Document:

Exhibit 10.14

 

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

 

	
  No.             

  	
  Original
  Issue Date: August 31, 2007

  
	
   

  	
  Amended and
  Restated Issue Date: September 26, 2007

  

 

	
  Holder:

  	
  John Fife

  
	
  Address:

  	
  303 East
  Wacker Drive

  
	
   

  	
  Suite 301

  
	
   

  	
  Chicago, IL
  60601

  

 

AMENDED AND RESTATED ORIGINAL ISSUE DISCOUNT
SECURED NOTE

 

THIS Amended
and Restated Original Issue Discount Secured Note is one of a duly authorized
issue of Notes of NATIONAL STORM MANAGEMENT, INC., a Nevada corporation, having
a principal place of business at 999 North Main Street, Suite 202, Glen Ellyn,
IL 60137 with offices at 1315 West 53rd Street, Mangonia Park, FL
33407 (the “Company”), designated as its Note or Notes (the “Note” or “Notes”)
in an aggregate face amount of Six Hundred Thousand and 00/100 Dollars ($600,000.00)
(the “Maturity Amount”). This Amended and Restated Original Issue Discount Secured
Note dated September 26, 2007 supersedes and replaces that certain Original
Issue Discount Secured Note dated August 31, 2007. The Notes shall be due upon
the earlier of (i) February 28, 2008 or (ii) the occurrence of an event of
default, as defined below (“Maturity Date”).

 

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

 

This Note is
subject to the following additional provisions:

 

Section 1.               [This
section intentionally left blank.]

 

Section 2.               Company
Covenants. The Company covenants and agrees that, so long as any amount is
due and owing under the Note, it shall not:

 

 

(a)           Fail to make any
payment of the principal of, interest on, or other obligations in respect of,
this Note, free of any claim of subordination, as and when the same shall
become due and payable (whether on the Maturity Date or by acceleration or
otherwise), for five (5) business days after the same shall be due and payable;

 

(b)           Fail to observe or
perform any other covenant, agreement or warranty contained in, or otherwise
commit any breach of, this Note or the Amended and Restated Stock Pledge
Agreement (the “Stock Pledge Agreement”) entered into contemporaneously
herewith (collectively, the “Loan Documents”), including but not limited to the
obligation of the Company to deliver to the Holder Pledged Shares (as defined
in the Stock Pledge Agreement), together with stock powers executed and with
the signatures thereon medallion guaranteed, and irrevocable letters of
instruction to the Company’s transfer agent, all under certain circumstances as
more fully set forth in the Stock Pledge Agreement, for five (5) Business Days
after the date on which notice of such failure or breach shall have been given;

 

(c)           Commence a voluntary
case under the United States Bankruptcy Code or insolvency laws as now or
hereafter in effect or any successor thereto (the “Bankruptcy Code”); or suffer
to have an involuntary case commenced against it under the Bankruptcy Code in
which the petition is not controverted within thirty (30 days), or is not
dismissed within sixty (60) days, after commencement of such involuntary case;
or suffer to have a “custodian” (as defined in the Bankruptcy Code) appointed
for, or take charge of, all or any substantial part of the property of the
Company, or commence any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company, or suffer to have commenced against it any such
proceeding which remains undismissed for a period of sixty (60) days; or be
adjudicated insolvent or bankrupt; or suffer to have any order of relief or
other order approving any such case or proceeding entered; or suffer to have
any appointment of any custodian or the like for it or any substantial part of
its property which continues undischarged or unstayed for a period of sixty
(60) days; or make a general assignment for the benefit of creditors; or fail
to pay, or state that it is unable to pay, its debts generally as they become
due; call a meeting of all of its creditors with a view to arranging a
composition or adjustment of its debts; or by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the foregoing;
or take any corporate or other action for the purpose of effecting any of the
foregoing;

 

(d)           Default in any of its
obligations under any mortgage, credit agreement or other facility, indenture,
agreement or other instrument under which there may be issued, or by which
there may be secured or evidenced any indebtedness of the Company in an amount
exceeding $750,000.00, whether such indebtedness now exists or shall hereafter
be created and such default shall result in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable; provided, that the default of the Company in its payment
obligations under that certain Fourth Amended and Restated Original Issue
Discount Secured Note dated June 29, 2007 shall not be deemed such an event of
default under this Section 2(d);

 

2

 

(e)           Be a party to any
Change of Control Transaction (as defined in Section 7), or sell or
dispose of all or in excess of forty-nine (49%) percent of its assets (based on
book value calculation as reflected in the Company’s most recent financial
statements) in one or more transactions (whether or not such sale would
constitute a Change of Control Transaction);

 

(f)              Have its common stock suspended or
delisted from trading for in excess of three (3) trading days;

 

(g)           Suffer to have the
average daily trading volume of its common stock, during any consecutive ten
(10) trading-day period, be less than two thousand ($2,000) dollars in value;

 

(h)           Suffer a determination by the U.S.
Securities and Exchange Commission or National Association of Securities
Dealers, or any applicable state regulatory authority, that it has violated
applicable securities laws;

 

(i)            Enter
into a transaction or series of transactions that would violate the “Twenty
Percent Rule” if the common stock of the Company were traded on the NASDAQ
market;

 

(j)            Enter into another
financing arrangement (other than a secured loan from a national banking
institution) or sale of equity (other than common stock at a fixed price per
share) with another entity;

 

(k)           Suffer to have an action, suit or proceeding
commenced against it seeking damages in an amount against which it is not
insured exceeding fifty thousand ($50,000) dollars;

 

(l)            Take any of the
following actions, or suffer to have any subsidiary corporation or entity in which
the Company owns beneficially or of record at least fifty percent (50%) of its
equity (each, a “Subsidiary”):  (i)
acquire any asset or assets outside of the ordinary course of business in a
transaction involving the payment by the Company or a Subsidiary of an
aggregate amount of more than fifty thousand and 00/100 dollars ($50,000.00),
(ii) sell, lease, license or transfer any property, including intellectual
property, except for sales of inventory and equipment or non-exclusive licenses
entered into in the ordinary course of business; (iii) redeem, purchase or
otherwise acquire, any of its capital stock or other equity, or warrants,
options or other rights convertible into such capital stock or other equity, or,
with respect to Subsidiaries only, issue any of such Subsidiary’s capital stock
or other equity or warrants, options or other rights convertible into such
capital stock or other equity; (iv) make any investments in, or loans or
advances to, any person other than in the ordinary course of business as
currently conducted, (v) fail to make any tax payment on or before the due
date; (vi) enter into any material transaction except, in the case of
transactions with persons that are not affiliates of the Company or such
Subsidiary except for transactions that are in the ordinary course of the
Company’s or such Subsidiary’s business, (vii) incur any indebtedness other
than trade credit incurred in the ordinary course of business, or (viii) agree
to do any of the foregoing; or

 

(m)          Make any representation
or warranty that is not true and correct in all material respects as of the
date of this Note and as of the date of a subsequent drawdown as provided in 

 

3

 

Section 1
as though made at that time, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in all
material respects as of such date.

 

Section 3.               Events
of Default. “Event of Default” wherever used herein, means a breach of one
or more of the covenants set forth in Section 2 (whatever the reason and
whether it shall be voluntary or involuntary or effected by operation of law or
pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body). Upon the occurrence of
an Event of Default, interest shall accrue on the unpaid portion of the
Maturity Amount at a rate of one and one/half (1.5%) percent per month, or
eighteen (18%) percent per year. Additionally, from and after the occurrence of
an Event of Default, the Note can be repaid, at the option of the Holder, in
stock of the Company valued at the Market Value (as defined in the Stock Pledge
Agreement), and, at the option of the Holder, the shares to be used for this purpose
may be newly issued shares, previously issued treasury shares or shares issued
by the Company in its own name and held by one or more lenders to the Company
as collateral security.

 

Section 4.               Transfer
or Exchange of Notes.

 

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

 

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

 

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

 

4

 

as may be
required solely to comply with the exemptions relied upon by the Company for
the transfer or disposition of the Note.

 

(ii)           If
in the opinion of the counsel referred to in this Section 4(b), the
proposed transfer or disposition of this Note described in the written notice
given pursuant to this Section 4(b) may not be effected without
registration or qualification of this Note, the Company shall promptly give
written notice thereof to the Holder, and the Holder will limit its activities
in respect to such as, in the opinion of such counsel, are permitted by law.

 

(c)           Prior to transfer of
this Note in compliance with Section 4(b), the Company and any agent of
the Company may treat the person in whose name this Note is duly registered on
the Note Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Note is
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.

 

Section 5.               Interest
Rate Limitation. The parties intend to conform strictly to the applicable
usury laws in effect from time to time during the term of the loan evidenced
hereby. Accordingly, if any transaction contemplated hereby would be usurious
under such laws, then notwithstanding any other provision hereof:  (i) the aggregate of all interest that is
contracted for, charged, or received under the Loan Documents shall not exceed
the maximum amount of interest allowed by applicable law (the “Highest Lawful
Rate”), and any excess shall be promptly credited to the Company by the Holder
(or, to the extent that such consideration shall have been paid, such excess
shall be promptly refunded to the Company by the Holder); (ii) neither the
Company nor any other person now or hereafter liable hereunder shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the Highest Lawful Rate; and (iii) the effective rate of interest shall be
reduced to the Highest Lawful Rate. All sums paid, or agreed to be paid, to the
Holder for the use, forbearance, and detention of the debt of the Company to
the Holder shall, to the extent permitted by applicable law, be allocated
throughout the full term of the Loan Documents until payment is made in full so
that the actual rate of interest does not exceed the Highest Lawful Rate in
effect at any particular time during the full term thereof. If at any time the
rate of interest under the Loan Documents exceeds the Highest Lawful Rate, the
rate of interest to accrue pursuant to the Loan Documents shall be limited,
notwithstanding anything to the contrary in the Loan Documents, to the Highest
Lawful Rate, but any subsequent reductions in the base rate shall not reduce
the interest to accrue pursuant to the Loan Documents below the Highest Lawful
Rate until the total amount of interest accrued equals the amount of interest
that would have accrued if a varying rate per annum equal to the interest rate
under the Loan Documents had at all times been in effect. If the total amount
of interest paid or accrued pursuant to the Loan Documents under the foregoing
provisions is less than the total amount of interest that would have accrued if
a varying rate per annum equal to the interest rate under the Loan Documents
had been in effect, then the Company agrees to pay to the Holder an amount
equal to the difference between (x) the lesser of (A) the amount of interest
that would have accrued if the Highest Lawful Rate had at all times been in
effect, or (B) the amount of interest that would have accrued if a varying rate
per annum equal to the interest rate under the Loan Documents had at all times
been in effect, and (y) the amount of interest accrued in accordance with the
other provisions of the Loan Documents.

 

5

 

Section 6.               Prepayment.

 

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

 

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

 

(c)           Any prepayment shall
reduce the Maturity Amount by the amount of such prepayment.

 

Section 7.               Definitions.
For the purposes hereof, the following terms shall have the following meanings:

 

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

 

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

 

Section 8.               Nature
of Company Obligation. Except as expressly provided herein, no provision of
this Note shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, interest and liquidated
damages (if any) on, this Note at the time, place, and rate, and in the coin or
currency, herein prescribed. This Note is a direct obligation of the Company.

 

Section 9.               Replacement
Note. If this Note shall be mutilated, lost, stolen or destroyed, the
Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Note, or in lieu of or in substitution for a lost,
stolen or destroyed Note, a new Note for the principal amount of this Note so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
loss, theft or destruction of such Note, and of the ownership hereof, and
indemnity, if requested, all reasonably satisfactory to the Company.

 

6

 

Section 10.             Choice of Law and Venue; Submission to
Jurisdiction; Service of Process.

 

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

 

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

 

(c)           THE COMPANY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, OR OTHER PROCESS ISSUED IN
ANY ACTION OR PROCEEDING AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT, OR
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO COMPANY.

 

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

 

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

 

Section 11.             Waiver. Any waiver by the Company
or the Holder of a breach of any provision of this Note shall not operate as or
be construed to be a waiver of any other breach of such provision or of any
breach of any other provision of this Note. The failure of the Company or the
Holder to insist upon strict adherence to any term of this Note on one or more
occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Note. Any waiver must be in writing.

 

7

 

Section 12.             Invalidity. If any provision of
this Note is invalid, illegal or unenforceable, the balance of this Note shall
remain in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons and
circumstances.

 

Section 13.             Business Day. Whenever any payment
or other obligation hereunder shall be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day (or, if such
next succeeding Business Day falls in the next calendar month, the preceding
Business Day in the appropriate calendar month).

 

Section 14.             Collateral Security. The obligation
of the Company for payment of principal, interest and all other sums hereunder,
in the event of a default and failure of the Company to perform hereunder, is
secured by the pledge of the Pledged Shares (as defined in the Stock Pledge
Agreement) by the Company as Pledgor under the terms and conditions of the
Stock Pledge Agreement.

 

Section 15.             Lock-Up. Except as provided below,
as long as any portion of the Note remains outstanding, the Company’s Chief
Executive Officer, Terry Kiefer, shall not sell, pledge, hypothecate, transfer
or otherwise dispose of or encumber any portion of the Company’s common stock
owned by him, or engage in any short sale or other derivative or hedging
transaction with respect to the Company’s common stock. Notwithstanding the
foregoing, Mr. Kiefer may sell (i) up to one (1%) percent of the total number
of the outstanding shares of the Company’s common stock during every ninety
(90) day period commencing on the effective date of a registration statement,
and (ii) up to four (4%) percent of the total number of the outstanding shares
of the Company’s common stock during each such ninety (90) day period at a
price equal to or greater than fifty ($0.50) cents per share.

 

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

 

Section 16.             Payment of Legal Fees. The Company
shall pay legal fees and expenses incurred by the Holder in connection with
negotiating and entering into the Note in an amount not to exceed five thousand
five hundred ($5,500) Dollars.

 

Section 17.             Waiver of Jury Trial. THE COMPANY
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS NOTE. THE COMPANY REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER AND KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

 

[signature page follows]

 

8

 

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

 

	
   

  	
  NATIONAL
  STORM MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terry
  Kiefer

  	
   

  
	
   

  	
  Name:

  	
  Terry Kiefer

  
	
   

  	
  Title:

  	
  Chief
  Executive OfficerExhibit 10.15

 

AMENDED AND RESTATED STOCK PLEDGE AGREEMENT

 

This AMENDED
AND RESTATED STOCK PLEDGE AGREEMENT (“Agreement”) is entered into as of September
26, 2007 by and between John Fife (the “Secured Party”), and National Storm
Management, Inc., a Nevada corporation having a principal place of business at
999 North Main Street, Suite 202, Glen Ellyn, IL 60137 with offices at 1315
West 53rd Street, Mangonia Park, FL 33407 (the “Pledgor”).

 

RECITALS

 

A.           Pursuant
to this Agreement, the Pledgor has agreed to pledge the Pledged Shares as
security for: (i) the performance of its obligations under its Original Issue
Discount Secured Note dated as of the date hereof and issued to the Secured
Party in an aggregate original face amount of Six Hundred Thousand and 00/100
dollars ($600,000.00) (the “Note”), which Note supersedes and replaces that
certain Original Issue Discount Secured Note dated as of August 31, 2007 issued
by the Pledgor to the Secured Party; and (ii) any and all other obligations of
the Pledgor to the Secured Party as the same may currently exist or arise from
time to time. Capitalized terms in this Agreement which are not identified
herein shall have the meanings given such terms in the Note.

 

B.             This
Agreement supersedes and replaces that certain Stock Pledge Agreement dated as
of August 31, 2007 by and between the Pledgor and the Secured Party.

 

C.             The
Secured Party is willing to accept the Note from the Pledgor only upon
receiving the Pledgor’s pledge of the Pledged Shares as set forth in this Agreement.

 

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

 

1.             Grant of Security
Interest; True-Up.

 

(a)           The Pledgor hereby
pledges to the Secured Party as collateral and security for the Secured
Obligations (as defined in Section 2) the securities set forth on the
attached Schedule 1 of this Agreement (the “Pledged Shares”), to secure
the obligations of the Pledgor as more fully set forth in the Note by the
Pledgor for the benefit of the holder of all or any part thereof (each, a “Holder”).
On or prior to the date of this Agreement, the Pledgor has delivered to the
Secured Party certificate(s) representing the Pledged Shares, along with a
stock transfer power duly executed in blank by the Pledgor and stamped with a
bank medallion guarantee, and an irrevocable letter of instruction to the
Pledgor’s transfer agent, instructing the transfer agent to register the
Pledged Shares in the name of the Holder in the event of a default under the
Note or under this Agreement (an “Irrevocable Letter of Instruction”). In
calculating the value of Pledged Shares delivered as part of a True-Up, the
common stock of the Pledgor (the “Common Stock”), including the shares being
delivered to the Secured Party, shall be deemed to have the market value that
it had on the date on which the deficiency in collateral was calculated, without

 

 

giving effect to any subsequent
increase or decrease in the value of the Common Stock in the market.

 

(b)           True-up. The
Pledgor shall be required to increase the number of Pledged Shares (a “True-Up”)
if (A) on any monthly anniversary during the term of the Note the market value
of the Pledged Shares then held by the Pledgor does not equal or exceed 300% of
the sum of the Maturity Amount of the Note (the “Obligations”), or (B) on any
trading day during the term of the Note the market value of the Pledged Shares
then held by the Pledgor does not equal or exceed 250% of the Obligations. A
True-Up shall not be deemed to be made until the following steps have been
taken:

 

(i)            Within
five (5) business days after receipt of notice from the Secured Party of a
deficiency in the value of the Pledged Shares, the Pledgor shall deliver to the
Secured Party (A) a certificate or certificates for additional shares equal to
not less than 300% of the principal amount of the Obligations (the “True-up
Shares”), together with (B) necessary stock powers, signed in blank and
medallion-guaranteed, and with (C) an Irrevocable Letter of Instruction (the
certificates, stock powers and Irrevocable Letter of Instruction are
collectively referred to as the “True-Up Documents”). In calculating the number
of Pledged Shares delivered as part of a True-Up, the Common Stock shall be
valued at the Market Value (as defined in Section 1(b)(ii) below)  based upon which the deficiency was
calculated (e.g., the average closing bid price for the ten (10) trading days
prior to the date on which the Collateral is valued).

 

(ii)           If
the Pledgor fails to deliver the True-up Documents to the Secured Party within
five (5) business days after receipt of notice by the Secured Party therefor,
the Pledgor shall pay to the Secured Party, in cash, two hundred and fifty
($250) dollars per business day until such certificates are delivered. Unless
otherwise set forth on Schedule 1 of this Agreement, the Pledgor is the
beneficial and record owner of the Pledged Shares set forth opposite the
Pledgor’s name on such Schedule. The Pledged Shares, together with any
additions, replacements, accessions and substitutes therefore, or proceeds
thereof, are hereinafter referred to collectively as the “Collateral” or the “Pledged
Shares”. Market Value means the average closing bid price for the ten (10)
trading days prior to the date on which the Collateral is valued for purposes
of this Section 1.

 

2.             Secured
Obligations. During the term hereof, the Collateral shall secure the
performance by the Pledgor of its obligations, covenants, and agreements under
(a) the Note and (b) derived from any other circumstance, whether or not
reduced to writing, and whether currently in existence or subsequently created,
to the Secured Party. The obligations, covenants and agreements described in
this Section 2 are the “Secured Obligations.”

 

3.             Perfection of
Security Interests.

 

(a)  Prior to execution of this Agreement by the
Pledgor, the Pledgor has delivered the Pledged Shares, together with stock
powers with medallion guarantees affixed thereto and an Irrevocable Letter of
Instruction.

 

2

 

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

 

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

 

5.             Pledgor’s Warranty.
On the date hereof, and at the time of any True-Up (as described in Section
1(b), the Pledgor represents and warrants hereby to the Secured Party as
follows with respect to the Pledged Shares and the transactions contemplated by
the Note and this Agreement:

 

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

 

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

 

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

 

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

 

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

 

(f)            The Pledgor has been
advised by counsel of the elements of a bona-fide pledge for purposes of Rule
144(d)(3)(iv) under the Securities Act of 1933, as amended, including the 

 

3

 

relevant SEC interpretations,
and affirms that its pledge of shares pursuant to this Agreement will
constitute a bona-fide pledge of such shares for purposes of such rule.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

(a)           The Secured Party may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies
of a secured party on default under the Uniform Commercial Code (the “Code”)
(irrespective of whether the Code applies to the affected items of Collateral),
and the Secured Party may also without notice (except as specified below) sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker’s board or at any of the Secured Party’s offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as the Secured Party may
deem commercially reasonable, irrespective of the impact of any such sales on
the market price of the Collateral. To the maximum extent permitted by
applicable law, the Secured Party may be the purchaser of any or all of the
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion
of the Collateral sold at any such public sale, to use and apply all or any
part of the Secured Obligations as a credit on account of the purchase price of
any Collateral payable at such sale. Each purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of the
Pledgor, and the Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay, or appraisal that it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. The Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) calendar days notice to the Pledgor of the
time and place of any public sale or the time after which a private sale is to
be made shall constitute reasonable notification. The Secured Party shall not
be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the maximum extent permitted by law, the Pledgor hereby waives
any claims against the Secured Party arising because the price at which any
Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale, even if the Secured Party
accepts the first offer received and does not offer such Collateral to more
than one offeree.

 

(b)           Notwithstanding the
foregoing, the Secured Party hereby acknowledges that the total number of
shares of stock that may be sold pursuant to Section 11(a) shall not
exceed, on any given trading day, the greater of:  (i) 3% of the aggregate trading volume during
the previous five (5) trading days, including that day; (ii) 15% of the trading
volume on that day; or (iii) such number of shares as yield proceeds (net of
commissions) of $50,000.

 

(c)           The Secured Party
hereby agrees that, upon delivery of an opinion of counsel stating that the
rights of the Secured Party will not be affected thereby, other shares of the
Common Stock may at any time be substituted for all or a portion of the Pledged
Shares;

 

(d)           The Pledgor hereby
agrees that any sale or other disposition of the Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies,
or other financial institutions in the city and state where the Secured Party
or the Pledgor is 

 

5

 

located in disposing of
property similar to the Collateral shall be deemed to be commercially
reasonable.

 

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

 

(f)            If the Secured Party
shall determine to exercise its right to sell all or any portion of the
Collateral pursuant to this Section 11, the Pledgor agrees that, upon
request of the Secured Party, the Pledgor will, at its own expense:

 

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

 

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

 

(iii)          Cause the Pledgor to
timely file all periodic reports required to be filed by the Pledgor under the
Securities Exchange Act of 1934.

 

(g)           THE PLEDGOR EXPRESSLY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW: 
(i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE
TIME THE SECURED PARTY DISPOSES OF ALL 

 

6

 

OR ANY PART OF THE COLLATERAL
AS PROVIDED IN THIS SECTION 11; (ii) ALL RIGHTS OF REDEMPTION, STAY OR
APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE
OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET
FORTH IN SUBSECTION (a) OF THIS SECTION 11, ANY REQUIREMENT OF
NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

 

(h)           Anything to the
contrary contained in this Agreement or otherwise notwithstanding, if and to
the extent that, on any date, the foreclosure by a Holder on any of the Pledged
Shares would result in the Secured Party or such designee being deemed the
beneficial owner of more than 9.99% of the then-outstanding shares of Common
Stock or any other class of Capital Shares (as defined below), then the Secured
Party shall not have the right, and the Pledgor shall not have the obligation, to
permit the re-issuance of any Pledged Shares in the name or at the direction of
such Holder as shall cause such Holder to be deemed the beneficial owner of
more than 9.99% of the then Outstanding (as defined below) Common Stock or any
other class of Capital Shares (as defined below). “Outstanding”, when used with
reference to the Capital Shares, means, on any date of determination, all
issued and outstanding Capital Shares, and includes all such shares issuable in
respect of outstanding scrip or any certificates representing fractional
interests in such shares; provided, however, that any Capital
Shares directly or indirectly owned or held by or for the account of the
Pledgor or any Subsidiary (as defined below) of the Pledgor shall not be deemed
“Outstanding” for purposes hereof. “Capital Shares” means the Common Stock and
any other shares of any other class or series of capital stock, whether now or
hereafter authorized and however designated, which have the right to
participate in the distribution of earnings and assets (upon dissolution,
liquidation or winding-up) of the Pledgor. “Subsidiary” means any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are owned directly or indirectly by the Pledgor.

 

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

 

7

 

12.           Term of Agreement
and Application of Proceeds.

 

 (a)          This Agreement shall continue in full force
and effect until the payment in full of the Secured Obligations. If the Note is
paid in full, the security interests in the relevant Collateral shall be deemed
released, and any portion of the Collateral not transferred to or sold by the
Secured Party shall be returned to the Pledgor. Within five (5) trading days of
the termination of this Agreement, (i) the relevant Collateral, along with any
relevant stock powers, shall be returned to the Pledgor, as contemplated above;
(ii) the Secured Party shall notify the transfer agent of the termination of
the Irrevocable Letter of Direction; and (iii) if any of the returned
Collateral has been registered in the name of the Secured Party pursuant to the
Irrevocable Letter of Instruction, such notice to the transfer agent by the
Secured Party shall instruct the transfer agent to register such Collateral in
the name of the Pledgor.

 

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

 

13.           Indemnity and
Expenses. The Pledgor agrees:

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

16.           Amendments; etc.
No amendment or waiver of any provision of this Agreement nor consent to any
departure by the Pledgor herefrom shall in any event be effective unless the
same shall be in writing and signed by the Secured Party, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Secured Party
to exercise, and no delay in exercising, any right under this Agreement, the
Note or otherwise with respect to any of the Secured Obligations, shall operate

 

9

 

as a waiver thereof; nor shall
any single or partial exercise of any right under this Agreement, the Note or
otherwise with respect to any of the Secured Obligations preclude any other or
further exercise thereof or the exercise of any other right. The remedies provided
for in this Agreement or otherwise with respect to any of the Secured
Obligations are cumulative and not exclusive of any remedies provided by law.

 

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

 

If to the
Pledgor:

 

National Storm
Management, Inc.

999 North Main
Street, Suite 202

Glen Ellyn, IL
60137

Attention:  Scott Knoll, Chief Financial Officer

Tel.:  (630)469-7663

Fax:  (630)446-4400

 

With copies
to:

 

Ungaretti
& Harris

3500 Three First National Plaza

70 West Madison Street

Chicago, IL 60602

Attention:  Michael Black, Esq.

Tel.:  (312)977-4400

Fax:  (312)977-4405

 

If to Secured
Party:

 

John Fife

303 East
Wacker Drive, Suite 301

Chicago, IL
60601

Tel.:  (312)565-1569

Fax:  (312)819-9701

 

10

 

With copies to:

 

Merrill Weber,
Esq.

303 East
Wacker Drive, Suite 301

Chicago, IL
60601

Tel.:  (773)406-2386

Fax:  (312)819-9701

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

21.           Severability. In
case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

 

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

 

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

 

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

 

12

 

IN WITNESS WHEREOF, the Pledgor
and the Secured Party have caused this Agreement to be duly executed and
delivered by themselves or, in the case of parties that are not natural
persons, their officers thereunto duly authorized, as of the date first written
above.

 

	
   

  	
  NATIONAL
  STORM MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terry
  Kiefer

  	
   

  
	
   

  	
   

  	
     Terry
  Kiefer, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Fife

  	
   

  
	
   

  	
   

  	
  (Name)

  	
     JOHN
  FIFE

  
					

 

 

Schedule 1 - Pledged Shares

 

	
  Pledged
  Shares:

  	
   

  	
  Seven million five hundred thousand (7,500,000) shares of the common
  stock of National Storm Management, Inc.

  
	
   

  	
   

  	
   

  
	
  Name of Pledgor:

  	
   

  	
  National Storm Management, Inc.

  
	
   

  	
   

  	
   

  
	
  Jurisdiction of Organization:

  	
   

  	
  Nevada

  
	
   

  	
   

  	
   

  
	
  Type of Interest:

  	
   

  	
  Shares of common stock

  
	
   

  	
   

  	
   

  
	
  Number of Shares/Units (if applicable): see above

  
	
   

  	
   

  	
   

  
	
  Certificate Number:

  	
   

  	
  419

  
	
   

  	
   

  	
   

  
	
  Date of Issuance:

  	
   

  	
  August 31, 2007

  
	
   

  	
   

  	
   

  
	
  Percentage of Outstanding Interests in Pledgor: 

  	
  Approximately        %

  
	
   

  	
   

  	
   

  
	
  Date of certificate:

  	
   

  	
  August 31, 2007

  
				

 

 

Schedule 2 - Pledgor Information

 

For Pledgor That Is a
Registered Organization

Jurisdiction of Organization:
Nevada

 

Type of Organization:
Corporation

 

Organizational ID Number (if
any): 04-3619346

 

For Pledgor That Is An
Individual:                                              

 

Address of Principal Residence:
See Notice section

 

For Pledgor That Is Neither a
Registered Organization nor an Individual:

 

Type of Organization:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}]]