TARPON INDUSTRIES, INC.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Tel: 000 000-0000
Fax: 000 000 0000
Email: xxxxxxxxx@xxxxxxxxx.xxx
AMENDMENT TO FINANCING AGREEMENT
DATED June 14, 2007
This amendment and extension agreement is made as of and to be effective as
of December 17, 2007 (Amendment and Extension Agreement), and is by and among
Tarpon Industries, Inc. (TPO) and High Capital Funding, LLC (HCF) acting in its
capacity as Lead Investor under that certain Financing Agreement dated June 14,
2007 by and among TPO, HCF, and certain other Investors signatory thereto.
RECITALS:
1. Unless otherwise stated herein, all capitalized terms have the
meanings ascribed to them in the Financing Agreement, provided that
"Qualified Offering" shall mean an underwritten public offering or a
private placement of equity securities by the Company resulting in
gross proceeds of $5,000,000 or more.
2. In or about June and July 2007 TPO issued a series of Bridge Notes to
HCF and the other Investors in the aggregate principal amount of
$1,700,000, pursuant to a financing agreement (the "Financing
Agreement") dated as of June 14, 2007.
3. The Bridge Notes have a Maturity Date of December 17, 2007, which may
be extended by the Lead Investor upon the written request of TPO for
up to six one-month periods upon such additional terms and conditions
as the Lead Investor shall determine in its sole discretion, as set
forth in the Financing Agreement.
4. As a result of unforeseen delays there has not been a closing of a
Qualified Offering on or before the Maturity Date, and accordingly, by
executing this Agreement, TPO is hereby making a written request to
HCF for a three month extension of the Maturity Date.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS;
HCF in its capacity as Lead Investor hereby grants TPO a three
month extension of the Maturity Date to March 17, 2008 upon the
following terms and conditions:
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(i) Recitals 1-4 are incorporated in this Amendment and Extension
Agreement as if fully set forth herein.
(ii) As set forth in the Financing Agreement, effective December 18,
2007 the interest rate shall be increased to 13% per annum.
(iii) Effective upon the mutual execution of this agreement by TPO and
HCF, each Holder of Bridge Shares shall have the right to
exchange his Bridge Shares at the closing of any Qualified
Offering for unregistered securities of TPO that are otherwise
identical to the securities issued by TPO in such Qualified
Offering (Exchange Securities). The number of Exchange Securities
shall be equal to the principal amount of the Bridge Note,
divided by the offering price of the securities sold in the
Qualified Offering.
(iv) The "Registration Rights" section of the Financing Agreement
shall be deemed to include the Exchange Securities as
"Registrable Securities," provided however: that no Registration
Statement shall be required to be filed before April 15, 2008. In
the event that the Exchange Securities include warrants, the
liquidated damages with respect to non-compliance with this
section as to such warrants and/or the underlying common stock
shall be equal to 2% of the principal amount of the related
Bridge Notes per month or part thereof that such non-compliance
continues.
(v) In the event the closing of a Qualified Offering has not occurred
on or before March 17, 2008, the Maturity Date may be further
extended for up to an additional three one month periods by HCF
as Lead Investor, each monthly extension being made, if at all,
at the written request of TPO. In consideration of such further
extensions each Holder of Bridge Shares, in addition to the
Exchange Securities in subsection (iii) above, shall receive
additional Exchange Securities equal to 1/12 of the principal
amount of the Bridge Note, divided by the offering price of the
securities sold in the Qualified Offering for each month or part
thereof of such additional extension.
(vi) As set forth in the Financing Agreement, effective December 18,
2007 the Holders are entitled to receive 1/4 of a share of TPO
restricted common stock per dollar of Bridge Note principal for
each month or part thereof that the Maturity Date is extended
(Extension Shares). This requirement is hereby waived.
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(vii) If there has been no Qualified Offering by March 17, 2008, or by
the latest extended Maturity Date pursuant to subsection (v)
above, the Holders shall have the right to exchange their Bridge
Shares for "Alternate Exchange Securities." The amount of
Alternate Exchange Securities shall be determined by dividing
100% of the Bridge Note principal (Exchange Amount), plus 1/12 of
the Exchange Amount for each month or part thereof of Maturity
Date extension beyond March 17, 2008, by the average closing bid
price of TPO common stock on a U.S. securities market (including
the OTCBB) for the five trading days ending on the latest
extended Maturity Date, but not later than June 17, 2008. If at
the time of the calculation of the number of Alternate Exchange
Securities the TPO common stock is being quoted on the Pink
Sheets the amount of Alternate Exchange Securities shall be
determined by dividing the Exchange Amount plus 1/12 of the
Exchange Amount for each month or part thereof of Maturity Date
extension beyond March 17, 2008, by 75% of the average closing
bid price of TPO common stock on the Pink Sheets for the five
trading days ending on the latest extended Maturity Date, but not
later than June 17, 2008. The right to exchange the Bridge Shares
for Alternate Exchange Securities shall be exercisable for a
period of one month following the latest extended Maturity Date.
(viii) Except as expressly modified by this Amendment and Extension
Agreement all other terms and conditions of the Financing
Agreement shall remain in full force and effect.
(ix) This agreement shall be effective upon the mutual execution by
TPO and HCF.
TARPON INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxxxx Date: December 24, 2007
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Xxxxx X. Xxxxxxxx, CEO
High Capital Funding, LLC
By: /s/ Xxxxx X. Xxxx Date: December 24, 2007
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Xxxxx X. Xxxx, Manager
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