made on the third (3rd)
Business Day after such cure. In the event the Company fails to make
Registration Delay Payments in a timely manner in accordance with the foregoing,
such Registration Delay Payments shall bear interest at the rate of one and
one-half percent (1.5%) per month (prorated for partial months) until paid in
full. Notwithstanding the foregoing, no Registration Delay Payments shall be
owed to an Investor (other than with respect to a Maintenance Failure resulting
from a suspension or delisting of the shares of Common Stock on the Company’s
principal trading market or exchange) with respect to any period during which
all of such Investor’s Registrable Securities may be sold by such Investor
without restriction under Rule 144 (including, without limitation, volume
restrictions) and without the need for current public information required by
Rule 144(c)(1) (or Rule 144(i)(2), if applicable).

    
      
         

      

      
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    (f)    Offering.
Notwithstanding anything to the contrary contained in this Agreement, but
subject to the payment of the Registration Delay Payments pursuant to Section
2(e), in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any
offering pursuant to a Registration Statement filed pursuant to this Agreement
as constituting an offering of securities by, or on behalf of, the Company, or
in any other manner, such that the Staff or the SEC do not permit such
Registration Statement to become effective and used for resales in a manner that
does not constitute such an offering and that permits the continuous resale at
the market by the Investors participating therein (or as otherwise may be
acceptable to each Investor) without being named therein as an “underwriter,”
then the Company shall reduce the number of shares to be included in such
Registration Statement by all Investors until such time as the Staff and the SEC
shall so permit such Registration Statement to become effective as aforesaid. In
making such reduction, the Company shall reduce the number of shares to be
included by all Investors on a pro rata basis (based upon the number of
Registrable Securities otherwise required to be included for each Investor)
unless the inclusion of shares by a particular Investor or a particular set of
Investors are resulting in the Staff or the SEC’s “by or on behalf of the
Company” offering position, in which event the shares held by such Investor or
set of Investors shall be the only shares subject to reduction (and if by a set
of Investors on a pro rata basis by such Investors or on such other basis as
would result in the exclusion of the least number of shares by all such
Investors). In addition, in the event that the Staff or the SEC requires any
Investor seeking to sell securities under a Registration Statement filed
pursuant to this Agreement to be specifically identified as an “underwriter” in
order to permit such Registration Statement to become effective, and such
Investor does not consent to being so named as an underwriter in such
Registration Statement, then, in each such case, the Company shall reduce the
total number of Registrable Securities to be registered on behalf of such
Investor, until such time as the Staff or the SEC does not require such
identification or until such Investor accepts such identification and the manner
thereof. Any reduction pursuant to this paragraph will first reduce all
Registrable Securities other than those issued pursuant to the Securities
Purchase Agreement. In the event of any reduction in Registrable Securities
pursuant to this paragraph, an affected Investor shall have the right to
require, upon delivery of a written request to the Company signed by such
Investor, the Company to file a registration statement within thirty (30) days
of such request (subject to any restrictions imposed by Rule 415 or required by
the Staff or the SEC) for resale by such Investor in a manner acceptable to such
Investor, and the Company shall following such request cause to be and keep
effective such registration statement in the same manner as otherwise
contemplated in this Agreement for registration statements hereunder, in each
case until such time as: (i) all Registrable Securities held by such Investor
have been registered and sold pursuant to an effective Registration Statement in
a manner acceptable to such Investor or (ii) all Registrable Securities may be
resold by such Investor without restriction (including, without limitation,
volume limitations) pursuant to Rule 144 (taking account of any Staff position
with respect to “affiliate” status) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or
(iii) such Investor agrees to be named as an underwriter in any such
Registration Statement in a manner acceptable to such Investor as to all
Registrable Securities held by such Investor and that have not theretofore been
included in a Registration Statement under this Agreement (it being understood
that the special demand right under this sentence may be exercised by an
Investor multiple times and with respect to limited amounts of Registrable
Securities in order to permit the resale thereof by such Investor as
contemplated above).

     

    (g)    Piggyback
Registrations. Without limiting any obligation of the Company hereunder
or under the Securities Purchase Agreement, if there is not an effective
Registration Statement covering all of the Registrable Securities or the
prospectus contained therein is not available for use and the Company shall
determine to prepare and file with the SEC a registration statement relating to
an offering for its own account or the account of others under the 1933 Act of
any of its equity securities (other than on Form S-4 or Form S-8 (each as
promulgated under the 1933 Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the Company’s stock
option or other employee benefit plans), then the Company shall deliver to each
Investor a written notice of such determination and, if within fifteen (15) days
after the date of the delivery of such notice, any such Investor shall so
request in writing, the Company shall include in such registration statement all
or any part of such Registrable Securities such Investor requests to be
registered; provided, however, the Company shall not be required to register any
Registrable Securities pursuant to this Section 2(g) that are eligible for
resale pursuant to Rule 144 without restriction (including, without limitation,
volume restrictions) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the
subject of a then-effective Registration Statement.

    
      
         

      

      
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    (h)           Allocation of Registrable
Securities. The initial number of Registrable Securities included in any
Registration Statement and any increase in the number of Registrable Securities
included therein shall be allocated pro rata among the Investors based on the
number of Registrable Securities held by each Investor at the time such
Registration Statement covering such initial number of Registrable Securities or
increase thereof is declared effective by the SEC. In the event that an Investor
sells or otherwise transfers any of such Investor’s Registrable Securities, each
transferee or assignee (as the case may be) that becomes an Investor shall be
allocated a pro rata portion of the then-remaining number of Registrable
Securities included in such Registration Statement for such transferor or
assignee (as the case may be). Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to
hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement.

     

    (i)           No Inclusion of Other
Securities. In no event shall the Company include any securities other
than Registrable Securities on any Registration Statement without the prior
written consent of each of the Investors. Until the Applicable Date (as defined
in the Securities Purchase Agreement), the Company shall not enter into any
agreement providing any registration rights to any of its security
holders.

     

    3.           Related
Obligations.

     

    The
Company shall use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof, and,
pursuant thereto, the Company shall have the following obligations:

     

    (a)           The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to all the Registrable Securities (but in no event later than the
applicable Filing Deadline) and use its best efforts to cause such Registration
Statement to become effective as soon as practicable after such filing (but in
no event later than the Effectiveness Deadline). Subject to Allowable Grace
Periods, the Company shall keep each Registration Statement effective (and the
prospectus contained therein available for use) pursuant to Rule 415 for resales
by the Investors on a delayed or continuous basis at then-prevailing market
prices (and not fixed prices) at all times until the earlier of (i) the date as
of which all of the Investors may sell all of the Registrable Securities
required to be covered by such Registration Statement (disregarding any
reduction pursuant to Section 2(f)) without restriction pursuant to Rule 144
(including, without limitation, volume restrictions) and without the need for
current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if
applicable) or (ii) the date on which the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration Period”).
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall ensure that, when filed and at all times while effective, each
Registration Statement (including, without limitation, all amendments and
supplements thereto) and the prospectus (including, without limitation, all
amendments and supplements thereto) used in connection with such Registration
Statement (1) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein, or necessary to make the
statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading and (2) will disclose
(whether directly or through incorporation by reference to other SEC filings to
the extent permitted) all material information regarding the Company and its
securities. The Company shall submit to the SEC, within two (2) Business Days
after the later of the date that (i) the Company learns that no review of a
particular Registration Statement will be made by the Staff or that the Staff
has no further comments on a particular Registration Statement (as the case may
be) and (ii) the approval of Legal Counsel is obtained pursuant to Section 3(c)
(which approval shall be immediately sought), a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
forty-eight (48) hours after the submission of such request.

    
      
         

      

      
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    (b)           Subject
to Section 3(r) of this Agreement, the Company shall prepare and file with the
SEC such amendments (including, without limitation, post-effective amendments)
and supplements to each Registration Statement and the prospectus used in
connection with each such Registration Statement, which prospectus is to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary
to keep each such Registration Statement effective at all times during the
Registration Period for such Registration Statement, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company required to be covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement; provided, however, by 8:30 a.m. (New York time) on the Business Day
immediately following each Effective Date, the Company shall file with the SEC
in accordance with Rule 424(b) under the 1933 Act the final prospectus to be
used in connection with sales pursuant to the applicable Registration Statement
(whether or not such a prospectus is technically required by such rule). In the
case of amendments and supplements to any Registration Statement which are
required to be filed pursuant to this Agreement (including, without limitation,
pursuant to this Section 3(b)) by reason of the Company filing a report on Form
10-Q or Form 10-K or any analogous report under the Securities Exchange Act of
1934, as amended (the “1934 Act”),
the Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement such
Registration Statement.

     

    (c)           The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor
to review and comment upon (i) each Registration Statement at least five (5)
Business Days prior to its filing with the SEC and (ii) all amendments and
supplements to each Registration Statement (including, without limitation, the
prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor
reports) within a reasonable number of days prior to their filing with the SEC,
and (B) not file any Registration Statement or amendment or supplement thereto
in a form to which Legal Counsel or any legal counsel for any other Investor
reasonably objects. The Company shall not submit a request for acceleration of
the effectiveness of a Registration Statement or any amendment or supplement
thereto or to any prospectus contained therein without the prior consent of
Legal Counsel, which consent shall not be unreasonably withheld. The Company
shall promptly furnish to Legal Counsel and legal counsel for each other
Investor, without charge, (i) copies of any correspondence from the SEC or the
Staff to the Company or its representatives relating to each Registration
Statement, provided that such correspondence shall not contain any material,
non-public information regarding the Company or any of its Subsidiaries (as
defined in the Securities Purchase Agreement), (ii) after the same is prepared
and filed with the SEC, one (1) copy of each Registration Statement and any
amendment(s) and supplement(s) thereto, including, without limitation, financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, and all exhibits and (iii) upon the effectiveness of
each Registration Statement, one (1) copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto. The Company
shall reasonably cooperate with Legal Counsel and legal counsel for each other
Investor in performing the Company’s obligations pursuant to this Section
3.

    
      
         

      

      
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    (d)           The
Company shall promptly furnish to each Investor whose Registrable Securities are
included in any Registration Statement, without charge, (i) after the same is
prepared and filed with the SEC, at least one (1) copy of each Registration
Statement and any amendment(s) and supplement(s) thereto, including, without
limitation, financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor, all exhibits and each
preliminary prospectus, (ii) upon the effectiveness of each Registration
Statement, ten (10) copies of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request from time to time) and (iii) such
other documents, including, without limitation, copies of any preliminary or
final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor.

     

    (e)           The
Company shall use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or “blue sky” laws of all applicable jurisdictions in the
United States, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel, legal counsel for
each other Investor and each Investor who holds Registrable Securities of the
receipt by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

    
      
         

      

      
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    (f)           The
Company shall notify Legal Counsel, legal counsel for each other Investor and
each Investor in writing of the happening of any event, as promptly as
practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, non-public
information regarding the Company or any of its Subsidiaries), and, subject to
Section 3(r), promptly prepare a supplement or amendment to such Registration
Statement and such prospectus contained therein to correct such untrue statement
or omission and deliver ten (10) copies of such supplement or amendment to Legal
Counsel, legal counsel for each other Investor and each Investor (or such other
number of copies as Legal Counsel, legal counsel for each other Investor or such
Investor may reasonably request). The Company shall also promptly notify Legal
Counsel, legal counsel for each other Investor and each Investor in writing (i)
when a prospectus or any prospectus supplement or post-effective amendment has
been filed, when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to Legal
Counsel, legal counsel for each other Investor and each Investor by facsimile or
e-mail on the same day of such effectiveness and by overnight mail), and when
the Company receives written notice from the SEC that a Registration Statement
or any post-effective amendment will be reviewed by the SEC, (ii) of any request
by the SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate; and (iv) of the receipt of any request by the SEC or any other
federal or state governmental authority for any additional information relating
to the Registration Statement or any amendment or supplement thereto or any
related prospectus. The Company shall respond as promptly as practicable to any
comments received from the SEC with respect to each Registration Statement or
any amendment thereto (it being understood and agreed that the Company’s
response to any such comments shall be delivered to the SEC no later than ten
(10) Business Days after the receipt thereof).

     

    (g)           The
Company shall (i) use its best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of each Registration Statement or the use
of any prospectus contained therein, or the suspension of the qualification, or
the loss of an exemption from qualification, of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and (ii) notify Legal Counsel, legal counsel for each other
Investor and each Investor who holds Registrable Securities of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

     

    (h)           If
any Investor may be required under applicable securities law to be described in
any Registration Statement as an underwriter and such Investor consents to so
being named an underwriter, at the request of any Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of such Registration
Statement and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company’s independent
certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Investors, and (ii) an opinion, dated as of
such date, of counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors.

    
      
         

      

      
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    (i)           If
any Investor may be required under applicable securities law to be described in
any Registration Statement as an underwriter and such Investor consents to so
being named an underwriter, upon the written request of such Investor, the
Company shall make available for inspection by (i) such Investor, (ii) legal
counsel for such Investor and (iii) one (1) firm of accountants or other agents
retained by such Investor (collectively, the “Inspectors”),
all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, each Inspector shall agree
in writing to hold in strict confidence and not to make any disclosure (except
to such Investor) or use of any Record or other information which the Company’s
board of directors determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement or any other Transaction
Document (as defined in the Securities Purchase Agreement). Such Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and such Investor, if any) shall
be deemed to limit any Investor’s ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and
regulations.

     

    (j)           The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
Transaction Document. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at such
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

    
      
         

      

      
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    (k)           Without
limiting any obligation of the Company under the Securities Purchase Agreement,
the Company shall use its best efforts either to (i) cause all of the
Registrable Securities covered by each Registration Statement to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, (ii) secure
designation and quotation of all of the Registrable Securities covered by each
Registration Statement on the OTC Bulletin Board, or (iii) if, despite the
Company’s best efforts to satisfy the preceding clauses (i) or (ii) the Company
is unsuccessful in satisfying the preceding clauses (i) or (ii), without
limiting the generality of the foregoing, to use its best efforts to arrange for
at least two market makers to register with the Financial Industry Regulatory
Authority (“FINRA”) as such with respect to such
Registrable Securities. In addition, the Company shall cooperate with each
Investor and any broker or dealer through which any such Investor proposes to
sell its Registrable Securities in effecting a filing with FINRA pursuant to
FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees
and expenses in connection with satisfying its obligations under this Section
3(k).

     

    (1)           The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts (as the case may
be) as the Investors may reasonably request from time to time and registered in
such names as the Investors may request.

     

    (m)           If
requested by an Investor, the Company shall as soon as practicable after receipt
of notice from such Investor and subject to Section 3(r) hereof, (i) incorporate
in a prospectus supplement or post-effective amendment such information as an
Investor reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) make
all required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) supplement or make amendments
to any Registration Statement or prospectus contained therein if reasonably
requested by an Investor holding any Registrable Securities.

     

    (n)           The
Company shall use its best efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.

     

    (o)           The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the applicable Effective Date of each Registration
Statement.

     

    (p)           The
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration
hereunder.

    
      
         

      

      
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    (q)           Within
one (1) Business Day after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.

     

    (r)           Notwithstanding
anything to the contrary herein (but subject to the last sentence of this
Section 3(r)), at any time after the Effective Date of a particular Registration
Statement, the Company may delay the disclosure of material, non-public
information concerning the Company or any of its Subsidiaries the disclosure of
which at the time is not, in the good faith opinion of the board of directors of
the Company, in the best interest of the Company and, in the opinion of counsel
to the Company, otherwise required (a “Grace Period”),
provided that the Company shall promptly notify the Investors in writing
of the (i) existence of material, nonpublic information giving rise to a Grace
Period (provided that in each such notice the Company shall not disclose the
content of such material, non-public information to any of the Investors) and
the date on which such Grace Period will begin and (ii) date on which such Grace
Period ends, provided further that (I) no Grace Period shall exceed ten (10)
consecutive days and during any three hundred sixty five (365) day period all
such Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the
first day of any Grace Period must be at least five (5) Trading Days after the
last day of any prior Grace Period and (III) no Grace Period may exist during
the first sixty (60) Trading Days after the Effective Date of such Registration
Statement (each, an “Allowable Grace Period”).
For purposes of determining the length of a Grace Period above, such
Grace Period shall begin on and include the date the Investors receive the
notice referred to in clause (i) above and shall end on and include the later of
the date the Investors receive the notice referred to in clause (ii) above and
the date referred to in such notice. The provisions of Section 3(g) hereof shall
not be applicable during the period of any Allowable Grace Period. Upon
expiration of each Grace Period, the Company shall again be bound by the first
sentence of Section 3(f) with respect to the information giving rise thereto
unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary contained in this Section 3(r), the
Company shall cause its transfer agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which such Investor has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the particular
Registration Statement to the extent applicable, prior to such Investor’s
receipt of the notice of a Grace Period and for which the Investor has not yet
settled.

     

    (s)           The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by each Investors of its Registrable Securities pursuant
to each Registration Statement.

    
      
         

      

      
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    4.           Obligations of the
Investors.

     

    (a)           At
least five (5) Business Days prior to the first anticipated filing date of each
Registration Statement, the Company shall notify each Investor in writing of the
information the Company requires from each such Investor with respect to such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect and maintain
the effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

     

    (b)           Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of each Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.

     

    (c)           Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first
sentence of Section 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary in this Section 4(c), the
Company shall cause its transfer agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which such Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of Section 3(f) and for which such Investor has not yet
settled.

     

    (d)           Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it in connection with sales of
Registrable Securities pursuant to a Registration Statement.

     

    5.            Expenses of
Registration.

     

    All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, FINRA filing fees (if any)
and fees and disbursements of counsel for the Company shall be paid by the
Company. The Company shall also reimburse Iroquois for the fees and
disbursements of Legal Counsel in connection with registration, filing or
qualification pursuant to Sections 2 and 3 of this Agreement which amount shall
be limited to $10,000.

    
      
         

      

      
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    6.           Indemnification.

     

    (a)           In
the event any Registrable Securities are included in any Registration Statement
under this Agreement, to the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor and each of
its directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding the lack of such title or
any other title) and each Person, if any, who controls such Investor within the
meaning of the 1933 Act or the 1934 Act and each of the directors, officers,
shareholders, members, partners, employees, agents, advisors, representatives
(and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”),
against any losses, obligations, claims, damages, liabilities,
contingencies, judgments, fines, penalties, charges, costs (including, without
limitation, court costs, reasonable attorneys’ fees and costs of defense and
investigation), amounts paid in settlement or expenses, joint or several,
(collectively, “Claims”) incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto (“Indemnified Damages”), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement, or contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, “Violations”).
Subject to Section 6(c), the Company shall reimburse the Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
for such Indemnified Person expressly for use in connection with the preparation
of such Registration Statement or any such amendment thereof or supplement
thereto and (ii) shall not be available to a particular Investor to the extent
such Claim is based on a failure of such Investor to deliver or to cause to be
delivered the prospectus made available by the Company (to the extent
applicable), including, without limitation, a corrected prospectus, if such
prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d) and then only if, and to the extent that, following the
receipt of the corrected prospectus no grounds for such Claim would have
existed; and (iii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of any of the
Registrable Securities by any of the Investors pursuant to Section
9.

    
      
         

      

      
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    (b)           In
connection with any Registration Statement in which an Investor is
participating, such Investor agrees to severally and not jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case, to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(c) and
the below provisos in this Section 6(b), such Investor will reimburse an
Indemnified Party any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed, provided further that such Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
applicable sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of any of the Registrable Securities by any of the
Investors pursuant to Section 9.

    
      
         

      

      
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    (c)        Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be)
under this Section 6 of notice of the commencement of any action or proceeding
(including, without limitation, any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party (as the case may be)
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party (as the case may be); provided,
however, an Indemnified Person or Indemnified Party (as the case may be) shall
have the right to retain its own counsel with the fees and expenses of such
counsel to be paid by the indemnifying party if: (i) the indemnifying party has
agreed in writing to pay such fees and expenses; (ii) the indemnifying party
shall have failed promptly to assume the defense of such Claim and to employ
counsel reasonably satisfactory to such Indemnified Person or Indemnified Party
(as the case may be) in any such Claim; or (iii) the named parties to any such
Claim (including, without limitation, any impleaded parties) include both such
Indemnified Person or Indemnified Party (as the case may be) and the
indemnifying party, and such Indemnified Person or such Indemnified Party (as
the case may be) shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Person
or such Indemnified Party and the indemnifying party (in which case, if such
Indemnified Person or such Indemnified Party (as the case may be) notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, then the indemnifying party shall not have
the right to assume the defense thereof and such counsel shall be at the expense
of the Indemnifying Party, provided further that in the case of clause (iii)
above the indemnifying party shall not be responsible for the reasonable fees
and expenses of more than one (1) separate legal counsel for such Indemnified
Person or Indemnified Party (as the case may be). The Indemnified Party or
Indemnified Person (as the case may be) shall reasonably cooperate with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person (as the case may be) which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
(as the case may be) reasonably apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent; provided, however, the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the prior written consent of the Indemnified
Party or Indemnified Person (as the case may be), consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person (as the case may be) of a release from
all liability in respect to such Claim or litigation, and such settlement shall
not include any admission as to fault on the part of the Indemnified Party.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person
(as the case may be) with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party (as the case may be)
under this Section 6, except to the extent that the indemnifying party is
materially and adversely prejudiced in its ability to defend such
action.

     

    (d)        No
Person involved in the sale of Registrable Securities who is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to indemnification from any
Person involved in such sale of Registrable Securities who is not guilty of
fraudulent misrepresentation.

     

    (e)       The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

     

    (f)         The
indemnity and contribution agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

    
      
         

      

      
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    7.           Contribution.

     

    To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however: (i) no contribution shall be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6 of this
Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation; and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the amount of net
proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement. Notwithstanding the
provisions of this Section 7, no Investor shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the net proceeds
actually received by such Investor from the applicable sale of the Registrable
Securities subject to the Claim exceeds the amount of any damages that such
Investor has otherwise been required to pay, or would otherwise be required to
pay under Section 6(b), by reason of such untrue or alleged untrue statement or
omission or alleged omission.

     

    8.           
Reports Under the 1934
Act.

     

    With a
view to making available to the Investors the benefits of Rule 144, the Company
agrees to:

     

    (a)       make
and keep public information available, as those terms are understood and defined
in Rule 144;

     

    (b)       file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood and agreed that nothing herein
shall limit any obligations of the Company under the Securities Purchase
Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and

     

    (c)       furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting, submission and posting requirements of Rule 144 and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company with the
SEC if such reports are not publicly available via EDGAR, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    9.           
Assignment of
Registration Rights.

     

    All or
any portion of the rights under this Agreement shall be automatically assignable
by each Investor to any transferee or assignee (as the case may be) of all or
any portion of such Investor’s Registrable Securities, Notes or Warrants if: (i)
such Investor agrees in writing with such transferee or assignee (as the case
may be) to assign all or any portion of such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
transfer or assignment (as the case may be); (ii) the Company is, within a
reasonable time after such transfer or assignment (as the case may be),
furnished with written notice of (a) the name and address of such transferee or
assignee (as the case may be), and (b) the securities with respect to which such
registration rights are being transferred or assigned (as the case may be);
(iii) immediately following such transfer or assignment (as the case may be) the
further disposition of such securities by such transferee or assignee (as the
case may be) is restricted under the 1933 Act or applicable state securities
laws if so required; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence such transferee or assignee
(as the case may be) agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer or assignment (as the case
may be) shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement, the Notes and the Warrants (as the case may
be); and (vi) such transfer or assignment (as the case may be) shall have been
conducted in accordance with all applicable federal and state securities
laws.

     

    10.          Amendment of Registration
Rights.

     

    Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each of the
Investors, provided that any Investor may give a waiver in writing as to itself.
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon each Investor and the Company. No such amendment or waiver (unless
given pursuant to the foregoing proviso in the case of a waiver) shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.

     

    11.          Miscellaneous.

     

    (a)       Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable
Securities whenever such Person owns, or is deemed to own, of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such Registrable
Securities.

     

    (b)       Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
(iii) with respect to Section 3(c), by electronic mail (provided confirmation of
transmission is electronically generated and kept on file by the sending party);
or (iv) one (1) Business Day after deposit with a nationally recognized
overnight delivery service with next day delivery specified, in each case,
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    If to the
Company:

     

    NACEL
Energy Corporation

    9375 E.
Shea Blvd., Suite 100

    Scottsdale,
Arizona 85260

    Telephone: 
(602) 235-0355

    Facsimile: 
(602) 235-0355

    Attention: 
Chief Executive Officer

     

    With a
copy (for informational purposes only) to:

     

    Allen
& Vellone, P.C.

    1600
Stout Street, Suite 1100

    Denver,
Colorado 80202

    Telephone:
(303) 534-4499

    Facsimile:
(303) 893-8332

    Attention:
Patrick J. Russell, Esq.

     

    If to the
Transfer Agent:

     

    Island
Stock Transfer

    100
Second Avenue South, Suite 705S

    St.
Petersburg, FL 33701

    Telephone:
(727) 289-0010

    Facsimile:
(727) 286-0069

    Attention:
Olessia Kurtskaia

     

    If to
Legal Counsel:

     

    Greenberg
Traurig, LLP

    77 W.
Wacker Drive, Suite 3100

    Chicago,
Illinois 60601

    Telephone:
(312) 456-8400

    Facsimile:
(312) 456-8435

    Attention: 
Peter H. Lieberman, Esq.

    Todd A.
Mazur, Esq.

     

    If to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached to the Securities Purchase Agreement, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers, or to such other address
and/or facsimile number and/or to the attention of such other Person as the
recipient party has specified by written notice given to each other party five
(5) days prior to the effectiveness of such change, provided that Greenberg
Traurig, LLP shall only be provided notices sent to Iroquois. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine or electronic mail transmission containing the
time, date, recipient facsimile number or electronic mail address and an image
of the first page of such transmission or (C) provided by a courier or overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    (c)       Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof. The Company and each Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party hereto shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement by any other party hereto 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), this being
in addition to any other remedy to which any party may be entitled by law or
equity.

     

    (d)       The
parties hereby agree that pursuant to 735 Illinois Compiled Statutes 105/5-5
they have chosen that all questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Illinois, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Illinois or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Illinois. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
Chicago, Illinois, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

     

    (e)        This
Agreement, the other Transaction Documents, the schedules and exhibits attached
hereto and thereto and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto and thereto solely with respect to
the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents, the schedules and
exhibits attached hereto and thereto and the instruments referenced herein and
therein supersede all prior agreements and understandings among the parties
hereto solely with respect to the subject matter hereof and thereof; provided,
however, nothing contained in this Agreement or any other Transaction Document
shall (or shall be deemed to) (i) have any effect on any agreements any Investor
has entered into with the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Investor in the
Company, (ii) waive, alter, modify or amend in any respect any obligations of
the Company or any of its Subsidiaries or any rights of or benefits to any
Investor or any other Person in any agreement entered into prior to the date
hereof between or among the Company and/or any of its Subsidiaries and any
Investor and all such agreements shall continue in full force and effect or
(iii) limit any obligations of the Company under any of the other Transaction
Documents.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    (f)        Subject
to compliance with Section 9 (if applicable), this Agreement shall inure to the
benefit of and be binding upon the permitted successors and assigns of each of
the parties hereto. This Agreement is not for the benefit of, nor may any
provision hereof be enforced by, any Person, other than the parties hereto,
their respective permitted successors and assigns and the Persons referred to in
Sections 6 and 7 hereof.

     

    (g)       The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of
like import shall be construed broadly as if followed by the words “without
limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire
Agreement instead of just the provision in which they are
found.

     

    (h)       This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original
thereof.

     

    (i)        Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

     

    (j)        The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party. Notwithstanding anything to the contrary set forth
in Section 10, terms used in this Agreement but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date in
such other Transaction Documents unless otherwise consented to in writing by
each Investor. Notwithstanding any references to “Buyers” herein, Iroquois and
the Company acknowledge and agree that Iroquois is the only Buyer that is a
party hereto.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    (k)       The
obligations of each Investor under this Agreement and the other Transaction
Documents are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under this Agreement or any other Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as, and the Company acknowledges that the Investors do
not so constitute, a partnership, an association, a joint venture or any other
kind of group or entity, or create a presumption that the Investors are in any
way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters,
and the Company acknowledges that the Investors are not acting in concert or as
a group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by this Agreement or any of the
other the Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained herein was
solely in the control of the Company, not the action or decision of any
Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and an Investor, solely,
and not between the Company and the Investors collectively and not between and
among Investors.

     

    [signature pages follow]

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, Buyer and
the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

     

    
      
        
          
            
              	
                      COMPANY:

                    
	 
      
	
                      NACEL
      ENERGY CORPORATION

                    
	 
      
	
                      By:

                    	
                      

                    
	 
      	
                      Name:
      Murray Fleming

                    
	 
      	
                      Title:
      Director

                    

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, Buyer and
the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

     

    
      
        
          
            
              	
                      BUYER:

                    
	 
      
	
                      IROQUOIS
      MASTER FUND LTD.

                    
	 
	
	
                      By:
      Joshua Silverman, Authorized
Signatory

                    

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    FORM OF NOTICE OF
EFFECTIVENESS

    OF REGISTRATION
STATEMENT

    

    ________________________

    ________________________

    ________________________

    Attention:
_______________

     

    Re:    NACEL
Energy Corporation

     

    Ladies
and Gentlemen:

     

    [We are]
[I am] counsel to NACEL Energy Corporation, a Wyoming corporation (the “Company”),
and have represented the Company in connection with that certain
Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into by and among the
Company and the buyers named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders secured
convertible notes (the “Notes”)
convertible into the Company’s shares of common stock, $0,001 par
value per share (the “Common Stock”), and warrants exercisable for
shares of Common Stock (the “Warrants”). Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders (the “Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the shares of Common Stock
issuable upon conversion of the Notes and exercise of the Warrants, under the
Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s
obligations under the Registration Rights Agreement, on ___________ ___, 20__,
the Company filed a Registration Statement on Form S-l (File No.
333-___________) (the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable
Securities which names each of the Holders as a selling stockholder
thereunder.

     

    In
connection with the foregoing, [we][I] advise you that a member of the SEC’s
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.

     

    This
letter shall serve as our standing opinion to you that the shares of Common
Stock underlying the Notes and Warrants are freely transferable by the Holders
pursuant to the Registration Statement. You need not require further letters
from us to effect any future legend-free issuance or reissuance of such shares
of Common Stock to the Holders as contemplated by the Company’s Irrevocable
Transfer Agent Instructions dated ___________________ __, 20__.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          	
                  Very
      truly yours,

                
	 
      
	
                  [ISSUER’S
      COUNSEL]

                
	 
      
	
                  By:

                	 
      

        

      

    

    

    CC:    [LIST NAMES OF
HOLDERS]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
B

     

    SELLING
STOCKHOLDERS

     

    The
shares of common stock being offered by the selling stockholders are those
issuable to the selling stockholders upon conversion of the notes and exercise
of the warrants. For additional information regarding the issuance of the notes
and the warrants, see “Private Placement of Notes and Warrants” above. We are
registering the shares of common stock in order to permit the selling
stockholders to offer the shares for resale from time to time. Except for the
ownership of the notes and the warrants issued pursuant to the Securities
Purchase Agreement, the selling stockholders have not had any material
relationship with us within the past three years.

     

    The table
below lists the selling stockholders and other information regarding the
beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
the shares of common stock held by each of the selling stockholders. The second
column lists the number of shares of common stock beneficially owned by the
selling stockholders, based on their respective ownership of shares of
common
stock, notes and warrants, as of ___________, 2009, assuming conversion of the
notes and exercise
of the warrants held by each such selling stockholder on that date but taking
account of any limitations on conversion and exercise set forth
therein.

     

    The third
column lists the shares of common stock being offered by this prospectus by the
selling stockholders and does not take in account any limitations on (i)
conversion of the notes set forth therein or (ii) exercise of the warrants set
forth therein.

     

    In
accordance with the terms of a registration rights agreement with the holders of
the notes and the warrants, this prospectus generally covers the resale of 133%
of the sum of (i) the maximum number of shares of common stock issuable upon
conversion of the notes and (ii) the maximum number of shares of common stock
issuable upon exercise of the warrants, in each case, determined as if the
outstanding notes and warrants were converted or exercised (as the case may be)
in full (without regard to any limitations on conversion or exercise contained
therein) as of the trading day immediately preceding the date this registration
statement was initially filed with the SEC. Because the conversion price of the
notes and the exercise price of the warrants may be adjusted, the number of
shares that will actually be issued may be more or less than the number of
shares being offered by this prospectus. The fourth column assumes the sale of
all of the shares offered by the selling stockholders pursuant to this
prospectus.

     

    Under the
terms of the notes and the warrants, a selling stockholder may not convert the
notes or exercise the warrants to the extent (but only to the extent) such
selling stockholder or any of its affiliates would beneficially own a number of
shares of our common stock which would exceed 4.9% (as applicable). The number
of shares in the second column reflects these limitations. The selling
stockholders may sell all, some or none of their shares in this offering. See
“Plan of Distribution.”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              	
                      Name of Selling Stockholder

                    	 
      	
                      Number of Shares of

                      Common Stock Owned

                      Prior to Offering

                    	 
      	
                      Maximum Number of

                      Shares of Common Stock to

                      be Sold Pursuant to this

                      Prospectus

                    	 
      	
                      Number of Shares of

                      Common Stock of Owned

                      After Offering

                    	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Iroquois
      Master Fund Ltd.

                    	 
      	 
      	 
      	 
      	 
      	 
      	 
      

            

          

        

      

    

    

    (1)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    PLAN
OF DISTRIBUTION

     

    We are
registering the shares of common stock issuable upon conversion of the notes and
exercise of the warrants to permit the resale of these shares of common stock by
the holders of the notes and warrants from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by the selling
stockholders of the shares of common stock. We will bear all fees and expenses
incident to our obligation to register the shares of common stock.

     

    The
selling stockholders may sell all or a portion of the shares of common stock
held by them and offered hereby from time to time directly or through one or
more underwriters, broker-dealers or agents. If the shares of common stock are
sold through underwriters or broker-dealers, the selling stockholders will be
responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,
pursuant to one or more of the following methods:

     

    
      	
               
      

            	
              ●

            	
              on
      any national securities exchange or quotation service on which the
      securities may be listed or quoted at the time of
  sale;

            

    

     

    
      	 	
                    
                ● 

              

            	
              in
      the over-the-counter market;

            

    

     

    
      	
               
      

            	
                    
                ●

              

            	
              in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

            

    

     

    
      	
               
      

            	
                    
                ●

              

            	
              through
      the writing or settlement of options, whether such options are listed on
      an options exchange or otherwise;

            

    

     

    
      	
               
      

            	
                    
                ●

              

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

     

    
      	
               
      

            	
                    
                ●

              

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

     

    
      	
               
      

            	
                    
                ●

              

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

     

    
      	 	
                    
                ●

              

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	 	
                    
                ●

              

            	
              privately
      negotiated transactions;

            

    

     

    
      	
               
      

            	
                    
                ●

              

            	
              short
      sales made after the date the Registration Statement is declared effective
      by the SEC;

            

    

     

    
      	
               
      

            	
                    
                ●

              

            	
              broker-dealers
      may agree with the selling securityholders to sell a specified number of
      such shares at a stipulated price per
share;

            

    

     

    
      	 	
                    
                ●

              

            	
              a
      combination of any such methods of sale;
and

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
            	
                    
                ●

              

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
selling stockholders may also sell shares of common stock under Rule 144
promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. In addition, the selling stockholders may transfer
the shares of common stock by other means not described in this prospectus. If
the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of
the shares of common stock or otherwise, the selling stockholders may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions they
assume. The selling stockholders may also sell shares of common stock short and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales. The
selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.

     

    The
selling stockholders may pledge or grant a security interest in some or all of
the notes, warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending, if necessary, the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus. The selling stockholders
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this
prospectus.

     

    To the
extent required by the Securities Act and the rules and regulations thereunder,
the selling stockholders and any broker-dealer participating in the distribution
of the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular
offering of the shares of common stock is made, a prospectus supplement, if
required, will be distributed, which will set forth the aggregate amount of
shares of common stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling stockholders and any
discounts, commissions or concessions allowed or re-allowed or paid to
broker-dealers.

     

    Under the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied
with.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    There can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which this
prospectus forms a part.

     

    The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common stock
by the selling stockholders and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
the distribution of the shares of common stock to engage in market-making
activities with respect to the shares of common stock. All of the foregoing may
affect the marketability of the shares of common stock and the ability of any
person or entity to engage in market-making activities with respect to the
shares of common stock.

     

    We will
pay all expenses of the registration of the shares of common stock pursuant to
the registration rights agreement, estimated to be $[   ] in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or “blue sky” laws; provided,
however, a selling stockholder will pay all underwriting discounts and selling
commissions, if any. We will indemnify the selling stockholders against
liabilities, including some liabilities under the Securities Act in accordance
with the registration rights agreements or the selling stockholders will be
entitled to contribution. We may be indemnified by the selling stockholders
against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreements or we may be entitled to
contribution.

     

    Once sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.SECURITY
AGREEMENT

       

      This
SECURITY AGREEMENT (this
“Agreement”), dated as of November 23rd, 2009, is made
by and among the grantors listed on the signature pages hereof (collectively,
jointly and severally, the “Grantors” and each, individually,
a “Grantor”), and the secured parties
listed on the signature pages hereof (collectively, the “Secured Parties” and each, individually,
a “Secured Party”).

       

      RECITALS

       

      WHEREAS, pursuant to that
certain Securities Purchase Agreement, dated as of November 23, 2009 (as
amended, restated, supplemented, or otherwise modified from time to time,
including all schedules thereto, collectively, the “Securities Purchase
Agreement”), by
and among NACEL Energy Corporation, a Wyoming corporation (“Parent”), and each of the Secured
Parties, Parent has agreed to sell, and each of the Secured Parties have agreed
to purchase, severally and not jointly, certain Notes and Warrants;
and

       

      WHEREAS, each Grantor other
than Parent is a direct or indirect wholly-owned Subsidiary (as defined below)
of Parent and will receive direct and substantial benefits from the purchase by
each of the Secured Parties of the Notes and Warrants; and

       

      WHEREAS, in order to induce
the Secured Parties to purchase, severally and not jointly, the Notes and
Warrants as provided for in the Securities Purchase Agreement, Grantors have
agreed to grant a continuing security interest in and to the Collateral in order
to secure the prompt and complete payment, observance and performance of the
Secured Obligations.

       

      AGREEMENTS

       

      NOW, THEREFORE, for and in
consideration of the recitals made above and other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

       

      1.     Defined Terms. All
capitalized terms used herein (including in the preamble and recitals hereof)
without definition shall have the meanings ascribed thereto in the Notes. Any
terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein or in the
Notes; provided, however, if the Code
is used to define any term used herein and if such term is defined differently
in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern. In addition to those terms defined elsewhere
in this Agreement, as used in this Agreement, the following terms shall have the
following meanings:

       

      (a)         “Account” means an account (as
that term is defined in the Code).

       

      (b)         “Account Debtor” means an account debtor
(as that term is defined in the Code).

       

      (c)         “Bankruptcy Code” means title 11 of the
United States Code, as in effect from time to time.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      (d)         “Books” means books and records
(including, without limitation, each Grantor’s Records) indicating, summarizing,
or evidencing each Grantor’s assets (including the Collateral) or liabilities,
each Grantor’s Records relating to its business operations (including, without
limitation, stock ledgers) or financial condition, and each Grantor’s goods or
General Intangibles related to such information.

       

      (e)     
   “Chattel
Paper” means
chattel paper (as that term is defined in the Code) and includes tangible
chattel paper and electronic chattel paper.

       

      (f)          “Code” means the Illinois
Uniform Commercial Code, as in effect from time to time; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection, priority, or remedies with respect to any Secured Party’s Lien on
any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of Illinois, the term “Code” shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies.

       

      (g)        “Collateral” has the meaning
specified therefor in Section 2.

       

      (h)         “Commencement Notice” means a written notice,
given by any Secured Party to the other Secured Parties in accordance with the
notice provisions set forth in the Securities Purchase Agreement, pursuant to
which such Secured Party notifies the other Secured Parties of the existence of
one or more Events of Default and of such Secured Party’s intent to commence the
exercise of one or more of the remedies provided for under this Agreement with
respect to all or any portion of the Collateral as a consequence thereof, which
notice shall incorporate a reasonably detailed description of each Event of
Default then existing and of the remedial action proposed to be
taken.

       

      (i)          “Commercial Tort Claims” means commercial tort
claims (as that term is defined in the Code), and includes those commercial tort
claims listed on Schedule
1 attached hereto.

       

      (j)      
  “Control
Agreement” means a control
agreement, in form and substance satisfactory to Secured Parties, executed and
delivered by a Grantor, one or more Secured Parties, and the applicable
securities intermediary (with respect to a Securities Account) or bank (with
respect to a Deposit Account), as amended, restated, supplemented, or otherwise
modified from time to time.

       

      (k)      
  “Copyrights” means all copyrights and
copyright registrations, and also includes (i) the copyright registrations and
recordings thereof and all applications in connection therewith listed on Schedule
2 attached
hereto and made a part hereof, (ii) all reissues, continuations, extensions or
renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iv) the right to sue for
past, present and future infringements and dilutions thereof, (v) the goodwill
of each Grantor’s business symbolized by the foregoing or connected therewith,
and (vi) all of each Grantor’s rights corresponding thereto throughout the
world.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      (1)     
   “Copyright
Security Agreement” means each Copyright
Security Agreement among Grantors, or any of them, and Secured Parties, in
substantially the form of Exhibit
A attached
hereto, pursuant to which Grantors have granted to each Secured Party a security
interest in all their respective Copyrights, as amended, restated, supplemented,
or otherwise modified from time to time.

       

      (m)      
 “Deposit
Account” means a deposit account
(as that term is defined in the Code).

       

      (n)    
   “Equipment” means equipment (as that
term is defined in the Code).

       

      (o)     
   “Event of
Default” has
the meaning specified therefor in the Notes.

       

      (p)       
“General
Intangibles” means general
intangibles (as that term is defined in the Code) and, in any event, includes
payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill
(including the goodwill associated with any Trademark, Patent, or Copyright),
Patents, Trademarks, Copyrights, URLs and domain names, industrial designs,
other industrial or Intellectual Property or rights therein or applications
therefor, whether under license or otherwise, programs, programming materials,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, including Intellectual Property Licenses,
infringement claims, computer programs, information contained on computer disks
or tapes, software, literature, reports, catalogs, pension plan refunds, pension
plan refund claims, insurance premium rebates, tax refunds, and tax refund
claims, interests in a partnership or limited liability company which do not
constitute a security under Article 8 of the Code, and any other personal
property other than Commercial Tort Claims, money, Accounts, Chattel Paper,
Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and
oil, gas, or other minerals before extraction.

       

      (q)      
“Governmental
Authority” means any domestic or
foreign federal, state, local, or other governmental or administrative body,
instrumentality, board, department, or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.

       

      (r)         “Guaranties” means each Guaranty
dated of even date herewith executed by Guarantors in favor of any or all of the
Secured Parties, together with any other guaranty or similar agreement now or
hereafter executed by a Guarantor in favor of any or all of the Secured Parties
in connection with the Notes or any of the other Transaction Documents, as
amended, restated, supplemented, or otherwise modified from time to
time.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      (s)         “Guarantor” means each Grantor,
other than Parent, and each other Person that now or hereafter executes a
Guaranty.

       

      (t)         “Insolvency Proceeding” means any proceeding
commenced by or against any Person under any provision of the Bankruptcy Code or
under any other state or federal bankruptcy or insolvency law or any equivalent
laws in any other jurisdiction, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar
relief.

       

      (u)         “Intellectual Property” means Patents,
Copyrights, Trademarks, the goodwill associated with such Trademarks, trade
secrets and customer lists, and Intellectual Property Licenses.

       

      (v)         “Intellectual Property
Licenses” means rights under or
interests in any patent, trademark, copyright or other intellectual property,
including software license agreements with any other party, whether the
applicable Grantor is a licensee or licensor under any such license agreement,
including the license agreements listed on Schedule
3
attached hereto and made a part hereof, as amended, restated,
supplemented, or otherwise modified from time to time.

       

      (w)         “Inventory” means inventory (as that
term is defined in the Code).

       

      (x)         “Investment Related
Property” means (i) investment
property (as that term is defined in the Code), and (ii) all of the following
(regardless of whether classified as investment property under the Code): all
Pledged Interests, Pledged Operating Agreements, and Pledged Partnership
Agreements.

       

      (y)         “Lien” has the meaning
specified therefor in the Notes.

       

      (z)         “Negotiable Collateral” means letters of credit,
letter-of-credit rights, instruments, promissory notes, drafts, and
documents.

       

      (aa)       “New Subsidiary” has the meaning
specified therefor in the Notes.

       

      (bb)      “Notes” has the meaning
specified therefor in the Securities Purchase Agreement.

       

      (cc)     
“Patents” means all patents and
patent applications, and also includes (i) the patents and patent applications
listed on Schedule
4 attached
hereto and made a part hereof, (ii) all renewals thereof, (iii) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
or dilutions thereof, (iv) the right to sue for past, present and future
infringements and dilutions thereof, and (v) all of each Grantor’s rights
corresponding thereto throughout the world.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      (dd)     
“Patent Security
Agreement” means each Patent
Security Agreement among Grantors and Secured Parties in substantially the form
of Exhibit
B attached
hereto, pursuant to which Grantors have granted to each Secured Party a security
interest in all their respective Patents, as amended, restated, supplemented, or
otherwise modified from time to time.

       

      (ee)      
“Permitted Liens” has the meaning
specified therefor in the Notes.

       

      (ff)       
“Permitted Secured
Party” means, with respect to
the exercise of any remedy provided for under this Agreement, any Secured Party
that has delivered a Commencement Notice with respect to the exercise of such
remedy to the other Secured Parties and has not received a Veto Notice with
respect thereto within the Veto Period; provided, however, there shall
only be a single Permitted Secured Party that may exercise any specific remedy
at any one time (it being agreed that if a Commencement Notice is delivered by
more than one Secured Party with respect to any remedy provided for under this
Agreement, then the first Secured Party to deliver a Commencement Notice and not
receive a Veto Notice within the Veto Period shall be the only Secured Party
that may exercise such remedy).

       

      (gg)      “Person” has the meaning
specified therefor in the Securities Purchase Agreement.

       

      (hh)    
 “Pledged
Companies” means, each Person
listed on Schedule
5 hereto as
a “Pledged Company,” together with each other Person all or a portion of whose
Stock is acquired or otherwise owned by a Grantor after the date
hereof.

       

      (ii)       
“Pledged Interests” means all of each
Grantor’s right, title and interest in and to all of the Stock now or hereafter
owned by such Grantor, regardless of class or designation, including all
substitutions therefor and replacements thereof, all proceeds thereof and all
rights relating thereto, also including any certificates representing the Stock,
the right to receive any certificates representing any of the Stock, all
warrants, options, share appreciation rights and other rights, contractual or
otherwise, in respect thereof, and the right to receive dividends, distributions
of income, profits, surplus, or other compensation by way of income or
liquidating distributions, in cash or in kind, and cash, instruments, and other
property from time to time received, receivable, or otherwise distributed in
respect of or in addition to, in substitution of, on account of, or in exchange
for any or all of the foregoing.

       

      (jj)       
“Pledged Operating
Agreements” means all of each
Grantor’s rights, powers, and remedies under the limited liability company
operating agreements of each of the Pledged Companies that are limited liability
companies, as amended, restated, supplemented, or otherwise modified from time
to time.

       

      (kk)     
“Pledged Partnership
Agreements” means all of each
Grantor’s rights, powers, and remedies under the partnership agreements of each
of the Pledged Companies that are partnerships, as amended, restated,
supplemented, or otherwise modified from time to time.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      (ll)        
“PPSA” means the Personal
Property Security Act (British Columbia), as in effect from time to
time.

       

      (mm)   
 “Proceeds” has the meaning
specified therefor in Section 2.

       

      (nn)     
“Real Property” means any estates or
interests in real property now owned or hereafter acquired by any Grantor and
the improvements thereto.

       

      (oo)     
“Records” means information that
is inscribed on a tangible medium or which is stored in an electronic or other
medium and is retrievable in perceivable form.

       

      (pp)     
“Secured
Obligations” mean all of the present
and future payment and performance obligations of Grantors arising under this
Agreement, the Notes, the Guaranties, and the other Transaction Documents,
including, without duplication, reasonable attorneys’ fees and expenses and any
interest, fees, or expenses that accrue after the filing of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any Insolvency Proceeding.

       

      (qq)     
“Securities
Account” means a securities
account (as that term is defined in the Code).

       

      (rr)       
“Security
Documents” means, collectively,
this Agreement, each Copyright Security Agreement, each Patent Security
Agreement, each Trademark Security Agreement, each Control Agreement, and each
other security agreement, pledge agreement, assignment, mortgage, security deed,
deed of trust, and other agreement or document executed and delivered by a
Grantor as security for any of the Secured Obligations, as amended, restated,
supplemented, or otherwise modified from time to time.

       

      (ss)      
“Security Interest” and “Security Interests” have the meanings
specified therefor in Section 2.

       

      (tt)        “Significant Secured
Party” means, on any date of
determination, any Secured Party holding twenty percent (20%) or more of the
aggregate principal amount of Notes outstanding on such date.

       

      (uu)    
 “Stock” means all shares,
options, warrants, interests (including, without limitation, membership and
partnership interests), participations, or other equivalents (regardless of how
designated) of or in a Person, whether voting or nonvoting, including common
stock, preferred stock, or any other “equity security” (as such term is defined
in Rule 3al 1-1 of the General Rules and Regulations promulgated by the United
States Securities and Exchange Commission and any successor thereto under the
Securities Exchange Act of 1934, as in effect from time to time).

       

      (vv)    
 “Subsidiaries” and “Subsidiary” each have the meanings
specified therefor in the Notes.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      (ww)    
“Supporting
Obligations” means supporting
obligations (as such term is defined in the Code).

       

      (xx)       “Trademarks” means all trademarks,
trade names, trademark applications, service marks, service mark applications,
and also includes (i) the trade names, trademarks, trademark applications,
service marks, and service mark applications listed on Schedule
6 attached
hereto and made a part hereof, and (ii) all renewals thereof, (iii) all
income, royalties, damages and payments now and hereafter due or payable under
and with respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
or dilutions thereof, (iv) the
right to sue for past, present and future infringements and dilutions thereof,
(v) the goodwill of each Grantor’s business symbolized by the foregoing or
connected therewith, and (vi) all of each Grantor’s rights corresponding thereto
throughout the world.

       

      (yy)     
“Trademark Security
Agreement” means each Trademark
Security Agreement among Grantors and Secured Parties in substantially the form
of Exhibit C attached hereto,
pursuant to which Grantors have granted to each Secured Party a security
interest in all their respective Trademarks.

       

      (zz)      
 “Transaction
Documents” has the meaning
specified therefor in the Securities Purchase Agreement.

       

      (aaa)   
 “URL” means “uniform resource
locator,” an internet web address.

       

      (bbb)  
“Veto Notice” means, with respect to
any Commencement Notice, a written notice given by any Significant Secured Party
to the other Secured Parties in accordance with the notice provisions set forth
in the Securities Purchase Agreement pursuant to which such Significant Secured
Party notifies the other Secured Parties of its objection to the commencement of
the remedial action specified in such Commencement Notice and certifies that, to
the best of its knowledge, it is a Significant Secured Party.

       

      (ccc)    
“Veto Period” means, with respect to
any Commencement Notice, the period of ten (10) consecutive calendar days
following the delivery of such Commencement Notice to the Secured
Parties.

       

      (ddd)   
“Warrants” has the meaning
specified therefor in the Securities Purchase Agreement.

       

      2.            
Grant of
Security. Each Grantor hereby unconditionally grants, assigns, and
pledges to each Secured Party a separate, continuing security interest (each, a
“Security Interest” and, collectively, the
“Security
Interests”) in all assets of such
Grantor (other than Real Property) whether now owned or hereafter acquired or
arising and wherever located (collectively, the “Collateral”), including, without limitation, such
Grantor’s right, title, and interest in and to the following, whether now owned
or hereafter acquired or arising and wherever located:

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      (a)        all
of such Grantor’s Accounts;

       

      (b)        all
of such Grantor’s Books;

       

      (c)        all
of such Grantor’s Chattel Paper;

       

      (d)        all
of such Grantor’s Deposit Accounts;

       

      (e)        all
of such Grantor’s Equipment and fixtures;

       

      (f)         all
of such Grantor’s General Intangibles;

       

      (g)        all
of such Grantor’s Inventory;

       

      (h)        all
of such Grantor’s Investment Related Property;

       

      (i)         all
of such Grantor’s Negotiable Collateral;

       

      (j)         all
of such Grantor’s rights in respect of Supporting Obligations;

       

      (k)    
   all of such Grantor’s Commercial Tort Claims;

       

      (l)        
all of such Grantor’s money, cash, cash equivalents, or other assets of each
such Grantor that now or hereafter come into the possession, custody, or control
of any Secured Party;

       

      (m)      
all of the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance or Commercial Tort Claims covering or
relating to any or all of the foregoing, and any and all Accounts, Books,
Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory,
Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease,
license, exchange, collection, or other disposition of any of the foregoing, the
proceeds of any award in condemnation with respect to any of the foregoing, any
rebates or refunds, whether for taxes or otherwise, and all proceeds of any such
proceeds, or any portion thereof or interest therein, and the proceeds thereof,
and all proceeds of any loss of, damage to, or destruction of the above, whether
insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or
otherwise with respect to any of the foregoing (the “Proceeds”). Without limiting the
generality of the foregoing, the term “Proceeds” includes whatever is receivable
or received when Investment Related Property or proceeds are sold, exchanged,
collected, or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes proceeds of any indemnity or guaranty payable to any
Grantor or any Secured Party from time to time with respect to any of the
Investment Related Property.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      3.       Security for
Obligations. This Agreement and the Security Interests created hereby
secure the payment and performance of the Secured Obligations, whether now
existing or arising hereafter. Without limiting the generality of the foregoing,
this Agreement secures the payment of all amounts which constitute part of the
Secured Obligations and would be owed by Grantors, or any of them, to Secured
Parties, or any of them, but for the fact that they are unenforceable or not
allowable due to the existence of an Insolvency Proceeding involving any
Grantor.

       

      4.           Grantors Remain
Liable. Anything herein to the contrary notwithstanding, (a) each of the
Grantors shall remain liable under the contracts and agreements included in the
Collateral, including the Pledged Operating Agreements and the Pledged
Partnership Agreements, to perform all of the duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by Secured Parties, or any of them, of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under such contracts
and agreements included in the Collateral, and (c) no Secured Party shall have
any obligation or liability under such contracts and agreements included in the
Collateral by reason of this Agreement, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder. Until
an Event of Default shall occur and be continuing, except as otherwise provided
in this Agreement or any other Transaction Document, Grantors shall have the
right to possession and enjoyment of the Collateral for the purpose of
conducting the ordinary course of their respective businesses, subject to and
upon the terms hereof and the other Transaction Documents. Without limiting the
generality of the foregoing, it is the intention of the parties hereto that
record and beneficial ownership of the Pledged Interests, including all voting,
consensual, and dividend rights, shall remain in the applicable Grantor until
the occurrence of an Event of Default and until any Secured Party shall notify
the applicable Grantor of such Secured Party’s exercise of voting, consensual,
or dividend rights with respect to the Pledged Interests pursuant to Section 15
hereof.

       

      5.           Representations and
Warranties. Each Grantor hereby represents and warrants as
follows:

       

      (a)         The
exact legal name of each of the Grantors is set forth on the signature pages of
this Agreement.

       

      (b)        Schedule
7 attached
hereto sets forth (i) all Real Property owned or leased by Grantors, together
with all other locations of Collateral, as of the date hereof, and (ii) the
chief executive office of each Grantor as of the date hereof.

       

      (c)        As
of the date hereof, no Grantor has any interest in, or title to, any Copyrights,
Intellectual Property Licenses, Patents, or Trademarks except as set forth on
Schedules
2, 3, 4 and
6, respectively,
attached hereto. This Agreement is effective to create a valid and continuing
Lien on such Copyrights, Intellectual Property Licenses, Patents and Trademarks
and, upon filing of the Copyright Security Agreement with the United States
Copyright Office and filing of the Patent Security Agreement and the Trademark
Security Agreement with the United States Patent and Trademark Office, and the
filing of appropriate financing statements in the jurisdictions listed on Schedule
8 hereto, all action necessary or desirable to protect and perfect the
Security Interests in and to each Grantor’s Patents, Trademarks, or Copyrights
has been taken and such perfected Security Interests are enforceable as such as
against any and all creditors of and purchasers from any Grantor. No Grantor has
any interest in any Copyright that is necessary in connection with the operation
of such Grantor’s business, except for those Copyrights identified on Schedule
2 attached
hereto which have been registered with the United States Copyright
Office.

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      (d)        This
Agreement creates a valid security interest in all of the Collateral of each
Grantor, to the extent a security interest therein can be created under the Code
or the PPSA, as applicable, securing the payment of the Secured Obligations.
Except to the extent a security interest in the Collateral cannot be perfected
by the filing of a financing statement under the Code or the PPSA, all filings
and other actions necessary or desirable to perfect and protect such security
interest have been duly taken or will have been taken upon the filing of
financing statements listing each applicable Grantor, as a debtor, and Secured
Parties, as secured parties, in the jurisdictions listed next to such Grantor’s
name on Schedule
8 attached
hereto. Upon the making of such filings, Secured Parties shall each have a first
priority perfected security interest in all of the Collateral of each Grantor to
the extent such security interest can be perfected by the filing of a financing
statement. All action by any Grantor necessary to protect and perfect such
security interest on each item of Collateral has been duly taken.

       

      (e)       
 (i) Except for the Security Interests created hereby, such Grantor is and
will at all times be the sole holder of record and the legal and beneficial
owner, free and clear of all Liens other than Permitted Liens, of the Pledged
Interests indicated on Schedule
5 as being
owned by such Grantor and, when acquired by such Grantor, any Pledged Interests
acquired after the date hereof; (ii) all of the Pledged Interests are duly
authorized, validly issued, fully paid and nonassessable and the Pledged
Interests constitute or will constitute the percentage of the issued and
outstanding Stock of the Pledged Companies of such Grantor identified on Schedule
5 hereto;
(iii) such Grantor has the right and requisite authority to pledge all
Investment Related Property pledged by such Grantor to each Secured Party as
provided herein; (iv) all actions necessary or desirable to perfect, establish
the first priority of, or otherwise protect, Secured Parties’ respective Liens
in the Investment Related Property pledged hereunder, and the proceeds thereof,
have been duly taken, (A) upon the execution and delivery of this Agreement; (B)
upon the taking of possession by any Secured Party of any certificates
constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated powers endorsed in blank by
the applicable Grantor; (C) upon the filing of financing statements in the
applicable jurisdiction set forth on Schedule
8 attached hereto for such Grantor with respect to the Pledged Interests
of such Grantor that are not represented by certificates, and (D) with respect
to any Securities Accounts, upon the delivery of Control Agreements with respect
thereto; and (v) each Grantor has delivered to and deposited with any Secured
Party (or, with respect to any Pledged Interests created or obtained after the
date hereof, will deliver and deposit in accordance with Sections 6(a) and 8
hereof) all certificates representing the Pledged Interests now or hereafter
owned by such Grantor to the extent such Pledged Interests are represented by
certificates, and undated powers endorsed in blank with respect to such
certificates. None of the Pledged Interests owned or held by such Grantor has
been issued or transferred in violation of any securities registration,
securities disclosure, or similar laws of any jurisdiction to which such
issuance or transfer may be subject.

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      (f)        No
consent, approval, authorization, or other order or other action by, and no
notice to or filing with, any Governmental Authority or any other Person is
required (i) for the grant of a Security Interest by such Grantor in and to the
Collateral pursuant to this Agreement or for the execution, delivery, or
performance of this Agreement by such Grantor, or (ii) for the exercise by any
Secured Party of the voting or other rights provided in this Agreement with
respect to Investment Related Property pledged hereunder or the remedies in
respect of the Collateral pursuant to this Agreement, except (A) as may be
required in connection with such disposition of Investment Related Property by
laws affecting the offering and sale of securities generally and (B) for any
consent that may be required for the assignment of any Intellectual Property
License that expressly provides that such Intellectual Property License is not
assignable (or is not assignable without the consent of the other party to such
Intellectual Property License).

       

      6.           
Covenants. Each
Grantor, jointly and severally, covenants and agrees with each Secured Party
that from and after the date of this Agreement and until the date of termination
of this Agreement in accordance with Section 24 hereof (but only to the extent
the particular assets described in this Section 6 constitute Collateral
hereunder):

       

      (a)       Possession of
Collateral. In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral, Investment Related Property,
or Chattel Paper, and if and to the extent that perfection or priority of
Secured Parties’ respective Security Interests is dependent on or enhanced by
possession, the applicable Grantor, immediately upon the request of any Secured
Party, shall execute such other documents and instruments as shall be requested
by such Secured Party or, if applicable, endorse and deliver physical possession
of such Negotiable Collateral, Investment Related Property, or Chattel Paper to
such Secured Party, together with such undated powers endorsed in blank as shall
be requested by such Secured Party.

       

      (b)       Chattel
Paper.

       

      (i)       Each
Grantor shall take all steps reasonably necessary to grant each Secured Party
control of all Chattel Paper in accordance with the Code and the PPSA and all
“transferable records” as that term is defined in Section 16 of the Uniform
Electronic Purchase Act and Section 201 of the federal Electronic Signatures in
Global and National Commerce Act as in effect in any relevant jurisdiction;
and

       

      (ii)      If
any Grantor retains possession of any Chattel Paper or instruments (which
retention of possession shall be subject to the extent permitted hereby and by
the Securities Purchase Agreement), promptly upon the request of any Secured
Party, such Chattel Paper and instruments shall be marked with the following
legend: “This writing and the obligations evidenced or secured hereby are
subject to the Security Interests of [names of Secured
Parties].”

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      (c)       Control
Agreements.

       

      (i)             Each
Grantor shall obtain an authenticated Control Agreement from each bank
maintaining a Deposit Account for such Grantor; and

       

      (ii)             Upon
request of any Secured Party, each Grantor shall obtain authenticated Control
Agreements from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for such Grantor.

       

      (d)       Letter-of-Credit
Rights. Each Grantor that is or becomes the beneficiary of a letter of
credit shall promptly (and in any event within 2 Business Days after becoming a
beneficiary) notify Secured Parties thereof and, upon the request by any Secured
Party, enter into a multi-party agreement with Secured Parties and the issuing
or confirming bank with respect to letter-of-credit rights assigning such
letter-of-credit rights to Secured Parties and directing all payments thereunder
to Secured Parties, all in form and substance satisfactory to Secured
Parties.

       

      (e)        Commercial Tort
Claims. Each Grantor shall promptly (and in any event within 2 Business
Days of receipt thereof) notify Secured Parties in writing upon incurring or
otherwise obtaining a Commercial Tort Claim after the date hereof and, upon
request of any Secured Party, promptly amend Schedule
1 to this
Agreement to describe such after-acquired Commercial Tort Claim in a manner that
reasonably identifies such Commercial Tort Claim, and hereby authorizes the
filing of additional financing statements or amendments to existing financing
statements describing such Commercial Tort Claims, and agrees to do such other
acts or things deemed necessary or desirable by any Secured Party to give
Secured Parties a first priority, perfected security interest in any such
Commercial Tort Claim.

       

      (f)        Government Contracts.
If any Account or Chattel Paper arises out of a contract or contracts with the
United States of America, the federal or any provincial government of Canada, or
any department, agency, or instrumentality thereof, Grantors shall promptly (and
in any event within 2 Business Days of the creation thereof) notify Secured
Parties thereof in writing and execute any instruments or take any steps
reasonably required by any Secured Party in order that all moneys due or to
become due under such contract or contracts shall be assigned to Secured
Parties, and shall provide written notice thereof and take all other appropriate
actions under the Assignment of Claims Act or other applicable law to provide
each Secured Party a first-priority perfected security interest in such
contract.

       

      (g)       Intellectual
Property.

       

      (i)            Upon request of any Secured Party, in
order to facilitate filings with the United States Patent and Trademark Office
and the United States Copyright Office or any other applicable Governmental
Authority, each Grantor shall execute and deliver to Secured Parties one or more
Copyright Security Agreements, Trademark Security Agreements, or Patent Security
Agreements to further
evidence Secured Parties’ respective Liens on such Grantor’s Copyrights,
Trademarks or Patents.

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      (ii)            Each
Grantor shall have the duty (A) to promptly sue for infringement,
misappropriation, or dilution with respect to its rights in Intellectual
Property and to recover any and all damages for such infringement,
misappropriation, or dilution, (B) to prosecute diligently any trademark
application or service mark application that is part of the Trademarks pending
as of the date hereof or hereafter until the termination of this Agreement, (C)
to prosecute diligently any patent application that is part of the Patents
pending as of the date hereof or hereafter until the termination of this
Agreement, and (D) to take all reasonable and necessary action to preserve and
maintain all of each Grantor’s Trademarks, Patents, Copyrights, Intellectual
Property Licenses, and its rights therein, including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings. Each Grantor shall promptly file
an application with the United States Copyright Office for any Copyright that
has not been registered with the United States Copyright Office. Each Grantor
shall promptly file an application with the United States Patent and Trademark
Office for any Patent or Trademark that has not been registered with the United
States Patent and Trademark Office. Any expenses incurred in connection with the
foregoing shall be borne by Grantors. Each Grantor further agrees not to abandon
any Trademark, Patent, Copyright, or Intellectual Property License.

       

      (iii)            Grantors
acknowledge and agree that Secured Parties shall have no duties with respect to
the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without
limiting the generality of this Section 6(g), Grantors acknowledge and agree
that no Secured Party shall be under any obligation to take any steps necessary
to preserve rights in the Trademarks, Patents, Copyrights, or Intellectual
Property Licenses against any other Person, but any Secured Party may do so at
its option from and after the occurrence and during the continuance of an Event
of Default, and all expenses incurred in connection therewith (including fees
and expenses of attorneys and other professionals) shall be for the sole account
of the Grantors and shall be deemed to be Secured Obligations.

       

      (h)       Investment Related
Property.

       

      (i)        If
any Grantor shall receive or become entitled to receive any Pledged Interests
after the date hereof, it shall promptly (and in any event within 2 Business
Days of receipt thereof) identify such Pledged Interests in a written notice to
Secured Parties;

       

      (ii)        All
sums of money and property paid or distributed in respect of the Investment
Related Property pledged hereunder which are received by any Grantor shall be
held by the Grantors in trust for the benefit of Secured Parties segregated from
such Grantor’s other property, and such Grantor shall deliver it forthwith to
the Secured Parties in the exact form received;

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      (iii)       Each
Grantor shall promptly deliver to Secured Parties a copy of each notice or other
communication received by it in respect of any Pledged Interests;

       

      (iv)       No
Grantor shall make or consent to any material amendment or other modification or
waiver with respect to any Pledged Interests, Pledged Operating Agreement, or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests;

       

      (v)        Each
Grantor agrees that it will cooperate with Secured Parties in obtaining all
necessary approvals and making all necessary filings under federal, state,
local, or foreign law in connection with the Security Interests on the
Investment Related Property pledged hereunder or any sale or transfer thereof;
and

       

      (vi)       As
to all limited liability company or partnership interests issued under any
Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor
hereby represents, warrants and covenants that the Pledged Interests issued
pursuant to such agreement (A) are not and shall not be dealt in or traded on
securities exchanges or in securities markets, (B) do not and will not
constitute investment company securities, and (C) are not and will not be held
by such Grantor in a securities account. In addition, none of the Pledged
Operating Agreements, the Pledged Partnership Agreements, or any other
agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide
that such Pledged Interests are securities governed by Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction.

       

      (i)       
Transfers and Other
Liens. Grantors shall not (i) sell, lease, license, assign (by operation
of law or otherwise), transfer or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except as expressly permitted by this
Agreement and the other Transaction Documents, or (ii) create or permit to exist
any Lien upon or with respect to any of the Collateral of any of Grantors,
except for Permitted Liens. The inclusion of Proceeds in the Collateral shall
not be deemed to constitute consent by any Secured Party to any sale or other
disposition of any of the Collateral except as expressly permitted in this
Agreement or the other Transaction Documents. Notwithstanding anything contained
in this Agreement to the contrary, Permitted Liens shall not be permitted with
respect to any Pledged Interests.

       

      (j)       
Preservation of
Existence. Each Grantor shall maintain and preserve its existence, rights
and privileges, and become or remain duly qualified and in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification
necessary.

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      (k)      
 Maintenance of
Properties. Each Grantor shall maintain and preserve all of its
properties which are necessary or useful in the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
or under which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.

       

      (1)      
Maintenance of
Insurance. Each Grantor shall maintain insurance with responsible and
reputable insurance companies or associations (including, without limitation,
comprehensive general liability, hazard, rent and business interruption
insurance) with respect to its properties (including all real properties leased
or owned by it) and business, in such amounts and covering such risks as is
required by any governmental authority having jurisdiction with respect thereto
or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated.

       

      (m)     
Other Actions as to
Any and All Collateral. Each Grantor shall promptly (and in any event
within 2 Business Days of acquiring or obtaining such Collateral) notify Secured
Parties in writing upon (i) acquiring or otherwise obtaining any Collateral
after the date hereof consisting of Trademarks, Patents, registered Copyrights,
Intellectual Property Licenses, Investment Related Property, Chattel Paper
(electronic, tangible or otherwise), documents (as defined in Article 9 of the
Code), promissory notes (as defined in the Code, or instruments (as defined in
the Code) or (ii) any amount payable under or in connection with any of the
Collateral being or becoming evidenced after the date hereof by any Chattel
Paper, documents, promissory notes, or instruments and, in each such case upon
the request of any Secured Party, promptly execute such other documents, or if
applicable, deliver such Chattel Paper, other documents or certificates
evidencing any Investment Related Property and do such other acts or things
deemed necessary or desirable by any Secured Party to protect Secured Parties’
respective Security Interests therein.

       

      7.            Relation to Other
Transaction Documents. The provisions of this Agreement shall be read and
construed with the Transaction Documents referred to below in the manner so
indicated.

       

      (a)       Securities Purchase
Agreement and Notes. In the event of any conflict between any provision
in this Agreement and any provision in the Securities Purchase Agreement or
Notes, such provision of the Securities Purchase Agreement or Notes shall
control, except to the extent the applicable provision in this Agreement is more
restrictive with respect to the rights of Grantors or imposes more burdensome or
additional obligations on Grantors, in which event the applicable provision in
this Agreement shall control.

       

      (b)       Patent, Trademark, Copyright
Security Agreements. The provisions of the Copyright Security Agreements,
Trademark Security Agreements, and Patent Security Agreements are supplemental
to the provisions of this Agreement, and nothing contained in the Copyright
Security Agreements, Trademark Security Agreements or the Patent Security
Agreements shall limit any of the rights or remedies of any Secured Party
hereunder.

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      8.        
   Further
Assurances.

       

      (a)       Each
Grantor agrees that from time to time, at its own expense, such Grantor will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or that any Secured Party may reasonably
request, in order to perfect and protect the Security Interests granted or
purported to be granted hereby or to enable any Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any of the
Collateral.

       

      (b)       Each
Grantor authorizes the filing by any Secured Party of financing or continuation
statements, or amendments thereto, and such Grantor will execute and deliver to
such Secured Party such other instruments or notices, as may be necessary or as
such Secured Party may reasonably request, in order to perfect and preserve the
Security Interests granted or purported to be granted hereby.

       

      (c)       Each
Grantor authorizes any Secured Party at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments (i)
describing the Collateral as “all personal property of debtor” or “all assets of
debtor” or words of similar effect, (ii) describing the Collateral as being of
equal or lesser scope or with greater detail, or (iii) that contain any
information required by part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance. Each Grantor also hereby ratifies any and all
financing statements or amendments previously filed by any Secured Party in any
jurisdiction.

       

      (d)       Each
Grantor acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
filed in connection with this Agreement without the prior written consent of
each Secured Party affected thereby, subject to such Grantor’s rights under
Section 9-509(d)(2) of the Code.

       

      (e)       Each
Grantor shall permit each Secured Party or its employees, accountants, attorneys
or agents, to examine and inspect any Collateral or any other property of such
Grantor at any time during ordinary business hours.

       

      9.       
    Secured Parties’ Right to
Perform Contracts, Exercise Rights, etc. Upon the occurrence and during
the continuance of an Event of Default, any Secured Party (a) may proceed to
perform any and all of the obligations of any Grantor contained in any contract,
lease, or other agreement and exercise any and all rights of any Grantor therein
contained as fully as such Grantor itself could, (b) shall have the right to use
any Grantor’s rights under Intellectual Property Licenses in connection with the
enforcement of the Secured Party’s rights hereunder, including the right to
prepare for sale and sell any and all Inventory and Equipment now or hereafter
owned by any Grantor and now or hereafter covered by such licenses, and (c)
shall have the right to request that any Stock that is pledged hereunder be
registered in the name of such Secured Party or any of its
nominees.

      
        

          
            
               

            

            
              16

              
                

              

            

            
               

            

          

          10.           Secured Parties Appointed
Attorney-in-Fact. Each Grantor, on behalf of itself and each New
Subsidiary of such Grantor, hereby irrevocably appoints each Secured Party as
the attorney-in-fact of such Grantor and each such New Subsidiary. In the event
any Grantor or any New Subsidiary fails to execute or deliver in a timely manner
any Transaction Document or other agreement, document, certificate or instrument
which such Grantor or New Subsidiary now or at any time hereafter is required to
execute or deliver pursuant to the terms of the Securities Purchase Agreement or
any other Transaction Document, each Secured Party shall have full authority in
the place and stead of such Grantor or New Subsidiary, and in the name of such
Grantor, such New Subsidiary or otherwise, to execute and deliver each of the
foregoing. Without limitation of the foregoing, each Secured Party shall have
full authority in the place and stead of each Grantor and each New Subsidiary,
and in the name of any such Grantor, any such New Subsidiary or otherwise, at
such time as an Event of Default has occurred and is continuing, to take any
action and to execute any instrument which such Secured Party may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation:

           

          (a)           to
ask, demand, collect, sue for, recover, compromise, receive and give acquittance
and receipts for moneys due and to become due under or in connection with any
Collateral of such Grantor or New Subsidiary;

           

          (b)           to
receive and open all mail addressed to such Grantor or New Subsidiary and to
notify postal authorities to change the address for the delivery of mail to such
Grantor or New Subsidiary to that of such Secured Party;

           

          (c)           to
receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

           

          (d)           to
file any claims or take any action or institute any proceedings which such
Secured Party may deem necessary or desirable for the collection of any of the
Collateral of such Grantor or New Subsidiary or otherwise to enforce the rights
of any Secured Party with respect to any of the Collateral;

           

          (e)           to
repair, alter, or supply goods, if any, necessary to fulfill in whole or in part
the purchase order of any Person obligated to such Grantor or New Subsidiary in
respect of any Account of such Grantor or New Subsidiary;

           

          (f)           to
use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, customer lists, advertising matter or other industrial or
intellectual property rights, in advertising for sale and selling Inventory and
other Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor or New Subsidiary; and

           

          (g)           such
Secured Party shall have the right, but shall not be obligated, to bring suit in
its own name to enforce the Trademarks, Patents, Copyrights and Intellectual
Property Licenses and, if such Secured Party shall commence any such suit, the
appropriate Grantor or New Subsidiary shall, at the request of such Secured
Party, do any and all lawful acts and execute any and all proper documents
reasonably required by such Secured Party in aid of such
enforcement.

          
            
               

            

            
              17

              
                

              

            

            
               

            

          

           

          To the
extent permitted by law, each Grantor hereby ratifies, for itself and each of
its New Subsidiaries, all that such attorney-in-fact shall lawfully do or cause
to be done by virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable until this Agreement is terminated.

           

          11.            Secured Parties May
Perform. If any Grantor fails to perform any agreement contained herein,
any Secured Party may itself perform, or cause performance of, such agreement,
and the reasonable expenses of such Secured Party incurred in connection
therewith shall be payable, jointly and severally, by Grantors.

           

          12.            Secured Parties’ Duties;
Bailee for Perfection. The powers conferred on Secured Parties hereunder
are solely to protect the Secured Parties’ respective interests in the
Collateral and shall not impose any duty upon any Secured Party in favor of any
Grantor or any other Secured Party to exercise any such powers. Except for the
safe custody of any Collateral in its actual possession and the accounting for
moneys actually received by it hereunder, no Secured Party shall have any duty
to any Grantor or any other Secured Party as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. A Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its actual possession if such Collateral is accorded treatment substantially
equal to that which such Secured Party accords its own property. Each Secured
Party agrees that, with respect to any Collateral at any time or times in its
possession and in which any other Secured Party has a Lien, the Secured Party in
possession of any such Collateral shall be the bailee of each other Secured
Party solely for purposes of perfecting (to the extent not otherwise perfected)
each other Secured Party’s Lien in such Collateral, provided that no Secured
Party shall be obligated to obtain or retain possession of any such Collateral.
Without limiting the generality of the foregoing, Secured Parties and Grantors
hereby agree that any Secured Party that is in possession of any Collateral at
such time as the Secured Obligations owing to such Secured Party have been paid
in full may re-deliver such Collateral to the applicable Grantor or, if
requested by any Secured Party prior to such re-delivery, may deliver such
Collateral (unless otherwise restricted by applicable law or court order and
subject in all events to the receipt of an indemnification of all liabilities
arising from such delivery) to the requesting Secured Party, without recourse to
or representation or warranty by the Secured Party in such
possession.

           

          13.            Collection of Accounts,
General Intangibles and Negotiable Collateral. At any time upon the
occurrence and during the continuation of an Event of Default, any Secured Party
may (a) notify Account Debtors of any Grantor that the Accounts, General
Intangibles, Chattel Paper or Negotiable Collateral have been assigned to such
Secured Party or that such Secured Party has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral
directly, and any collection costs and expenses shall constitute part of the
Secured Obligations.

          
            
               

            

            
              18

              
                

              

            

            
               

            

          

           

          14.           Disposition of Pledged
Interests by Secured Party. None of the Pledged Interests existing as of
the date of this Agreement are, and none of the Pledged Interests hereafter
acquired on the date of acquisition thereof will be, registered or qualified
under the various federal, state or other securities laws of the United States
or any other jurisdiction, and disposition thereof after an Event of Default may
be restricted to one or more private (instead of public) sales in view of the
lack of such registration. Each Grantor understands that in connection with such
disposition, any Secured Party may approach only a restricted number of
potential purchasers and further understands that a sale under such
circumstances may yield a lower price for the Pledged Interests than if the
Pledged Interests were registered and qualified pursuant to federal, state and
other securities laws and sold on the open market. Each Grantor, therefore,
agrees that: (a) if a Secured Party shall, pursuant to the terms of this
Agreement, sell or cause the Pledged Interests or any portion thereof to be sold
at a private sale, such Secured Party shall have the right to rely upon the
advice and opinion of any nationally recognized brokerage or investment firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest or any portion
thereof for sale and as to the best price reasonably obtainable at the private
sale thereof; and (b) such reliance shall be conclusive evidence that such
Secured Party has handled the disposition in a commercially reasonable
manner.

           

          15.           Voting
Rights.

           

          (a)           Upon
the occurrence and during the continuation of an Event of Default, (i) any
Secured Party may, at its option, and with 2 Business Days prior notice to any
Grantor, and in addition to all rights and remedies available to Secured Parties
under any other agreement, at law, in equity, or otherwise, exercise all voting
rights, and all other ownership or consensual rights in respect of the Pledged
Interests owned by such Grantor, but under no circumstances is any Secured Party
obligated by the terms of this Agreement to exercise such rights, and (ii) if
such Secured Party duly exercises its right to vote any of such Pledged
Interests, each Grantor hereby appoints such Secured Party as such Grantor’s
true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged
Interests in any manner that such Secured Party deems advisable for or against
all matters submitted or which may be submitted to a vote of shareholders,
partners or members, as the case may be. The power-of-attorney granted hereby is
coupled with an interest and shall be irrevocable.

           

          (b)           For
so long as any Grantor shall have the right to vote the Pledged Interests owned
by it, such Grantor covenants and agrees that it will not, without the prior
written consent of Secured Parties, vote or take any consensual action with
respect to such Pledged Interests which would materially or adversely affect the
rights of Secured Parties exercising the voting rights owned by such Grantor or
the value of the Pledged Interests.

           

          16.           Remedies. Upon the
occurrence and during the continuance of an Event of Default:

            
              
                 

              

              
                19

                
                  

                

              

              
                 

              

            

          

           

          (a)           Any
Secured Party may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein, in the other Transaction Documents, or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code, the PPSA or any other applicable law. Without limiting
the generality of the foregoing, each Grantor expressly agrees that, in any such
event, any Secured Party without any demand, advertisement, or notice of any
kind (except a notice specified below of time and place of public or private
sale) to or upon any Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or by any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own expense and upon request
of such Secured Party forthwith, assemble all or part of the Collateral as
directed by such Secured Party and make it available to such Secured Party at
one or more locations where such Grantor regularly maintains Inventory, and (ii)
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 of such Secured
Party’s offices or elsewhere, for cash, on credit, and upon such other terms as
such Secured Party may deem commercially reasonable. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at least 10 days notice
to any Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification and
specifically such notice shall constitute a reasonable “authenticated
notification of disposition” within the meaning of Section 9-611 of the Code. No
Secured Party shall be obligated to make any sale of Collateral regardless of
notice of sale having been given. Any 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.

           

          (b)           Any
Secured Party may seek the appointment of a receiver, receiver-manager or keeper
(a “Receiver”) under the laws of Canada
or any province thereof to take possession of all or any portion of the
Collateral or to operate same and, to the maximum extent permitted by law, may
seek the appointment of such a Receiver without the requirement of prior notice
or a hearing. Any such Receiver shall, so far as concerns responsibility for
his/her acts, be deemed agent of the applicable Grantor and not any Secured
Party, and no Secured Party shall be in any way responsible for any misconduct,
negligence or non-feasance on the part of any such Receiver, his/her servants or
employees. Subject to the provisions of the instrument appointing him/her, any
such Receiver shall have power to take possession of Collateral, to preserve
Collateral or its value, to carry on or concur in carrying on all or any part of
the business of the applicable Grantor, and to sell, lease, license or otherwise
dispose of or concur in selling, leasing, licensing or otherwise disposing of
Collateral. To facilitate the foregoing powers, any such Receiver may, to the
exclusion of all others, including Grantors, enter upon, use and occupy all
premises owned or occupied by Grantors wherein Collateral may be situated,
maintain Collateral upon such premises, borrow money on a secured or unsecured
basis, and use Collateral directly in carrying on Grantors’ business or as
security for loans or advances to enable the Receiver to carry on Grantors’
business or otherwise, as such Receiver shall, in its discretion, determine.
Except as may be otherwise directed by a Secured Party, all money received from
time to time by such Receiver in carrying out his/her appointment shall be
received in trust for and paid over to Secured Parties. Every such Receiver may,
in the discretion of any Secured Party, be vested with all or any of the rights
and powers of any Secured Party. Any Secured Party may, either directly or
through its nominees, exercise any or all powers and rights given to a Receiver
by virtue of the foregoing provisions of this paragraph.

          
            
               

            

            
              20

              
                

              

            

            
               

            

          

           

          (c)           Each
Secured Party is hereby granted a license or other right to use, without
liability for royalties or any other charge, each Grantor’s labels, Patents,
Copyrights, rights of use of any name, trade secrets, trade names, Trademarks,
service marks and advertising matter, URLs, domain names, industrial designs,
other industrial or intellectual property or any property of a similar nature,
whether owned by any Grantor or with respect to which any Grantor has rights
under license, sublicense, or other agreements (but only to the extent (i) such
license, sublicense or agreement does not prohibit such use by such Secured
Party and (ii) such Grantor will not be in default under such license,
sublicense, or other agreement as a result of such use by such Secured Party),
as it pertains to the Collateral, in preparing for sale, advertising for sale
and selling any Collateral, and each Grantor’s rights under all licenses and all
franchise agreements shall inure to the benefit of such Secured
Party.

           

          (d)           Any
cash held by any Secured Party as Collateral and all proceeds received by any
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral shall be applied against the Secured
Obligations in the order set forth in Section 17 hereof. In the event the
proceeds of Collateral are insufficient to indefeasibly satisfy and discharge
all of the Secured Obligations in full, each Grantor shall remain jointly and
severally liable for any such deficiency.

           

          (e)           Each
Grantor hereby acknowledges that the Secured Obligations arose out of a
commercial transaction, and agrees that if an Event of Default shall occur and
be continuing any Secured Party shall have the right to an immediate writ of
possession without notice of a hearing. Without limitation of Section 16(b)
hereof, each Secured Party shall have the right to the appointment of a receiver
for the properties and assets of each Grantor, and each Grantor hereby consents
to such rights and such appointment and hereby waives any objection such Grantor
may have thereto or the right to have a bond or other security posted by any
Secured Party.

           

          (f)           Notwithstanding
anything in this Agreement to the contrary, each Secured Party agrees that it
will not exercise any remedy provided for under this Agreement with respect to
all or any portion of the Collateral unless such Secured Party is a Permitted
Secured Party (provided that the foregoing shall not prevent any Secured Party
from commencing or participating in any Insolvency Proceeding or taking any
action (other than with respect to the Collateral) to enforce the payment or
performance of any Grantors’ obligations under any of the Notes, Guaranties or
other Transaction Documents). This Section 16(f) is not intended to confer any
rights or benefits upon Grantors, or any of them, or any other Person except
Secured Parties, and no Person (including any or all Grantors) other than
Secured Parties shall have any right to enforce any of the provisions of this
Section 16(f). As between Grantors, or any of them, and any Secured Party, any
action that such Secured Party may take under this Agreement shall be
conclusively presumed to have been authorized and approved by the other Secured
Parties.

          
            
               

            

            
              21

              
                

              

            

            
               

            

          

           

          17.           Priority of Liens;
Application of Proceeds of Collateral. Each Secured Party hereby
acknowledges and agrees that, notwithstanding the time or order of the filing of
any financing statement or other registration or document with respect to the
Collateral and the Security Interests, or any provision of this Agreement, any
other Security Document, the Code, the PPSA or other applicable law, solely as
amongst the Secured Parties, the separate Security Interests of the Secured
Parties shall have the same rank and priority; provided, that, the foregoing
shall not apply to any Security Interest of a Secured Party that is void or
voidable as a matter of law. In furtherance thereof, all proceeds of Collateral
received by any Secured Party shall be applied as follows:

           

          (a)           first, ratably to pay
any expenses due to any of the Secured Parties (including, without limitation,
the reasonable costs and expenses paid or incurred by any Secured Party to
correct any default under or enforce any provision of the Transaction Documents,
or after the occurrence of any Event of Default in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated) or indemnities then due to any of
the Secured Parties under the Transaction Documents, until paid in
full;

           

          (b)           second, ratably to
pay any fees or premiums then due to any of the Secured Parties under the
Transaction Documents, until paid in full;

           

          (c)           third, ratably to pay
interest due in respect of the Secured Obligations then due to any of the
Secured Parties, until paid in full;

           

          (d)           fourth, ratably to
pay the principal amount of all Secured Obligations then due to any of the
Secured Parties, until paid in full;

           

          (e)           fifth, ratably to pay
any other Secured Obligations then due to any of the Secured Parties;
and

           

          (f)           sixth, to Grantors or
such other Person entitled thereto under applicable law.

          

          18.           Remedies Cumulative.
Each right, power, and remedy of any Secured Party as provided for in this
Agreement or in any other Transaction Document or now or hereafter existing at
law or in equity or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power, or remedy provided for in
this Agreement or in the other Transaction Documents or now or hereafter
existing at law or in equity or by statute or otherwise, and the exercise or
beginning of the exercise by any Secured Party, of any one or more of such
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by such Secured Party of any or all such other rights, powers, or
remedies.

          
            
               

            

            
              22

              
                

              

            

            
               

            

          

          19.           Marshaling. No
Secured Party shall be required to marshal any present or future collateral
security (including but not limited to the Collateral) for, or other assurances
of payment of, the Secured Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising. To the extent that
it lawfully may, each Grantor hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of any Secured Party’s rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by
which any of the Secured Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each Grantor hereby
irrevocably waives the benefits of all such laws.

          

          20.           Acknowledgment.

          

          (a)    
 Each Secured Party hereby agrees and acknowledges that no other Secured
Party has agreed to act for it as an administrative or collateral agent, and
each Secured Party is and shall remain solely responsible for the attachment,
perfection and priority of all Liens created by this Agreement or any other
Security Document in favor of such Secured Party. No Secured Party shall have by
reason of this Agreement or any other Transaction Document an agency or
fiduciary relationship with any other Secured Party. No Secured Party (which
term, as used in this sentence, shall include reference to each Secured Party’s
officers, directors, employees, attorneys, agents and affiliates and to the
officers, directors, employees, attorneys and agents of such Secured Party’s
affiliates) shall: (i) have any duties or responsibilities except those
expressly set forth in this Agreement and the other Security Documents or (ii)
be required to take, initiate or conduct any enforcement action (including any
litigation, foreclosure or collection proceedings hereunder or under any of the
other Security Documents). Without limiting the foregoing, no Secured Party
shall have any right of action whatsoever against any other Secured Party as a
result of such Secured Party acting or refraining from acting hereunder or under
any of the Security Documents except as a result and to the extent of losses
caused by such Secured Party’s actual gross negligence or willful misconduct (it
being understood and agreed by each Secured Party that the delivery by any
Significant Secured Party of one or more Veto Notices shall not be deemed to be
or construed as gross negligence or willful misconduct on the part of the
Secured Party delivering any such Veto Notice). No Secured Party assumes any
responsibility for any failure or delay in performance or breach by any Grantor
or any Secured Party of its obligations under this Agreement or any other
Transaction Document. No Secured Party makes to any other Secured Party any
express or implied warranty, representation or guarantee with respect to any
Secured Obligations, Collateral, Transaction Document or Grantor. No Secured
Party nor any of its officers, directors, employees, attorneys or agents shall
be responsible to any other Secured Party or any of its officers, directors,
employees, attorneys or agents for: (i) any recitals, statements, information,
representations or warranties contained in any of the Transaction Documents or
in any certificate or other document furnished pursuant to the terms hereof;
(ii) the execution, validity, genuineness, effectiveness or enforceability of
any of the Transaction Documents; (iii) the validity, genuineness,
enforceability, collectability, value, sufficiency or existence of any
Collateral, or the attachment, perfection or priority of any Lien therein; or
(iv) the assets, liabilities, financial condition, results of operations,
business, creditworthiness or legal status of any Grantor or any Account Debtor.
No Secured Party nor any of its officers, directors, employees, attorneys or
agents shall have any obligation to any other Secured Party to ascertain or
inquire into the existence of any default or Event of Default, the observance or
performance by any Grantor of any of the duties or agreements of such Grantor
under any of the Transaction Documents or the satisfaction of any conditions
precedent contained in any of the Transaction Documents.

          
            
               

            

            
              23

              
                

              

            

            
               

            

          

          (b)     
Each Secured Party hereby acknowledges and represents that it has, independently
and without reliance upon any other Secured Party, and based upon such
documents, information and analyses as it has deemed appropriate, made its own
credit analysis of each Grantor and its own decision to enter into the
Transaction Documents and to purchase the Notes and Warrants, and each Secured
Party has made such inquiries concerning the Transaction Documents, the
Collateral and each Grantor as such Secured Party feels necessary and
appropriate, and has taken such care on its own behalf as would have been the
case had it entered into the Transaction Documents without any other Secured
Party. Each Secured Party hereby further acknowledges and represents that the
other Secured Parties have not made any representations or warranties to it
concerning any Grantor, any of the Collateral or the legality, validity,
sufficiency or enforceability of any of the Transaction Documents. Each Secured
Party also hereby acknowledges that it will, independently and without reliance
upon the other Secured Parties, and based upon such financial statements,
documents and information as it deems appropriate at the time, continue to make
and rely upon its own credit decisions in taking or refraining to take any other
action under this Agreement or the Transaction Documents. No Secured Party shall
have any duty or responsibility to provide any other Secured Party with any
notices, reports or certificates furnished to such Secured Party by any Grantor
or any credit or other information concerning the affairs, financial condition,
business or assets of any Grantor (or any of its affiliates) which may come into
possession of such Secured Party.

           

          21.        
 Indemnity and
Expenses.

           

          (a)     
Without limiting any obligations of Parent under the Securities Purchase
Agreement, each Grantor agrees to indemnify all Secured Parties from and against
all claims, lawsuits and liabilities (including attorneys’ fees) arising out of
or resulting from this Agreement (including enforcement of this Agreement) or
any other Transaction Document, except claims, losses or liabilities resulting
from the gross negligence or willful misconduct of the party seeking
indemnification as determined by a final non-appealable order of a court of
competent jurisdiction. This provision shall survive the termination of this
Agreement and the Transaction Documents and the indefeasible satisfaction and
discharge of all the Secured Obligations in full.

          
            
               

            

            
              24

              
                

              

            

            
               

            

          

          (b)    
 Grantors, jointly and severally, shall, upon demand, pay to each Secured
Party all of the costs and expenses which such Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or, upon an Event of Default, the sale of,
collection from, or other realization upon, any of the Collateral in accordance
with this Agreement and the other Transaction Documents, (iii) the exercise or
enforcement of any of the rights of such Secured Party hereunder or (iv) the
failure by any Grantor to perform or observe any of the provisions
hereof.

          

          22.            Merger, Amendments;
Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES SOLELY WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this
Agreement, and no consent to any departure by any of Grantors herefrom, shall in
any event be effective unless the same shall be in writing and signed by each
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 amendment of
any provision of this Agreement shall be effective unless the same shall be in
writing and signed by each Secured Party and each Grantor to which such
amendment applies.

          

          23.            Addresses for
Notices. All notices and other communications provided for hereunder (a)
shall be given in the form and manner set forth in the Securities Purchase
Agreement and (b) shall be delivered, (i) in the case of notice to any Grantor,
by delivery of such notice to Parent at Parent’s address specified in the
Securities Purchase Agreement or at such other address as shall be designated by
Parent in a written notice to each of the Secured Parties in accordance with the
provisions thereof, and (ii) in the case of notice to any Secured Party, by
delivery of such notice to such Secured Party at its address specified in the
Securities Purchase Agreement or at such other address as shall be designated by
such Secured Party in a written notice to Parent and each other Secured Party in
accordance with the provisions thereof.

           

          24.            Separate, Continuing
Security Interests; Assignments under Transaction Documents. This
Agreement shall create a separate, continuing security interest in the
Collateral in favor of each Secured Party and shall (a) remain in full force and
effect until the Secured Obligations have been indefeasibly satisfied and
discharged in full in accordance with the provisions of the Transaction
Documents, (b) be binding upon each of Grantors, and their respective permitted
successors and permitted assigns, and (c) inure to the benefit of, and be
enforceable by, the Secured Parties and their respective successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), any
Secured Party may, in accordance with the provisions of the Transaction
Documents, assign or otherwise transfer all or any portion of its rights and
obligations under the Transaction Documents to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to such Secured Party herein or otherwise. Upon the indefeasible
satisfaction and discharge in full of the Secured Obligations in accordance with
the provisions of the Transaction Documents, the Security Interests granted
hereby shall terminate and all rights to the Collateral shall revert to Grantors
or any other Person entitled thereto. At such time, each Secured Party will
authorize the filing of appropriate termination statements to terminate such
Security Interests. No transfer or renewal, extension, assignment, or
termination of this Agreement or any other Transaction Document, or any other
instrument or document executed and delivered by any Grantor to any Secured
Party nor any additional loans made by any Secured Party to any Grantor, nor the
taking of further security, nor the retaking or re-delivery of the Collateral to
Grantors, or any of them, by any Secured Party, nor any other act of Secured
Parties, or any of them, shall release any of Grantors from any obligation,
except a release or discharge executed in writing by all Secured Parties. No
Secured Party shall by any act, delay, omission or otherwise, be deemed to have
waived any of its rights or remedies hereunder, unless such waiver is in writing
and signed by such Secured Party and then only to the extent therein set forth.
A waiver by any Secured Party of any right or remedy on any occasion shall not
be construed as a bar to the exercise of any such right or remedy which such
Secured Party would otherwise have had on any other occasion.

          
            
               

            

            
              25

              
                

              

            

            
               

            

          

           

          25.           Governing Law; Jurisdiction;
Service of Process; Jury Trial. The parties hereby agree that pursuant to
735 Illinois Compiled Statutes 105/5-5 they have chosen that all questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in Chicago, Illinois, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper; provided, however, any suit
seeking enforcement against any Collateral or other property may be brought, at
any Secured Party’s option, in the courts of any jurisdiction where such Secured
Party elects to bring such action or where such Collateral or other property may
be found. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Without limitation of the foregoing, each
Grantor other than Parent hereby irrevocably appoints Parent as such Grantor’s
agent for purposes of receiving and accepting any service of process hereunder
or under any of the other Security Documents. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by
law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

          
            
               

            

            
              26

              
                

              

            

            
               

            

          

           

          26.           Miscellaneous.

          

          (a)      This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original thereof. Any
party delivering an executed counterpart of this Agreement by facsimile or other
electronic method of transmission 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, and binding effect of
this Agreement. The foregoing shall apply to each other Security Document mutatis
mutandis.

          

          (b)           Any
provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other
jurisdiction.

          

          (c)           Headings
used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.

           

          (d)           The
pronouns used herein shall include, when appropriate, either gender and both
singular and plural, and the grammatical construction of sentences shall conform
thereto.

          

          (e)           The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will
be applied against any party. For clarification purposes, the Recitals are part
of this Agreement. Notwithstanding any references to “Secured Parties” herein,
Iroquois and the Parent acknowledge and agree that Iroquois is the only Secured
Party that is a party hereto as of the date hereof.

          

          (f)           Unless
the context of this Agreement or any other Transaction Document clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms “includes” and “including” are not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or.” The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Agreement or any other
Transaction Document refer to this Agreement or such other Transaction Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Transaction Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in any
other Transaction Document to any agreement, instrument, or document shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
or in any other Transaction Document to the satisfaction in full of the Secured
Obligations shall mean the indefeasible payment in full in cash and discharge,
or other satisfaction in accordance with the terms of the Transaction Documents
and discharge, of all Secured Obligations in full. Any reference herein to any
Person shall be construed to include such Person’s permitted successors and
permitted assigns. Any requirement of a writing contained herein or in any other
Transaction Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.

          
            
               

            

            
              27

              
                

              

            

            
               

            

          

          (g)    
All dollar amounts referred to in this Agreement and the other Transaction
Documents are in United States Dollars (“US Dollars”), and all amounts owing under
this Agreement and all other Transaction Documents shall be paid in US Dollars.
All amounts denominated in other currencies shall be converted in the US Dollar
equivalent amount in accordance with the Exchange Rate on the date of
calculation. “Exchange
Rate” means,
in relation to any amount of currency to be converted into US Dollars pursuant
to this Agreement, the US Dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.

           

          27. Subordination. Solely
in connection with the incurrence of specific Permitted Project Indebtedness (as
defined in the Notes), each Secured Party shall execute and deliver a
subordination agreement (in form and substance acceptable to such Secured Party)
to the lender of such Permitted Project Indebtedness if such lender requires
that a security interest in the assets of the applicable Project Subsidiary (as
defined in the Notes) be granted with respect to such Permitted Project
Indebtedness that is senior to the Security Interest granted by such Project
Subsidiary to the Secured Parties hereunder; provided, however, no Secured Party
shall have any obligation to enter into any such subordination agreement with
respect to any Grantor that is not a Project Subsidiary or with respect to any
Indebtedness (as defined in the Securities Purchase Agreement) that is not
Permitted Project Indebtedness.

           

          [signature
pages follow]

          

          
            
              
              

            

            
              28

              
                

              

            

            
              
              

            

          

           

          IN
WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by
and through their duly authorized officers, as of the day and year first above
written.

          

          
            
              
                	
                        GRANTORS:

                      	
                        NACEL
      ENERGY CORPORATION, a Wyoming

                        corporation

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	 
      
	 
      	
                        

                      
	 
      	
                        Name: 

                      	
                        Murray Fleming

                      
	 
      	
                        Title:

                      	
                        Director

                      
	 
      	 
      	 
      
	 
      	
                        0758817
      B.C. LTD., a corporation existing pursuant to

                        the
      British Columbia Business Corporations Act

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	 
      
	 
      	
                        
                          

                        

                      
	 
      	
                        Name:

                      	
                        Murray Fleming

                      
	 
      	
                        Title:

                      	
                        Secretary

                      
	 
      	 
      	 
      
	 
      	
                        BLUE
      CREEK WIND ENERGY FACILITY LLC, a

                        Texas
      limited liability company

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	 
      
	 
      	
                        
                          

                        

                      
	 
      	
                        Name:

                      	
                        Murray Fleming

                      
	 
      	
                        Title:

                      	
                        Officer of Sole
  Member

                      

              

            

          

          

          SECURITY
AGREEMENT

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          
            
              	
                      CHANNING
      FLATS WIND ENERGY FACILITY

                      LLC,
      a Texas limited liability company

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      
                        

                      

                    
	
                      Name: 

                    	
                      Murray Fleming

                    
	
                      Title:

                    	
                      Officer of Sole
  Member

                    

            

          

          

          SECURITY
AGREEMENT

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

          

          
            
              
                
                  
                    	
                            HEDLEY
      POINTE WIND ENERGY FACILITY

                            LLC,
      a Texas limited liability company

                          
	 
      	 
      
	
                            By:

                          	 
      
	
                            
                              

                            

                          
	
                            Name: 

                          	
                            Murray Fleming

                          
	
                            Title:

                          	
                            Officer of Sole Member

                          
	 
      	 
      
	
                            LEILA
      LAKE WIND ENERGY FACILITY LLC, a

                            Texas
      limited liability company

                          
	 
      	 
      
	
                            By:

                          	 
      
	
                            
                              

                            

                          
	
                            Name:

                          	
                            Murray Fleming

                          
	
                            Title:

                          	
                            Officer of Sole Member

                          
	 
      	 
      
	
                            SNOWFLAKE
      WIND ENERGY FACILITY LLC, an

                            Arizona
      limited liability company

                          
	 
      	 
      
	
                            By:

                          	 
      
	
                            
                              

                            

                          
	
                            Name:

                          	
                            Murray Fleming

                          
	
                            Title:

                          	
                            Officer of Sole
  Member

                          

                  

                

              

            

          

          

          SECURITY
AGREEMENT

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

          

          
            
              	
                      SWISHER
      WIND ENERGY FACILITY LLC, a

                      Texas
      limited liability company

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      
                        

                      

                    
	
                      Name: 

                    	
                      Murray Fleming

                    
	
                      Title:

                    	
                      Officer of Sole
  Member

                    

            

          

          

          SECURITY
AGREEMENT

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          
            
              	
                      SECURED
      PARTIES:

                    	
                      IROQUOIS
      MASTER FUND LTD.

                    
	 
      	 
      
	 
      	
                      
                        

                      

                    
	 
      	
                      By: 

                    	
                      Joshua
      Silverman, Authorized
Signatory

                    

            

          

           

          SECURITY
AGREEMENT

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          SCHEDULE
1

           

          COMMERCIAL
TORT CLAIMS 

           

          NONE

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          
            SCHEDULE
2

          

           

          
            COPYRIGHTS

             

            NONE

          

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          SCHEDULE
3

           

          INTELLECTUAL
PROPERTY LICENSES

           

          NONE

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          SCHEDULE
4

           

          PATENTS

           

          NONE

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          SCHEDULE
5

           

          PLEDGED
COMPANIES

          

          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              Name of Pledgor

                                            	 	
                                              Name of Pledged Company

                                            	 	
                                              Percentage of Class

                                              Owned

                                            	 
	 	 	 	 	 	 	 
	
                                              NACEL
      Energy Corporation

                                            	 	
                                              0758817
      B.C. Ltd.

                                            	 	 	100	%
	 	 	 	 	 	 	 
	
                                              NACEL
      Energy Corporation

                                            	 	
                                              Blue
      Creek Wind Energy Facility LLC

                                            	 	 	100	%
	 	 	 	 	 	 	 
	
                                              NACEL
      Energy Corporation

                                            	 	
                                              Charnning
      Flats Wind Energy Facility LLC

                                            	 	 	100	%
	 	 	 	 	 	 	 
	
                                              NACEL
      Energy Corporation

                                            	 	
                                              Hedley
      Pointe Wind Energy Facility LLC

                                            	 	 	100	%
	 	 	 	 	 	 	 
	
                                              NACEL
      Energy Corporation

                                            	 	
                                              Leila
      Lake Wind Energy Facility LLC

                                            	 	 	100	%
	 	 	 	 	 	 	 
	
                                              NACEL
      Energy Corporation

                                            	 	
                                              Snowflake
      Wind Energy Facility LLC

                                            	 	 	100	%
	 	 	 	 	 	 	 
	
                                              NACEL
      Energy Corporation

                                            	 	
                                              Swisher
      Wind Energy Facility LLC

                                            	 	 	100	%

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          SCHEDULE
6

           

          TRADEMARKS

           

          NONE

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          SCHEDULE
7

           

          REAL
PROPERTY

          
            Owned Real
Property

          

           

          NONE

           

          Leased Real
Property

           

          Parent
has a month-to-month lease on its office located at 9375 E. Shea Blvd., Suite
100, Scottsdale, Arizona 85260.

           

          (Leases Applicable to
Swisher Project)

           

          On
November 12, 2008 (Effective Date), Parent entered into the following contracts
which pertain to the development of its Swisher wind energy
project:

           

          •     A
Wind Project Agreement with S&T Swisher Farm covering 773 acres of land
located in Swisher County, Texas, being in the Texas panhandle.

           

          •    A
Wind Project Agreement with Jeffrey Dalluge covering 800 acres of land located
in Swisher County, Texas, being in the Texas panhandle

           

          (Lease Applicable to Blue
Creek Project)

           

          On
October 13, 2008, Parent entered into a Wind Project Agreement with Oglesby
Farms covering 2,082 acres of land located in Moore County, Texas, being in the
Texas panhandle.

           

          (Leases Applicable to Hedley
Pointe Project)

           

          On
January 28, 2009, Parent executed and entered into the following contracts which
pertain to the development of its Hedley Pointe wind energy
project:

           

          •    A
Wind Project Agreement dated as of January 15, 2009 with Faye Naylor covering
316 acres of land located in Donley County, Texas, being in the Texas
panhandle.

           

          •    A
Wind Project Agreement dated as of January 14, 2009 with Linda Lewis covering
320 acres of land located in Donley County, Texas, being in the Texas
panhandle.

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          (Leases Applicable to Leila
Lake Project)

           

          Parent
has entered into the following contracts which pertain to the development of its
Leila Lake wind energy project:

           

          •            
A Wind Project Agreement dated as of April 13, 2009 with Bob and Patricia White
covering 640 acres of land located in Donley County, Texas, being in the Texas
panhandle.

           

          •            
A Wind Project Agreement dated as of April 13, 2009 with Roger and Rachel Wade
covering 107.67 net acres of land located in Donley County, Texas, being in the
Texas panhandle. As of August 7, 2009, Parent and Roger and Rachel Wade entered
into an Addendum to the original Agreement.

           

          •            
A Wind Project Agreement dated as of July 31, 2009 with the Holland Family Trust
covering 320 acres of land located in Donley County, Texas, being in the Texas
panhandle. As of August 7, 2009, Parent and the Holland Family Trust entered
into an Addendum to the original Agreement.

           

          •            
A Wind Project Agreement dated as of July 1, 2009 with Johnny Leathers covering
353 acres of land located in Donley County, Texas, being in the Texas
panhandle.

           

          •            
A Wind Project Agreement dated as of July 1, 2009 with Thelma Sheilds covering
160 acres of land located in Donley County, Texas, being in the Texas
panhandle.

           

          •            
A Wind Project Agreement dated as of July 1, 2009 with Grace Cox covering 320
acres of land located in Donley County, Texas, being in the Texas
panhandle.

           

          •            
A Wind Project Agreement dated as of July 1, 2009 with Billy Michael Owens
covering 192 acres of land located in Donley County, Texas, being in the Texas
panhandle.

           

          (Lease Applicable to
Snowflake Project)

           

          On July
6, 2009, Parent executed and entered into a Wind Project Agreement with Langley
NZ Ranches, LLC covering 640 acres of land located in Navajo County,
Arizona.

          

          SECURITY
AGREEMENT

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          SCHEDULE
8

           

          
            LIST OF
UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Grantor

                                  	 
      	
                                    Jurisdictions

                                  
	 	 	 
	
                                    NACEL
      Energy Corporation

                                  	 
      	
                                    Wyoming

                                  
	 	 	 
	
                                    Blue
      Creek Wind Energy Facility LLC

                                  	 
      	
                                    Texas

                                  
	 	 	 
	
                                    Charnning
      Flats Wind Energy Facility LLC

                                  	 
      	
                                    Texas

                                  
	 	 	 
	
                                    Hedley
      Pointe Wind Energy Facility LLC

                                  	 
      	
                                    Texas

                                  
	 	 	 
	
                                    Leila
      Lake Wind Energy Facility LLC

                                  	 
      	
                                    Texas

                                  
	 	 	 
	
                                    Snowflake
      Wind Energy Facility LLC

                                  	 
      	
                                    Arizona

                                  
	 	 	 
	
                                    Swisher
      Wind Energy Facility LLC

                                  	 
      	
                                    Texas

                                  
	 	 	 
	
                                    0758817
      B.C. Ltd.

                                  	 
      	
                                    District
      of
Columbia

                                  

                          

                        

                      

                    

                  

                

              

            

          

          

          LIST OF
PPSA FILINGS

          

          
            
              
                	
                        Grantor

                      
	 
	
                        0758817
      B.C. Ltd.

                      

              

            

          

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

          EXHIBIT
A

           

          COPYRIGHT SECURITY
AGREEMENT

           

          This
COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”)
is made
this __ day of November 2009, by the Grantors listed on the signature pages
hereof (collectively,
jointly and severally, “Grantors” and each
individually “Grantor”), in favor of the Secured
Parties under and as defined in the below-described Security
Agreement.

           

          RECITALS

           

          WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated as of November 23,
2009 (as amended, restated, supplemented, or otherwise modified from time to
time, including all schedules thereto, collectively, the “Securities Purchase
Agreement”), by
and among NACEL Energy Corporation, a Wyoming corporation (“Parent”), and each of the Secured
Parties, Parent has agreed to sell, and each of the Secured Parties have agreed
to purchase, severally and not jointly, certain Notes and Warrants;
and

           

          WHEREAS,
in order to induce each of the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Securities Purchase
Agreement, Grantors have executed and delivered to each of the Secured Parties
that certain Security Agreement of even date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”); and

           

          WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to each of the Secured Parties this Copyright Security
Agreement.

           

          AGREEMENTS

           

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

           

          1.           DEFINED TERMS. All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement.

           

          2.           GRANT OF SECURITY INTEREST
IN COPYRIGHT COLLATERAL. Each Grantor hereby grants to each Secured Party
a continuing first priority security interest in all of such Grantor’s right,
title and interest in, to and under the following, whether presently existing or
hereafter created or acquired (collectively, the “Copyright Collateral”):

           

          (a)     all
of each Grantor’s Copyrights and Copyright Intellectual Property Licenses to
which it is a party including those referred to on Schedule
I hereto;

           

          (b)     all
reissues, continuations or extensions of the foregoing; and

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

          (c) all
products and proceeds of the foregoing, including any claim by such Grantor
against third parties for past, present or future infringement or dilution of
any Copyright or any Copyright licensed under any Intellectual Property
License.

           

          3.           SECURITY FOR
OBLIGATIONS. This Copyright Security Agreement and the Security Interests
created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Copyright Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Secured Parties, or any of them,
whether or not they are unenforceable or not allowable due to the existence of
an Insolvency Proceeding involving any Grantor.

           

          4.           SECURITY AGREEMENT.
The security interests granted pursuant to this Copyright Security Agreement are
granted in conjunction with the security interests granted to Secured Parties
pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Secured Parties with respect to their respective
security interests in the Copyright Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

           

          5.           AUTHORIZATION TO
SUPPLEMENT. To the extent required under the Security Agreement, Grantors
shall give Secured Parties prompt notice in writing of any additional copyright
registrations or applications therefor after the date hereof. Grantors hereby
authorize Secured Parties unilaterally to modify this Agreement by amending
Schedule
I to include
any future registered copyrights or applications therefor of Grantors.
Notwithstanding the foregoing, no failure to so modify this Copyright Security
Agreement or amend Schedule
I shall in any way affect, invalidate or detract from any Secured Party’s
continuing security interest in all Collateral, whether or not listed on Schedule
I.

           

          6.           COUNTERPARTS. This
Copyright Security Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof. In proving this Copyright Security Agreement or any
other Transaction Document in any judicial proceedings, it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom such enforcement is sought.

          
            
               

            

            
              2

              
                

              

            

            
               

            

          

           

          7.           CONSTRUCTION. Unless
the context of this Copyright Security Agreement or any other Transaction
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Copyright
Security Agreement or any other Transaction Document refer to this Copyright
Security Agreement or such other Transaction Document, as the case may be, as a
whole and not to any particular provision of this Copyright Security Agreement
or such other Transaction Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Copyright Security
Agreement unless otherwise specified. Any reference in this Copyright Security
Agreement or in any other Transaction Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein or in any other Transaction Document to the satisfaction in
full of the Secured Obligations shall mean the indefeasible payment in full in
cash and discharge, or other satisfaction in accordance with the terms of the
Transaction Documents and discharge, of all Secured Obligations in full. Any
reference herein to any Person shall be construed to include such Person’s
permitted successors and permitted assigns. Any requirement of a writing
contained herein or in any other Transaction Document shall be satisfied by the
transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. The language used in this Copyright Security
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party. For clarification purposes, the Recitals are part of this Copyright
Security Agreement.

          

          [signature
page follows]

           

          
            
              
              

            

            
              3

              
                

              

            

            
              
              

            

          

           

          IN WITNESS WHEREOF, each Grantor has
caused this Copyright Security Agreement to be executed and delivered by its
duly authorized officer as of the date first set forth above.

          

          
            
              
                
                  
                    
                      
                        
                          	
                                  GRANTORS:

                                	
                                  NACEL
      ENERGY CORPORATION, a Wyoming

                                  corporation

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  
                                    

                                  

                                
	 
      	
                                  Name:

                                	
                                  Murray Fleming

                                
	 
      	
                                  Title:

                                	
                                  Director

                                
	 
      	 
      	 
      
	 
      	
                                  0758817
      B.C. LTD., a corporation existing pursuant to

                                  the
      British Columbia Business Corporations Act

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  
                                    

                                  

                                
	 
      	
                                  Name: 

                                	
                                  Murray Fleming

                                
	 
      	
                                  Title:

                                	
                                  Secretary

                                
	 
      	 
      	 
      
	 
      	
                                  BLUE
      CREEK WIND ENERGY FACILITY LLC, a

                                  Texas
      limited liability company

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  
                                    

                                  

                                
	 
      	
                                  Name:

                                	
                                  Murray Fleming

                                
	 
      	
                                  Title:

                                	
                                  Officer of Sole
  Member

                                

                        

                      

                    

                  

                

              

            

          

          

          COPYRIGHT
SECURITY AGREEMENT

          
            
               

            

            
              4

              
                

              

            

            
               

            

          

          

          
            
              
                
                  	
                          CHANNING
      FLATS WIND ENERGY FACILITY

                          LLC,
      a Texas limited liability company

                        
	 
      	 
      
	
                          By:

                        	 
      
	
                          
                            

                          

                        
	
                          Name: 

                        	
                          Murray Fleming

                        
	
                          Title:

                        	
                          Officer of Sole
  Member

                        

                

              

            

          

          
            
               

            

            
              5

              
                

              

            

            
               

            

          

          

          
            
              
                
                  
                    
                      
                        
                          	
                                  HEDLEY
      POINTE WIND ENERGY FACILITY

                                  LLC,
      a Texas limited liability company

                                
	 
      	 
      
	
                                  By:

                                	 
      
	
                                  
                                    

                                  

                                
	
                                  Name: 

                                	
                                  Murray Fleming

                                
	
                                  Title:

                                	
                                  Officer of Sole Member

                                
	 
      	 
      
	
                                  LEILA
      LAKE WIND ENERGY FACILITY LLC, a

                                  Texas
      limited liability company

                                
	 
      	 
      
	
                                  By:

                                	 
      
	
                                  
                                    

                                  

                                
	
                                  Name:

                                	
                                  Murray Fleming

                                
	
                                  Title:

                                	
                                  Officer of Sole Member

                                
	 
      	 
      
	
                                  SNOWFLAKE
      WIND ENERGY FACILITY LLC, an

                                  Arizona
      limited liability company

                                
	 
      	 
      
	
                                  By:

                                	 
      
	
                                  
                                    

                                  

                                
	
                                  Name:

                                	
                                  Murray Fleming

                                
	
                                  Title:

                                	
                                  Officer of Sole
  Member

                                

                        

                      

                    

                  

                

              

            

          

          
            
               

            

            
              6

              
                

              

            

            
               

            

          

          

          
            
              
                
                  	
                          SWISHER
      WIND ENERGY FACILITY LLC, a

                          Texas
      limited liability company

                        
	 
      	 
      
	
                          By:

                        	 
      
	
                          
                            

                          

                        
	
                          Name: 

                        	
                          Murray Fleming

                        
	
                          Title:

                        	
                          Officer of Sole
  Member

                        

                

              

            

          

          
            
               

            

            
              7

              
                

              

            

            
               

            

          

          SCHEDULE
I

          TO

          COPYRIGHT SECURITY
AGREEMENT

           

          Copyright Registrations

           

          
            
              
                
                  
                    
                      
                        	
                                Grantor

                              	 
      	
                                Country

                              	 
      	
                                Copyright

                              	 
      	
                                Registration No.

                              	 
      	
                                Registration

                                Date

                              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      

                      

                    

                  

                

              

            

          

          

          Copyright
Licenses

          

          COPYRIGHT
SECURITY AGREEMENT

          
            
               

            

            
              
              

              
                

              

            

            
               

            

          

           

        

      

    

     

    EXHIBIT
B

     

    PATENT SECURITY
AGREEMENT

     

    This
PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this ____ day of
November 2009, by the Grantors listed on the signature pages hereof
(collectively, jointly and severally, “Grantors” and each individually “Grantor”), in favor of the Secured Parties
under and as defined in the below-described Security Agreement.

     

    RECITALS

     

    WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated as of November 23,
2009 (as amended, restated, supplemented, or otherwise modified from time to
time, including all schedules thereto, collectively, the “Securities Purchase Agreement”), by and among NACEL Energy
Corporation, a Wyoming corporation (“Parent”), and each of the Secured Parties,
Parent has agreed to sell, and each of the Secured Parties have agreed to
purchase, severally and not jointly, certain Notes and Warrants;
and

     

    WHEREAS,
in order to induce each of the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Securities Purchase
Agreement, Grantors have executed and delivered to each of the Secured Parties
that certain Security Agreement of even date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”); and

     

    WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to each of the Secured Parties this Patent Security Agreement.

     

    AGREEMENTS

     

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

     

    1.    DEFINED TERMS. All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement.

     

    2.    GRANT OF SECURITY INTEREST
IN PATENT COLLATERAL. Each Grantor hereby grants to each Secured Party a
continuing first priority security interest in all of such Grantor’s right,
title and interest in, to and under the following, whether presently existing or
hereafter created or acquired (collectively, the “Patent Collateral”):

     

    (a)   
  all of its Patents
and Patent Intellectual Property Licenses to which it is a party including
those referred to on Schedule
I hereto;

     

    (b)  
   all reissues,
continuations or extensions of the foregoing; and

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (c)  
   all products
and proceeds of the foregoing, including any claim by such Grantor against third
parties for past, present or future infringement or dilution of any Patent or
any Patent licensed under any Intellectual Property License.

     

    3.    SECURITY FOR
OBLIGATIONS. This Patent Security Agreement and the Security Interests
created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Patent Security Agreement secures the payment
of all amounts which constitute part of the Secured Obligations and would be
owed by Grantors, or any of them, to Secured Parties, or any of them, whether or
not they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.

     

    4.    SECURITY AGREEMENT.
The security interests granted pursuant to this Patent Security Agreement are
granted in conjunction with the security interests granted to Secured Parties
pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Secured Parties with respect to their respective
security interests in the Patent Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

     

    5.    AUTHORIZATION TO
SUPPLEMENT. If any Grantor shall obtain rights to any new patentable
inventions or become entitled to the benefit of any patent application or patent
for any reissue, division, or continuation, of any patent, the provisions of
this Patent Security Agreement shall automatically apply thereto. To the extent
required under the Security Agreement, Grantors shall give prompt notice in
writing to Secured Parties with respect to any such new patent rights. Without
limiting each Grantor’s obligations under this Section 5, Grantors hereby
authorize Secured Parties unilaterally to modify this Agreement by amending
Schedule
I to include
any such new patent rights of Grantors. Notwithstanding the foregoing, no
failure to so modify this Patent Security Agreement or amend Schedule
I shall in
any way affect, invalidate or detract from any Secured Party’s continuing
security interest in all Collateral, whether or not listed on Schedule
I.

     

    6.    COUNTERPARTS. This
Patent Security Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event that any signature is delivered by facsimile
transmission or by an e-mail which contains a portable document format (.pdf)
file of an executed signature page, such signature page shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such signature page were an
original thereof. In proving this Patent Security Agreement or any other
Transaction Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party
against whom such enforcement is sought.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    7.    CONSTRUCTION. Unless
the context of this Patent Security Agreement or any other Transaction Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the terms “includes” and
“including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Patent
Security Agreement or any other Transaction Document refer to this Patent
Security Agreement or such other Transaction Document, as the case may be, as a
whole and not to any particular provision of this Patent Security Agreement or
such other Transaction Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Patent Security
Agreement unless otherwise specified. Any reference in this Patent Security
Agreement or in any other Transaction Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein or in any other Transaction Document to the satisfaction in
full of the Secured Obligations shall mean the indefeasible payment in full in
cash and discharge, or other satisfaction in accordance with the terms of the
Transaction Documents and discharge, of all Secured Obligations in full. Any
reference herein to any Person shall be construed to include such Person’s
permitted successors and permitted assigns. Any requirement of a writing
contained herein or in any other Transaction Document shall be satisfied by the
transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. The language used in this Patent Security
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party. For clarification purposes, the Recitals are part of this Patent
Security Agreement.

     

    [signature pages follow]

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

      IN
WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

       

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      	
                                                              GRANTORS:

                                                            	
                                                              NACEL
      ENERGY CORPORATION, a Wyoming

                                                              corporation

                                                            
	 
      	 
      
	 
      	
                                                              By:

                                                            
	 
      	
                                                              

                                                            
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Director
	 
      	 
      
	 
      	
                                                              0758817
      B.C. LTD., a corporation existing pursuant to

                                                              the
      British Columbia Business Corporations Act

                                                            
	 
      	 
      
	 
      	
                                                              By:

                                                            
	 
      	
                                                              

                                                            
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Secretary
	 
      	 
      
	 
      	
                                                              BLUE
      CREEK WIND ENERGY FACILITY LLC, a

                                                              Texas
      limited liability company

                                                            
	 
      	 
      
	 
      	
                                                              By:

                                                            
	 
      	
                                                              

                                                            
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole
Member

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                CHANNING
      FLATS WIND ENERGY FACILITY

                                LLC,
      a Texas limited liability company

                              
	 
      	 
      
	 
      	
                                By:

                              
	 
      	
                                

                              
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole
Member

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    	 
      	
                                                            HEDLEY
      POINTE WIND ENERGY FACILITY

                                                            LLC,
      a Texas limited liability company

                                                          
	 
      	 
      
	 
      	
                                                            By:

                                                          
	 
      	
                                                            

                                                          
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole Member
	 
      	 
      
	 
      	
                                                            LEILA
      LAKE WIND ENERGY FACILITY LLC, a

                                                            Texas
      limited liability company

                                                          
	 
      	 
      
	 
      	
                                                            By:

                                                          
	 
      	
                                                            

                                                          
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole Member
	 
      	 
      
	 
      	
                                                            SNOWFLAKE
      WIND ENERGY FACILITY LLC, an

                                                            Arizona
      limited liability company

                                                          
	 
      	 
      
	 
      	
                                                            By:

                                                          
	 
      	
                                                            

                                                          
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole
Member

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                
                  	 	
                          SWISHER
      WIND ENERGY FACILITY LLC, a

                        
	 	
                          Texas
      limited liability company

                        
	 	 
	 
      	
                          By:

                        
	 
      	
                          
                            

                          

                        
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole
Member

                

              

            

          

        

      
 

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    EXHIBIT
C

     

    TRADEMARK SECURITY
AGREEMENT

     

    This
TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made this _____ day of November
2009, by the Grantors listed on the signature pages hereof (collectively,
jointly and severally, “Grantors” and each individually “Grantor”), in favor of the Secured Parties
under and as defined in the below-described Security Agreement.

     

    RECITALS

     

    WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated as of November 23,
2009 (as amended, restated, supplemented, or otherwise modified from time to
time, including all schedules thereto, collectively, the “Securities Purchase Agreement”), by and among NACEL Energy
Corporation, a Wyoming corporation (“Parent”), and each of the Secured Parties,
Parent has agreed to sell, and each of the Secured Parties have agreed to
purchase, severally and not jointly, certain Notes and Warrants;
and

     

    WHEREAS,
in order to induce each of the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Securities Purchase
Agreement, Grantors have executed and delivered to each of the Secured Parties
that certain Security Agreement of even date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the “Security Agreement”); and

     

    WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to each of the Secured Parties this Trademark Security Agreement.

     

    AGREEMENTS

     

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

     

    1.    DEFINED TERMS. All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement.

     

    2.    GRANT OF SECURITY INTEREST
IN TRADEMARK COLLATERAL. Each Grantor hereby grants to each Secured Party
a continuing first priority security interest in all of such Grantor’s right,
title and interest in, to and under the following, whether presently existing or
hereafter created or acquired (collectively, the “Trademark Collateral”):

     

    (a)    all of its
Trademarks and Trademark Intellectual Property Licenses to which it is a party
including those referred to on Schedule
I hereto;

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    (b)    all goodwill,
trade secrets, proprietary or confidential information, technical
information, procedures, formulae, quality control standards, designs, operating
and training
manuals, customer lists, and other General Intangibles with respect to the
foregoing;

     

    (c)    all reissues,
continuations or extensions of the foregoing;

     

    (d)    all goodwill
of the business connected with the use of, and symbolized by, each Trademark and
each Trademark Intellectual Property License; and

     

    (e)    all products
and proceeds of the foregoing, including any claim by such Grantor against third
parties for past, present or future (i) infringement or dilution of any
Trademark or any Trademark licensed under any Intellectual Property License or
(ii) injury to the goodwill associated with any Trademark or any Trademark
licensed under any Intellectual Property License.

     

    3.    SECURITY FOR
OBLIGATIONS. This Trademark Security Agreement and the Security Interests
created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Trademark Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Secured Parties, or any of them,
whether or not they are unenforceable or not allowable due to the existence of
an Insolvency Proceeding involving any Grantor.

     

    4.    SECURITY AGREEMENT.
The security interests granted pursuant to this Trademark Security Agreement are
granted in conjunction with the security interests granted to Secured Parties
pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms
that the rights and remedies of Secured Parties with respect to their respective
security interests in the Trademark Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

     

    5.    AUTHORIZATION TO
SUPPLEMENT. If any Grantor shall obtain rights to any new trademarks, the
provisions of this Trademark Security Agreement shall automatically apply
thereto. To the extent required under the Security Agreement, Grantors shall
give prompt notice in writing to Secured Parties with respect to any such new
trademarks or renewal or extension of any trademark registration. Without
limiting each Grantor’s obligations under this Section 5, Grantors hereby
authorize Secured Parties unilaterally to modify this Agreement by amending
Schedule
I to include
any such new trademark rights of Grantors. Notwithstanding the foregoing, no
failure to so modify this Trademark Security Agreement or amend Schedule
I shall in any way affect, invalidate or detract from any Secured Party’s
continuing security interest in all Collateral, whether or not listed on Schedule
I.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    6.    COUNTERPARTS. This
Trademark Security Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof. In proving this Trademark Security Agreement or any
other Transaction Document in any judicial proceedings, it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom such enforcement is sought.

     

    7.    CONSTRUCTION. Unless
the context of this Trademark Security Agreement or any other Transaction
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Trademark
Security Agreement or any other Transaction Document refer to this Trademark
Security Agreement or such other Transaction Document, as the case may be, as a
whole and not to any particular provision of this Trademark Security Agreement
or such other Transaction Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Trademark Security Agreement or in
any other Transaction Document to any agreement, instrument, or document shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
or in any other Transaction Document to the satisfaction in full of the Secured
Obligations shall mean the indefeasible payment in full in cash and discharge,
or other satisfaction in accordance with the terms of the Transaction Documents
and discharge, of all Secured Obligations in full. Any reference herein to any
Person shall be construed to include such Person’s permitted successors and
permitted assigns. Any requirement of a writing contained herein or in any other
Transaction Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein. The language
used in this Trademark Security Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. For clarification purposes, the
Recitals are part of this Trademark Security Agreement.

     

    [signature pages follow]

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              GRANTORS:

                                            	
                                              NACEL
      ENERGY CORPORATION, a Wyoming

                                              corporation

                                            
	 
      	 
      
	 
      	
                                              By:

                                            
	 
      	
                                              

                                            
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Director
	 
      	 
      
	 
      	
                                              0758817
      B.C. LTD., a corporation existing pursuant to

                                              the
      British Columbia Business Corporations Act

                                            
	 
      	 
      
	 
      	
                                              By:

                                            
	 
      	
                                              

                                            
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Secretary

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	 
      	
                                                BLUE
      CREEK WIND ENERGY FACILITY LLC, a

                                                Texas
      limited liability company

                                              
	 
      	 
      
	 
      	
                                                By:

                                              
	 
      	
                                                

                                              
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole Member
	 
      	 
      
	 
      	
                                                CHANNING
      FLATS WIND ENERGY FACILITY

                                                LLC,
      a Texas limited liability company

                                              
	 
      	 
      
	 
      	
                                                By:

                                              
	 
      	
                                                

                                              
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole
Member

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	 
      	
                                                                HEDLEY
      POINTE WIND ENERGY FACILITY

                                                                LLC,
      a Texas limited liability company

                                                              
	 
      	 
      
	 
      	
                                                                By:

                                                              
	 
      	
                                                                

                                                              
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole Member
	 
      	 
      
	 
      	
                                                                LEILA
      LAKE WIND ENERGY FACILITY LLC, a

                                                                Texas
      limited liability company

                                                              
	 
      	 
      
	 
      	
                                                                By:

                                                              
	 
      	
                                                                

                                                              
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole Member
	 
      	 
      
	 
      	
                                                                SNOWFLAKE
      WIND ENERGY FACILITY LLC, an

                                                                Arizona
      limited liability company

                                                              
	 
      	 
      
	 
      	
                                                                By:

                                                              
	 
      	
                                                                

                                                              
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole
Member

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 	
                                        SWISHER
      WIND ENERGY FACILITY LLC, a

                                      
	 	
                                        Texas
      limited liability company

                                      
	 	 
	 
      	
                                        By:

                                      
	 
      	
                                        
                                          

                                        

                                      
	 
      	Name:
      Murray
      Fleming
	 
      	Title:
      Officer
      of Sole
Member

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    SCHEDULE
I

    to

    TRADEMARK SECURITY
AGREEMENT

     

    Trademark
Registrations/Applications

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              	
                                                      Grantor

                                                    	 	
                                                      Country

                                                    	 	
                                                      Mark

                                                    	 	
                                                      Application/

                                                      Registration No.

                                                    	 	
                                                      App/Reg Date

                                                    	 
	 
      	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Trade
Names

     

    Common Law
Trademarks

     

    Trademarks Not Currently In
Use

     

    Trademark
Licenses

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]