Full-Recourse Secured Promissory Note

Exhibit 10.15







June 7, 2006



1.               For value received, the undersigned (“Debtor”)promises to pay to GeoPetro Resources Company, a California corporation (“Lender”),or order, at One Maritime Plaza, Suite 700, San Francisco, California  94111, or at such other location as Lendermay from time to time designate, the principal sum of One Million Dollars($1,000,000), with interest thereon at the rate of eight percent (8 %) perannum, (the “Interest Rate”). Principal and interest shall be due and payableMarch 31, 2007 (the “Payment Date”).  Allpayments made shall first be applied to accrued but unpaid interest and secondto outstanding principal.  If the PaymentDate falls on a day which is not a banking day in California, the payment shallbe due on the next succeeding banking day.


2.               This Note is the Full-Recourse referred to in that certain Pledge Agreement (the “PledgeAgreement”), dated as of even date herewith, between Debtor and Lender, and theholder hereof is entitled to the benefits thereof. Reference is herein made tosaid Pledge Agreement for a description of the provisions upon which this Noteis issued and secured, and the nature and extent of the security and the rightsof the holder hereof.

3.               Debtor is and shall remain absolutely andunconditionally liable for the performance of its obligations under this Note,including, without limitation, any deficiency by reason of the failure of thecollateral described in the Pledge Agreement to satisfy all amounts due Lenderhereunder.  Debtor acknowledges andagrees that Lender is not required to utilize or exhaust the collateraldescribed in the Pledge Agreement to satisfy any amounts due hereunder whichare not timely paid, and that Lender may exercise any or all rights at law,equity or otherwise to receive payment in the event Debtor fails to pay anyamount due hereunder.

4.               Principal and interest shall be payablein lawful money of the United States of America.

5.               This Note may be prepaid, in whole or inpart, at any time without penalty.

6.               The following events shall constitute an “Eventof Default” under the Note:  (a) thefailure of Debtor to make any payment required under this Note when due; (b)any breach, misrepresentation or other default by Debtor under this Note or thePledge Agreement; (c) the insolvency of Debtor or the failure of Debtorgenerally to pay his debts as such debts become due; (d) the commencement as toDebtor of any voluntary or involuntary proceeding under any laws relating tobankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtorrelief; (e) the assignment by Debtor for the benefit of Debtor’s creditors; (f)the appointment, or commencement of any proceedings for the appointment, of areceiver, trustee, custodian or similar official for any of Debtor’s property;(g) the death of Debtor; (h) the failure of Debtor to comply with any order,judgment, injunction, decree, writ or demand of any court or other publicauthority; (i) the filing or recording against Debtor, or the property ofDebtor, of any notice of levy, notice to withhold, or other legal process fortaxes other than property taxes; (j) the default by Debtor on any obligationconcerning the




borrowing of money; (k) the issuance against Debtor, or the property ofDebtor, of any writ of attachment, execution, or other judicial lien; or (l)the deterioration of the financial condition of Debtor which results in Lenderdeeming itself, in good faith, insecure. Upon the occurrence of any such Event of Default, Lender may declare, inits discretion, all obligations under this Note immediately due and payable;however, upon the occurrence of an event of default under (d), (e) or (f), allprincipal and interest shall automatically become immediately due and payable.

7.               In case any oneor more Events of Default shall occur and be continuing and acceleration ofthis Note shall have occurred, Lender may, among other things, proceed to protectand enforce its rights by an action at law, suit in equity or other appropriateproceeding, whether for the specific performance of any agreement containedherein or in the Pledge Agreement, or for an injunction against a violation ofany of the terms hereof or thereof or in and of the exercise of any powergranted hereby or thereby or by law.  Noright conferred upon Lender hereby or by the Pledge Agreement shall beexclusive of any other right referred to herein or therein or now or hereafteravailable at law, in equity, by statute or otherwise.  Any principal or interest not paid by Debtorwhen due under this Note will bear interest at the rate of ten percent (10%).

8.               Debtor agrees to pay all costs, expensesand fees (including, without limitation, all attorneys’ fees) incurred byLender in any proceeding for collection of the debt evidenced hereby, or in anylitigation or controversy arising from or connected with this Note.

9.               This Note shall be governed by, andconstrued in accordance with, the laws of the State of California withoutreference to its conflict of laws principles. Debtor hereby expressly consents to jurisdiction and venue for anylitigation arising out of, under or related to this Note in the federal andstate courts of California.

10.         Reference in this Note to “Lender” shallmean the original Lender hereunder so long as such Lender shall be a holder ofthis Note, and thereafter shall mean any subsequent holder(s) of this Note.

11.         Time is of the essence of each obligationof Debtor hereunder.

12.         No delay or omission on the part ofLender in exercising any rights hereunder or under any other instrument givento secure this Note, shall operate as a waiver of such right or of any otherright hereunder, or under said instruments.

13.         Debtor hereby waives presentment forpayment, demand, notice of dishonor, and protest of this Note, and furtheragrees that none of the terms or provisions of this Note may be waived,altered, modified or amended, except as Lender may consent thereto in writing.

14.         All agreements between Debtor and Lenderare hereby expressly limited so that in no contingency or event whatsoevershall the amount paid or agreed to be paid to Lender for the use, forbearance,or retention of money exceed the maximum permissible under applicable law.  If, from any circumstance whatsoever,fulfillment of any provision hereof, at the time performance of such provisionsshall be due, shall be prohibited by law, the obligation to be fulfilled shallbe reduced to the maximum not so prohibited, and, if from any circumstances,




Lender should ever receive as interest an amount which would exceed thehighest lawful rate, such amount as would be excessive interest shall beapplied to the reduction of the principal balance outstanding under this Noteand not to the payment of interest. This provision shall control every otherprovision of all agreements between Debtor and Lender.









/s/ G. Carter Sednaoui



G. Carter Sednaoui






This Pledge Agreement(the “Agreement”) is made effective as of June ____, 2006, byG. Carter Sednaoui (“Pledgor”) in favor of GeoPetro Resources Company, aCalifornia corporation (“Lender”).


A.            Pledgor has executed that certain Full-Recourse of even date herewith (hereinafter, as the same may besubsequently amended, restated, supplemented or otherwise modified from time totime, the “Note”) in favor of Lender, pursuant to which Lender has lent fundsto Pledgor (the “Loan”) subject to the terms and conditions thereof.

B.            Pledgor is the record and beneficial owner of certainshares of capital stock of Lender.

NOW, THEREFORE, inconsideration of the above Recitals and to induce Lender to make the Loan, theparties hereto hereby agree as follows:

1.             Definitions.           The following terms shall have(unless otherwise provided elsewhere in this Agreement) the followingrespective meanings (such meanings being equally applicable to both thesingular and plural form of the terms defined):

“Bankruptcy Code” shallmean the provisions of title 11 of the United States Code, 11 U.S.C. §§ 101 etseq.

“Event of Default” shallhave the meaning assigned to it in Section 8.

“Indebtedness” shall havethe meaning assigned to it in Section 3.

“Pledged Collateral”shall have the meaning assigned to it in Section 2.

“Pledged Shares” shallhave the meaning assigned to it in Section 2.

“Securities Act” shallmean the provisions of the Securities Act of 1933, 15 U.S.C. Sections 77a etseq.

“Termination Date” shallmean the date on which the Indebtedness has been indefeasibly repaid in full.

2.             Grantof Security Interest.                Pledgorhereby grants to Lender a possessory security interest in 564,120 of Pledgor’sshares of common stock of Lender (the “Pledged Shares”) and the certificatesrepresenting the Pledged Shares, any and all replacements, accessions andsubstitutions in respect of the Pledged Shares, and all dividends,distributions, cash instruments and other property  or proceeds from time to time received,receivable or otherwise distributed in respect of or in exchange for any or allof such Pledged Shares (the “Pledged Collateral”).




3.             Indebtedness.        Pledgor agrees that the PledgedCollateral is and shall be security for the timely payment and performance ofall obligations under all Indebtedness to Lender.  “Indebtedness” means all debts, obligationsand liabilities of Pledgor in connection with the Note; all renewals,extensions and modifications thereof; and all attorneys’ fees and costsincurred by Lender in connection with the collection and enforcement thereof.

4.             Deliveryof Pledged Collateral.         Allcertificates evidencing the Pledged Collateral have been or shall be deliveredto and held by Lender or to a bailee on behalf of Lender pursuant to the termsof this Agreement.  All Pledged Sharesshall be accompanied by duly executed instruments of transfer or assignment inblank, all in form and substance satisfactory to Lender.

5.             Representationsand Warranties.    Pledgor representsand warrants to Lender that:

(a)           Pledgor is, and at the time ofdelivery of the Pledged Shares to Lender, the sole holder of record and thesole beneficial owner of such Pledged Collateral pledged by it free and clearof any lien thereon or affecting the title thereto, except for any lien createdby this Agreement;

(b)           Pledgor has the right and requisiteauthority to pledge, assign, transfer, deliver, deposit and set over thePledged Collateral pledged by Pledgor to Lender as provided herein;

(c)           No consent, approval, authorizationor other order or other action by, and no notice to or filing with, anygovernmental authority or any other Person is required (i) for the pledgeby Pledgor of the Pledged Collateral pursuant to this Agreement or for theexecution, delivery or performance of this Agreement by Pledgor, or (ii) forthe exercise by Lender of the voting or other rights provided for in this Agreementor the remedies in respect of the Pledged Collateral pursuant to thisAgreement, except as may be required in connection with such disposition bylaws affecting the offering and sale of securities generally;

(d)           Thepledge, assignment and delivery of the Pledged Collateral pursuant to thisAgreement will create a valid first priority lien in favor of Lender in thePledged Collateral and the proceeds thereof, securing the payment of Pledgor’sobligations under the Note, subject to no other lien; and

(e)           ThisAgreement has been duly authorized, executed and delivered by Pledgor andconstitutes a legal, valid and binding obligation of Pledgor enforceableagainst Pledgor in accordance with its terms.

The representations andwarranties set forth in this Section 5 shall survive the execution anddelivery of this Agreement.

6.             Covenants.            Pledgor covenants and agrees thatuntil the Termination Date:

(a)           Withoutthe prior written consent of Lender (which it can withhold, condition or delayin its sole and absolute discretion), Pledgor will not sell, assign, transfer,




pledge, orotherwise encumber any of its rights in or to any Pledged Collateral, or anyunpaid dividends or other distributions or payments with respect to any PledgedCollateral, or grant a lien in the Pledged Collateral;

(b)           Pledgorwill, at its expense, promptly execute, acknowledge and deliver all instrumentsand documents and take all such actions as Lender from time to time mayreasonably request in order to ensure to Lender the benefits of the liens inand to the Pledged Collateral intended to be created by this Agreement,including the filing of any UCC financing statements, which may be filed byLender with or (to the extent permitted by law) without the signature ofPledgor, and will cooperate with Lender, at Pledgor’s expense, in obtaining allnecessary approvals and making all necessary filings under federal, state,local or foreign law in connection with such liens or any private sale ortransfer of the Pledged Collateral, which sale or transfer would only occurupon the occurrence and during the continuance of an Event of Default; and

(c)           Pledgorhas and will defend the title to the Pledged Collateral and the liens of Lenderin the Pledged Collateral against the claim of any Person and will maintain andpreserve such liens.

7.             Pledgor’sRights.                So long as no Event ofDefault shall have occurred and be continuing and until written notice shall begiven to Pledgor in accordance with Section 9(a):

(a)           Pledgorshall have the right, from time to time, to vote and give consents with respectto the Pledged Collateral or any part thereof for all purposes not inconsistentwith the provisions of this Agreement or the Note; provided, thatwithout the prior written consent of Lender (which it can withhold, conditionor delay in its sole and absolute discretion), no vote shall be cast, and noconsent shall be given or action taken, that would have the effect of impairingthe position or interest of Lender in respect of the Pledged Collateral or thatwould authorize, effect or consent to: (i) the dissolution or liquidation,in whole or in part, of Lender; (ii) the consolidation or merger of Lender withany other entity (other than a merger in which Lender is the surviving entity);or (iii) the sale, disposition or encumbrance of all or substantially allof the assets of Lender.

(b)           Pledgorshall be entitled, from time to time, to collect and receive for its own useall dividends and other distributions paid in respect of the Pledged Shares,except for any and all dividends of stock in Lender; provided, that all suchdistributions and, until actually paid, all rights thereto, shall be subject tothe lien in favor of Lender created by this Agreement.

(c)           Allstock dividends and all other stock distributions paid or payable in respect ofany of the Pledged Shares, whenever paid or made, shall, when actually paid, bedelivered to Lender to hold as Pledged Collateral in the same form as soreceived (with any necessary endorsements).

8.             Eventsof Default. The occurrence of anyof the following shall constitute an “Event of Default” under this Agreement:

(a)                                  Pledgor shall fail to perform anyobligation under this Agreement; or




(b)           Pledgorshall fail to perform under the Note.

9.             Defaults and Remedies; Proxy.

(a)           Uponthe occurrence and during the continuation of any Event of Default, andconcurrently with written notice to Pledgor, Lender (personally or through anagent) is hereby authorized and empowered to transfer and register in its nameor in the name of its nominee the whole or any part of the Pledged Collateral,to exchange certificates representing or evidencing Pledged Collateral forcertificates of smaller or larger denominations, to exercise the voting and allother rights as a holder with respect thereto, to collect and receive all cashdividends and other distributions made thereon, to sell in one or more salesafter ten days’ notice of the time and place of any public sale or of the timeat which a private sale is to take place (which notice Pledgor agrees iscommercially reasonable) the whole or any part of the Pledged Collateral and tootherwise act with respect to the Pledged Collateral as though Lender were theoutright owner thereof.  Any sale shallbe made at a public or private sale at Lender’s place of business, or at anyplace to be named in the notice of sale, either for cash or upon credit or forfuture delivery at such price as Lender may deem fair, and Lender may be thepurchaser of the whole or any part of the Pledged Collateral so sold and holdthe same thereafter in its own right free from any claim of Pledgor or anyright of redemption.  Each sale shall bemade to the highest bidder, but Lender reserves the right to reject any and allbids at such sale that, in its discretion, it shall deem inadequate.  Except as otherwise specifically provided forin this Agreement or the Note, demands of performance, notices of sale,advertisements and the presence of property at sale are hereby waived and anysale hereunder may be conducted by an auctioneer or any officer or agent ofLender.  PLEDGOR HEREBY IRREVOCABLYCONSTITUTES AND APPOINTS LENDER AS ITS PROXY AND ATTORNEY-IN-FACT WITH RESPECTTO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES, WITHFULL POWER OF SUBSTITUTION TO DO SO.  THEAPPOINTMENT OF LENDER AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTERESTAND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE.  IN ADDITION TO THE RIGHT TO VOTE THE PLEDGEDSHARES, THE APPOINTMENT OF LENDER AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDETHE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TOWHICH A HOLDER OF PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDINGWRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS ANDVOTING AT SUCH MEETINGS).  SUCH PROXYSHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION(INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES ON THE RECORD BOOKS OF THE ISSUERTHEREOF) BY ANY PERSON (INCLUDING ANY ISSUER OF ANY PLEDGED SHARES OR ANYOFFICER THEREOF), UPON THE OCCURRENCE OF AN EVENT OF DEFAULT.  NOTWITHSTANDING THE FOREGOING, LENDER SHALLNOT HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALLNOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.

(b)           If,at the original time or times appointed for the sale of the whole or any partof the Pledged Collateral, (i) the highest bid, if there is but one sale, shallbe inadequate to discharge in full all the Indebtedness, or (ii) such PledgedCollateral is offered for sale in lots, the




highest bid forthe lot offered for sale at any of such sales would indicate to Lender, in itsdiscretion, that the proceeds of the sales of the whole of the PledgedCollateral would be unlikely to be sufficient to discharge all theIndebtedness, then Lender may, on one or more occasions and in its discretion,postpone any of said sales by public announcement at the time of sale or thetime of previous postponement of sale, and no other notice of such postponementor postponements of sale need be given, any other notice being hereby waived; provided,that any sale or sales made after such postponement shall be after ten days’notice to Pledgor.

(c)           If,at any time when Lender shall determine to exercise its right to sell the wholeor any part of the Pledged Collateral hereunder, such Pledged Collateral or thepart thereof to be sold shall not, for any reason whatsoever, be effectivelyregistered under the Securities Act (or any similar statute), then Lender may,in its discretion (subject only to applicable requirements of law), sell suchPledged Collateral or part thereof by private sale in such manner and undersuch circumstances as Lender may deem necessary or advisable, but subject tothe other requirements of this Section 9, and shall not be required toeffect such registration or to cause the same to be effected.  Without limiting the generality of theforegoing, in any such event, Lender in its discretion may (i) in accordancewith applicable securities laws proceed to make such private salenotwithstanding that a registration statement for the purpose of registeringsuch Pledged Collateral or part thereof could be or shall have been filed underthe Securities Act (or similar statute), (ii) approach and negotiate with asingle possible purchaser to effect such sale, and (iii) restrict such sale toa purchaser who is an accredited investor under the Securities Act and who willrepresent and agree that such purchaser is purchasing for its own account, forinvestment and not with a view to the distribution or sale of such PledgedCollateral or any part thereof.  Inaddition to a private sale as provided above in this Section 9, if anyof the Pledged Collateral shall not be freely distributable to the publicwithout registration under the Securities Act (or similar statute) at the timeof any proposed sale pursuant to this Section 9, then Lender shall notbe required to effect such registration or cause the same to be effected but,in its discretion (subject only to applicable requirements of law), may requirethat any sale hereunder (including a sale at auction) be conducted subject torestrictions:

(i)            as to the financial sophisticationand ability of any Person permitted to bid or purchase at any such sale;

(ii)           as to the content of legends to beplaced upon any certificates representing the Pledged Collateral sold in suchsale, including restrictions on future transfer thereof;

(iii)          as to the representations required tobe made by each Person bidding or purchasing at such sale relating to suchPerson’s access to financial information about the issuer of the PledgedCollateral and such Person’s intentions as to the holding of the PledgedCollateral so sold for investment for its own account and not with a view tothe distribution thereof; and

(iv)          as to such other matters as Lendermay, in its discretion, deem necessary or appropriate in order that such sale(notwithstanding any failure so to register) may be effected in compliance withthe Bankruptcy Code and other laws affecting the enforcement of creditors’rights and the Securities Act and all applicable state securities laws.




(d)           Pledgorrecognizes that Lender may be unable to effect a public sale of any or all thePledged Collateral and may be compelled to resort to one or more private salesthereof in accordance with clause (c) above.  Pledgor also acknowledges that any suchprivate sale may result in prices and other terms less favorable to the sellerthan if such sale were a public sale and, notwithstanding such circumstances,agrees that any such private sale shall not be deemed to have been made in acommercially unreasonable manner solely by virtue of such sale beingprivate.  Lender shall be under noobligation to delay a sale of any of the Pledged Collateral for the period oftime necessary to permit registration of such securities for public sale underthe Securities Act, or under applicable state securities laws.

10.          Costsand Expenses.            Pledgor promises, tothe extent permitted by applicable law, to reimburse Lender promptly for allreasonable costs and expenses incurred by Lender in performing any agreement ofPledgor which Pledgor shall fail to perform, or in taking any other actionwhich Lender deems necessary for the maintenance or preservation of any PledgedCollateral or its interest therein, which costs and expenses shall constituteIndebtedness under this Agreement.

11.          Power of Attorney.

(a)           Pledgorhereby irrevocably appoints Lender, or any officer thereof, as Pledgor’s trueand lawful attorney-in-fact coupled with an interest, with full power ofsubstitution, to sign or endorse any instrument, document, or other writingnecessary or desirable to transfer title or other rights to or in any of thePledged Collateral; and to do all acts necessary or incidental to assert,protect and enforce Lender’s rights in the Pledged Collateral and under thisAgreement.  Pledgor agrees that Pledgorwill reimburse Lender promptly upon demand for any reasonable expenses Lendermay incur while acting as Pledgor’s attorney-in-fact, which expenses shallconstitute Indebtedness under this Agreement.

(b)           Atany time, without notice, and at the expense of Pledgor, Lender in its name orin the name of Pledgor may, but shall not be obligated to (i) collect by legalproceedings or otherwise, endorse, receive and receipt for all distributions nowor hereafter payable upon or on account of the Pledged Collateral; (ii) insure,process and preserve the Pledged Collateral; and (iii) participate in anyrecapitalization, reclassification, reorganization, consolidation, redemption,merger or liquidation of any issuer of securities which constitute PledgedCollateral, and in connection therewith may deposit or surrender control of thePledged Collateral, accept money or other property in exchange for the PledgedCollateral, and take such action as it deems proper in connection therewith,and any other money or property received in exchange for the Pledged Collateralshall be applied to the Indebtedness or held by Lender thereafter as PledgedCollateral pursuant to the provisions hereof.

12.          Waiversof Pledgor.            Pledgor waives anyright to require Lender to proceed against any Person, or to exhaust anyPledged Collateral or to pursue any remedy in Lender’s power whatsoever.  Lender shall not be required to makepresentment, demand or protest, or give any notices thereof, or take any actionto preserve rights against prior parties with respect to any of the PledgedCollateral.  Pledgor waives the right toplead any statute of limitations or any defense to the personal liability ofPledgor as a defense to Lender’s exercise of any right or remedyhereunder.  No delay on Lender’s part inexercising any power of sale, lien, option or



other right hereunder, and nonotice or demand that may be given to or made upon Pledgor by Lender withrespect to any power of sale, lien, option or other right hereunder, shallconstitute a waiver thereof, or limit or impair Lender’s right to take anyaction or to exercise any power of sale, lien, option, or any other righthereunder, without notice or demand, or prejudice Lender’s rights as againstPledgor in any respect.

13.          Non-Waiver.         Lender may, in the exercise of itssole discretion, waive an Event of Default, or cure an Event of Default atPledgor’s expense.  Any such waiver shallbe subject to Section 15 (c) below.

14.          Lender’s Duties.

(a)           Lender’ssole duty with respect to the Pledged Collateral in its possession shall be touse reasonable care in the custody and preservation thereof.  Lender shall be deemed to have exercised reasonablecare in the custody and preservation of such Pledged Collateral if such PledgedCollateral is accorded treatment substantially equal to that which Lenderaccords its own property, it being understood that Lender shall not have anyresponsibility for ascertaining or taking action with respect to calls,conversions, exchanges, maturities, declining value, tenders or other mattersrelative to any Pledged Collateral, regardless of whether Lender has or isdeemed to have knowledge of such matters; or taking any necessary steps topreserve any rights against any person with respect to any PledgedCollateral.  Under no circumstances shallLender be responsible for any injury or loss to the Pledged Collateral, or anypart thereof, arising from any cause beyond the reasonable control of Lender.

(b)           Lendermay at any time deliver the Pledgor Collateral or any part thereof to Pledgorand the receipt of Pledgor shall be a complete and full acquittance for thePledged Collateral so delivered, and Lender shall thereafter be discharged fromany liability or responsibility therefor.

15.          General Provisions.

(a)           Notices. Any notices givenby any party under this Agreement or the Note shall be in writing and shalleither be served personally or by registered or certified mail, return receiptrequested. Each party may change the address to which notices, requests andother communications are to be sent by giving written notice of such change toeach other party.

(b)           BindingEffect.     ThisAgreement shall be binding upon Pledgor, its permitted successors,representatives and assigns, and shall inure to the benefit of Lender and itssuccessors, representatives and assigns; provided however that Pledgor may notassign or transfer’s Pledgor’s obligations under this Agreement without Lender’sprior written consent (which it can withhold, condition or delay in its soleand absolute discretion).

(c)           NoWaiver.            Anywaiver, consent or approval by Lender of any Event of Default or breach of anyprovision, condition or covenant of this Agreement or the Note must be inwriting and shall be effective only to the extent set forth in writing.  No waiver of any breach or default shall bedeemed a waiver of any later breach or default of the same or any otherprovision of this Agreement or the Note. No failure or delay on the part of Lender in exercising any power, rightor privilege under this Agreement or the Note shall operate as a waiverthereof,




and no single orpartial exercise of any such power, right or privilege shall preclude anyfurther exercise thereof, or the exercise of any further power, right orprivilege.

(d)           RightsCumulative.             Allrights and remedies existing under this Agreement are cumulative to, and notexclusive of, any other rights or remedies available under contract orapplicable law.

(e)           UnenforceableProvisions. Anyprovision of this Agreement which is prohibited or unenforceable in anyjurisdiction shall be so only as to such jurisdiction and only to the extent ofsuch prohibition or unenforceability, but all the remaining provisions of thisAgreement shall remain valid and enforceable.

(f)            Choiceof Law; Amendments.            ThisAgreement shall be binding upon and inure to the benefit of Pledgor and Lenderand their respective successors and assigns (to the extent permittedhereunder), and shall be governed by, and construed and enforced in accordancewith, the internal laws of state of California, excluding conflict of lawsprinciples that would cause the application of laws of any other jurisdiction,and none of the terms or provisions of this Agreement may be waived, altered,modified or amended except in writing duly signed for and on behalf of Lender,and Pledgor.

(g)           Indemnification.   Pledgor shall payand protect, defend and indemnify Lender and Lender’s employees, officers,directors, shareholders, affiliates, correspondents, agents and representatives(other than Lender, collectively “Agents”) against, and hold Lender and eachsuch Agent harmless from, all claims, actions, proceedings, liabilities,damages, losses, expenses (including, without limitation, attorneys’ fees andcosts) and other amounts incurred by Lender and each such Agent, arising fromthe matters contemplated by this Agreement; provided, however, that thisindemnification shall not apply to any of the foregoing incurred solely as theresult of Lender’s or any Agent’s gross negligence or willful misconduct.  This indemnification shall survive thepayment and satisfaction of all of Pledgor’s obligations and liabilities toLender.

(h)           Reimbursement.  Pledgor shallreimburse Lender for all costs and expenses, including without limitationreasonable attorneys’ fees and disbursements (and fees and disbursements ofLender’s in-house counsel) expended or incurred by Lender in any arbitration,mediation, judicial reference, legal action or otherwise in connection with (a)the enforcement of this Agreement, (b) any proceeding for declaratory relief,any counterclaim to any proceeding, or any appeal, or (c) the protection,preservation or enforcement of any rights of Lender.  For the purposes of this section, attorneys’fees shall include, without limitation, fees incurred in connection with thefollowing:  (1) contempt proceedings; (2)discovery; (3) any motion, proceeding or other activity of any kind inconnection with a bankruptcy proceeding or case arising out of or relating toany petition under the Bankruptcy Code, as the same shall be in effect fromtime to time, or any similar law; (4) garnishment, levy, and Pledgor and/orthird party examinations; and (5) postjudgment motions and proceedings of anykind, including without limitation any activity taken to collect or enforce anyjudgment.




(i)            EntireAgreement.              ThisAgreement is intended by Pledgor and Lender as the final expression of Pledgor’sobligations to Lender in connection with the Pledged Collateral and supersedesall prior understandings or agreements concerning the subject matter hereof.

(j)            Counterparts.       This Agreementmay be executed in any number of counterparts, which shall, collectively andseparately, constitute one agreement. Delivery of an executed counterpart of a signature page to thisAgreement by facsimile transmission shall be effective as delivery of amanually executed counterpart thereof.

(k)           Jurisdiction.         Debtor herebyexpressly consents to jurisdiction and venue for any litigation arising out of,under or related to this Agreement in the federal and state courts ofCalifornia.

16.          Terminationand Release of Pledged Shares.                When all of theIndebtedness has been fully and completely discharged and this Agreement isterminated, Lender shall return to Pledgor the Pledged Shares and other PledgedCollateral then held by Lender under this Agreement.

INWITNESS WHEREOF, Pledgor has executed this Agreement as of the date of thepreamble.