SECOND AMENDMENT AGREEMENT
This
Second Amendment Agreement (this “Agreement”),
is
made and entered into as of March 27, 2008, by and among Solomon Technologies,
Inc., a Delaware corporation (the “Company”)
and
each of the investors signatory hereto (each, a “Holder”
and
collectively, 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 each of the Holders 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 “2007
Debentures”),
and
Common Stock Purchase Warrants to purchase up to, in the aggregate, 2,006,250
shares of Common Stock (the “2007
Warrants”);
and
WHEREAS,
the Company and each of the Holders are also parties to that certain Securities
Purchase Agreement, dated as of August 30, 2007 under which the Company issued
to the Holders additional Debentures with an aggregate principal amount of
$500,000 and additional Warrants (and together with the 2007 Debentures, the
“Debentures”
and
together with the 2007 Warrants, the “Warrants”);
and
WHEREAS,
commencing on February 18, 2008, the Holders should be entitled to use
Rule 144 to sell, without volume or manner restrictions, 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,
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 each of the Holders a Monthly Redemption Amount that became
payable on January 1, 2008 (“January
2008 Redemption”)
and
March 1, 2008 (“March
2008 Redemption”)
and
remains unpaid as of the date of this Agreement; and
WHEREAS,
each Holder proposes to defer the payment of the January 2008 Redemption and
and
March 2008 Redemption, at its election, certain other monthly redemptions to
the
end of the Monthly Redemption scheduled; 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 has issued to each of the Holders, as inducement to enter into
this
Agreement, 350,000 restricted shares of Common Stock, in the aggregate (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, each of the Holders 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, including any shares underlying the Warrants that
can
be acquired through a cashless exercise (whether or not the Holder elects to
exercise the Warrants on a cashless basis) 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. Amendment
of the Maturity Date to the Debentures.
The
definition of “Maturity Date” in the Debentures is hereby extended by one month
for each Monthly Redemption thereunder that is deferred under Section 3, 4
and 5
of this Agreement.
Section
3. January
2008 Redemption.
The
Monthly Redemption Date as to the January 2008 Redemption shall be May 17,
2009.
The Monthly Redemption Share Amount for the January 2008 Redemption shall be
calculated based on the lesser of (a) $0.35, subject to adjustment therein
and
(b) the Monthly Redemption Price as calculated on May 17, 2009.
Section
4. March
2008 Redemption.
The
Monthly Redemption Date as to the March 2008 Redemption shall be June 17, 2009.
The Monthly Redemption Share Amount for the March 2008 Redemption shall be
calculated based on the lesser of (a) $0.35, subject to adjustment therein
and
(b) the Monthly Redemption Price as calculated on June 17, 2009.
Section
5. May
2008 Redemption through April 2009 Redemption.
At the
election of the Holder upon written notice to the Company prior to the
applicable Pre-Redemption Conversion Shares Delivery Date with respect to a
Monthly Redemption, the Monthly Redemption Share Amounts for up to three of
the
Monthly Redemptions, in all or in part, beginning with the May 2008 Redemption
through the April 2009 Redemption may be deferred to the end of the Monthly
Redemption Schedule (i.e., to July 2009, August 2009 and September 2009,
respectively), provided
that
the
calculation of the Monthly Redemption Share Amounts for any such deferred
Monthly Redemptions shall be the lesser of (a) $0.35, subject to adjustment
therein and (b) the Monthly Redemption Price as calculated on the new applicable
Monthly Redemption Date (i.e., July 1, 2009, August 1, and September 1, 2009,
respectively).
Section
6. Waivers
with respect to the Registration Rights Agreement.
In
consideration for the Inducement Shares and subject to the terms and conditions
of this Agreement, each 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
accrued but unpaid liquidated damages as set forth in Section 2(b) of the
Registration Rights Agreement as a result of any past failure or delay by the
Company in fulfilling its obligations under the Registration Rights Agreement
and any such liquidated damages that would have accrued prior to February 18,
2008.
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Section
7. 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”), each Holder waives any failure by the Company to meet: 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 January 1, 2008, and continuing until the Debentures are fully
redeemed, provided that (i) the Conversion Shares may be sold by the Holder
without volume or manner restrictions and counsel to the Company has provided
the Holder with an opinion addressed to the transfer agent to such effect and
acceptable to the transfer agent, (ii) no Event of Default restricts in any
way
the Holder’s ability to immediately resell the Conversion Shares, and (iii) the
aggregate trading volume of the Common Stock on the Trading Market for the
12
consecutive Trading Days immediately prior to the applicable Monthly Redemption
Date exceeds $150,000.
Section
8. Waiver
of Overdue Redemption Payments.
Each
Holder hereby waives any Event of Default (as defined in the Debentures)
occasioned by the Company’s failure to make timely payment to such Holder of (i)
the January 2008 Redemption or (b) the March 2008 Redemption.
Section
9. 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.
Section
10. 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..
Section
11. Non-Affiliate.
Each of
the Holders 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.
Each
of the Holders 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
12. Inducement
Shares.
The
Inducement Shares may only be transferred or otherwise disposed of in compliance
with state and federal securities laws. The
Holders acknowledges receipt of the Inducement Shares, as follows:
| Truk Opportunity Fund LLC: | 244,786 shares | ||
| Truk International Fund, LP: | 41,190 shares | ||
| Shelter Island Opportunity Fund Ltd. | 64,024 shares |
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Section
13. 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. | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxxxx | |
|
Name: Xxxx X. Xxxxxxxxx |
||
| Title: Chairman, Board of Directors | ||
HOLDERS
Truk
Opportunity Fund LLC:
Signature
of Authorized Signatory of Holder: /s/ Xxxxxxx
Xxxxxxxxxx
Name
of
Authorized Signatory: Xxxxxxx
Xxxxxxxxxx
Title
of
Authorized Signatory: Principal
Truk
International Fund, LP:
Signature
of Authorized Signatory of Holder: /s/ Xxxxxxx
Xxxxxxxxxx
Name
of
Authorized Signatory: Xxxxxxx
Xxxxxxxxxx
Title
of
Authorized Signatory: Principal
Shelter
Island Opportunity Fund Ltd:
Signature
of Authorized Signatory of Holder: /s/ Xxxxxxx
Xxxxxxxxxx
Name
of
Authorized Signatory: Xxxxxxx
Xxxxxxxxxx
Title
of
Authorized Signatory: Principal
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