Document:

EX 10.3

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

    

    
      	
              No.
                1

            	
              Original
                Issue Date: December 76, 2006

            

    

    
      	
              Holder:

            	
              John
                Fife

            
	 	
            
	
              Address:
                

            	
              303
                East Wacker Drive

            
	 	
              Suite
                301

            
	 	
              Chicago,
                IL 60601

            

    

     

    ORIGINAL
      ISSUE DISCOUNT SECURED NOTE

     

    This
      Note
      is one of a duly authorized issue of Notes of PHANTOM ENTERTAINMENT, INC.,
      a
      Delaware corporation, having a principal place of business at 800 Fifth Avenue,
      Suite 4100, Seattle, Washington 98004 (the “Company”),
      designated as its Note (the “Note”)
      in an
      aggregate face amount of up to Eighty Three Thousand Three Hundred Thirty Three
      and 00/100 Dollars ($83,333.00) (the “Maturity Amount”). The Note shall be due
      (i) on June 7, 2007, or (ii) upon an event of default, as defined below
      (collectively, the “Maturity Date”).

     

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

    

    This
      Note
      is subject to the following additional provisions:

    

    Section
      1.    The
      Notes
      are exchangeable for an equal aggregate principal amount of Notes of different
      authorized denominations, as requested by the Holder surrendering the same
      but
      shall not be issuable in denominations of less than integral multiples of Ten
      Thousand Dollars ($10,000) unless such amount represents the full principal
      balance of Notes outstanding to such Holder. No service charge will be made
      for
      such registration of transfer or exchange.

    

     Section
      2.    Transfer
      of Note.

     

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

     

    (i)    If
      in the
      opinion of such counsel the proposed transfer may be effected without
      registration or qualification (under any federal or state securities laws),
      the
      Company, as promptly as practicable, shall

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    notify
      the Holder of such opinion, whereupon the Holder shall be entitled to transfer
      this Note or to dispose of Underlying Shares received upon the previous
      conversion of this Note, all in accordance with the terms of the notice
      delivered by the Holder to the Company; provided that an appropriate legend
      may
      be endorsed on this Note respecting restrictions upon transfer thereof necessary
      or advisable in the opinion of counsel and satisfactory to the Company to
      prevent further transfers which would be in violation of Section 5 of the
      Securities Act and applicable state securities laws; and provided further that
      the prospective transferee or purchaser shall execute such documents and make
      such representations, warranties, and agreements as may be required solely
      to
      comply with the exemptions relied upon by the Company for the transfer or
      disposition of the Note.

     

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

     

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

    

    Section
      3.    Events
      of Default.

     

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

    

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

    

    (ii)    the
      Company or any Pledgor shall fail to observe or perform any other covenant,
      agreement or warranty contained in, or otherwise commit any breach of, this
      Note
      or the Stock Pledge Agreement, including, but not limited to, the obligation
      of
      the Pledgor to issue the True-up Shares and the Company’s failure to offer the
      Holder a right of first refusal with respect to the issuance by the Company
      of
      common stock, or any instruments convertible or exercisable into common stock,
      as set forth in Section 5 of this Note, and such failure or breach shall not
      have been remedied within 10 days after the date on which notice of such failure
      or breach shall have been given; or

    

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

    

    (iv)    the
      Company shall default in any of its obligations under any mortgage, credit
      agreement or other facility, indenture, agreement or other instrument under
      which there may be issued, or by which there may be secured or evidenced any
      indebtedness of the Company in an amount exceeding $2,500,000.00, whether such
      indebtedness now exists or shall hereafter be created and such default shall
      result in such indebtedness becoming or being declared due and payable prior
      to
      the date on which it would otherwise become due and payable; or

    

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

    

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

    

    (vii)    the
      Company shall fail to file any reports required by Section 13 or 15(d) of the
      Exchange Act in a timely manner; or

    

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

    

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

    

    (x)    an
      action, suit or proceeding in the ordinary course of business is commenced
      against the Company seeking damages in an amount against which the Company
      is
      not insured exceeding $2,500,000;

     

    (xi)    an
      action, suit or proceeding not in the ordinary course of business is commenced
      against the Company seeking damages in an amount against which the Company
      is
      not insured exceeding $2,500,000;

    

    (xii)    the
      Company enters into a transaction or a series of transactions that would trigger
      the “twenty percent rule” if the Company’s common stock is listed for trading on
      the New York Stock Exchange, the American Stock Exchange, the Nasdaq or the
      Nasdaq Capital Market, notwithstanding the fact that the Company’s common stock
      is not listed for trading on such markets;

    

    (xiii)    a
      decline
      in the value of the Pledged Shares (as defined in Section 14 of this Note)
      in an
      amount equal to less than two and one-quarters (2.25) times the Maturity Amount,
      measured by the average daily volume weighted average price of the Company's
      common stock for the five (5) trading days subsequent to the most recent weekly
      anniversary date of this Note ; provided that, sufficient True-up Shares are
      not
      delivered by the Company to the Holder on or prior to 5 business days after
      such
      a decline in value; or

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (xiv)    a
      decline
      in the value of the Pledged Shares in an amount equal to less than the Maturity
      Amount, measured by the closing bid price of the Company common stock on the
      trading day prior to such a decline in value. 

    

    
      
        Upon
          the
          occurrence and during the continuation of any Event of Default specified
          in this
          Section 3, at the option of the Holder the Company shall pay to the Holder
          an amount equal to the sum of (1) the outstanding principal amount of this
          Note
plus
          (2)
          accrued and unpaid default interest, if any, thereon at the rate provided
          in
          this Note to the date of payment, (X) the Holder shall be entitled to exercise
          all rights and remedies under the Stock Pledge Agreement and Guaranty,
          and (Y)
          the Holder shall be entitled to exercise all other rights and remedies
          available
          at law or in equity

         

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

         

      

    

    Section
      5.    Right
      of First Refusal. From
      the
      date hereof until the one
      hundred eightieth (180th)
      day
      following the date that all the outstanding principal amount of this Note is
      repaid by the Company, upon
      any
      financing (a “Subsequent Financing”) by the Company of its common stock or
      securities convertible or exercisable into shares of common stock, the Holder
      shall have the right to participate in up to 100% of such Subsequent Financing.
      At least five (5) Business Days prior to the closing of the Subsequent
      Financing, the Company shall deliver to the Holder a written notice of its
      intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice
      shall ask the Holder if it wants to review the details of such financing (such
      additional notice, a “Subsequent Financing Notice”). Upon the request of the
      Holder, and only upon a request by the Holder, for a Subsequent Financing
      Notice, the Company shall promptly, but no later than one Business Day after
      such request, deliver a Subsequent Financing Notice to the Holder.
      Subsequent Financing Notice shall describe in reasonable detail the proposed
      terms of such Subsequent Financing, the amount of proceeds intended to be raised
      thereunder, and attached to which shall be a term

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    sheet
      or
      similar document relating thereto. The
      Holder
      shall
      notify the Company by 5:00 p.m. (New York City time) on the fifth (5th)
      Business Day after receipt of the Subsequent Financing Notice of its willingness
      to provide the Subsequent Financing on the terms described in the Subsequent
      Financing Notice, subject to completion of mutually acceptable documentation.
      If
the
      Holder
      fails to
      notify the Company of its willingness to provide all of the Subsequent
      Financing, the Company may effect the Subsequent Financing. Notwithstanding
      the
      foregoing, this Section 5 shall not apply in respect of the issuance of (a)
      shares of common stock or options to employees, consultants, officers or
      directors of the Company pursuant to any stock or option plan duly adopted
      by a
      majority of the Board of Directors of the Company, (b) securities upon the
      exercise of or conversion of any convertible securities, options or warrants
      issued and outstanding on the date of this Note, (c) securities issued pursuant
      to a merger, acquisition or strategic transaction approved by a majority of
      the
      Board of Directors of the Company (collectively, “Excluded
      Issuances”).

    

    Section
      6.    Prepayment.

    

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

    

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

    

    Section
      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 State of New
                York
                are authorized or required by law or other government action to
                close.

            

    

    

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

            

    

    

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      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 FLORIDA (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 FLORIDA, STATE
      OF
      FLORIDA OR, AT THE SOLE OPTION OF HOLDER, IN ANY OTHER COURT IN WHICH HOLDER
      SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
      JURISDICTION OVER THE MATTER IN CONTROVERSY. 

    

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

    

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

    

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

    

    
      	
              (e)
                

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

            

    

    

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

    

    Section
      12.    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.    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.    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 130,000,000 shares of common stock (the
      “Pledged
      Shares”)
      by the
      Company as Pledgor under the terms and conditions of a Stock Pledge Agreement,
      and a Guaranty executed and delivered by Timothy Roberts. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      15.    Payment
      of Legal Fees.
      The
      Company shall pay legal fees and expenses incurred by the Holder in connection
      with negotiating and entering into the Note in an amount not to exceed Five
      Thousand ($5,000) Dollars.

     

    Section
      16.    Waiver
      of Jury Trial.

     

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

    

    PHANTOM
      ENTERTAINMENT, INC.

     

    By: 
      /s/
      Greg
      Koler

      
        

      

    

    Name: 
      Greg
      Koler

    Title: 
      Chief
      Executive OfficerEX 10.4

    STOCK
      PLEDGE AGREEMENT

    

    STOCK
      PLEDGE AGREEMENT ("Agreement")
      entered into as of the 7th day of December 2006 by and among John Fife (the
      “Secured Party”), and Phantom Entertainment, Inc. (the “Pledgor”).

     

    RECITALS

     

    A.    The
      Pledgor has agreed to pledge certain shares as security for: (i) the performance
      by the Pledgor of its obligations under its Original Issue Discount Secured
      Note
      in an aggregate face amount of up to Two Hundred Fifty Thousand and 00/100
      Dollars ($250,000.00) payable to the Secured Party (the “Note”)
      and
      (ii) the performance by Timothy Roberts of his Guaranty delivered to Secured
      Party of even date herewith. Capitalized terms in this Agreement which are
      not
      identified herein will have the meanings given such terms in the Note.

    

    B.    The
      Secured Party is willing to accept the Note from the Company only upon receiving
      the Guaranty and pledge of certain stock 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.
      Pledgor
      hereby pledges to the Secured Party as collateral and security for the Secured
      Obligations (as defined in paragraph 2) the securities initially set forth
      on
      the attached Schedule 1 of this Agreement, (the “Pledged
      Shares”).
      Within five (5) business days of the date of this Agreement, the Pledgor shall
      deliver 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. If
      on any
      weekly anniversary during the term of the Note, the market value of the
      Collateral then held by the escrow agent, does not equal or exceed two and
      one-quarter (2.25) times the Maturity Amount of the Note, then within five
      (5)
      business days after such anniversary date, the Pledgor shall deliver to be
      held
      under the terms of this Agreement a certificate or certificates for additional
      shares and necessary stock powers equal to not less than two and one-quarter
      (2.25) times the Maturity Amount of the Note (the “True-up Shares”). The True-up
      Shares shall be valued at the Market Value on the relevant weekly anniversary
      date of the Note. For purposes of calculating the market value of the Pledged
      Shares, the market price will be the average daily volume weighted average
      price
      of the Company’s common stock for the five (5) trading
      days subsequent to the most recent weekly anniversary date of this Note. If
      the
      Pledgor fails to deliver the True-up Shares to the Secured Party within five
      business days after prior recalculation, the Pledgor shall pay to the Secured
      Party, in cash, Two Hundred Fifty ($250) Dollars per business day until such
      certificates are delivered. Unless otherwise set forth on Schedule 1 of this
      Agreement, Pledgor is the beneficial and record owner of the Pledged Shares
      set
      forth opposite such Pledgor’s name on such Schedule. Such Pledged Shares,
      together with any additions, replacements, accessions and substitutes therefore,
      or proceeds thereof, are hereinafter referred to collectively as the
“Collateral.” Market
      Value means the average closing bid price for the five 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 following:

    

    a.    The
      performance by the Pledgor of its obligations, covenants, and agreements under
      the Note, or of its obligations, covenants, and agreements under any additional
      notes which the Company may issue to the Secured Party after the date
      hereof.

    

    b.    The
      performance by Timothy Roberts of his obligations, covenants, and agreements
      under the Guaranty.

    

    The
      obligations, covenants and agreements described in clause (a) and (b) are the
      “Secured
      Obligations.”

    

    3.    Perfection
      of Security Interests.
      (a)
      Upon execution of this Agreement by the Pledgor, the Pledgor shall deliver
      the
      Pledge Shares, together with Stock Powers (with Medallion Guarantees
      annexed).

     

    (b)    The
      Pledgor will, at its expense, cause to be searched the public records with
      respect to the Collateral and will execute, deliver, file and record (in such
      manner and form as the Secured Party may require), or permit the Secured Party
      to file and record, as 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, as the case may be, such additional financing
      statements as the Secured Party may request.

    

    4.    Assignment.
      In
      connection with the transfer of the Note in accordance with their 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 the Secured Party's security interest in the Collateral. Any
      transferee of the Collateral shall be vested with all of the rights and powers
      of Secured Party hereunder with respect to the Collateral. 

    

    5.    Pledgor’s
      Warranty.
      (A)
      Title. The Pledgor represents and warrants hereby to the Secured Party as
      follows with respect to the Pledged Shares set forth opposite such Pledgor’s
      name on Schedule 2 to this Agreement: 

     

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

     

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

     

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

     

    B.    Other:
       (i)
      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 Notes. 

    

    (ii)    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.

    

    6.    Collection
      of Dividends and Interest.
      During
      the term of this Agreement and so long as Pledgor is not in default under the
      Note, 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 Secured Party has exercised its rights under this Agreement to foreclose
      its
      security interest in the Collateral, 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 Secured Party to be held under the terms hereof in the same manner
      as the Collateral.

    

    9.    Preservation
      of the Value of the Collateral.
      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)    Pledgor
      hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
      full authority in the place and stead of Pledgor and in the name of Pledgor,
      Secured Party or otherwise, from time to time at Secured Party's discretion,
      to
      take any action and to execute any instrument that 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
      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 Company or any other Person to the name
      of
      Secured Party or to the name of Secured Party's nominee.

    

    (b)    In
      addition to the designation of Secured Party as Pledgor's attorney-in-fact
      in
      subsection (a), Pledgor hereby irrevocably appoints Secured Party as 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 Pledgor engages in business, in order to transfer or to more
      effectively transfer any of the Pledged Interests or otherwise enforce Secured
      Party's rights hereunder.

    

    11.    Remedies
      upon Default.

    

    Upon
      the
      occurrence and during the continuance of an Event of Default under the Note
      and/or the Guaranty “Event of Default”):

    

    (a)    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 Code (irrespective of whether
      the Code applies to the affected items of Collateral), and Secured Party may
      also without notice (except as specified below) sell the Collateral or any
      part
      thereof in one or more parcels at public sale, at any exchange, broker's board
      or at any of 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 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, 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 Pledgor, and 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. Pledgor agrees that, to the extent notice of sale shall
      be
      required by law, at least ten (10) calendar days notice to Pledgor of the time
      and place of any public sale is to be made shall constitute reasonable
      notification. Secured Party shall not be obligated to make any sale of
      Collateral regardless of notice of sale having been given. Secured Party may
      adjourn any public 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)    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) of this Agreement
      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 $250,000.

    

    (c)    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 Borrower’s common stock may at any time be substituted for all or a portion
      of the Pledged Shares; 

    

    (d)    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 Secured Party is
      located in disposing of property similar to the Collateral shall be deemed
      to be
      commercially reasonable.

    

    (e)    Pledgor
      hereby acknowledges that the sale by 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 Secured Party or any subsequent transferee of the Collateral may dispose
      thereof. Pledgor acknowledges and agrees that in order to protect 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. Pledgor has no
      objection to sale in such a manner and agrees that Secured Party shall have
      no
      obligation to obtain the maximum possible price for the Collateral. Without
      limiting the generality of the foregoing, Pledgor agrees that, upon the
      occurrence and during the continuation of an Event of Default, Secured Party
      may, subject to applicable law, from

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    time
      to
      time attempt to sell all or any part of the Collateral by a private placement,
      restricting the bidders and prospective purchasers to those who will represent
      and agree that they are purchasing for investment only and not for distribution.
      In so doing, Secured Party may solicit offers to buy the Collateral or any
      part
      thereof for cash, from a limited number of investors reasonably believed by
      Secured Party to be institutional investors or other accredited investors who
      might be interested in purchasing the Collateral. If Secured Party shall solicit
      such offers, then the acceptance by Secured Party of one of the offers shall
      be
      deemed to be a commercially reasonable method of disposition of the
      Collateral.

    

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

    

    (i)    execute
      and deliver, or cause the officers and directors of the Company to execute
      and
      deliver, to any person, entity or governmental authority as Secured Party may
      choose, any and all documents and writings which, in 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 Pledgor
      or the Company engage in business, in order to transfer or to more effectively
      transfer the Pledged Interests or otherwise enforce 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
      Company to timely file all periodic reports required to be filed by the Company
      under the Securities Exchange Act of 1934.

    

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

    

    (g)    PLEDGOR
      EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL
      OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME SECURED PARTY DISPOSES
      OF
      ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS
      OF REDEMPTION, STAY, OR APPRAISAL THAT 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.

    

    12.     (a)
      Term
      of Agreement.
      This
      Agreement shall continue in full force and effect until the payment in full
      of
      the Note. 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 any one or more Secured Parties shall be returned
      to
      the Pledgor (and for such purpose, delivery to Darrin Ocasio, Esq., of Sichenzia
      Ross Friedman Ference LLP of New York, NY shall deemed to comply with such
      return requirement). Upon termination of this Pledge Agreement, the relevant
      Collateral shall be returned within five (5) Trading Days to Debtor or to the
      Pledgor, as contemplated above.

    

    (b)    Application
      of Proceeds.
      Upon
      the occurrence and during the continuance of an Event of Default, any cash
      held
      by Secured Party as Collateral and all cash Proceeds received by 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 Secured Party of its remedies
      as a secured creditor as provided in Section 9 shall be applied from time to
      time by the Secured Part as provided in the Note.

    

    13.    Indemnity
      and Expenses.

    

    Pledgor
      agrees:

    

    (a)    To
      indemnify and hold harmless 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 Secured Party upon demand for all reasonable costs and expenses
      (including, without limitation, reasonable attorneys' fees and expenses) that
      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 Note or otherwise available to it (whether at law, in
      equity or otherwise), or (iii) the failure by Pledgor to perform or observe
      any
      of the provisions hereof. The provisions of this Section shall survive the
      execution and delivery of this Agreement, the repayment of any of the Secured
      Obligations, the termination of the commitments of Secured Party under the
      Note
      and the termination of this Agreement.

    

    14.    Duties
      of Secured Party.

    

    The
      powers conferred on 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, Secured Party shall have no
      duty with respect to the Collateral or any responsibility for taking any
      necessary steps to preserve rights against any Persons with respect to any
      Collateral.

    

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

    

    (a)    THE
      VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT,
      AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
      AND
      CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (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 SARASOTA COUNTY,
      STATE
      OF FLORIDA OR, AT THE SOLE OPTION OF SECURED PARTY, IN ANY OTHER COURT IN WHICH
      SECURED PARTY SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS
      SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. 

    

    (b)    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)    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 PLEDGOR AT ITS ADDRESS FOR NOTICES IN ACCORDANCE WITH THIS
      AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
      OF
      PLEDGOR'S ACTUAL RECEIPT THEREOF OR THREE 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 SECURED
      PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO
      PRECLUDE THE ENFORCEMENT BY 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 Pledgor herefrom shall in any event be effective unless the same
      shall be in writing and signed by 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 Secured Party to exercise, and no
      delay in exercising any right under this Agreement, any other Credit Document,
      or otherwise with respect to any of the Secured Obligations, shall operate
      as a
      waiver thereof; nor shall any single or partial exercise of any right under
      this
      Agreement, any other Credit Document, or otherwise with respect to any of the
      Secured Obligations preclude any other or further exercise thereof or the
      exercise of any other right. The remedies provided for in this Agreement or
      otherwise with respect to any of the Secured Obligations are cumulative and
      not
      exclusive of any remedies provided by law.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    17.    Notices.

    

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

    

    If
      to
      Pledgor: 

     

    Phantom
      Entertainment, Inc.

    800
      Fifth
      Avenue, Suite 4100

    Seattle,
      Washington 98004

    Attn:
      Greg Koler

    Fax:
      (877) 482-9585

    

    With
      copies to: 

    

    Darrin
      M.
      Ocasio, Esq.

    Sichenzia
      Ross Friedman Ference LLP

    1065
      Avenue of the Americas

    New
      York,
      NY 10018  

    Fax
      No.: 212-930-9725

     

    If
      to
      Secured Party:

    

    John
      Fife

    303
      East
      Wacker Drive

    Suite
      301  

    Chicago,
      IL 60601

    

    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 Credit Agreement; (b) be binding
      upon Pledgor and its successors and assigns; and (c) inure to the benefit of
      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 Credit Agreement,
      the security interests granted herein shall automatically terminate and all
      rights to the Collateral shall revert to Pledgor. Upon any such termination,
      Secured Party will, at Pledgor's expense, execute and deliver to Pledgor such
      documents as Pledgor shall reasonably request to evidence such termination.
      Such
      documents shall be prepared by Pledgor and shall be in form and substance
      reasonably satisfactory to Secured Party.

    

    19.    Security
      Interest Absolute.

    

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

    

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

    

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

    

    (d)    any
      other
      circumstances that might otherwise constitute a defense available to, or a
      discharge of, 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
      Pledgor and Secured Party acknowledges and agrees that in exercising any rights
      under or with respect to the Collateral: (a) Secured Party is under no
      obligation to marshal any Collateral; (b) may, in its absolute discretion,
      realize upon the Collateral in any order and in any manner it so elects; and
      (c)
      may, in its absolute discretion, apply the proceeds of any or all of the
      Collateral to the Secured Obligations in any order and in any manner it so
      elects. Pledgor and Secured Party waive any right to require the marshaling
      of
      any of the Collateral.

    

    24.    Waiver
      of Jury Trial.

    

    PLEDGOR
      AND 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. PLEDGOR
      AND
      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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

    

    PHANTOM
      ENTERTAINMENT, INC.

     

     

    By: 
      /s/
      Greg
      Koler

      
        

      

    

    Name: 
      Greg
      Koler

    Title: 
      Chief
      Executive Officer

     

     

    JOHN
      FIFE

     

    By: 
      /s/
      John
      Fife

      
        

      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
      1 - Pledged Interests

    

    

    Pledged
      Interests: 129,000,000 shares of common stock of Phantom Entertainment,
      Inc.

    

    Name
      of
      Issuer: Phantom Entertainment, Inc.

    

    Jurisdiction
      of Organization: Delaware

    

    Type
      of
      Interest: Shares of common stock 

    

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

    

    Certificate
      Number(s): 

    

    Certificate
      Number, Number of Shares, Date of Issuance 

    

    #6210-9
      -
      10,000,000 

    Date
      of
      Issuance: November 17, 2006

    

    #6211-7
      -
      10,000,000

    Date
      of
      Issuance: November 17, 2006

    

    #6212-5
      -
      20,000,000

    Date
      of
      Issuance: November 17, 2006

    

    #6213-3
      -
      8,000,000

    Date
      of
      Issuance: November 17, 2006

    

    #6209-1
      -
      10,000,000

    Date
      of
      Issuance: November 17, 2006

    

    #6208-3
      -
      10,000,000

    Date
      of
      Issuance: November 17, 2006

    

    #6207-5
      -
      10,000,000

    Date
      of
      Issuance: November 17, 2006

    

    #6095-4
      -
      51,000,000

    Date
      of
      Issuance: October 31, 2006

    

    Percentage
      of Outstanding Interests in Issuer: approximately ___% 

     

     

     

    Schedule
      2 - Pledgor Information

    

    

    For
      Pledgor That Is a Registered Organization

    

    Jurisdiction
      of Organization: Phantom Entertainment, Inc. - Delaware

    

    Type
      of
      Organization: for-profit corporation

    

    Organizational
      Tax ID Number (if any): 65-1048794

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    For
      Pledgor That Is An Individual:
      _________________________________________________

    

    Address
      of Principal Residence:
      ___________________________________________________

    

    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-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]