FINANCING TERMS AGREEMENT A4S TECHNOLOGIES, INC. 489 N. Denver Avenue Loveland, CO 80537 Tel: 888 825-0247 Fax: 888 837-7665 April 12, 2005 Offering to terminate on April 18, 2005 SALE OF SECURED PROMISSORY NOTES AND WARRANTS
EXHIBIT 10.13
FINANCING TERMS AGREEMENT
A4S TECHNOLOGIES, INC.
000 X. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Tel: 000 000-0000
Fax: 000 000-0000
April 12, 2005
Offering to terminate on
April 18, 2005
SALE OF SECURED PROMISSORY NOTES AND WARRANTS
| Issuer: | A4S Technologies, Inc. (A4S or the Company). |
| Securities/Amount: | Up to $1,000,000.00 in forty (40) Units (Units) of $25,000 in
exchange for bridge notes (Bridge Note(s)) and warrants to purchase the Company's Common Stock (Bridge Warrant(s)and
Extension Warrant(s)). |
| Lender(s): | High Capital Funding, LLC (HCF) and other "accredited" investors
as defined in Regulation D of the Securities Act of 1933. See
signature pages hereto for names, addresses, and principal
amounts of Bridge Note(s) and minimum number of Bridge
Warrant(s) being purchased. The Lender(s) shall have the right,
subject to applicable state and federal securities laws, to
assign the Bridge Note(s) and/or the Bridge Warrant(s) and
Extension Warrant(s). An initial Lender and/or an assignee of a
Bridge Note(s) and/or a Bridge Warrant(s) and Extension
Warrant(s) is herein referred to as a "Bridge Note Holder" or a
"Bridge Warrant Holder" or an "Extension Warrant Holder" and
collectively, as a "Holder(s)." |
| Selling Agent: | The Company has retained Newbridge Securities Corporation
(Selling Agent) to assist it with the private placement of the
Units. The Selling Agent has been retained on a best efforts
basis, and will receive a fee of 10% of the amount of Bridge
Note(s) sold, and shall receive Selling Agent Warrants equal to
10% of the number of Bridge Warrants issued to the Lender(s).
The Company has also agreed to indemnify the Selling Agent, its
directors, officers, agents, employees and controlling persons
against certain liabilities and to pay certain expenses. |
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| Use of Proceeds: | Working Capital |
| Term of Note: | Maturity Date: The Company plans to raise between $7,000,000
and $10,000,000 in an initial public offering to be co-managed
by Bathgate Capital Partners and Newbridge Securities
Corporation (Public Offering). The principal amount and accrued
and unpaid interest on the Bridge Note(s) will be due and
payable on October 17, 2005, unless extended as provided herein,
except that in the event of the closing of the Public Offering
(Public Offering Closing), the principal amount and accrued and
unpaid interest will become immediately due and payable
(Maturity Date). Upon the written request of the Selling Agent
the Bridge Note(s) Holder(s) agree to automatically extend the
payment of the Bridge Notes past the Maturity Date to the
earlier of a Public Offering Closing or December 16, 2005. In
addition, in the event there is no Public Offering Closing by
the Maturity Date, upon the written request of the Company to
the Bridge Note(s) Holder(s), the payment of the Bridge Note(s)
will be extended to the earlier of a Public Offering Closing or
January 16, 2006. Upon such Company request the Extension
Warrants (as defined herein) will become exercisable. |
| Interest and Pre-Payment: | Interest will accrue on the principal amount of the Bridge
Note(s) at the rate of eight (8%) percent per annum, based on a
360-day year until the Maturity Date (as defined below) and at
eighteen (18%) percent per annum thereafter. The Company will
have the right to prepay without penalty any amount owed under
the Bridge Note(s) in whole or in part at any time. |
| First Closing Date: | The first Closing of the Unit offering (First Closing) will be
held when the Company, through its counsel, has received
offering proceeds of not less than $500,000. Additional
Closings shall be scheduled at the mutual convenience of the
Selling Agent and the Company, but in no event shall any
Closings extend past April 18, 2005, unless mutually agreed
between the Selling Agent and the Company. |
| Security: | Repayment of the Bridge Note(s) shall be secured by a lien on
all assets of the Company which shall be subordinated to no more
than $500,000 of secured debt from First Interstate Bank or any
replacement institutional lender, and which shall be senior to
all other indebtedness of the Company. |
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| Warrants: | 100 % warrant coverage: At Closing each Lender(s) will receive
Bridge Warrant(s) to purchase a number of shares of the
Company's Common Stock equal to the quotient of the principal
amount of such Lender(s)' Bridge Note(s), divided by the lower
of (a) $7.00; or (b) the Public Offering Price. The Bridge
Warrant(s) will have an exercise price per share equal to the
Public Offering Price. The Bridge Warrants will be exercisable
for five years and three months from the final Closing of this
Unit offering, provided that if the Company files a registration
statement for a Public Offering, then the Bridge Warrant(s) will
not be exercisable until the earlier of 90 days after the Public
Offering closing and six months after the filing of the Public
Offering registration statement. Subject to the exercisability
limitations in the foregoing sentence, the Bridge Warrant(s)
will provide for cashless exercise if, at any time after one (1)
year from the First Closing, the Company does not have available
both an effective registration statement and current prospectus
covering the issuance or resale of the Company's Common Stock
issued or issuable upon exercise of the Bridge Warrant(s). The
Bridge Warrant(s) will be non-callable. |
| Extension Warrant Coverage: | At Closing, each Lender(s) will receive Extension Warrant(s) to
purchase a number of shares of the Company's Common Stock equal
to the quotient of 50% of the principal amount of such
Lender(s') Bridge Note, divided by the lower of (a) $7.00; or (b)
the Public Offering Price. The Extension Warrant(s) have an
exercise price per share equal to the lower of (a) $7.00; or (b)
the Public Offering Price (Regular Exercise). The shares
underlying the Extension Warrants are referred to hereinafter as
the "Extension Warrant Shares." Each Holder shall have a
one-time option to exercise the Extension Warrants to purchase a
number of shares of the Company's Common Stock at an exercise
price per share of $.01 (Extension Option Shares) and receive a
number of Extension Option Shares equal to 40% of the number of
Extension Warrant Shares such Holder would have received
pursuant to a Regular Exercise.. If a Holder elects the option
of the reduced exercise price per share, then the Extension
Warrants will be deemed exercised in full and thereafter void.
The term, registration rights and other features of the
Extension Warrants shall be otherwise identical to the Bridge
Warrants. |
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| Registration Rights: | The Company will include the resale of the shares underlying the
Bridge Warrants and the Extension Warrants (collectively the
Bridge Warrants Shares) in its Public Offering registration
statement subject to a six-month lock-up from the IPO closing on
the sale of such shares by the Holder(s). In the event that
during the period starting on the six-month anniversary of the
IPO closing and ending on the two-year anniversary of the Final
Closing the Bridge Warrants Shares (including shares that could
be received pursuant to a cashless exercise of the Bridge
Warrants or Extension Warrants) may not be sold pursuant to: (a)
an effective registration statement with a current prospectus
available, or (b) Rule 144 under the Securities Act of 1933, the
Bridge Warrant Holder(s) shall be paid a cash fee of 2% of the
original principal amount of the Bridge Note(s) for each period
of up to ten days that such sales may not be effected. |
| Default Provisions: | A majority-in-interest of the Lender(s), including HCF, shall be
required to give written notice of any default under the Bridge
Note(s) and/or to give a written waiver of any default under the
Bridge Note(s). |
| Anti Dilution Provisions: | If at any time from the date of the First Closing until the
conversion of the Bridge Note(s) or exercise of the Bridge
Warrant(s) and the Extension Warrant(s) the Company issues a
stock dividend, combines outstanding shares into a lesser number
of shares (reverse split) or increases the number of outstanding
shares without the receipt of new full consideration (forward
split), then the number of shares into which the Bridge Note(s)
may be converted or for which the Bridge Warrant(s) and the
Extension Warrant(s) may be exercised , shall be adjusted to
reflect such event so that the relative interests of the
Holder(s) shall be fully protected from dilution resulting from
such an event. Notice of the required adjustment including the
number of shares and the new exercise/conversion price shall be
promptly mailed to each Holder subsequent to each such
adjustment event. |
| Jurisdiction/Choice of Law: | All transaction documents shall be governed by and construed
under the laws of the state of Colorado as applied to agreements
entered into and to be performed entirely within the state of
Colorado without giving effect to principles of conflicts of
law. The parties irrevocably consent to the jurisdiction and
venue of the state and federal courts located in Denver, CO in
connection with any action relating to this transaction. At or
prior to any Closing, the Lender(s) shall receive a legal
opinion from Company counsel in form and substance satisfactory
to HCF as to the validity and enforceability of the Bridge
Note(s), Bridge Warrants, Extension Warrants and Security
Agreement. |
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| Binding Agreement: | All parties executing this Financing Terms Agreement shall be
legally bound by the above terms and shall execute such further
documents (Further Documents), which may include without
limitation subscription document(s), Bridge Note(s), Bridge
Warrant(s), Extension Warrant(s) and a Security Agreement. If
there are any inconsistencies between this Financing Terms
Agreement and any such Further Documents executed in connection
with this transaction, the terms of this Financing Terms
Agreement shall govern. This Financing Terms Agreement may be
signed in two or more counterparts, all of which taken together
shall constitute an original. Facsimile signatures shall be
deemed to be original signatures. |
| A4S Technologies, Inc. By: ________________________________ (signature) ________________________________ (name and title) |
Date: ______________ |
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SIGNATURE PAGE OF
LENDER(S) TO A4S TECHNOLOGIES, INC.
FINANCING TERMS
AGREEMENT
| (Name of Entity) By: _______________________________ _______________________________ Name & Title Date: ___________________ Address: Telephone No.: Fax No.: Tax ID#/SS#: Email: |
Bridge Note Amount $_______________________ Minimum Number of Bridge Warrants ________________________ Minimum Number of Extension Warrants _________________________ |
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SIGNATURE PAGE OF
LENDER(S) TO A4S TECHNOLOGIES, INC.
FINANCING TERMS
AGREEMENT
| Name: ______________________________ Sig: ______________________________ Joint Name: _________________________ Sig: ______________________________ Date: _______________________________ Address: Telephone No.: Fax No.: Tax ID#/SS#: Email: |
Bridge Note Amount $_______________________ Minimum Number of Bridge Warrants _________________________ Minimum Number of Extension Warrants __________________________ |
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ACCREDITED INVESTOR DECLARATION
THE UNITS BEING OFFERED BY THE COMPANY ARE SECURITIES AS THAT TERM HAS BEEN DEFINED IN THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THAT ACT IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION PROVIDED BY SECTIONS 3(b) and 4(2) AND AS PROVIDED BY REGULATION D OF THE ACT, AND ARE SUBJECT TO RESTRICTIONS ON TRANSFER. FURTHER, THESE SECURITIES MAY BE SOLD PURSUANT TO EXEMPTIONS FROM REGISTRATION IN THE VARIOUS STATES, AND MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER IN SUCH JURISDICTIONS.
The undersigned represents to the Company and the Selling Agent that the Securities are being acquired for investment for the undersigned’s own account, not as a nominee or agent, and without a view to distribution thereof. The undersigned is an experienced investor, can bear the economic risk of an investment in the Securities, and has such knowledge and experience in financial or business matters that the undersigned is capable of evaluating the merits and risks of the investment in the Securities. The undersigned has had the opportunity to ask questions and to receive answers from the Company regarding the terms and conditions of this offering and the business, prospects and financial condition of the Company. The undersigned is aware that an investment in the Company involves a high degree of risk.
The undersigned qualifies as an “Accredited Investor,” as defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the Act, based on one or more of the following (check the appropriate numbered paragraphs):
| ______ (1) | A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940; |
| ______ (2) | An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, limited liability company, or partnership not formed for the purpose of investing in the Securities, with total assets in excess of $5,000,000; |
| ______ (3) | A director, executive officer, member, or general partner of the issuer of the Securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; |
| ______ (4) | A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of purchase, exceeds $1,000,000; |
| ______ (5) | A natural person who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with that person’s spouse of $300,000 in each of those years and has a reasonable expectation of reaching those levels in the current year; |
| ______ (6) | Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities offered, whose purchase is directed by a sophisticated person as described in Section 506(b)(2)(ii); or |
| ______ (7) | Any entity in which all of the equity owners are accredited investors. |
Date: ______________________________
Signed: ____________________________
Please print name: _______________________________
Address: ____________________________________________________________________________________
Tax I.D. No.: _______________________________
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