MASTER SECURITIES AMENDMENT AGREEMENT
This
MASTER
SECURITIES AMENDMENT AGREEMENT
(this
“Amendment Agreement”), effective as of May 17, 2007 (the “Effective Date”),
supplements and amends the transaction documents (collectively, the “Transaction
Documents”) executed and delivered in connection with the private placement (the
“October 2006 Private Placement”) by Radial Energy Inc., a Nevada corporation
(the “Company”), of its secured convertible debentures and common stock purchase
warrants to Cornell Capital Partners, LP (the “Buyer”), which securities were
issued pursuant to the Securities Purchase Agreement dated October 2, 2006
by
and between the Company and the Buyer (the “Purchase Agreement”). The
Transaction Documents are supplemented, modified, and amended as set forth
in
this Amendment Agreement. Capitalized terms used and not defined in this
Amendment Agreement shall have the respective meanings set forth in the Purchase
Agreement.
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1.
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The
Company and the Buyer are parties to the Purchase Agreement, pursuant
to
which the Company has issued and sold to the Buyer secured convertible
debentures in the aggregate principal amount of $3,500,000 (the
“Outstanding Debentures”) and warrants to purchase an aggregate of
8,166,667 shares of the Company’s common stock (the “Outstanding
Warrants”).
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2.
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In
connection with the Purchase Agreement, the Company and the Buyer
entered
into an Investor Registration Rights Agreement, dated as of October
2,
2006 (the “Registration Rights Agreement”), pursuant to which the Company
agreed to undertake certain registration obligations to the
Buyer.
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3.
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In
connection with the Purchase Agreement, the Company entered into
the
Security Agreement dated October 2, 2006 with the Buyer (the “Security
Agreement”), pursuant to which the Company granted a security interest in
the Company property identified therein to secure the obligations
of the
Company to the Buyer in respect of the Convertible Debentures.
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4.
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In
connection with the Purchase Agreement, certain shareholders of
the
Company (each, a “Pledgor,” and collectively, the “Pledgors”) entered into
the Pledge and Escrow Agreement (the “Pledge and Escrow Agreement”) dated
October 2, 2006 in favor of Cornell Capital Partners, LP, in its
capacity
as collateral agent for the Buyer (the “Collateral Agent”), pursuant to
which the Pledgors granted a security interest in the Pledged Shares
to
secure the obligations of the Company to the Buyer in respect of
the
Convertible Debentures.
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5.
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In
connection with the Purchase Agreement, each of the Company’s officers and
directors executed a lock-up agreement (the “Lock-Up Agreements”).
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1.
Outstanding
Debentures. Subject to the terms hereof, the Company and the Buyer agree
that the Company shall redeem all of the amounts outstanding under each
of the
Outstanding Debentures by paying the Buyer, who is also the holder of
the
Outstanding Debentures, in respect of each Outstanding Debenture, an
amount
equal to the principal amount of the Outstanding Debenture plus the redemption
premium as set forth below (the “Redemption Premium”), and accrued interest
(collectively referred to as the “Redemption Amount”). The Redemption Premium
shall be eighteen percent (18%) of the principal amount being redeemed.
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1.1
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The
Redemption Amount shall be paid on or within ninety (90) days of
the date
of this Agreement.
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1.2
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As
a condition to the Company’s payment of the Redemption Amount, the Buyer
shall have surrendered each of the originally executed Outstanding
Debentures to the Company for
cancellation.
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1.3
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The
provisions of this Section 1 shall supersede any provisions in
the
Outstanding Debenture that addresses the same
topic.
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2.
Outstanding
Warrants. The Company and the Buyer agree that the Outstanding Warrants
previously issued by the Company to the Buyer pursuant to the Purchase
Agreement
shall continue to be in full force and effect.
3.
Securities
Purchase Agreement. The Company and the Buyer agree that, effective as of
the date of this Amendment Agreement, the Purchase Agreement shall be
terminated
and no longer have any force or effect. For the sake of clarity and for
avoidance of any doubt, the Company and the Buyer agree that the Company
shall
have no further obligation to issue to the Buyer, and the Buyer shall
have no
further obligation to purchase from the Company, a Convertible Debenture
in the
principal amount of $1,500,000, and the Company shall have no further
obligation
to issue to the Buyer the D Warrants.
4.
Registration
Rights. Subject to the terms hereof, the Company and the Buyer agree that,
effective as of the date of this Amendment Agreement, the Registration
Rights
Agreement shall be terminated and no longer have any force or
effect.
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4.1.
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As
a condition to the termination of the Registration Rights Agreement,
the
Company hereby agrees to undertake the registration obligations
to the
Buyer as set forth in this subsection 4.1 in respect of the shares
underlying the Outstanding Warrants. If the Company shall determine
to
register any of its securities either for its own account or the
account
of a security holder or holders, other than a registration relating
solely
to employee benefit plans, a registration relating to the offer
and sale
of debt securities, a registration relating to a corporate reorganization
or other Rule 145 transaction, or a registration on any registration
form
that does not permit secondary sales, the Company
will:
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2
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(a)
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promptly
give written notice of the proposed registration to the Buyer;
and
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(b)
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use
its best efforts to include in such registration (and any related
qualification under blue sky laws or other compliance) all of the
shares
of the Company’s common stock underlying the Outstanding
Warrants.
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4.2.
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The
Buyer hereby acknowledges that the Company had informed the Buyer
of its
intention to withdraw its registration statement on Form SB filed
with the
Securities and Exchange Commission (the “SEC”) on November 1, 2006 and
amended on February 21, 2007, registration no. 333-138351 (the
“Registration Statement”). The Buyer further acknowledges that it agreed
to such withdrawal, pursuant to which agreement the Company filed
an
application to withdraw the Registration Statement with the SEC
on March
7, 2007.
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4.3.
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The
Buyer hereby agrees and acknowledges that the Company has no obligations
whatsoever to the Buyer in respect of the Liquidated Damages set
forth in
the Registration Rights Agreement and has not otherwise breached
the
agreement, and, to the extent the Company may have incurred any
obligations to the Buyer in respect of such Liquidated Damages
or has
otherwise breached the agreement, the Buyer hereby waives any such
obligations or breaches.
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5.
Security
Agreement. The Company and the Buyer agree that, effective as of the date
of
this Amendment Agreement, the Security Agreement shall be terminated
and no
longer have any force or effect.
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5.1.
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In
connection with the termination of the Security Agreement, the
Buyer
hereby releases any and all security interests granted by the Company
in
favor of the Buyer set forth in the Security Agreement, effective
upon
execution of this Amendment Agreement. The Buyer hereby acknowledges
that,
effect upon the execution of this Amendment Agreement, all rights
of the
Buyer in the Pledged Property shall be
terminated.
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5.2.
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The
Buyer represents and warrants to the Company that, on or prior
to the date
of this Amendment Agreement, the Buyer has filed a form UCC-3 or
such
other forms as may be required to release fully the Buyer’s interests in
the Pledged Property as detailed in the Security Agreement. The
Buyer
shall deliver to the Company such documents as the Company shall
reasonably request to evidence such
termination.
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5.3.
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The
Buyer shall execute and deliver all such other certificates, instruments
and documents, as the Company may reasonably request in order to
effect
the release of the security interest in the Pledged Property as
set forth
in the Security Agreement.
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6.
Pledge
and Escrow Agreement. The Collateral Agent (who is also the Buyer) hereby
agrees that, effective as of the date of this Amendment Agreement, the
Pledge
and Escrow Agreement shall be terminated and no longer have any force
or
effect.
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6.1.
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In
connection with the termination of the Pledge and Escrow Agreement,
the
Collateral Agent hereby releases any and all security interests
granted by
each of the Pledgors as security for the Obligations set forth
in the
Security Agreement, effective upon execution of this Amendment
Agreement.
The Collateral Agent hereby acknowledges that, effective upon the
execution of this Amendment Agreement, all rights of the Collateral
Agent
in the Pledged Shares shall be
terminated.
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6.2.
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The
parties agree that an executed copy of this Amendment Agreement
shall
constitute instructions to the Escrow Agent to return to each Pledgor
the
Pledged Materials with respect to each Pledgor’s Pledged Shares, which
materials include without limitation the stock certificates made
out in
favor of the Pledgor representing the Pledged Shares, together
with duly
executed stock powers or other transfer documents with medallion
bank
guarantees and executed in blank by each
Pledgor.
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6.3.
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Promptly
upon execution of this Amendment Agreement, the Escrow Agent shall
return
to each Pledgor the Pledged Materials.
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6.4.
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The
Collateral Agent shall execute and deliver all such other certificates,
instruments and documents, as the Company may reasonably request
in order
to effect the release of the security interest in the Pledged Shares
as
set forth in the Pledge and Escrow
Agreement.
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7.
Irrevocable
Transfer Agent Instructions. Subject to the terms hereof, the Company, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq. (acting as the Escrow Agent), and Transfer Online (the
“Transfer
Agent”) agree that the Irrevocable Transfer Agent Instructions dated October
2,
2006 (the “Prior Instructions”) in connection with the October 2006 Private
Placement shall be amended to reflect the terms of this Amendment Agreement
as
set forth herein, effective upon the execution of this Amendment
Agreement.
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7.1.
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All
references in the Prior Instructions to the Debentures and the
Conversion
Shares, and all provisions and agreements in the Prior Instructions
related to such securities, are hereby deleted such that the Prior
Instructions, as amended by this Amendment Agreement, shall be
applicable
only with respect to the Outstanding Warrants and the shares of
the
Company’s common stock underlying the Outstanding Warrants. Since the
Company is no longer obligated to issue to the Buyer the D Warrants,
the
definition of the Warrant Shares is hereby amended to mean “Up to
8,166,667 shares of Common Stock to be issued to the Buyer upon
exercise
of the Warrants.”
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7.2.
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The
Buyer hereby agrees to and acknowledges the modifications to the
Prior
Instructions as set forth herein.
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4
8.
Lock-Up
Agreements. The Company and the Buyer agree that, effective as of the date
of this Amendment Agreement, the Lock-Up Agreements shall be terminated
and no
longer have any force or effect.
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9.1.
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Amendments;
Waivers. No provision of this Amendment Agreement may be waived or
amended except in a written instrument signed, in the case of an
amendment, by the parties hereto as set forth on the signature
pages
hereto, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect
to any
provision, condition or requirement of this Amendment Agreement
shall be
deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition
or
requirement hereof, nor shall any delay or omission of either party
to
exercise any right hereunder in any manner impair the exercise
of any such
right.
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9.2.
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Amendment
Controls. If any topic is addressed both in the a Transaction Document
(or any document related thereto) and in this Amendment Agreement,
this
Amendment Agreement shall control.
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9.3.
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Construction.
The headings herein are for convenience only, do not constitute
a part of
this Amendment Agreement and shall not be deemed to limit or affect
any of
the provisions hereof. The language used in this Amendment Agreement
will
be deemed to be the language chosen by the parties to express their
mutual
intent, and no rules of strict construction will be applied against
any
party.
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9.4.
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Governing
Law. This Amendment shall be governed by and interpreted in accordance
with the laws of the State of New Jersey without regard to the
principles
of conflict of laws. The parties further agree that any action
between
them shall be heard in ▇▇▇▇▇▇ County, New Jersey, and expressly
consent to
the jurisdiction and venue of the Superior Court of New Jersey,
sitting in
▇▇▇▇▇▇ County and the United States District Court for the District
of New
Jersey sitting in Newark, New Jersey for the adjudication of any
civil
action asserted pursuant to this Section
9.4.
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9.5.
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Execution.
This Amendment Agreement may be executed in two or more counterparts,
all
of which when taken together shall be considered one and the same
document
and shall become effective when counterparts have been signed by
each
party and delivered to the other party, it being understood that
both
parties need not sign the same counterpart.
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9.6.
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Severability.
If any provision of this Amendment Agreement is held to be invalid
or
unenforceable in any respect, the validity and enforceability of
the
remaining terms and provisions of this Amendment Agreement shall
not in
any way be affected or impaired thereby and the parties will attempt
to
agree upon a valid and enforceable provision that is a reasonable
substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Amendment
Agreement.
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(Signature
Page Follows)
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RADIAL
ENERGY INC.
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By:_/s/
▇. ▇▇▇▇▇ Lyons________________________________
Name: G. ▇▇▇▇▇ ▇▇▇▇▇
Title: President
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CORNELL
CAPITAL PARTNERS, LP
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By:_/s/
▇▇▇▇ Angelo_________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
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With
respect to the Pledge and Escrow Agreement only:
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ESQ., as
escrow
agent
/s/
▇▇▇▇▇ Gonzales_______________________________________
▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
With
respect to the Irrevocable Transfer Agent Instructions only:
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ESQ., as escrow agent
/s/
▇▇▇▇▇
Gonzales_______________________________________
▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
TRANSFER
ONLINE
By:
/s/ ▇▇▇▇▇ Cochran_____________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Officer
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