WAIVER AND AMENDMENT AGREEMENT
This
Waiver and Amendment Agreement (this “Agreement”),
is
made and entered into as of February 4, 2008, by and among Solomon Technologies,
Inc., a Delaware corporation (the “Company”)
and
the investors that is a signatory hereto (individually, a “Holder”
and
together with other investors in the Debentures (as defined herein), the
“Holders”). Capitalized terms not defined in this Agreement have the same
meanings ascribed to them in the Purchase Agreement (as defined
below).
WHEREAS,
the Company and the Holder are parties to that certain Securities Purchase
Agreement, dated as of January 17, 2007, as amended on August 24, 2007 (the
“Purchase
Agreement”),
under
which the Company issued to the Holders its Variable Rate Self-Liquidating
Senior Secured Convertible Debentures with an aggregate principal amount of
$5,350,000 (the “Debentures”),
and
Common Stock Purchase Warrants to purchase up to, in the aggregate, 2,006,250
shares of Common Stock (the “Warrants”);
and
WHEREAS,
January 23, 2008 will be the one-year anniversary of the date when the Company
issued the Debentures to the Holders; and
WHEREAS,
commencing on January 23, 2008, the Holders should be entitled to use
Rule 144 to sell the Conversion Shares issuable upon (i) conversion of the
Debentures then held by the Holders or (ii) payment of a Monthly Redemption
Amount by the Company; and
WHEREAS,
commencing on February 18, 2008, the Holder should be entitled to use
Rule 144 to sell, without volume or manner restrictions, the Conversion
Shares as provided herein; and
WHEREAS,
as long as the Debentures are outstanding the Company will owe to each of the
Holders a Monthly Redemption Amount payable on each Monthly Redemption Date;
and
WHEREAS,
the Company owes to the Holder a Monthly Redemption Amount that became payable
on January 1, 2008 (each, a “January
2008 Redemption”)
and
remains unpaid as of the date of this Agreement; and
WHEREAS,
the Company will owe to the Holder a Monthly Redemption Amount that will become
payable on February 1, 2008 (each, a “February
2008 Redemption”);
and
WHEREAS,
the Company proposes to pay to the Holder its (i) January 2008 Redemptions
and
(ii) February 2008 Redemptions in Conversion Shares and has requested that
the
Holder waive certain provisions of the Transaction Documents in connection
with
the payment of the January 2008 Redemptions and the February 2008 Redemptions;
and
WHEREAS,
beginning with the Monthly Redemption due March 1, 2008, and, except as provided
herein, continuing through the Monthly Redemption on May 1, the Company proposes
to make the Holder’s Monthly Redemptions by paying to the Holder its Monthly
Redemption Share Amount of Conversion Shares, and has requested that the Holder
waive certain provisions of the Transaction Documents in connection with the
payment of the Monthly Redemption Amounts in Conversion Shares; and
WHEREAS,
the Company proposes to include the shares of Common Stock issuable upon
exercise of the Warrants in a registration statement (the “New
Registration Statement”)
on
Form SB-2 (or another appropriate form) that the Company will file pursuant
to a
pending private equity placement; and
WHEREAS,
the Company will use its commercially reasonable best efforts to file the New
Registration Statement with the Commission no later than May 31, 2008;
and
WHEREAS,
the parties desire to waive and amend certain provisions of the Debentures
and
the Registration Rights Agreement, each as previously amended, according to
the
terms of this Agreement; and
WHEREAS,
the Company wishes to offer the Holder, as inducement to enter into this
Agreement, 31,674 restricted shares of Common Stock (the “Inducement
Shares”).
NOW
THEREFORE, in consideration of the terms contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties, intending to be legally bound, agree as
follows:
Section
1. Amendment
of the Registration Rights Agreement.
Notwithstanding the provisions of Section 1 of the Registration Rights
Agreement, the Holder agrees that the definition of Registrable Securities
shall
not include any shares that can be sold by the holder thereof without volume
or
manner restrictions pursuant to Rule 144 or any successor rule under the
Securities Act, provided that counsel to the Company provides the transfer
agent
of the Company with an opinion that such Registrable Securities may be resold
pursuant to Rule 144 without volume or manner restrictions.
Section
2. Waivers
with respect to the Registration Rights Agreement.
In
consideration for the Inducement Shares and subject to the terms and conditions
of this Agreement, the Holder waives (i) any failure or delay by the Company
that may have occurred through the date hereof in fulfilling any of the
Company’s obligations under the Registration Rights Agreement; and (ii) any
rights to liquidated damages as set forth in Section 2(b) of the Registration
Rights Agreement as a result of any past, present or future failure or delay
by
the Company in fulfilling its obligations under the Registration Rights
Agreement.
Section
3. New
Registration Statement.
The
Company will include the shares underlying the Warrants in the New Registration
Statement, and the Company will use its commercially reasonable best efforts
to
file the New Registration Statement with the Commission no later than May 31,
2008.
Section
4. Waivers
with respect to Equity Conditions.
Subject
to the terms and conditions of this Agreement and concerning the Equity
Conditions set forth in Section 1 of each of the Debentures (the “Equity
Conditions”), the Holder waives any failure by the Company to meet:
(a) each
of
the Equity Conditions in connection with paying the January 2008 Redemptions
and
the February 2008 Redemptions in Conversion Shares, provided that such
Conversion shares will be saleable under Rule 144 with volume restrictions
through February 17, 2008 and without volume or manner restrictions thereafter;
and
(b) clauses
(ii), (iii), (vi), and (x) of the Equity Conditions in connection with paying
the Monthly Redemptions in Conversion Shares, beginning with the Monthly
Redemption due March 1, 2008, and continuing through the Monthly Redemption
due
May 1, 2008, provided that the Conversions Shares issued with respect to the
Monthly Redemptions in March, April and May, 2008 do not have any restrictive
legend and are freely tradable.
Section
5. Effect
on Transaction Documents.
The
foregoing waivers and agreements are given solely in respect of the transactions
described herein. Except
as
expressly set forth in this Agreement, all of the terms and conditions of the
Transaction Documents shall continue in full force and effect after the
execution of this Agreement. This
Agreement shall not constitute a novation or accord and satisfaction of any
such
Transaction Document.
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Section
6. Filing
of 8-K.
Within
four Trading Days of the date of this Agreement, the Company shall issue a
Current Report on Form 8-K disclosing the material terms of the transactions
contemplated, which shall include this Agreement as an attachment
thereto.
Section
7. Non-Affiliate.
The
Holder represents and warrants that as of the date of this Agreement (i) it
is
not an Affiliate of the Company and (ii) it has not been an Affiliate of the
Company for at least the three months preceding the date of this Agreement.
The
Holder covenants that, if it becomes an Affiliate of the Company at any time
while it holds any Debentures or Warrants, it shall promptly notify the Company
of its Affiliate status.
Section
8. Delivery
of Shares.
(a) The
Company hereby agrees that on February 4, 2008, it will cause its transfer
agent
to issue to the Holder 1,221,912 Conversion Shares. The certificate for the
Conversion Shares shall bear the standard Rule 144 restrictive legend.
(b) The
Company hereby agrees that on February 4, 2008, it will cause its transfer
agent
to issue to the Holder the Inducement Shares. The Inducement Shares may only
be
transferred or otherwise disposed of in compliance with state and federal
securities laws. The certificates for the Inducement Shares shall bear the
standard Rule 144 restrictive legend.
(c) The
Holder agrees that the delivery to it of the Conversion Shares and Inducement
Shares shall constitute full payment of the January 2008 Redemption and February
2008 Redemption owed to the Holder.
Section
9. Execution
and Counterparts.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement.
IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed
this Agreement as of the date first set forth above.
| SOLOMON TECHNOLOGIES, INC. | ||
| |
|
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| By: | Xxxx X. Xxxxxxxxx | |
|
Name:
Xxxx X. Xxxxxxxxx
Title:
Chairman of the Board
|
||
HOLDERS
Name
of
Holder: BridgePointe Master Fund Ltd.
Signature
of Authorized Signatory of Holder: /s/
Xxxx X. Xxxxxx
Name
of
Authorized Signatory: Xxxx
X. Xxxxxx
Title
of
Authorized Signatory: Director
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