ECO2 PLASTICS, INC. CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT December 17, 2008
Exhibit
10.1
ECO2
PLASTICS, INC.
December
17, 2008
This
Convertible Note and Warrant Purchase Agreement (this “Agreement”)
is made as of December 17, 2008 by and among ECO2 PLASTICS, INC., a
Delaware corporation (the “Company”),
PENINSULA PACKAGING, LLC, a California limited liability company (“Peninsula”),
TRIDENT CAPITAL FUND-VI, L.P. (“Trident Capital
I”), TRIDENT CAPITAL FUND-VI PRINCIPALS FUND, L.L.C. (“Trident Capital
II” and, collectively with Trident Capital I, the “Trident
Lenders”), XXXXXX LIVING TRUST DATED 12/10/1996 (“Xxxxxx
Trust”) and the other parties set forth on Schedule I (each, an
“Additional
Lender” and collectively, the “Additional
Lenders”). Each of Trident Capital I, Trident Capital II, the
Xxxxxx Trust and Peninsula, and each Additional Lender, is sometimes referred to
herein as a “Purchaser”
and collectively as the “Purchasers.”
WHEREAS
on November 21, 2008, J. Xxxxxxx Xxxx loaned Six Hundred Thousand Dollars
($600,000) to the Company pursuant to a certain promissory note dated as of the
date thereof (the “Buff
Note”); and
WHEREAS,
on November 17 and November 21, 2008, the Trident Lenders loaned an aggregate of
Five Hundred Fifty Thousand Dollars ($550,000) to the Company pursuant to
certain promissory notes dated as of November 17 or November 21, 2008
(collectively, the “Trident
Notes”); and
WHEREAS,
on November 17, 2008, the Xxxxxx Trust loaned Fifty Thousand Dollars ($50,000)
to the Company pursuant to a certain promissory note dated as of such date (the
“Xxxxxx
Note” and, collectively with the Trident Notes and the Buff Note, the
“Nov08
Notes”); and
WHEREAS,
on the date hereof, Buff assigned all of his right, title and interest in, under
and to the Buff Note and certain documents related thereto to Peninsula;
and
WHEREAS,
Peninsula, on the one hand, and the Trident Lenders and Additional Lenders, on
the other hand, each desire to lend at least an additional Nine Hundred Thousand
Dollars ($900,000) to the Company, totaling at least One Million Eight Hundred
Thousand Dollars ($1,800,000) in the aggregate; and
WHEREAS,
in connection with such additional loans, the Company and Peninsula desire to
amend and restate the Buff Note in order to evidence the entire approximately
One Million Five Hundred Thousand Dollar ($1,500,000) loan which shall be owed
to Peninsula; and
WHEREAS,
in connection with such additional loans, the Company and the Trident Lenders
desire to amend and restate the Trident Notes in order to evidence the new
amounts which shall be owed to the Trident Lenders; and
WHEREAS,
in connection with such additional loans, the Xxxxxx Trust has agreed to amend
and restate the Xxxxxx Note in order to conform such note to the terms of the
new Peninsula and Trident Notes; and
WHEREAS,
in connection with such additional loans, the Company desires to issue certain
promissory notes to the Additional Lenders; and
WHEREAS,
the Company desires to issue certain warrants to the Purchasers.
AGREEMENT
In
consideration of the mutual covenants contained in this Agreement, and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company and each Purchaser (severally and not jointly), intending to be
legally bound, hereby agree as follows:
1. The Loans; Closing;
Delivery.
(a) The
Notes. Subject to the terms and conditions hereof, each
Purchaser shall loan to the Company the amount set forth opposite such
Purchaser’s name under the column heading, “Delivery Amount” on Schedule I attached
hereto. Each Purchaser shall surrender its respective Nov08 Note(s)
to the Company, if any, and shall receive from the Company a promissory note in
the form relating to such Purchaser attached hereto as Exhibit A (a “Note” and, collectively with all
other promissory notes issued to the Purchasers hereunder, the “Notes”),
in the amount set forth opposite such Purchaser’s name under the column heading
“Aggregate Loan Amount” on Schedule I attached
hereto. The loans evidenced by the Notes shall be referred to herein
as the “Loans.”
(b) The
Warrants. Subject to the terms and conditions hereof, the
Company agrees to issue to each Purchaser a warrant, in the form relating to
such Purchaser attached hereto as Exhibit B
(collectively, the “Warrants”),
to purchase, at an exercise price of $0.015 per share, that number of shares of
common stock of the Company, par value $0.001 per share (the “Common
Stock”), equal to 33.3333333 multiplied by the principal amount of such
Purchaser’s Loan, as more specifically set forth opposite each Purchaser’s name
under the column heading, “Warrant Shares” on Schedule I attached
hereto.
(c) Place and Date of
Closing. The closing of the transactions provided for herein
shall take place at the offices of Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP, 000
Xxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000, at not later than
5:00 p.m. (EST) on December 17, 2008 (the “Initial
Closing”), or at such date as the Purchasers and the Company may agree
upon, such time and date of delivery against payment being herein referred to as
the “Initial Closing
Date.” References
herein to the “Closing
Date” shall mean the Initial Closing Date or the date of any Additional
Closing (as defined below), as applicable.
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(d) Delivery. At
each Closing, the Notes and Warrants in definitive form evidencing the Loans and
Warrants that the Purchasers have agreed to purchase pursuant to this Agreement
shall be delivered by or on behalf of the Company, against delivery by or on
behalf of each of the Purchasers of (i) the amount set forth opposite such
Purchaser’s name under the column heading, “Delivery Amount” on Schedule I by check
or wire transfer of immediately available funds to the account of the Company
previously designated by it in writing, and (ii) the original Nov08 Notes issued
to such Purchaser, if any.
(e) Subsequent
Closings. The Purchasers understand and agree that at any time
and from time to time during the period following the Initial Closing Date but
not later than January 9, 2009, the Company may, at one or more additional
closings (each, an “Additional
Closing”), without obtaining the signature, consent or permission of any
of the Purchasers, offer and sell any authorized but unsold Notes and Warrants
to such persons as shall be acceptable to the Board of Directors of the Company
on the terms and conditions set forth herein. The term “Closing”
as used herein shall refer to the “Initial
Closing” and/or each “Additional
Closing,” as appropriate. Notwithstanding the foregoing, in no
event shall the Company offer and sell any Notes such that the principal amount
of all such Notes shall exceed $4,900,000 in the aggregate.
(f) No
Usury. This Agreement and each Note issued pursuant to the
terms of this Agreement are hereby expressly limited so that in no event
whatsoever, whether by reason of deferment or advancement of loan proceeds,
acceleration of maturity of the loan evidenced hereby, or otherwise, shall the
amount paid or agreed to be paid to the Purchasers hereunder for the loan, use,
forbearance or detention of money exceed the maximum interest rate permitted by
the laws of the State of California. If at any time the performance
of any provision hereof or any Note involves a payment exceeding the limit of
the price that may be validly charged for the loan, use, forbearance or
detention of money under applicable law, then automatically and retroactively,
ipso facto, the obligation to be performed shall be reduced to such limit, it
being the specific intent of the Company and the Purchasers hereof that all
payments under this Agreement or any Note are to be credited first to interest
as permitted by law, but not in excess of (i) the agreed rate of interest
set forth in the Note, or (ii) that permitted by law, whichever is the
lesser, and the balance toward the reduction of principal. The
provisions of this Section 1(f) shall never be superseded or waived and shall
control every other provision of this Agreement and any Note.
(g) Security
Agreement. The Company and the Purchasers agree to execute the
Amended and Restated Security Agreements, dated as of the date hereof, in the
forms attached hereto as Exhibit E-1 and Exhibit E-2 (the
“Security
Agreements”), whereby the Purchasers will receive security interests in
the collateral of the Company described in the Security Agreements, pursuant to
the terms of the Security Agreements. It is agreed that all of the
Company’s indebtedness, whether outstanding on the date hereof or subsequently
incurred or assumed, except all indebtedness secured by perfected security
interests granted by the Company in connection with the Senior Debt (as such
term is defined in the Security Agreements), shall be junior in right of payment
to the indebtedness and other obligations of the Company pursuant to the
Notes.
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(h) Subordination and
Intercreditor Agreement. The Company and the Purchasers agree
to execute the Amended and Restated Subordination and Intercreditor Agreement,
dated as of the date hereof, in the form attached hereto as Exhibit F (the “Subordination
Agreement”).
(i) Securities and
Disclosure. The Notes and Warrants are referred to herein as
the “Securities.” The
Securities will be offered and sold to the Purchasers without such offers and
sales being registered under the Securities Act of 1933, as amended (together
with the rules and regulations of the Securities and Exchange Commission (the
“SEC”)
promulgated thereunder, the “Securities
Act”), in reliance on exemptions therefrom.
In
connection with the sale of the Securities, the Company has made available
(including electronically via the SEC's XXXXX system) to Purchasers its periodic
and current reports, forms, schedules, proxy statements and other documents
(including exhibits and all other information incorporated by reference) filed
with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). These reports, forms, schedules, statements, documents,
filings and amendments, are collectively referred to as the “SEC
Documents.” All references
in this Agreement to financial statements and schedules and other information
which is “contained,” “included” or “stated” in the SEC Documents (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules, documents, exhibits and other information
which is incorporated by reference in the SEC Documents.
This
Agreement, the Notes, the Warrants, the Security Agreements and the
Subordination Agreement are sometimes herein collectively referred to as the
“Transaction
Documents.” The shares of Common Stock issuable upon exercise
of the Warrants are referred to herein as the “Warrant
Conversion Shares.” The Warrant Conversion Shares and the shares of
Common Stock issuable upon conversion of the Series C Convertible Preferred
Stock are herein collectively referred to as the “Conversion
Shares.”
2. Representations and
Warranties of the Company. Except as set forth in the SEC
Documents and on the Disclosure Schedule attached hereto and made a part hereof
(the “Disclosure
Schedule”), the Company represents and warrants to and agrees with
Purchasers as follows:
(a) Except
as set forth in Section 2(a) of the Disclosure Schedule, the Company has filed
in a timely manner all documents that the Company was required to file with the
SEC under the Exchange Act since becoming subject to the requirements of the
Exchange Act. The SEC Documents as of their respective dates did not
and will not as of the Closing Date (after giving effect to any updated
disclosures therein), contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The SEC
Documents and the documents incorporated or deemed to be incorporated by
reference therein, at the time they were filed or hereafter are filed with the
SEC, complied and will comply, at the time of filing, in all material respects
with the requirements of the Securities Act and/or the Exchange Act, as the case
may be, as applicable.
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(b) The
Company has no subsidiaries. The Company has been duly
incorporated and is
validly existing in good standing as a corporation under the laws of its
jurisdiction of incorporation, with the requisite corporate power and authority
to own its properties and conduct its business as now conducted as described in
the SEC Documents and is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions where the ownership or leasing of
its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the business, condition (financial
or other), earnings, management, properties, prospects or results of operations
of the Company (any such event, a “Material Adverse
Effect”); the Company does not own directly or indirectly any of the
capital stock or other equity or long-term debt securities of or have any equity
interest in any other individual, corporation, partnership, limited liability
company, joint venture, trust or unincorporated organization or a government or
agency or political subdivision thereof (a “Person”);
all of the outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of or subject to any preemptive or other rights to subscribe
for or purchase securities, and are owned free and clear of all liens,
encumbrances, equities, and restrictions on transferability (other than those
imposed by the Securities Act and the state securities or “Blue Sky” laws);
except as set forth in Section 2(b) of the Disclosure Schedule, no options,
warrants or other rights to purchase from the Company, agreements or other
obligations of the Company to issue or other rights to convert any obligation
into, or exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding; and there is no agreement,
understanding or arrangement between the Company and any of its stockholders or
any other Person relating to the ownership or disposition of any capital stock
of the Company or the election of directors of the Company or the governance of
the Company’s affairs, and, if any, such agreements, understandings and
arrangements will not be breached or violated as a result of the execution and
delivery of, or the consummation of the transactions contemplated by, the
Transaction Documents; there are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) (“Voting
Debt”) of the Company issued and outstanding; except as set forth in
Section 2(b) of the Disclosure Schedule, there are no existing options,
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company, obligating the Company to issue, transfer, sell, redeem,
purchase, repurchase or otherwise acquire or cause to be issued, transferred,
sold, redeemed, purchased, repurchased or otherwise acquired any capital stock
or Voting Debt of, or other equity interest in, the Company or securities or
rights convertible into or exchangeable for such shares or equity interests or
obligations of the Company to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment; the issuance of the Notes, the Warrants or the Conversion Shares
will not give rise to any preemptive rights or rights of first refusal on behalf
of any Person or result in the triggering of any anti-dilution or other similar
right; except as set forth in Section 2(b) of the Disclosure Schedule, there are
no agreements or arrangements under which the Company is obligated to register
the sale of any of their securities under the Securities Act; there are no
securities, agreements, documents or instruments containing anti-dilution
provisions that will be triggered by the issuance of the Notes, the Warrants and
the Conversion Shares; the Company has made available to Purchasers a true,
correct and complete copy of its certificate of incorporation and bylaws, each
as amended and as in effect on the date hereof.
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(c) The
authorized capital stock of the Company (immediately prior to the Closing Date)
consists of 1,500,000,000 shares of Common Stock and 700,000,000 shares of
preferred stock, par value $0.001 per share (the “Preferred
Stock”), and 152,843,414 shares of Preferred Stock have been designated
as the Series A Convertible Preferred Stock (the “Series A
Preferred Stock”), 336,240,039 shares of Preferred Stock have been
designated as Series B-1 Stock, and 10,916,547 shares of Preferred Stock have
been designated as Series B-2 Stock. The issued and outstanding
capital stock of the Company, as of immediately prior to the Closing Date and as
of the Closing Date, is as set forth in Section 2(c) of the Disclosure Schedule
attached hereto (other than for subsequent issuances, if any, pursuant to
employee benefit plans described in the SEC Documents or upon exercise of
outstanding options, warrants and other convertible securities described in the
SEC Documents). Each share of Preferred Stock is convertible into one
share of Common Stock. Except for preemptive rights or rights of
first refusal which have been waived or complied with, the issuance of the
Securities will not give rise to any preemptive rights, rights of first refusal,
or similar rights on behalf of any person. There are no securities,
agreements, documents or instruments containing anti-dilution provisions that
will be triggered by the issuance of the Securities. The Company has
obtained the approval and consent of a majority of the outstanding shares of its
Series B Convertible Preferred Stock, as well as any other approvals required,
in order to authorize and designate a newly created series of the Company’s
preferred stock designated as “Series C Convertible Preferred
Stock.” Subject to Section 3(d) hereof, the Series C Convertible
Preferred Stock shall initially have the rights, preferences and privileges as
are set forth in the Form of Certificate of Designations attached hereto as
Exhibit C (the
“Series C
Certificate of Designations”). Not later than January 9, 2009,
the authorized capital stock of the Company shall, pursuant to a duly authorized
and filed amendment to the Certificate of Incorporation of the Company, consist
of 2,500,000,000 shares of Common Stock and 1,700,000,000 shares of Preferred
Stock, and 152,843,414 shares of Preferred Stock shall have been designated as
the Series A Preferred Stock, 336,240,039 shares of Preferred Stock shall have
been designated as Series B-1 Stock, approximately 140,000,000 shares of
Preferred Stock shall have been designated as Series B-2 Stock and 700,000,000
shares of Preferred Stock shall have been designated as Series C
Stock.
(d) The
Company has the requisite corporate power and authority to execute, deliver and
perform its obligations under the Transaction Documents. Each of the
Transaction Documents has been duly and validly authorized by the Company and,
when executed and delivered by the Company, will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights generally and to general principles of
equity).
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(e) The
Warrant Conversion Shares have been duly authorized and validly reserved for
issuance, and when issued upon exercise of the Warrants in accordance with the
terms of the Warrant, will have been validly issued, fully paid and
non-assessable. Not later than January 9, 2009, the shares of Series
C Convertible Preferred Stock (and the shares of Common Stock issuable upon
conversion thereof) issuable upon conversion of the Notes shall have been duly
authorized and validly reserved for issuance, and when issued upon conversion of
the Notes in accordance with the terms thereof, will have been validly issued,
fully paid and non-assessable. The Common Stock of the Company
conforms to the description thereof contained in the SEC
Documents. No stockholder of the Company or other Person has any
preemptive, co-sale rights, rights of first refusal or any other similar rights
with respect to the Warrants, the Notes or the Common Stock, except for rights
which have been waived or fully complied with.
(f) No
consent, approval, order or authorization of, license, registration,
qualification, exemption or filing with any court or governmental agency or body
or third party is required for the performance of the Transaction Documents by
the Company or for the consummation by the Company of the transactions
contemplated thereby, or the application of the proceeds of the issuance of the
Securities as described in this Agreement, except for such consents, approvals,
authorizations, licenses, qualifications, exemptions or orders (i) as have
been obtained on or prior to the Closing Date, or (ii) as are not required
to be obtained on or prior to the Closing Date that will be obtained when
required.
(g) The
Company is not (i) in violation of its certificate of incorporation,
certificates of designations or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree, order, rule
or regulation applicable to it or any of its properties or assets, or
(iii) in default (nor has any event occurred which with notice or passage
of time, or both, would constitute a default) in the performance or observance
of any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate or agreement or instrument to which it
is a party or to which it is subject.
(h) The
execution, delivery and performance by the Company of the Transaction Documents
and the consummation by the Company of the transactions contemplated thereby and
the fulfillment of the terms thereof will not (a) violate, conflict with or
constitute or result in a breach of or a default under (or an event that, with
notice or lapse of time, or both, would constitute a breach of or a default
under) any of (i) the terms or provisions of any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate or agreement or instrument to which the Company
is a party or to which any of its properties or assets are subject,
(ii) its certificate of incorporation, certificates of designations or
bylaws (or similar organizational document) or (iii) any statute, judgment,
decree, order, rule or regulation of any court or governmental agency or other
body applicable to the Company or any of its properties or assets or
(b) result in the imposition of any lien upon or with respect to any of the
properties or assets now owned or hereafter acquired by the Company; with
respect to (a)(i), (a)(iii) and (b) only, which violation, conflict, breach,
default or lien would, individually or in the aggregate, have a Material Adverse
Effect.
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(i) The
audited financial statements included in the SEC Documents present fairly the
financial position, results of operations, cash flows and changes in
shareholders’ equity of the Company, at the dates and for the periods to which
they relate and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis; the interim un-audited
financial statements included in the SEC Documents present fairly the financial
position, results of operations and cash flows of the Company, at the dates and
for the periods to which they relate subject to year-end audit adjustments and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis with the audited financial statements included
therein; the selected financial and statistical data included in the SEC
Documents present fairly the information shown therein and have been prepared
and compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein; and each of the auditors
previously engaged by the Company or to be engaged in the future by the Company
is an independent certified public accountant as required by the Securities
Act. Except as set forth in the SEC Documents, since the date of the
latest interim un-audited balance sheet of the Company included in the SEC
Documents, (i) there has been no material change in total liabilities of the
Company and (ii) there have been no liabilities incurred outside of the
ordinary course of business. Except as set forth in the SEC
Documents, immediately after the Closing Date, the Company will not have any
indebtedness, except the Loans and indebtedness incurred in the ordinary course
of business and consistent with past practices. The Company is not a
guarantor or indemnitor of any indebtedness of any third party.
(j) There
is not pending or, to the knowledge of the Company, threatened, any action,
suit, proceeding, inquiry or investigation, governmental or otherwise, to which
the Company is a party, or to which its properties or assets are subject, before
or brought by any court, arbitrator or governmental agency or body, that, if
determined adversely to the Company, would, individually or in the aggregate,
have a Material Adverse Effect or that seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the Securities to
be sold hereunder or the application of the proceeds therefrom or the other
transactions described in the SEC Documents. The Company is not a party to or
subject to the provisions of any injunction, judgment, decree or order of any
court, regulatory body, administrative agency or other governmental agency or
body.
(k) Intellectual
Property.
(i)
General. Section 2(k)(i) of the Disclosure Schedule sets forth with
respect to the Company Intellectual Property Rights: (A) for each patent and
patent application, the patent number or application serial number for each
jurisdiction in which the patent or application has been filed, the date filed
or issued and the present status thereof; (B) for each registered trademark,
trade name or service xxxx, the application serial number or registration number
for each applicable country, province and/or state and the class of goods
covered; (C) for each URL or domain name, the registration date, any renewal
date and name of registry; and (D) for each registered copyrighted work, the
number and date of registration for each by country, province and/or state in
which a copyright application has been registered. In addition, true
and correct copies of all applications filed and registrations (including all
pending applications and application related documents) related to the
Intellectual Property Rights listed on Section 2(k)(i) of the Disclosure
Schedule have been provided or made available to Purchasers.
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(ii) Sufficiency. The
Intellectual Property Rights and Technology owned or licensed by the Company
constitute all Intellectual Property Rights and Technology necessary for the
conduct of the Company’s business as presently conducted, including the design,
manufacture, license and sale of all products currently under development or in
production.
(iii) Royalties
and Licenses. Except pursuant to the licenses listed in Section
2(k)(iii) of the Disclosure Schedule, the Company has no obligation to
compensate or account to any person for the use of any of the Intellectual
Property Rights or Technology used by the Company in the conduct of the
business. Section 2(k)(iii) of the Disclosure Schedule sets forth all
third party components, whether hardware, firmware or software, that are
incorporated in or provided by the Company with its products, or that are
otherwise necessary for the manufacture of the Company’s
products. Section 2(k)(iii) of the Disclosure Schedule lists
all in-licenses of the Intellectual Property Rights and Technology applicable to
the Company’s products, other than standard, off-the-shelf software commercially
available on standard terms from third-party vendors.
(iv) Ownership. The
Company (A) owns all right, title and interest in and to the Company
Intellectual Property Rights and Company Technology, including the Intellectual
Property Rights and Technology listed in Section 2(k)(iv) of the Disclosure
Schedule, free and clear of any liens, claims or encumbrances and (B) has a
valid and enforceable right or license to use all other Intellectual Property
Rights and Technology used in the conduct of the business, and all such licensed
Intellectual Property Rights and rights to use Technology will not cease to be
valid and enforceable rights of the Company by reason of the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby. Without limiting the foregoing, the Company
Intellectual Property Rights and Company Technology have been: (1) developed by
employees of the Company within the scope of their employment and who have
assigned their rights to the Company pursuant to enforceable written agreements;
(2) developed by independent contractors or agents who have assigned their
rights to the Company pursuant to enforceable written agreements or (3)
otherwise acquired by the Company from a third party who has assigned all the
Intellectual Property Rights and ownership of all Technology it has developed on
the Company’s behalf to the Company.
(v) Absence
of Claims; Non-infringement. No claim or legal proceeding has been
instituted or is pending against the Company, or, to the knowledge of the
Company, is threatened, that challenges the right of the Company with respect to
the use or ownership of the Company Intellectual Property Rights or Company
Technology. Without limiting the foregoing, no interference,
opposition, reissue, reexamination, legal proceeding or other proceeding is or
has been pending or, to the best of the Company’s knowledge, threatened, in
which the scope, validity or enforceability of any of the Company Intellectual
Property Rights is being, has been or could reasonably be expected to be
contested or challenged. The Company’s past and present use of the
Company Intellectual Property Rights or Company Technology does not infringe
upon, misappropriate, breach or otherwise conflict with the rights of any other
Person anywhere in the world. The Company has not received any notice
alleging, and otherwise has no knowledge of (A) the invalidity of, or any
limitation on the Company’s right to use, any of the Company Intellectual
Property Rights or Company Technology or of (B) the alleged infringement,
misappropriation or breach of any Intellectual Property Rights of others by the
Company. The Company Intellectual Property Rights and Company
Technology are not subject to any judgment, decree, order, writ, award,
injunction or determination of an arbitrator, court or other governmental
authority affecting the rights of the Company with respect
thereto. To the knowledge of the Company, no person has interfered
with, infringed upon or misappropriated any of the Company Intellectual Property
Rights, or is currently doing so.
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(vi) Licenses
to Third Parties. Section 2(k)(vi) of the Disclosure Schedule lists
all of the contracts pursuant to which any person has been granted any license
under, or otherwise has received or acquired any right (whether or not currently
exercisable) or interest in, any Company Intellectual Property Rights or Company
Technology. The Company is not bound by, and no Company Intellectual
Property Rights are subject to, any contract containing any covenant or other
provision that in any way limits or restricts the ability of the Company to use,
exploit, assert or enforce any of its Intellectual Property Rights anywhere in
the world. Without limiting the foregoing, the Company has not
granted any exclusive licenses to the Company Intellectual Property Rights or
Company Technology.
(vii) Protection
of Intellectual Property Rights. All of the registrations and pending
applications to governmental or regulatory bodies with respect to the Company
Intellectual Property Rights have been timely and duly filed, prosecution for
such applications has been attended to, all maintenance and related fees have
been paid and the Company has taken all other actions required to maintain their
validity and effectiveness. The Company has taken all steps
reasonably necessary or appropriate (including, entering into written
confidentiality and nondisclosure agreements with officers, directors,
subcontractors, employees, licensees and customers) to safeguard the Company
Intellectual Property Rights and maintain the secrecy and confidentiality of
trade secrets that are material to the Company. Without limiting the
foregoing, (A) there has been no misappropriation of any trade secrets or other
confidential Intellectual Property Rights or Technology used in connection with
the business by any person; (B) no employee, independent contractor or agent of
the Company has misappropriated any trade secrets of any other person in the
course of performance as an employee, independent contractor or agent of the
business and (C) no employee, independent contractor or agent of the Company is
in default or breach of any term of any employment agreement, nondisclosure
agreement, assignment of invention agreement or similar agreement or contract
relating in any way to the protection, ownership, development, use or transfer
of the Company Intellectual Property Rights and Company Technology.
(viii) Funding;
Certification with Standards Bodies. Except as set forth in Section 2(k)(viii)
of the Disclosure Schedule, no funding, facilities or personnel of any
governmental entity or educational institution were used, directly or
indirectly, to develop or create, in whole or in part, any of the Company
Intellectual Property Rights or Company Technology. The Company
has not made any submission or suggestion to, or otherwise participated in, and
is not subject to any agreement with, government, any standards bodies or other
entities that could obligate the Company to grant licenses to or otherwise
impair its control of Company Intellectual Property Rights.
-10-
(ix) “Intellectual
Property Rights” means all (A) United States and foreign patents and
patent applications and disclosures relating thereto (and any patents that issue
as a result of those patent applications), and any renewals, reissues,
reexaminations, extensions, continuations, continuations-in-part, divisions and
substitutions relating to any of the patents and patent applications; (B) United
States and foreign trademarks, service marks, trade dress, logos, 800 numbers,
trade names and corporate names, whether registered or unregistered, and the
goodwill associated therewith, together with any registrations and applications
for registration thereof; (C) United States and foreign copyrights and rights
under copyrights, whether registered or unregistered, including moral rights,
and any registrations and applications for registration thereof; (D) rights in
databases and data collections (including knowledge databases, customer lists
and customer databases) under the laws of the United States or any other
jurisdiction, whether registered or unregistered, and any applications for
registration therefor; (E) trade secrets and other rights in know-how and
confidential or proprietary information (including any business plans, designs,
technical data, customer data, financial information, pricing and cost
information, bills of material or other similar information); (F) URL and domain
name registrations; (G) inventions (whether or not patentable) and improvements
thereto; (H) all claims and causes of action arising out of or related to
infringement or misappropriation of any of the foregoing and (I) other
proprietary or intellectual property rights now known or hereafter recognized in
any jurisdiction.
(x) “Technology”
means tangible embodiments of the Intellectual Property Rights, whether in
electronic, written or other media, including software, technical documentation,
specifications, designs, bills of material, build instructions, test reports,
schematics, algorithms, application programming interfaces, user interfaces,
routines, formulae, databases, lab notebooks, processes, prototypes, samples,
studies or other know-how and other works of authorship.
(l) The
Company possesses all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities
(including, but not limited to, those that may be required by the U.S. Food and
Drug Administration (the “FDA”)),
all self-regulatory organizations and all courts and other tribunals presently
required or necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as now or proposed to be conducted as
set forth in the SEC Documents (“Permits”),
except where the failure to obtain such Permits would not, individually or in
the aggregate, have a Material Adverse Effect. Each of such
Permits is in full force and effect, and the Company has not received any notice
of any proceeding relating to revocation or modification of any such Permit,
except where such revocation or modification would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse
Effect.
(m) The
Company holds and is operating in compliance with such exceptions, permits,
licenses, franchises, authorizations and clearances of the FDA and/or any
committee thereof required, for the conduct of its business as currently
conducted (collectively, the “FDA
Permits”), and all such FDA Permits are in full force and
effect. The Company has fulfilled and performed all of its
obligations with respect to the FDA Permits, and, no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the holder of any
FDA Permit.
-11-
(n) The
Company: (i) is and at all times has been in material compliance with all
statutes, rules, regulations, or guidance applicable to the ownership, testing,
development, manufacture, packaging, processing, use, distribution, marketing,
labeling, promotion, sale, offer for sale, storage, import, export or disposal
of any product under development, manufactured or distributed by the Company
(“Applicable
Laws”); (ii) has not received any FDA Form 483, notice of adverse
finding, warning letter, untitled letter or other correspondence or notice from
the FDA or any other federal, state, local or foreign governmental or regulatory
authority alleging or asserting noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable Laws (“Authorizations”);
(iii) has not received notice of any claim, action, suit, proceeding,
hearing, enforcement, investigation, arbitration or other action from the FDA or
any other federal, state, local or foreign governmental or regulatory authority
or third party alleging that any product operation or activity is in violation
of any Applicable Laws or Authorizations and has no knowledge that the FDA or
any other federal, state, local or foreign governmental or regulatory authority
or third party is considering any such claim, litigation, arbitration, action,
suit, investigation or proceeding; (iv) has not received notice that the
FDA or any other federal, state, local or foreign governmental or regulatory
authority has taken, is taking or intends to take action to limit, suspend,
modify or revoke any Authorizations and has no knowledge that the FDA or any
other federal, state, local or foreign governmental or regulatory authority is
considering such action; (v) has filed, obtained, maintained or submitted
all reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
complete and correct on the date filed (or were corrected or supplemented by a
subsequent submission); and (vi) has not, either voluntarily or
involuntarily, initiated, conducted, or issued or caused to be initiated,
conducted or issued, any recall, market withdrawal or replacement, safety alert,
post sale warning, “dear doctor” letter, or other notice or action relating to
the alleged lack of safety or efficacy of any product or any alleged product
defect or violation and, to the Company’s knowledge, no third party has
initiated, conducted or intends to initiate any such notice or
action.
(o) (i)
The Company is not in material violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
natural resources or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum, petroleum products or by-products, asbestos-containing materials or
mold (collectively, “Hazardous
Materials”) or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of, or exposure to,
Hazardous Materials (collectively, “Environmental
Laws”), including, without limitation, to the best of the Company’s
knowledge, the handling, transport, and disposal of the by-product generated by
the Company’s recycling operations, (ii) the Company has all permits,
authorizations and approvals required under any applicable Environmental Laws
for the operation of its business and facilities (“Environmental
Permits”) and is in material compliance with their requirements, (iii) no
material expenditures will be required to maintain compliance with applicable
Environmental Laws or Environmental Permits; (iv) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company and (v) there are no events or circumstances that would reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or agency,
against or affecting the Company relating to Hazardous Materials or
Environmental Laws, including, without limitation, the Company’s leasing of
facilities located at the Riverbank Army Ammunition Plant Superfund site (EPA
ID# CA7210020759).
-12-
(p) Subsequent
to the respective dates as of which information is given in the SEC Documents,
(i) the Company has not incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions not in the
ordinary course of business or (ii) the Company has not purchased any of
its outstanding capital stock, or declared, paid or otherwise made any dividend
or distribution of any kind on any of its capital stock or otherwise,
(iii) there has not been any material increase in the indebtedness of the
Company, (iv) there has not occurred any event or condition, individually
or in the aggregate, that has had a Material Adverse Effect, (v) the
Company has not sustained any material loss or interference with respect to its
business or properties from fire, flood, hurricane, earthquake, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding; (vi) the Company has not received any
notice from the SEC in connection with any investigation or action by the SEC
that seeks to, or could reasonably be expected to result in, the restatement by
the Company of any of its current or previously disclosed financial statements;
(vii) there has not been any material change in compensation agreement or
arrangement with any executive officer or director of the Company; (viii) there
has not been any loan or guarantees made by the Company to or for the benefit of
its employees, officer or directors or any members of their immediate families,
other than travel advances and other advances made in the ordinary course of
business and consistent with past practice; and (ix) the Company has not altered
its method of accounting or changed its auditors. The Company has not
taken any steps to seek protection pursuant to any bankruptcy law nor does the
Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact,
which would reasonably lead a creditor to do so. Based on the
financial condition of the Company as of the Closing Date, after giving effect
to transactions contemplated hereby to occur on the Closing Date, the Company
reasonably expects to have sufficient cash on hand to pay all of its currently
foreseeable expenses for at least the next four months.
(q) There
are no material legal or governmental proceedings nor are there any material
contracts or other documents required by the Securities Act to be described in a
prospectus that are not described in the SEC Documents. The Company
is not in default under any of the contracts described in the SEC Documents, has
not received a notice or claim of any such default and does not have knowledge
of any breach of such contracts by the other party or parties thereto, except
for such defaults or breaches as would not, individually or in the aggregate,
have a Material Adverse Effect.
-13-
(r) The
Company has good and marketable title to all real property described in the SEC
Documents as being owned by it and good and marketable title to the leasehold
estate in the real property described therein as being leased by it, free and
clear of all liens, charges, encumbrances or restrictions, except, in each case,
as would not, individually or in the aggregate, have a Material Adverse
Effect. All material leases, contracts and agreements to which the
Company is a party or by which it is bound are valid and enforceable against the
Company, are, to the knowledge of the Company, valid and enforceable against the
other party or parties thereto and are in full force and effect.
(s) The
Company has filed all necessary federal, state and foreign income and franchise
tax returns, except where the failure to so file such returns would not,
individually or in the aggregate, have a Material Adverse Effect, and has paid
all taxes shown as due thereon; and other than tax deficiencies which the
Company is contesting in good faith and for which adequate reserves have been
provided in accordance with generally accepted accounting principles,
there is no material tax deficiency that has been asserted against the
Company.
(t) The
Company is not, and immediately after the Closing Date will not be, required to
register as an “investment company” or a company “controlled by” an “investment
company” within the meaning of the Investment Company Act of 1940, as amended
(the “Investment
Company Act”).
(u) None
of the Company or, to the knowledge of the Company, any of its directors,
officers, employees, agents or controlling persons, has taken, directly or
indirectly, any action designed, or that might reasonably be expected, to cause
or result in the stabilization or manipulation of the price of the Common
Stock.
(v) None
of the Company or any of its affiliates (as defined in Rule 501(b) of
Regulation D under the Securities Act) directly, or through any agent,
engaged in any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) in connection with
the offering of the Securities or engaged in any other conduct that would cause
such offering to be constitute a public offering within the meaning of
Section 4(2) of the Securities Act. Assuming the accuracy of the
representations and warranties of the Purchasers in Section 5 hereof, it is
not necessary in connection with the offer, sale and delivery of the Securities
to the Purchasers in the manner contemplated by this Agreement to register any
of the Securities under the Securities Act.
(w) There
is no strike, labor dispute, slowdown or work stoppage with the employees of the
Company which is pending or, to the knowledge of the Company,
threatened.
-14-
(x) The
Company maintains insurance underwritten by insurers of recognized financial
responsibility covering its properties, operations, personnel and businesses
comparable to other companies of its size and similar business, including,
without limitation, appropriate general business, environmental and directors’
and officers’ liability insurance. All such insurance is in full
force and effect.
(y) The
Company maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with
management’s authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its material assets is permitted only in
accordance with management’s authorization and (D) the values and amounts
reported for its material assets are compared with its existing assets at
reasonable intervals.
(z) Except
as disclosed in the SEC Documents, the Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act) that
comply with the requirements of the Exchange Act; such disclosure controls and
procedures have been designed to ensure that material information relating to
the Company is made known to the Company’s principal executive officer and
principal financial officer by others within those entities; and such disclosure
controls and procedures are effective.
(aa) No
Person has or will have a claim for services, either in the nature of a finder’s
fee or financial advisory fee, with respect to the offering of the Securities
and the transactions contemplated by the Transaction Documents.
(bb) The
Common Stock is traded on the National Association of Securities Dealers OTC
Bulletin Board (the “OTC Bulletin
Board”). The Company currently is not in violation of, and the
consummation of the transactions contemplated by the Transaction Documents will
not violate, any rule of the OTC Bulletin Board.
(cc) The
Company is eligible to use Form S-1 for the resale of the Conversion Shares by Purchasers or their
transferees. The Company has no reason to believe that it is not
capable of satisfying the registration or qualification requirements (or an
exemption therefrom) necessary to permit the resale of the Conversion
Shares under the
securities or “blue sky” laws of any jurisdiction within the United
States.
(dd) None
of the Company, any of its affiliates, or any Person acting on their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the Securities Act or cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act or any applicable stockholder approval
provisions, including without limitation, under the rules and regulations of the
OTC Bulletin Board.
(ee) The
Company and its Board of Directors have taken all necessary action, if any, to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s charter documents or the laws of its
state of incorporation that is applicable to any of the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including, without limitation, as
a result of the Company’s issuance of the Securities and the Purchasers’
ownership of the Securities.
-15-
(ff) The
Company has described in, or filed as an exhibit to, the SEC Documents filed
prior to the date of this Agreement all of the following types of documents,
agreements, plans or arrangements that are required by federal securities laws
to be described in, or filed as an exhibit to, the SEC
Documents: employment agreements, consulting agreements, deferred
compensation, pension or retirement agreements or arrangements (including all
“employee pension benefit plans” as defined in Section 3(2) of ERISA, bonus,
incentive or profit-sharing plans or arrangements, or labor or collective
bargaining agreements in effect by the Company) (the “ERISA
Documents”). Except for any compliance failures that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect, (a) the Company is in compliance in all material respects with
all applicable laws and regulations relating to labor, employment, fair
employment practices, terms and conditions of employment, and wages and hours,
and with the terms of the ERISA Documents; and (b) each such ERISA Document is
in compliance in all material respects with all applicable requirements of
ERISA. To the Company’s knowledge, none of the Company’s employees
are obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of his
or her employment obligations to the Company or that would conflict with the
Company’s business as now conducted or proposed to be conducted, except for such
contracts and other agreements, judgments, decrees and orders that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(gg) Except
as disclosed in the SEC Documents, no transaction has occurred: (A) between or
among the Company and any of its officers or directors, stockholders or any
affiliate of any such officer or director or stockholder; and (B) to the
Company’s knowledge, between or among any stockholders of the
Company.
3. Certain Covenants of the
Company. The Company covenants and agrees with each Purchaser
as follows:
(a) Use of
Proceeds. The proceeds of the issuance of the Securities as
described in this Agreement shall be used to fund the ordinary course working
capital needs of the Company. None of the proceeds of the Loans will
be used to reduce or retire any existing debt of the Company (other than for
trade payables), except to the extent any such notes or debt are being cancelled
as consideration for purchase of Securities by a Purchaser hereunder and as
specifically set forth on Schedule I
hereto.
(b) No Integrated
Offering. None of the Company or any of its affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any “security” (as defined in the Securities Act) that could be integrated
with the sale of the Securities in a manner which would require the registration
under the Securities Act of the Securities.
-16-
(c) Investment Company Act
Status. The Company will not become, at any time prior to the
expiration of three years after the Closing Date, an open-end investment
company, unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under the Investment
Company Act.
(d) Voting
Rights. The Company shall file the Series C Certificate of
Designations with the Delaware Secretary of State no later than January 9, 2009;
provided, however, that upon the request of Peninsula prior to such date, the
Company shall negotiate in good faith with Peninsula to revise the Series C
Certificate of Designations as Peninsula may request, shall thereafter promptly
obtain all necessary board and stockholder approvals necessary in order to file
the Series C Certificate of Designations as so revised, and shall thereafter
promptly file the same with the Delaware Secretary of State. The Company shall
file the amendment to the Certificate of Incorporation of the Company referenced
in Section 2(c) hereof no later than January 9, 2009. Until such time
that the Loans have been paid in full, the Company shall not, without the prior
written consent of the holders of at least 70% of the aggregate principal amount
of the Notes then outstanding, and notwithstanding the absence of any issuances
of Series C Preferred Stock to the Purchasers, amend the Series C Certificate of
Designations as initially filed by the Company, nor engage in any action that
would, pursuant to the terms of the Series C Certificate of Designations,
require the affirmative vote of a majority or more of the then outstanding
shares of Series C Preferred Stock. For so long as the Notes to
Peninsula are outstanding, or Peninsula is still the holder of at least fifty
percent (50%) of any shares of Series C Preferred Stock originally issued to
Peninsula, Peninsula shall have the right to elect one (1) director to the
Company’s Board of Directors. The individual elected to such seat
shall not be removed absent gross misconduct. In the case of any
vacancy in the office of a director elected by Peninsula to the Board of
Directors, Peninsula may elect a successor to hold office for the unexpired term
of the director whose place shall be vacant. Additionally, for so
long as the Notes to Peninsula are outstanding, or Peninsula is still the holder
of at least fifty percent (50%) of any shares of Series C Preferred Stock
originally issued to Peninsula, the Company shall establish an Operations
Committee of the Board of Directors, and Peninsula shall have the right to elect
its one (1) director to such Operations Committee. The
individual elected to such seat shall not be removed absent gross
misconduct. In the case of any vacancy in the office of a director
elected by Peninsula to the Operations Committee, Peninsula may elect a
successor to hold office for the unexpired term of the director whose place
shall be vacant.
(e) Further
Action. The Company will use its best efforts to do and
perform all things required to be done and performed by it under this Agreement
and the other Transaction Documents and to satisfy all conditions precedent on
its part to the obligations of the Purchasers to purchase and accept delivery of
the Securities.
(f) Investor Rights
Agreement. The Purchasers
shall be entitled, with respect to any shares of the Company’s capital stock
issued upon exercise of the Warrants and upon conversion of the Notes, as the
case may be, to all of the registration and other rights set forth in the
Company’s Investor Rights Agreement dated as of June 4, 2008, as amended
September 15, 2008 (the “Rights
Agreement”), to the same extent and on the same terms and conditions as
possessed by the investors thereunder and as if such were included in the
definition of “Registrable Securities” in the Rights
Agreement. Peninsula shall also be entitled to all of the rights of a
“Major Holder” under the Rights Agreement as if its Note had been converted into
equity in the Company (and notwithstanding the absence of such conversion). No
later than January 9, 2009, the Company shall take such action as may be
reasonably necessary to assure that the granting of such rights to the
Purchasers does not violate the provisions of the Rights Agreement or any of the
Company’s charter documents or rights of prior grantees of registration
rights.
-17-
(g) Further
Indebtedness. The Company
hereby covenants and agrees that so long as any principal amount and accrued
interest remains outstanding under the Notes issued pursuant to the terms of
this Agreement, that it shall not, without the written consent of Purchasers
holding Notes representing at least 70% of the principal amount of all Notes
then outstanding, incur, guaranty, assume or otherwise become obligated to pay
indebtedness, other than amounts under equipment leases existing as of the
Initial Closing Date, accounts payable and other obligations incurred in the
ordinary course of business, other than pursuant to this Agreement.
4. Conditions of the
Purchasers’ Obligations. The obligation of each Purchaser to
purchase and pay for the Securities at each Closing Date is subject to the
following conditions unless waived by the Purchaser:
(a) The
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the Closing Date. The Company shall have
complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date.
(b) None
of the issuance and sale of the Securities pursuant to this Agreement or any of
the transactions contemplated by any of the other Transaction Documents shall be
enjoined (temporarily or permanently) and no restraining order or other
injunctive order shall have been issued in respect thereof; and there shall not
have been any legal action, order, decree or other administrative proceeding
instituted or, to the Company’s knowledge, threatened against the Company or
against any Purchaser relating to the issuance of the Securities or any
Purchaser’s activities in connection therewith or any other transactions
contemplated by this Agreement, the other Transaction Documents or the SEC
Documents.
(c) The
Purchasers shall have received certificates, dated the Closing Date and signed
by the Chief Executive Officer and the Chief Financial Officer of the Company,
to the effect of Sections 4(a) and 4(b).
(d) The
Purchasers shall have received the Notes in the forms attached hereto as Exhibit
A.
(e) The
Purchasers shall have received the Warrants in the forms attached hereto as
Exhibit
B.
(f) The
Purchasers shall have received an opinion of legal counsel to the Company, with
respect to the Securities and other customary matters in the form attached
hereto as Exhibit D.
-18-
(g) The
Purchasers shall have received the Security Agreements in the forms attached
hereto as Exhibit
E-1 and Exhibit
E-2.
(h) The
Purchasers shall have received the Subordination Agreement in the form attached
hereto as Exhibit
F.
(i)
The Purchasers shall be satisfied, in their sole discretion, with the results of
their due diligence investigation with respect to the Company.
(j) The
Company shall have received all necessary governmental and third party waivers,
consents and approvals.
(k) The
Company shall have complied with all applicable securities laws.
(l) As
soon as reasonably practicable following the Initial Closing, the Company shall
receive a fairness opinion with regard to valuation matters.
(m) On
or prior to the date of the Initial Closing, the Company shall have filed (or
authorized the filing of) all UCC and similar financing statements in form and
substance satisfactory to the Purchasers at the appropriate offices to create a
valid and perfected security interest in the Collateral (as defined in the
Security Agreements).
(n) On
or prior to the Closing Date, the Company shall have furnished to the Purchasers
such additional information, certificates and documents as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale of
the Securities as contemplated herein, or to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained, or otherwise in connection with the transaction contemplated
hereby; and all opinions and certificates mentioned above or elsewhere in this
Agreement shall be reasonably satisfactory in form and substance to the
Purchasers.
5. Representations and
Warranties of the Purchasers.
(a) Each
Purchaser represents and warrants to the Company that the Securities to be
acquired by it hereunder (including the Conversion Shares that it may acquire
upon conversion thereof) are being acquired for its own account for investment
and with no present intention of distributing or reselling such Securities
(including the Conversion Shares that it may acquire upon conversion thereof) or
any part thereof or interest therein in any transaction which would be in
violation of the securities laws of the United States of America or any
State. Nothing in this Agreement, however, shall prejudice or
otherwise limit a Purchaser’s right to sell or otherwise dispose of all or any
part of such Conversion Shares under an effective registration statement under
the Securities Act and in compliance with applicable state securities laws or
under an exemption from such registration.
-19-
(b) Each
Purchaser understands that the Securities and Conversion Shares have not been
registered under the Securities Act and may not be offered, resold, pledged or
otherwise transferred except (a) pursuant to an exemption from registration
under the Securities Act (and, if requested by the Company, based upon an
opinion of counsel acceptable to the Company) or pursuant to an effective
registration statement under the Securities Act and (b) in accordance with
all applicable securities laws of the states of the United States and other
jurisdictions.
Each
Purchaser agrees to the imprinting, so long as appropriate, of the following
legend on the Securities (including the Conversion Shares that it may acquire
upon conversion thereof):
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
The
legend set forth above may be removed if and when the Securities or Conversion
Shares are disposed of pursuant to an effective registration statement under the
Securities Act or, in the opinion of counsel to the Company experienced in the
area of United States Federal securities laws, such legends are no longer
required under applicable requirements of the Securities Act. The
Company agrees that it will provide each Purchaser, upon request, with a
substitute certificate, not bearing such legend at such time as such legend is
no longer applicable.
(c) Each
Purchaser is an “accredited investor” within the meaning of Rule 501(a) of
Regulation D under the Securities Act. None of the Purchasers learned
of the opportunity to acquire Securities or any other security issuable by the
Company through any form of general advertising or public
solicitation.
(d) Each
Purchaser represents and warrants to the Company that it has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Securities, having been represented by counsel, and has so evaluated the merits
and risks of such investment and is able to bear the economic risk of such
investment and, at the present time, is able to afford a complete loss of such
investment.
(e) Each
Purchaser represents and warrants to the Company that the purchase of the
Securities to be purchased by it has been duly and properly authorized and this
Agreement has been duly executed and delivered by it or on its behalf and
constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity.
-20-
(f) Each
Purchaser represents and warrants to the Company that neither it nor any of its
directors, officers, employees, agents, partners, members, or controlling
persons has taken, or will take, directly or indirectly, any actions designed,
or that might reasonably be expected to cause or result in, the destabilization
or manipulation of the price of the Common Stock.
(g) Each
Purchaser acknowledges it or its representatives have reviewed the SEC Documents
and further acknowledges that it or its representatives have been afforded
(i) the opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Securities and the merits and risks of
investing in the Securities; and (ii) access to information about the
Company and the Company’s financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment in the Securities.
(h) Each
Purchaser represents and warrants to the Company that it has based its
investment decision solely upon the information contained in the SEC Documents
and such other information as may have been provided to it or its
representatives by the Company in response to its inquiries, and has not based
its investment decision on any research or other report regarding the Company
prepared by any third party (“Third Party
Reports”). Each Purchaser understands and acknowledges that
(i) the Company does not endorse any Third Party Reports and (ii) its
actual results may differ materially from those projected in any Third Party
Report.
(i) Each
Purchaser understands and acknowledges that (i) any forward-looking
information included in the SEC Documents is subject to risks and uncertainties,
including those risks and uncertainties set forth in the SEC Documents; and
(ii) the Company’s actual results may differ materially from those
projected by the Company or its management in such forward-looking
information.
(j) Each
Purchaser understands and acknowledges that (i) the Securities are offered
and sold without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act and
(ii) the availability of such exemption depends in part on, and that the
Company and its counsel will rely upon, the accuracy and truthfulness of the
foregoing representations and Purchaser hereby consents to such
reliance. Each Purchaser also understands that there is no assurance
that any exemption from registration under the Securities Act will be available
and that, even if available, such exemption may not allow Purchaser to transfer
all or any portion of the Securities or Conversion Shares under the
circumstances, in the amounts or at the times Purchaser might
propose.
-21-
(k) None
of the Purchasers is a broker or dealer registered pursuant to Section 15
of the Exchange Act (a “registered
broker-dealer”) or is affiliated with a registered
broker-dealer.
6.
Covenants of
Purchasers.
(a) No Short
Sale. Purchasers, on behalf of themselves and their affiliates
and the permitted assignee of any Conversion Shares, hereby covenant and agree
not to, directly or indirectly, offer to “short sell”, contract to “short sell”
or otherwise “short sell” any securities of the Company prior to the Closing
Date.
(b) Agreement to Convert or
Subordinate Notes. All Notes may be converted or subordinated
at any time upon approval of the same by holders of at least 70% of the
principal amount of the Notes then outstanding. In the event of such
conversion of the Notes pursuant to this Section 6(b), the Notes shall
immediately accrue the full amount of interest that would otherwise be payable
as of the Maturity Date (as defined in such Notes), as if such Notes were
outstanding on such date, notwithstanding the fact such Notes would have been
converted prior to that date.
7. No Original Issue
Discount. The Company and the Purchasers hereby acknowledge
and agree that each Warrant is part of an investment unit within the meaning of
Section 1273(c)(2) of the Internal Revenue Code, which includes the Note issued
to each respective Purchaser. The Company and the Purchasers further agree as
between the Company and each Purchaser, that the fair market value of the
Warrant issued to such Purchaser is equal to 0.1% of the principal amount of the
Notes purchased by such Purchaser, as more specifically set forth opposite such
Purchaser’s name under the column heading, “Warrant Shares Purchase Price” on
Schedule I
attached hereto. The Company and the Purchaser agree to prepare their
federal income tax returns in a manner consistent with the foregoing agreement
and, pursuant to Treas. Reg. §1.1273, the original issue discount on the Notes
shall be considered to be zero.
8. Indemnification. The
Company agrees to indemnify and hold harmless each of the Purchasers, any
affiliates of the Purchasers, and each Person, if any, who controls, is
controlled by or under common control with any Purchaser within the meaning of
the Securities Act (each, an “Indemnified
Party”), against any losses, claims, actions, damages, liabilities or
expenses (collectively, “Losses”),
joint or several, to which such Indemnified Party may become subject under the
Securities Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such Losses (or actions in respect thereof as contemplated
below) arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company contained in this Agreement or any
failure of the Company to perform its obligations hereunder, and will reimburse
each Indemnified Party for any legal and other expenses reasonably incurred as
such expenses are incurred by such Indemnified Party in connection with
investigating, defending, settling, compromising or paying any such Loss; provided, however, that the
Company will not be liable in any such case to the extent that any such Loss
arises out of or is based upon the inaccuracy of any representations made by
such Indemnified Party herein.
-22-
9. Termination.
(a) This
Agreement may be terminated by Peninsula or the Trident Lenders by notice to the
Company given in the event that (i) the Company shall have failed, refused
or been unable to satisfy all material conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date or (ii) if after the
date of this Agreement but prior to the Closing Date, trading in securities of
the Company on the OTC Bulletin Board shall have been suspended and the Company
ceases to be publicly traded.
(b) This
Agreement may be terminated by mutual written consent of the Company and the
Purchasers.
10. Notices. All
communications hereunder shall be in writing and shall be hand delivered, mailed
by first-class mail, couriered by next-day air courier or by facsimile and
confirmed in writing (i) if to the Company, at the addresses set forth
below, or (ii) if to a Purchaser, to the address set forth for such party
on the signature pages hereto.
If to the
Company:
ECO2
Plastics, Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief
Executive Officer
Telephone:
000-000-0000
Facsimile: 000-000-0000
with a
copy to:
The Xxxx
Law Group, PLLC
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Attn: Xxxxx
Xxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
All such
notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered;
(ii) five business days after being deposited in the mail, postage prepaid,
if mailed certified mail, return receipt requested; (iii) one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; (iv) the date of transmission if sent via facsimile to the
facsimile number as set forth in this Section or the signature page hereof prior
to 5:00 pm in the time zone of the recipient on a business day, with
confirmation of successful transmission or (v) the business day following
the date of transmission if sent via facsimile at a facsimile number set forth
in this Section or on the signature page hereof after 5:00 p.m. in the time zone
of the recipient or on a date that is not a business day. Change of a
party’s address or facsimile number may be designated hereunder by giving notice
to all of the other parties hereto in accordance with this
Section.
-23-
11. Survival
Clause. The respective representations, warranties, agreements
and covenants of the Company and the Purchasers set forth in this Agreement
shall survive until the first anniversary of the Closing.
12. Enforcement. If
any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement or the Certificates of Designations, the prevailing party or
parties shall be entitled to receive from the other party or parties reasonable
attorneys’ fees, costs and necessary disbursements in addition to any other
relief to which the prevailing party or parties may be entitled.
13. Successors and
Assigns. This Agreement shall inure to the benefit of and be
binding upon Purchasers and the Company and their respective successors and
legal representatives. Neither the Company nor any Purchaser may
assign this Agreement or any rights or obligation hereunder without the prior
written consent of the other parties; provided, that
Peninsula may assign this Agreement to an Affiliate without such
consent. For purposes of this Agreement, “Affiliate” means any
other party that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under control with, such party.
14. Amendment and
Waiver. Except as otherwise expressly provided herein,
this Agreement may be amended or modified, and any obligations of the Company
and rights of the Purchasers hereunder may waived, in each case only upon the
written consent of (i) the Company and (ii) the holders of at least 70% of the
principal amount of then outstanding Notes; provided, however, that no
amendment of this Agreement shall materially and adversely affect the rights of
a Purchaser in a manner that materially and disproportionately discriminates
against such Purchaser by its express terms in relation to the other Purchasers
without such Purchaser's written consent. Notwithstanding anything to
the contrary herein, Schedule I hereto may
be amended and revised by the Company in connection with Additional Closings (as
defined in Section 1(e) above) without requiring the consent of any of the other
parties hereto. Any amendment or waiver effected in accordance with
this Section 14 shall be binding upon each Purchaser, each future Purchaser, and
the Company. The Purchasers and their respective successors and
assigns acknowledge that by the operation of this Section 14, the holders of at
least 70% of the Notes then outstanding, acting in conjunction with the Company,
will have the right and power to diminish or eliminate any or all rights
pursuant to this Agreement.
15. Entire Agreement; No Third
Party Beneficiary. This Agreement, together with the other
Transaction Documents, constitutes the entire agreement among the parties hereto
and supersedes all prior agreements, understandings and arrangements, oral or
written, among the parties hereto with respect to the subject matter hereof and
thereof. Disclosure by the Company in any Schedule to this Agreement
shall be deemed applicable to all applicable provisions hereof. This
Agreement is not intended to confer upon any Person not a party hereto (or their
successors and permitted assigns) any rights or remedies hereunder, except as
provided in Section 8 hereof.
-24-
16. Severability. If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired
thereby.
17. APPLICABLE
LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND
THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO
PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR
FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA AND HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE.
18. Waiver of Participation
Rights. By execution of this Agreement, each Purchaser
expressly waives any right of first refusal, pre-emptive right, right of first
offer or other participation right (and any related document delivery and notice
rights) with respect to the issuance of the Notes, the Warrants and any shares
of the Company’s capital stock issuable upon conversion or exercise thereof,
including without limitation, all rights under Section 7 of the Rights Agreement
to the extent the Purchaser is a party thereto and qualifies as a “Major Holder”
thereunder.
19. Default. Notwithstanding
anything to the contrary contained in this Agreement or the Notes, upon a
default by the Company of Section 3(d) or 3(f) hereof, which default, if
curable, is not cured within ten (10) days following written notice from
Peninsula to the Company specifying the default in reasonable detail, Peninsula
shall have the right, without the affirmative vote of 70% of the holders of the
aggregate principal amount of the Notes then outstanding, to call an Event of
Default under its Note and exercise all remedies provided therein.
20. No
Novation. The Nov08 Notes shall be amended and restated
pursuant to this Agreement, but nothing herein shall discharge the obligations
of, nor constitute a novation with respect to, the indebtedness of the Company
pursuant to the Nov08 Notes.
21. Subordination
Agreement. Each Purchaser obtaining Notes or Warrants in
connection with an Additional Closing and executing a counterpart signature to
this Agreement hereby agrees to be bound by the Subordination Agreement as a
“Senior Lender” thereunder without further action required on the part of such
Purchaser or any other party.
22. Counterparts. This
Agreement may be executed in two or more counterparts and may be delivered by
facsimile transmission, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[signature
pages follow]
-25-
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the day and year first above
written.
|
ECO2
PLASTICS, INC.
|
|
|
By:
|
|
|
Name: Xxxxxx
X. Xxxxxxxx
|
|
|
Title: Chief
Executive Officer
|
|
Signature
Pages to Purchase Agreement
|
Trident
Capital Fund-VI, L.P.
|
||
|
Trident
Capital Fund-VI Principals Fund, L.L.C.
|
||
|
Executed
by the undersigned as an authorized signatory of the General Partner of
Trident Capital Fund-VI, L.P. and of the Managing Member of Trident
Capital Fund-VI Principals Fund, L.L.C.
|
||
|
(signature)
|
||
|
(print
name)
|
||
|
Address: 000
Xxxxxxxx Xxxxxx, Xxxxx 000
|
||
|
Xxxx
Xxxx, XX 00000
|
||
|
Attn: Xxxxxx
X. Xxxxxx
|
||
|
Chief
Administrative Officer and General Counsel
|
||
|
Fax: (000)
000-0000
|
||
|
Xxxxxx
Living Trust Dated 12/10/1996
|
||
|
By:
|
||
|
X.
Xxxxxxxx Xxxxxx, Trustee
|
||
|
Address:
Xxx Xxxxxxxx Xxxxxx
|
||
|
Xxxxxxxx,
XX 00000
|
||
|
Fax: (000)
000-0000
|
||
Signature
Pages to Purchase Agreement
|
Peninsula
Packaging, LLC
|
|
|
By:
|
|
|
Name:
Xxxx Xxxxxx
|
|
|
Title:
Managing Director
|
|
| Address: c/o Stradley Ronon Xxxxxxx & Xxxxx, LLP | |
|
0000
Xxx Xxxxxxxx Xxxxxx
|
|
|
Xxxxxxxxxxxx,
XX 00000
|
|
|
Attn:
Xxxx X. Xxxxxx, Esquire
|
|
| Fax: (000) 000-0000 | |
Signature
Pages to Purchase Agreement
ADDITIONAL
LENDERS:
|
If
an entity:
|
|
|
(Company
name)
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Address:
|
|
|
Fax:
|
|
|
Amount
of Note: $ _________________________________
|
|
|
If
an individual:
|
|
|
(Signature
of individual)
|
|
|
Printed
Name: ____________________________________
|
|
|
Address:
|
|
|
Fax:
|
|
|
Amount
of Note: $
_________________________________
|
|
Signature
Pages to Purchase Agreement
Schedule
I
Schedule
of Purchasers
December
17, 2008
|
Purchaser
|
Delivery
Amount
|
Aggregate
Loan Amount
|
Warrant
Shares
|
Warrant
Shares
Purchase
Price
|
||||||||||||
|
Peninsula
Packaging, LLC
|
$ | 900,000.00 | $ | 1,503,024.66 | 50,100,822 | $ | 1,503.02 | |||||||||
|
Trident
Capital Fund-VI, L.P.
|
$ | 866,398.15 | $ | 1,399,007.52 | 46,633,583 | $ | 1,399.01 | |||||||||
|
Trident
Capital Fund-VI Principals Fund, L.L.C.
|
$ | 33,601.85 | $ | 54,258.23 | 1,808,608 | $ | 54.26 | |||||||||
|
Xxxxxx
Living Trust dated 12/10/1996
|
$ | 0 | $ | 50,328.77 | 1,677,626 | $ | 50.33 | |||||||||
Schedule
I
Disclosure
Schedule
This
Disclosure Schedule is being furnished by ECO2 Plastics, Inc., a Delaware
corporation, (the “Company”),
to the Purchasers listed on Schedule I to that
certain Convertible Note and Warrant Purchase Agreement of even date herewith by
and among the Company and such Purchasers (the “Agreement”)
in connection with the execution and delivery of the Agreement, pursuant to
Section 2 of the Agreement. Unless the context otherwise requires,
all capitalized terms used in this Disclosure Schedule shall have the respective
meanings ascribed to such terms in the Agreement.
This
Disclosure Schedule and the information, descriptions and disclosures included
herein is intended to set forth exceptions to the representations and warranties
of the Company contained in the Agreement. The contents of all
agreements and other documents referred to in a particular section of this
Disclosure Schedule is incorporated by reference into such particular section as
though fully set forth in such section.
[Attached separately]
Disclosure
Schedule
Exhibit
A
Forms of
Notes
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
AMENDED
AND RESTATED PROMISSORY NOTE
San Francisco, California
Date of Issuance: December 17,
2008
FOR VALUE RECEIVED, ECO2 PLASTICS, INC., a Delaware
corporation (the “Promisor”) hereby
promises to pay to the order of PENINSULA PACKAGING, LLC, a
California limited liability company (the “Promisee” or the
“Holder”), in
lawful money of the United States at the address of the Holder set forth herein,
the principal amount of one million five hundred and three thousand, twenty-four
dollars and sixty-six cents ($1,503,024.66) (the “Note Amount”),
together with Interest, as defined below. This Amended and Restated
Promissory Note (“Note”) has been
executed by the Promisor on the date set forth above (the “Effective
Date”).
This Note is one of a series of
promissory notes issued by the Promisor pursuant to that certain Convertible
Note and Warrant Purchase Agreement, dated as of December 17, 2008, by and among
the Promisor and the parties named therein (the “Purchase
Agreement”). This Note and such other promissory notes issued
by the Promisor pursuant to the Purchase Agreement are herein collectively
referred to as the “Notes.” This
Note is secured by a security interest in certain collateral of the Promisor
pursuant to the Amended and Restated Security Agreement, dated as of December
17, 2008, as amended, supplemented, restated or otherwise modified from time to
time, by and between the Promisor and the Promisee (the “Security
Agreement”) and is entitled to all
the benefits and obligations provided therein. All payments of
interest and principal shall be in lawful money of the United States of America
and shall be made pro rata among all holders of the Notes. The
following is a statement of the rights of the Holder of this Note and the terms
and conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of the Note agrees:
1. Interest. Interest
shall accrue at eight percent (8%) per annum on the outstanding principal amount
of this Note (the “Interest”). Upon
the occurrence of an Event of Default and for so long as such Event of Default
continues, Interest shall accrue on the outstanding Note Amount at the rate of
eight percent (8%) per annum (the “Default Interest
Rate”).
2. Maturity
Date. The Note Amount, any accrued Interest thereon and all
other sums due hereunder, shall be due and payable three (3) years from the
Effective Date (the “Maturity
Date”).
3. Security. This
Note is secured pursuant to the terms of the Security Agreement by a security
interest in the Collateral (as such term is defined in the Security
Agreement). This Note is subject to the provisions of the Security
Agreement. It is agreed that all Promisor’s indebtedness, whether outstanding on
the date hereof or subsequently incurred or assumed, except all indebtedness
secured by perfected security interests granted by Promisor in connection with
the Senior Debt (as such term is defined in the Security Agreement) shall be
junior in right of payment to the indebtedness and other obligations of Promisor
pursuant to the Notes.
4. Application of
Payments.
4.1. Except
as otherwise expressly provided herein, payments under this Note shall be
applied, (i) first to the repayment of any sums incurred by the Holder for the
payment of any expenses in enforcing the terms of this Note, (ii) then to the
payment of any accrued but unpaid Interest under this Note, and (iii) then to
the reduction of the Note Amount.
4.2. The
Promisor may only prepay principal upon the written consent of holders of 70% or
more of the aggregate principal amount of the Notes then
outstanding.
4.3. Upon
payment in full of the Note Amount, any applicable accrued and unpaid Interest
thereon, and any other sums due hereunder, this Note shall be marked “Paid in
Full” and returned to the Promisor.
5. Waiver of
Notice. The Promisor hereby waives presentment for payment,
demand, notice of nonpayment, notice of protest and protest of this Note, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note, and agrees that the
liability of the Promisor shall be unconditional without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
the Promisee.
6. Events of
Default. The occurrence of any of the following events (each
an “Event of
Default”) shall constitute an Event of Default of the
Promisor:
6.1. the
failure of the Promisor to make any payment due hereunder within three (3) days
after the due date thereof;
6.2. a
material default by the Promisor under the Purchase Agreement or any other
document or agreement executed by the Promisor pursuant thereto, which default,
if curable, is not cured within thirty (30) days following written notice by the
Promisee to the Promisor specifying the default in reasonable detail;
and
6.3. (i)
the application for the appointment of a receiver or custodian for the Promisor
or the property of the Promisor, (ii) the entry of an order for relief or the
filing of a petition by or against the Promisor under the provisions of any
bankruptcy or insolvency law, (iii) any assignment for the benefit of creditors
by or against the Promisor, or (iv) the Promisor’s insolvency (which term is
defined for purposes of this paragraph as the failure or inability of the
Promisor to meet its obligations as the same fall due).
Upon the occurrence of any Event of
Default that is not cured within any applicable cure period, if any, the Holder
may, upon the consent of holders of at least 70% of the aggregate principal
amount of the Notes then outstanding (except in the case of an Event of Default
pursuant to Section 6.3(i), (ii) or (iii), in which case no such consent shall
be necessary), elect to take at any time any or all of the following actions:
(i) declare this Note to be forthwith due and payable, whereupon the entire
unpaid Note Amount, together with all accrued and unpaid Interest thereon
(including the Default Interest Rate), and all other cash obligations hereunder,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Promisor, anything contained herein to the contrary notwithstanding, (ii)
set-off any amounts owed by the Promisee or any Affiliate of the Promisee (each
of which is an intended third party beneficiary hereunder), to the Promisor
whatsoever against any amounts owed by the Promisor to the Promisee hereunder;
and (iii) exercise any and all other remedies provided hereunder or available at
law or in equity. For purposes of this Note, “Affiliate” means any
other party that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under control with, such party.
If an Event of Default occurs by the
Promisor, the Promisor agrees to pay, in addition to the Note Amount, reasonable
attorneys' fees and any other reasonable costs incurred by the Holder in
connection with its pursuit of its remedies under this Note.
7.
Conversion.
7.1 At
any time upon written notice by the Promisee to the Promisor, the principal
amount and all Interest due under this Note shall be converted into shares of
Series C Convertible Preferred Stock of the Promisor (“Securities”) at a
price per share equal to $0.015 (subject to appropriate adjustment for all stock
splits, subdivisions, combinations, recapitalizations and the
like). No fractional shares of Securities will be issued upon such
conversion of this Note. In lieu thereof, the number of Securities to
be issued to the Holder shall be rounded to the nearest whole
share. Upon conversion of this Note pursuant to this Section 7, the
Holder shall surrender this Note, duly endorsed, at the principal offices of the
Promisor or any transfer agent of the Promisor. At its expense, the
Promisor will, as soon as practicable thereafter, issue and deliver to such
Holder, at such principal office, a certificate or certificates for the number
of shares to which such Holder is entitled upon such conversion, together with
any other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the Holder
for any cash amounts payable as described herein. Upon conversion of
this Note, the Promisor will be forever released from all of its obligations and
liabilities under this Note with regard to that portion of the principal amount
and accrued interest being converted including without limitation the obligation
to pay such portion of the principal amount and accrued interest.
7.2 At
any time upon the written election at their discretion of holders of 70% or more
of the aggregate principal amount of Notes then outstanding, the principal
amount and all Interest due under each Note shall be converted into shares of
Securities in the same manner described in Section 7.1 above.
8.
Miscellaneous.
8.1 Successors and
Assigns. The terms and conditions of this Note shall inure to
the benefit of and be binding upon the respective executors, administrators,
heirs, successors and permitted assigns of the parties. This Note (or
a portion hereof) may be assigned by the Holder without the consent of the
Promisor. This Note may not be assigned by the Promisor without the
prior written consent of the Promisee.
8.2 Loss or Mutilation of
Note. Upon receipt by the Promisor of evidence reasonably
satisfactory to the Promisor of the loss, theft, destruction or mutilation of
this Note, together with indemnity reasonably satisfactory to the Promisor, in
the case of loss, theft or destruction, or the surrender and cancellation of
this Note, in the case of mutilation, the Promisor shall execute and deliver to
the Holder a new promissory note of like tenor and denomination as this
Note.
8.3 Notices. Any
notice or other communication required or permitted to be given pursuant to the
terms of this Note shall be in writing and shall be deemed effectively given the
earlier of, (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate
confirmation), or (iv) one (1) business day after being deposited with an
overnight courier service, and addressed to the recipient at the addresses set
forth below unless another address is provided to the other party in
writing:
If to Promisee,
to:
Peninsula
Packaging, LLC
c/o
Stradley Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx
X. Xxxxxx
Fax: (000)
000-0000
If to the Promisor,
to:
ECO2 Plastics,
Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx,
XX 00000
Attn: Xxxxxx
X. Xxxxxxxx
Fax: (000)
000-0000
with a copy
to:
The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Xxxxx
X. Xxxx
Fax: (000)
000-0000
8.4 Governing
Law. This Note shall be governed in all respects by the laws
of the State of California as applied to agreements entered into and performed
entirely within the State of California by residents thereof, without regard to
any provisions thereof relating to conflicts of laws among different
jurisdictions.
8.5 Waiver and
Amendment. Any term of this Note may be amended, waived or
modified with the written consent of the Promisor and the Holder; provided
however, that (a) the terms of this Note may be amended or modified, and
any obligations of Promisor and the rights of Holder may be waived, in each case
upon the written consent of Promisor and the holders of at least 70% of the
aggregate principal amount of Notes then outstanding, and (b) this Note may
be converted as set forth herein or subordinated without any action of Holder
upon approval by holders of at least 70% of the aggregate principal amount of
Notes then outstanding.
8.6 Remedies. No
delay or omission by the Holder in exercising any of its rights, remedies,
powers or privileges hereunder or at law or in equity and no course of dealing
between the Holder and the undersigned or any other person shall be deemed a
waiver by the Holder of any such rights, remedies, powers or privileges, even if
such delay or omission is continuous or repeated, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise thereof by the Holder or the exercise of any other right,
remedy, power or privilege by the Holder. The rights and remedies of
the Holder described herein shall be cumulative and not restrictive of any other
rights or remedies available under any other instrument, at law or in equity
provided that such rights or remedies are not inconsistent with the express
provisions hereof.
8.7 Usury Savings
Clause. In the event any interest is paid on this Note which
is deemed to be in excess of the then legal maximum rate, then that portion of
the interest payment representing an amount in excess of the then legal maximum
rate shall be deemed a payment of principal and applied against the principal of
this Note.
8.8 Severability. If
any provision hereof is found by a court of competent jurisdiction to be
prohibited or unenforceable, it shall be ineffective only to the extent of such
prohibition or unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is not prohibited
or unenforceable, nor invalidate the other provisions hereof, all of which shall
be liberally construed in favor of the Promisee in order to effect the
provisions of this Note.
8.9 Setoff. Notwithstanding
the absence of an Event of Default, the Promisee shall have the right to set-off
any amounts owed by the Promisee or any Affiliate of the Promisee (each of which
is an intended third party beneficiary hereunder) to the Promisor whatsoever
against any amounts owed by the Promisor to the Promisee hereunder.
8.10 Amendment and
Restatement. This Note amends, restates and supersedes, but
does not discharge the obligations of, nor constitute a novation with respect
to, the indebtedness of the Promisor to J. Xxxxxxx Xxxx pursuant to that certain
Promissory Note in the principal amount of $600,000 dated November 21, 2008,
which such document was assigned by J. Xxxxxxx Xxxx to the Promisee on the date
hereof.
IN WITNESS WHEREOF, the Promisor has
caused this Note to be signed on the Effective Date.
|
ECO2 PLASTICS,
INC.
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive Officer
|
STATE OF
_______________________ :
:ss
COUNTY OF
_____________________ :
On the ____ day of December, 2008
before me personally came Xxxxxx X. Xxxxxxxx who, being by me duly sworn, did
depose and say that he is the Chief Executive Officer of ECO2 Plastics,
Inc., and being authorized so to do, executed the foregoing instrument for the
purpose of binding said entity and that he acknowledged said instrument to be
his act and deed.
|
Notary
Public
|
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
AMENDED
AND RESTATED PROMISSORY NOTE
San Francisco, California
Date of Issuance: December 17,
2008
FOR VALUE RECEIVED, ECO2 PLASTICS, INC., a Delaware
corporation (the “Promisor”) hereby
promises to pay to the order of TRIDENT CAPITAL FUND-VI, L.P. (the “Promisee” or the
“Holder”), in
lawful money of the United States at the address of the Holder set forth herein,
the principal amount of one million three hundred ninety-nine thousand seven
dollars and fifty-two cents ($1,399,007.52) (the “Note Amount”),
together with Interest, as defined below. This Amended and Restated
Promissory Note (“Note”) has been
executed by the Promisor on the date set forth above (the “Effective
Date”).
This Note is one of a series of
promissory notes issued by the Promisor pursuant to that certain Convertible
Note and Warrant Purchase Agreement, dated as of December 17, 2008, by and among
the Promisor and the parties named therein (the “Purchase
Agreement”). This Note and such other promissory notes issued
by the Promisor pursuant to the Purchase Agreement are herein collectively
referred to as the “Notes.” This
Note is secured by a security interest in certain collateral of the Promisor
pursuant to the Amended and Restated Security Agreement, dated as of December
17, 2008, as amended, supplemented, restated or otherwise modified from time to
time, by and between the Promisor and the Promisee (the “Security
Agreement”) and is entitled to all
the benefits and obligations provided therein. All payments of
interest and principal shall be in lawful money of the United States of America
and shall be made pro rata among all holders of the Notes. The
following is a statement of the rights of the Holder of this Note and the terms
and conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of the Note agrees:
7. Interest. Interest
shall accrue at eight percent (8%) per annum on the outstanding principal amount
of this Note (the “Interest”). Upon
the occurrence of an Event of Default and for so long as such Event of Default
continues, Interest shall accrue on the outstanding Note Amount at the rate of
eight percent (8%) per annum (the “Default Interest
Rate”).
8. Maturity
Date. The Note Amount, any accrued Interest thereon and all
other sums due hereunder, shall be due and payable three (3) years from the
Effective Date (the “Maturity
Date”).
9. Security. This
Note is secured pursuant to the terms of the Security Agreement by a security
interest in the Collateral (as such term is defined in the Security
Agreement). This Note is subject to the provisions of the Security
Agreement. It is agreed that all Promisor’s indebtedness, whether outstanding on
the date hereof or subsequently incurred or assumed, except all indebtedness
secured by perfected security interests granted by Promisor in connection with
the Senior Debt (as such term is defined in the Security Agreement) shall be
junior in right of payment to the indebtedness and other obligations of Promisor
pursuant to the Notes.
10. Application of
Payments.
10.1. Except
as otherwise expressly provided herein, payments under this Note shall be
applied, (i) first to the repayment of any sums incurred by the Holder for the
payment of any expenses in enforcing the terms of this Note, (ii) then to the
payment of any accrued but unpaid Interest under this Note, and (iii) then to
the reduction of the Note Amount.
10.2. The
Promisor may only prepay principal upon the written consent of holders of 70% or
more of the aggregate principal amount of the Notes then
outstanding.
10.3. Upon
payment in full of the Note Amount, any applicable accrued and unpaid Interest
thereon, and any other sums due hereunder, this Note shall be marked “Paid in
Full” and returned to the Promisor.
11. Waiver of
Notice. The Promisor hereby waives presentment for payment,
demand, notice of nonpayment, notice of protest and protest of this Note, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note, and agrees that the
liability of the Promisor shall be unconditional without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
the Promisee.
12. Events of
Default. The occurrence of any of the following events (each
an “Event of
Default”) shall constitute an Event of Default of the
Promisor:
12.1. the
failure of the Promisor to make any payment due hereunder within three (3) days
after the due date thereof;
12.2. a
material default by the Promisor under the Purchase Agreement or any other
document or agreement executed by the Promisor pursuant thereto, which default,
if curable, is not cured within thirty (30) days following written notice by the
Promisee to the Promisor specifying the default in reasonable detail;
and
12.3. (i) the application for the appointment
of a receiver or custodian for the Promisor or the property of the Promisor,
(ii) the entry of an order for relief or the filing of a petition by or against
the Promisor under the provisions of any bankruptcy or insolvency law, (iii) any
assignment for the benefit of creditors by or against the Promisor, or (iv) the
Promisor’s insolvency (which term is defined for purposes of this paragraph as
the failure or inability of the Promisor to meet its obligations as the same
fall due).
Upon the occurrence of any Event of
Default that is not cured within any applicable cure period, if any, the Holder
may, upon the consent of holders of at least 70% of the aggregate principal
amount of the Notes then outstanding (except in the case of an Event of Default
pursuant to Section 6.3(i), (ii) or (iii), in which case no such consent shall
be necessary), elect to take at any time any or all of the following actions:
(i) declare this Note to be forthwith due and payable, whereupon the entire
unpaid Note Amount, together with all accrued and unpaid Interest thereon
(including the Default Interest Rate), and all other cash obligations hereunder,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Promisor, anything contained herein to the contrary notwithstanding, (ii)
set-off any amounts owed by the Promisee or any Affiliate of the Promisee (each
of which is an intended third party beneficiary hereunder), to the Promisor
whatsoever against any amounts owed by the Promisor to the Promisee hereunder;
and (iii) exercise any and all other remedies provided hereunder or available at
law or in equity. For purposes of this Note, “Affiliate” means any
other party that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under control with, such party.
If an Event of Default occurs by the
Promisor, the Promisor agrees to pay, in addition to the Note Amount, reasonable
attorneys' fees and any other reasonable costs incurred by the Holder in
connection with its pursuit of its remedies under this Note.
7.
Conversion.
7.1 At
any time upon written notice by the Promisee to the Promisor, the principal
amount and all Interest due under this Note shall be converted into shares of
Series C Convertible Preferred Stock of the Promisor (“Securities”) at a
price per share equal to $0.015 (subject to appropriate adjustment for all stock
splits, subdivisions, combinations, recapitalizations and the
like). No fractional shares of Securities will be issued upon such
conversion of this Note. In lieu thereof, the number of Securities to
be issued to the Holder shall be rounded to the nearest whole
share. Upon conversion of this Note pursuant to this Section 7, the
Holder shall surrender this Note, duly endorsed, at the principal offices of the
Promisor or any transfer agent of the Promisor. At its expense, the
Promisor will, as soon as practicable thereafter, issue and deliver to such
Holder, at such principal office, a certificate or certificates for the number
of shares to which such Holder is entitled upon such conversion, together with
any other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the Holder
for any cash amounts payable as described herein. Upon conversion of
this Note, the Promisor will be forever released from all of its obligations and
liabilities under this Note with regard to that portion of the principal amount
and accrued interest being converted including without limitation the obligation
to pay such portion of the principal amount and accrued interest.
7.2 At
any time upon the written election at their discretion of holders of 70% or more
of the aggregate principal amount of Notes then outstanding, the principal
amount and all Interest due under each Note shall be converted into shares of
Securities in the same manner described in Section 7.1 above.
8.
Miscellaneous.
8.1 Successors and
Assigns. The terms and conditions of this Note shall inure to
the benefit of and be binding upon the respective executors, administrators,
heirs, successors and permitted assigns of the parties. This Note (or
a portion hereof) may be assigned by the Holder without the consent of the
Promisor. This Note may not be assigned by the Promisor without the
prior written consent of the Promisee.
8.2 Loss or Mutilation of
Note. Upon receipt by the Promisor of evidence reasonably
satisfactory to the Promisor of the loss, theft, destruction or mutilation of
this Note, together with indemnity reasonably satisfactory to the Promisor, in
the case of loss, theft or destruction, or the surrender and cancellation of
this Note, in the case of mutilation, the Promisor shall execute and deliver to
the Holder a new promissory note of like tenor and denomination as this
Note.
8.3 Notices. Any
notice or other communication required or permitted to be given pursuant to the
terms of this Note shall be in writing and shall be deemed effectively given the
earlier of, (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate
confirmation), or (iv) one (1) business day after being deposited with an
overnight courier service, and addressed to the recipient at the addresses set
forth below unless another address is provided to the other party in
writing:
If to Promisee,
to:
Trident
Capital Fund-VI, L.P.
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx
Xxxx, XX 00000
Attn:
Fax: (000)
000-0000
If to the Promisor,
to:
ECO2 Plastics,
Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx,
XX 00000
Attn
: Xxxxxx X. Xxxxxxxx
Fax:
(000) 000-0000
with a copy
to:
The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Xxxxx
X. Xxxx
Fax: (000)
000-0000
8.4 Governing
Law. This Note shall be governed in all respects by the laws
of the State of California as applied to agreements entered into and performed
entirely within the State of California by residents thereof, without regard to
any provisions thereof relating to conflicts of laws among different
jurisdictions.
8.5 Waiver and
Amendment. Any term of this Note may be amended, waived or
modified with the written consent of the Promisor and the Holder; provided
however, that (a) the terms of this Note may be amended or modified, and
any obligations of Promisor and the rights of Holder may be waived, in each case
upon the written consent of Promisor and the holders of at least 70% of the
aggregate principal amount of Notes then outstanding, and (b) this Note may
be converted as set forth herein or subordinated without any action of Holder
upon approval by holders of at least 70% of the aggregate principal amount of
Notes then outstanding.
8.6 Remedies. No
delay or omission by the Holder in exercising any of its rights, remedies,
powers or privileges hereunder or at law or in equity and no course of dealing
between the Holder and the undersigned or any other person shall be deemed a
waiver by the Holder of any such rights, remedies, powers or privileges, even if
such delay or omission is continuous or repeated, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise thereof by the Holder or the exercise of any other right,
remedy, power or privilege by the Holder. The rights and remedies of
the Holder described herein shall be cumulative and not restrictive of any other
rights or remedies available under any other instrument, at law or in equity
provided that such rights or remedies are not inconsistent with the express
provisions hereof.
8.7 Usury Savings
Clause. In the event any interest is paid on this Note which
is deemed to be in excess of the then legal maximum rate, then that portion of
the interest payment representing an amount in excess of the then legal maximum
rate shall be deemed a payment of principal and applied against the principal of
this Note.
8.8 Severability. If
any provision hereof is found by a court of competent jurisdiction to be
prohibited or unenforceable, it shall be ineffective only to the extent of such
prohibition or unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is not prohibited
or unenforceable, nor invalidate the other provisions hereof, all of which shall
be liberally construed in favor of the Promisee in order to effect the
provisions of this Note.
8.9 Setoff. Notwithstanding
the absence of an Event of Default, the Promisee shall have the right to set-off
any amounts owed by the Promisee or any Affiliate of the Promisee (each of which
is an intended third party beneficiary hereunder) to the Promisor whatsoever
against any amounts owed by the Promisor to the Promisee hereunder.
8.10 Amendment and
Restatement. This Note amends, restates and supersedes, but
does not discharge the obligations of, nor constitute a novation with respect
to, the indebtedness of the Promisor to Promisee pursuant to that certain
Promissory Note in the principal amount of $144,399.69 dated November 17, 2008,
and that certain Promissory Note in the principal amount of $385,065.85
dated November 21, 2008.
IN WITNESS WHEREOF, the Promisor has
caused this Note to be signed on the Effective Date.
|
ECO2
PLASTICS, INC.
|
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
Title:
Chief Executive Officer
|
STATE OF
_______________________ :
:ss
COUNTY OF
_____________________ :
On the ____ day of December, 2008
before me personally came Xxxxxx X. Xxxxxxxx who, being by me duly sworn, did
depose and say that he is the Chief Executive Officer of ECO2 Plastics,
Inc., and being authorized so to do, executed the foregoing instrument for the
purpose of binding said entity and that he acknowledged said instrument to be
his act and deed.
|
|
|
Notary
Public
|
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
AMENDED
AND RESTATED PROMISSORY NOTE
San
Francisco, California
Date of
Issuance: December 17, 2008
FOR VALUE RECEIVED, ECO2 PLASTICS, INC., a Delaware
corporation (the “Promisor”) hereby
promises to pay to the order of XXXXXX LIVING TRUST DATED 12/10/1996 (the “Promisee” or the
“Holder”), in
lawful money of the United States at the address of the Holder set forth herein,
the principal amount of fifty thousand three hundred twenty-eight dollars and
seventy-seven cents ($50,328.77) which includes the total principal plus
interest from the current November 17, 2008 note (the “Note Amount”),
together with Interest, as defined below. This Amended and Restated
Promissory Note (“Note”) has been
executed by the Promisor on the date set forth above (the “Effective
Date”).
This Note is one of a series of
promissory notes issued by the Promisor pursuant to that certain Convertible
Note and Warrant Purchase Agreement, dated as of December 17, 2008, by and among
the Promisor and the parties named therein (the “Purchase
Agreement”). This Note and such other promissory notes issued
by the Promisor pursuant to the Purchase Agreement are herein collectively
referred to as the “Notes.” This
Note is secured by a security interest in certain collateral of the Promisor
pursuant to the Amended and Restated Security Agreement, dated as of December
17, 2008, as amended, supplemented, restated or otherwise modified from time to
time, by and between the Promisor and the Promisee (the “Security
Agreement”) and is entitled to all
the benefits and obligations provided therein. All payments of
interest and principal shall be in lawful money of the United States of America
and shall be made pro rata among all holders of the Notes. The
following is a statement of the rights of the Holder of this Note and the terms
and conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of the Note agrees:
13.
Interest. Interest
shall accrue at eight percent (8%) per annum on the outstanding principal amount
of this Note (the “Interest”). Upon
the occurrence of an Event of Default and for so long as such Event of Default
continues, Interest shall accrue on the outstanding Note Amount at the rate of
eight percent (8%) per annum (the “Default Interest
Rate”).
14. Maturity
Date. The Note Amount, any accrued Interest thereon and all
other sums due hereunder, shall be due and payable three (3) years from the
Effective Date (the “Maturity
Date”).
15. Security. This
Note is secured pursuant to the terms of the Security Agreement by a security
interest in the Collateral (as such term is defined in the Security
Agreement). This Note is subject to the provisions of the Security
Agreement. It is agreed that all Promisor’s indebtedness, whether outstanding on
the date hereof or subsequently incurred or assumed, except all indebtedness
secured by perfected security interests granted by Promisor in connection with
the Senior Debt (as such term is defined in the Security Agreement) shall be
junior in right of payment to the indebtedness and other obligations of Promisor
pursuant to the Notes.
16. Application of
Payments.
16.1. Except
as otherwise expressly provided herein, payments under this Note shall be
applied, (i) first to the repayment of any sums incurred by the Holder for the
payment of any expenses in enforcing the terms of this Note, (ii) then to the
payment of any accrued but unpaid Interest under this Note, and (iii) then to
the reduction of the Note Amount.
16.2. The
Promisor may only prepay principal upon the written consent of holders of 70% or
more of the aggregate principal amount of the Notes then
outstanding.
16.3. Upon
payment in full of the Note Amount, any applicable accrued and unpaid Interest
thereon, and any other sums due hereunder, this Note shall be marked “Paid in
Full” and returned to the Promisor.
17. Waiver of
Notice. The Promisor hereby waives presentment for payment,
demand, notice of nonpayment, notice of protest and protest of this Note, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note, and agrees that the
liability of the Promisor shall be unconditional without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
the Promisee.
18. Events of
Default. The occurrence of any of the following events (each
an “Event of
Default”) shall constitute an Event of Default of the
Promisor:
18.1. the
failure of the Promisor to make any payment due hereunder within three (3) days
after the due date thereof;
18.2. a
material default by the Promisor under the Purchase Agreement or any other
document or agreement executed by the Promisor pursuant thereto, which default,
if curable, is not cured within thirty (30) days following written notice by the
Promisee to the Promisor specifying the default in reasonable detail;
and
18.3. (i)
the application for the appointment of a receiver or custodian for the Promisor
or the property of the Promisor, (ii) the entry of an order for relief or the
filing of a petition by or against the Promisor under the provisions of any
bankruptcy or insolvency law, (iii) any assignment for the benefit of creditors
by or against the Promisor, or (iv) the Promisor’s insolvency (which term is
defined for purposes of this paragraph as the failure or inability of the
Promisor to meet its obligations as the same fall due).
Upon the occurrence of any Event of
Default that is not cured within any applicable cure period, if any, the Holder
may, upon the consent of holders of at least 70% of the aggregate principal
amount of the Notes then outstanding (except in the case of an Event of Default
pursuant to Section 6.3(i), (ii) or (iii), in which case no such consent shall
be necessary), elect to take at any time any or all of the following actions:
(i) declare this Note to be forthwith due and payable, whereupon the entire
unpaid Note Amount, together with all accrued and unpaid Interest thereon
(including the Default Interest Rate), and all other cash obligations hereunder,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Promisor, anything contained herein to the contrary notwithstanding, (ii)
set-off any amounts owed by the Promisee or any Affiliate of the Promisee (each
of which is an intended third party beneficiary hereunder), to the Promisor
whatsoever against any amounts owed by the Promisor to the Promisee hereunder;
and (iii) exercise any and all other remedies provided hereunder or available at
law or in equity. For purposes of this Note, “Affiliate” means any
other party that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under control with, such party.
If an Event of Default occurs by the
Promisor, the Promisor agrees to pay, in addition to the Note Amount, reasonable
attorneys' fees and any other reasonable costs incurred by the Holder in
connection with its pursuit of its remedies under this Note.
7. Conversion.
7.1 At
any time upon written notice by the Promisee to the Promisor, the principal
amount and all Interest due under this Note shall be converted into shares of
Series C Convertible Preferred Stock of the Promisor (“Securities”) at a
price per share equal to $0.015 (subject to appropriate adjustment for all stock
splits, subdivisions, combinations, recapitalizations and the
like). No fractional shares of Securities will be issued upon such
conversion of this Note. In lieu thereof, the number of Securities to
be issued to the Holder shall be rounded to the nearest whole
share. Upon conversion of this Note pursuant to this Section 7, the
Holder shall surrender this Note, duly endorsed, at the principal offices of the
Promisor or any transfer agent of the Promisor. At its expense, the
Promisor will, as soon as practicable thereafter, issue and deliver to such
Holder, at such principal office, a certificate or certificates for the number
of shares to which such Holder is entitled upon such conversion, together with
any other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the Holder
for any cash amounts payable as described herein. Upon conversion of
this Note, the Promisor will be forever released from all of its obligations and
liabilities under this Note with regard to that portion of the principal amount
and accrued interest being converted including without limitation the obligation
to pay such portion of the principal amount and accrued interest.
7.2 At
any time upon the written election at their discretion of holders of 70% or more
of the aggregate principal amount of Notes then outstanding, the principal
amount and all Interest due under each Note shall be converted into shares of
Securities in the same manner described in Section 7.1 above.
8.
Miscellaneous.
8.1 Successors and
Assigns. The terms and conditions of this Note shall inure to
the benefit of and be binding upon the respective executors, administrators,
heirs, successors and permitted assigns of the parties. This Note (or
a portion hereof) may be assigned by the Holder without the consent of the
Promisor. This Note may not be assigned by the Promisor without the
prior written consent of the Promisee.
8.2 Loss or Mutilation of
Note. Upon receipt by the Promisor of evidence reasonably
satisfactory to the Promisor of the loss, theft, destruction or mutilation of
this Note, together with indemnity reasonably satisfactory to the Promisor, in
the case of loss, theft or destruction, or the surrender and cancellation of
this Note, in the case of mutilation, the Promisor shall execute and deliver to
the Holder a new promissory note of like tenor and denomination as this
Note.
8.3 Notices. Any
notice or other communication required or permitted to be given pursuant to the
terms of this Note shall be in writing and shall be deemed effectively given the
earlier of, (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate
confirmation), or (iv) one (1) business day after being deposited with an
overnight courier service, and addressed to the recipient at the addresses set
forth below unless another address is provided to the other party in
writing:
If to Promisee,
to:
Xxxxxx
Living Trust Dated 00/00/0000
Xxx
Xxxxxxxx Xxxxxx
Xxxxxxxx, XX
00000
Fax: (000)
000-0000
If to the Promisor,
to:
ECO2 Plastics,
Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx,
XX 00000
Attn: Xxxxxx
X. Xxxxxxxx
Fax: (000)
000-0000
with a copy
to:
The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Xxxxx X.
Xxxx
Fax: (000)
000-0000
8.4 Governing
Law. This Note shall be governed in all respects by the laws
of the State of California as applied to agreements entered into and performed
entirely within the State of California by residents thereof, without regard to
any provisions thereof relating to conflicts of laws among different
jurisdictions.
8.5 Waiver and
Amendment. Any term of this Note may be amended, waived or
modified with the written consent of the Promisor and the Holder; provided
however, that (a) the terms of this Note may be amended or modified, and
any obligations of Promisor and the rights of Holder may be waived, in each case
upon the written consent of Promisor and the holders of at least 70% of the
aggregate principal amount of Notes then outstanding, and (b) this Note may
be converted as set forth herein or subordinated without any action of Holder
upon approval by holders of at least 70% of the aggregate principal amount of
Notes then outstanding.
8.6 Remedies. No
delay or omission by the Holder in exercising any of its rights, remedies,
powers or privileges hereunder or at law or in equity and no course of dealing
between the Holder and the undersigned or any other person shall be deemed a
waiver by the Holder of any such rights, remedies, powers or privileges, even if
such delay or omission is continuous or repeated, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise thereof by the Holder or the exercise of any other right,
remedy, power or privilege by the Holder. The rights and remedies of
the Holder described herein shall be cumulative and not restrictive of any other
rights or remedies available under any other instrument, at law or in equity
provided that such rights or remedies are not inconsistent with the express
provisions hereof.
8.7 Usury Savings
Clause. In the event any interest is paid on this Note which
is deemed to be in excess of the then legal maximum rate, then that portion of
the interest payment representing an amount in excess of the then legal maximum
rate shall be deemed a payment of principal and applied against the principal of
this Note.
8.8 Severability. If
any provision hereof is found by a court of competent jurisdiction to be
prohibited or unenforceable, it shall be ineffective only to the extent of such
prohibition or unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is not prohibited
or unenforceable, nor invalidate the other provisions hereof, all of which shall
be liberally construed in favor of the Promisee in order to effect the
provisions of this Note.
8.9 Setoff. Notwithstanding
the absence of an Event of Default, the Promisee shall have the right to set-off
any amounts owed by the Promisee or any Affiliate of the Promisee (each of which
is an intended third party beneficiary hereunder) to the Promisor whatsoever
against any amounts owed by the Promisor to the Promisee hereunder.
8.10 Amendment and
Restatement. This Note amends, restates and supersedes, but
does not discharge the obligations of, nor constitute a novation with respect
to, the indebtedness of the Promisor to Promisee pursuant to that certain
Promissory Note in the principal amount of $50,000 dated November 17,
2008.
IN WITNESS WHEREOF, the Promisor has
caused this Note to be signed on the Effective Date.
|
ECO2
PLASTICS, INC.
|
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
Title:
Chief Executive Officer
|
STATE OF
_______________________
:
:ss
COUNTY OF
_____________________ :
On the ____ day of December, 2008
before me personally came Xxxxxx X. Xxxxxxxx who, being by me duly sworn, did
depose and say that he is the Chief Executive Officer of ECO2 Plastics,
Inc., and being authorized so to do, executed the foregoing instrument for the
purpose of binding said entity and that he acknowledged said instrument to be
his act and deed.
|
|
|
Notary
Public
|
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
AMENDED
AND RESTATED PROMISSORY NOTE
San
Francisco, California
Date of
Issuance: December 17, 2008
FOR VALUE RECEIVED, ECO2 PLASTICS, INC., a Delaware
corporation (the “Promisor”) hereby
promises to pay to the order of TRIDENT CAPITAL FUND-VI PRINCIPALS
FUND, LLC (the “Promisee” or the
“Holder”), in
lawful money of the United States at the address of the Holder set forth herein,
the principal amount of fifty-four thousand two hundred fifty-eight dollars and
twenty-three cents ($54,258.23) (the “Note Amount”),
together with Interest, as defined below. This Amended and Restated
Promissory Note (“Note”) has been
executed by the Promisor on the date set forth above (the “Effective
Date”).
This Note is one of a series of
promissory notes issued by the Promisor pursuant to that certain Convertible
Note and Warrant Purchase Agreement, dated as of December 17, 2008, by and among
the Promisor and the parties named therein (the “Purchase
Agreement”). This Note and such other promissory notes issued
by the Promisor pursuant to the Purchase Agreement are herein collectively
referred to as the “Notes.” This
Note is secured by a security interest in certain collateral of the Promisor
pursuant to the Amended and Restated Security Agreement, dated as of December
17, 2008, as amended, supplemented, restated or otherwise modified from time to
time, by and between the Promisor and the Promisee (the “Security
Agreement”) and is entitled to all
the benefits and obligations provided therein. All payments of
interest and principal shall be in lawful money of the United States of America
and shall be made pro rata among all holders of the Notes. The
following is a statement of the rights of the Holder of this Note and the terms
and conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of the Note agrees:
19. Interest. Interest
shall accrue at eight percent (8%) per annum on the outstanding principal amount
of this Note (the “Interest”). Upon
the occurrence of an Event of Default and for so long as such Event of Default
continues, Interest shall accrue on the outstanding Note Amount at the rate of
eight percent (8%) per annum (the “Default Interest
Rate”).
20. Maturity
Date. The Note Amount, any accrued Interest thereon and all
other sums due hereunder, shall be due and payable three (3) years from the
Effective Date (the “Maturity
Date”).
21. Security. This
Note is secured pursuant to the terms of the Security Agreement by a security
interest in the Collateral (as such term is defined in the Security
Agreement). This Note is subject to the provisions of the Security
Agreement. It is agreed that all Promisor’s indebtedness, whether outstanding on
the date hereof or subsequently incurred or assumed, except all indebtedness
secured by perfected security interests granted by Promisor in connection with
the Senior Debt (as such term is defined in the Security Agreement) shall be
junior in right of payment to the indebtedness and other obligations of Promisor
pursuant to the Notes.
22. Application of
Payments.
22.1. Except
as otherwise expressly provided herein, payments under this Note shall be
applied, (i) first to the repayment of any sums incurred by the Holder for the
payment of any expenses in enforcing the terms of this Note, (ii) then to the
payment of any accrued but unpaid Interest under this Note, and (iii) then to
the reduction of the Note Amount.
22.2. The
Promisor may only prepay principal upon the written consent of holders of 70% or
more of the aggregate principal amount of the Notes then
outstanding.
22.3. Upon
payment in full of the Note Amount, any applicable accrued and unpaid Interest
thereon, and any other sums due hereunder, this Note shall be marked “Paid in
Full” and returned to the Promisor.
23. Waiver of
Notice. The Promisor hereby waives presentment for payment,
demand, notice of nonpayment, notice of protest and protest of this Note, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note, and agrees that the
liability of the Promisor shall be unconditional without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
the Promisee.
24. Events of
Default. The occurrence of any of the following events (each
an “Event of
Default”) shall constitute an Event of Default of the
Promisor:
24.1. the
failure of the Promisor to make any payment due hereunder within three (3) days
after the due date thereof;
24.2. a
material default by the Promisor under the Purchase Agreement or any other
document or agreement executed by the Promisor pursuant thereto, which default,
if curable, is not cured within thirty (30) days following written notice by the
Promisee to the Promisor specifying the default in reasonable detail;
and
24.3. (i)
the application for the appointment of a receiver or custodian for the Promisor
or the property of the Promisor, (ii) the entry of an order for relief or the
filing of a petition by or against the Promisor under the provisions of any
bankruptcy or insolvency law, (iii) any assignment for the benefit of creditors
by or against the Promisor, or (iv) the Promisor’s insolvency (which term is
defined for purposes of this paragraph as the failure or inability of the
Promisor to meet its obligations as the same fall due).
Upon the occurrence of any Event of
Default that is not cured within any applicable cure period, if any, the Holder
may, upon the consent of holders of at least 70% of the aggregate principal
amount of the Notes then outstanding (except in the case of an Event of Default
pursuant to Section 6.3(i), (ii) or (iii), in which case no such consent shall
be necessary), elect to take at any time any or all of the following actions:
(i) declare this Note to be forthwith due and payable, whereupon the entire
unpaid Note Amount, together with all accrued and unpaid Interest thereon
(including the Default Interest Rate), and all other cash obligations hereunder,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Promisor, anything contained herein to the contrary notwithstanding, (ii)
set-off any amounts owed by the Promisee or any Affiliate of the Promisee (each
of which is an intended third party beneficiary hereunder), to the Promisor
whatsoever against any amounts owed by the Promisor to the Promisee hereunder;
and (iii) exercise any and all other remedies provided hereunder or available at
law or in equity. For purposes of this Note, “Affiliate” means any
other party that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under control with, such party.
If an Event of Default occurs by the
Promisor, the Promisor agrees to pay, in addition to the Note Amount, reasonable
attorneys' fees and any other reasonable costs incurred by the Holder in
connection with its pursuit of its remedies under this Note.
7.
Conversion.
7.1 At
any time upon written notice by the Promisee to the Promisor, the principal
amount and all Interest due under this Note shall be converted into shares of
Series C Convertible Preferred Stock of the Promisor (“Securities”) at a
price per share equal to $0.015 (subject to appropriate adjustment for all stock
splits, subdivisions, combinations, recapitalizations and the
like). No fractional shares of Securities will be issued upon such
conversion of this Note. In lieu thereof, the number of Securities to
be issued to the Holder shall be rounded to the nearest whole
share. Upon conversion of this Note pursuant to this Section 7, the
Holder shall surrender this Note, duly endorsed, at the principal offices of the
Promisor or any transfer agent of the Promisor. At its expense, the
Promisor will, as soon as practicable thereafter, issue and deliver to such
Holder, at such principal office, a certificate or certificates for the number
of shares to which such Holder is entitled upon such conversion, together with
any other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the Holder
for any cash amounts payable as described herein. Upon conversion of
this Note, the Promisor will be forever released from all of its obligations and
liabilities under this Note with regard to that portion of the principal amount
and accrued interest being converted including without limitation the obligation
to pay such portion of the principal amount and accrued interest.
7.2 At
any time upon the written election at their discretion of holders of 70% or more
of the aggregate principal amount of Notes then outstanding, the principal
amount and all Interest due under each Note shall be converted into shares of
Securities in the same manner described in Section 7.1 above.
8. Miscellaneous.
8.1 Successors and
Assigns. The terms and conditions of this Note shall inure to
the benefit of and be binding upon the respective executors, administrators,
heirs, successors and permitted assigns of the parties. This Note (or
a portion hereof) may be assigned by the Holder without the consent of the
Promisor. This Note may not be assigned by the Promisor without the
prior written consent of the Promisee.
8.2 Loss or Mutilation of
Note. Upon receipt by the Promisor of evidence reasonably
satisfactory to the Promisor of the loss, theft, destruction or mutilation of
this Note, together with indemnity reasonably satisfactory to the Promisor, in
the case of loss, theft or destruction, or the surrender and cancellation of
this Note, in the case of mutilation, the Promisor shall execute and deliver to
the Holder a new promissory note of like tenor and denomination as this
Note.
8.3 Notices. Any
notice or other communication required or permitted to be given pursuant to the
terms of this Note shall be in writing and shall be deemed effectively given the
earlier of, (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate
confirmation), or (iv) one (1) business day after being deposited with an
overnight courier service, and addressed to the recipient at the addresses set
forth below unless another address is provided to the other party in
writing:
If to Promisee,
to:
Trident
Capital Fund-VI Principals Fund, LLC
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx
Xxxx, XX 00000
Attn:
Fax: (000)
000-0000
If to the Promisor,
to:
ECO2 Plastics,
Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx,
XX 00000
Attn:
Xxxxxx X. Xxxxxxxx
Fax: (000)
000-0000
with a copy
to:
The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Xxxxx
X. Xxxx
Fax: (000)
000-0000
8.4 Governing
Law. This Note shall be governed in all respects by the laws
of the State of California as applied to agreements entered into and performed
entirely within the State of California by residents thereof, without regard to
any provisions thereof relating to conflicts of laws among different
jurisdictions.
8.5 Waiver and
Amendment. Any term of this Note may be amended, waived or
modified with the written consent of the Promisor and the Holder; provided
however, that (a) the terms of this Note may be amended or modified, and
any obligations of Promisor and the rights of Holder may be waived, in each case
upon the written consent of Promisor and the holders of at least 70% of the
aggregate principal amount of Notes then outstanding, and (b) this Note may
be converted as set forth herein or subordinated without any action of Holder
upon approval by holders of at least 70% of the aggregate principal amount of
Notes then outstanding.
8.6 Remedies. No
delay or omission by the Holder in exercising any of its rights, remedies,
powers or privileges hereunder or at law or in equity and no course of dealing
between the Holder and the undersigned or any other person shall be deemed a
waiver by the Holder of any such rights, remedies, powers or privileges, even if
such delay or omission is continuous or repeated, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise thereof by the Holder or the exercise of any other right,
remedy, power or privilege by the Holder. The rights and remedies of
the Holder described herein shall be cumulative and not restrictive of any other
rights or remedies available under any other instrument, at law or in equity
provided that such rights or remedies are not inconsistent with the express
provisions hereof.
8.7 Usury Savings
Clause. In the event any interest is paid on this Note which
is deemed to be in excess of the then legal maximum rate, then that portion of
the interest payment representing an amount in excess of the then legal maximum
rate shall be deemed a payment of principal and applied against the principal of
this Note.
8.8 Severability. If
any provision hereof is found by a court of competent jurisdiction to be
prohibited or unenforceable, it shall be ineffective only to the extent of such
prohibition or unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is not prohibited
or unenforceable, nor invalidate the other provisions hereof, all of which shall
be liberally construed in favor of the Promisee in order to effect the
provisions of this Note.
8.9 Setoff. Notwithstanding
the absence of an Event of Default, the Promisee shall have the right to set-off
any amounts owed by the Promisee or any Affiliate of the Promisee (each of which
is an intended third party beneficiary hereunder) to the Promisor whatsoever
against any amounts owed by the Promisor to the Promisee hereunder.
8.10 Amendment and
Restatement. This Note amends, restates and supersedes, but
does not discharge the obligations of, nor constitute a novation with respect
to, the indebtedness of the Promisor to Promisee pursuant to that certain
Promissory Note in the principal amount of $5,600.31 dated November 17, 2008,
and that certain Promissory Note in the principal amount of $14,934.15
dated November 21, 2008.
IN WITNESS WHEREOF, the Promisor has
caused this Note to be signed on the Effective Date.
|
ECO2
PLASTICS, INC.
|
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
Title:
Chief Executive Officer
|
STATE OF
_______________________ :
:ss
COUNTY OF
_____________________ :
On the ____ day of December, 2008
before me personally came Xxxxxx X. Xxxxxxxx who, being by me duly sworn, did
depose and say that he is the Chief Executive Officer of ECO2 Plastics,
Inc., and being authorized so to do, executed the foregoing instrument for the
purpose of binding said entity and that he acknowledged said instrument to be
his act and deed.
|
|
|
Notary
Public
|
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
CONVERTIBLE
PROMISSORY NOTE
San
Francisco, California
Date of
Issuance: December 17, 2008
FOR VALUE RECEIVED, ECO2 PLASTICS, INC., a Delaware
corporation (the “Promisor”) hereby
promises to pay to the order of __________________ (the “Promisee” or the
“Holder”), in
lawful money of the United States at the address of the Holder set forth herein,
the principal amount of [_____________________] (the “Note Amount”),
together with Interest, as defined below. This Convertible Promissory
Note (“Note”)
has been executed by the Promisor on the date set forth above (the “Effective
Date”).
This Note is one of a series of
promissory notes issued by the Promisor pursuant to that certain Convertible
Note and Warrant Purchase Agreement, dated as of December 17, 2008, by and among
the Promisor and the parties named therein (the “Purchase
Agreement”). This Note and such other promissory notes issued
by the Promisor pursuant to the Purchase Agreement are herein collectively
referred to as the “Notes.” This
Note is secured by a security interest in certain collateral of the Promisor
pursuant to the Amended and Restated Security Agreement, dated as of December
17, 2008, as amended, supplemented, restated or otherwise modified from time to
time, by and between the Promisor and the Promisee (the “Security
Agreement”) and is entitled to all
the benefits and obligations provided therein. All payments of
interest and principal shall be in lawful money of the United States of America
and shall be made pro rata among all holders of the Notes. The
following is a statement of the rights of the Holder of this Note and the terms
and conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of the Note agrees:
25. Interest. Interest
shall accrue at eight percent (8%) per annum on the outstanding principal amount
of this Note (the “Interest”). Upon
the occurrence of an Event of Default and for so long as such Event of Default
continues, Interest shall accrue on the outstanding Note Amount at the rate of
eight percent (8%) per annum (the “Default Interest
Rate”).
26. Maturity
Date. The Note Amount, any accrued Interest thereon and all
other sums due hereunder, shall be due and payable three (3) years from the
Effective Date (the “Maturity
Date”).
27. Security. This
Note is secured pursuant to the terms of the Security Agreement by a security
interest in the Collateral (as such term is defined in the Security
Agreement). This Note is subject to the provisions of the Security
Agreement. It is agreed that all Promisor’s indebtedness, whether outstanding on
the date hereof or subsequently incurred or assumed, except all indebtedness
secured by perfected security interests granted by Promisor in connection with
the Senior Debt (as such term is defined in the Security Agreement) shall be
junior in right of payment to the indebtedness and other obligations of Promisor
pursuant to the Notes.
28. Application of
Payments.
28.1. Except
as otherwise expressly provided herein, payments under this Note shall be
applied, (i) first to the repayment of any sums incurred by the Holder for the
payment of any expenses in enforcing the terms of this Note, (ii) then to the
payment of any accrued but unpaid Interest under this Note, and (iii) then to
the reduction of the Note Amount.
28.2. The
Promisor may only prepay principal upon the written consent of holders of 70% or
more of the aggregate principal amount of the Notes then
outstanding.
28.3. Upon
payment in full of the Note Amount, any applicable accrued and unpaid Interest
thereon, and any other sums due hereunder, this Note shall be marked “Paid in
Full” and returned to the Promisor.
29. Waiver of
Notice. The Promisor hereby waives presentment for payment,
demand, notice of nonpayment, notice of protest and protest of this Note, and
all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note, and agrees that the
liability of the Promisor shall be unconditional without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
the Promisee.
30. Events of
Default. The occurrence of any of the following events (each
an “Event of
Default”) shall constitute an Event of Default of the
Promisor:
30.1. the
failure of the Promisor to make any payment due hereunder within three (3) days
after the due date thereof;
30.2. a
material default by the Promisor under the Purchase Agreement or any other
document or agreement executed by the Promisor pursuant thereto, which default,
if curable, is not cured within thirty (30) days following written notice by the
Promisee to the Promisor specifying the default in reasonable detail;
and
30.3. (i)
the application for the appointment of a receiver or custodian for the Promisor
or the property of the Promisor, (ii) the entry of an order for relief or the
filing of a petition by or against the Promisor under the provisions of any
bankruptcy or insolvency law, (iii) any assignment for the benefit of creditors
by or against the Promisor, or (iv) the Promisor’s insolvency (which term is
defined for purposes of this paragraph as the failure or inability of the
Promisor to meet its obligations as the same fall due).
Upon the occurrence of any Event of
Default that is not cured within any applicable cure period, if any, the Holder
may, upon the consent of holders of at least 70% of the aggregate principal
amount of the Notes then outstanding (except in the case of an Event of Default
pursuant to Section 6.3(i), (ii) or (iii), in which case no such consent shall
be necessary), elect to take at any time any or all of the following actions:
(i) declare this Note to be forthwith due and payable, whereupon the entire
unpaid Note Amount, together with all accrued and unpaid Interest thereon
(including the Default Interest Rate), and all other cash obligations hereunder,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Promisor, anything contained herein to the contrary notwithstanding, (ii)
set-off any amounts owed by the Promisee or any Affiliate of the Promisee (each
of which is an intended third party beneficiary hereunder), to the Promisor
whatsoever against any amounts owed by the Promisor to the Promisee hereunder;
and (iii) exercise any and all other remedies provided hereunder or available at
law or in equity. For purposes of this Note, “Affiliate” means any
other party that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under control with, such party.
If an Event of Default occurs by the
Promisor, the Promisor agrees to pay, in addition to the Note Amount, reasonable
attorneys' fees and any other reasonable costs incurred by the Holder in
connection with its pursuit of its remedies under this Note.
7. Conversion.
7.1 At
any time upon written notice by the Promisee to the Promisor, the principal
amount and all Interest due under this Note shall be converted into shares of
Series C Convertible Preferred Stock of the Promisor (“Securities”) at a
price per share equal to $0.015 (subject to appropriate adjustment for all stock
splits, subdivisions, combinations, recapitalizations and the
like). No fractional shares of Securities will be issued upon such
conversion of this Note. In lieu thereof, the number of Securities to
be issued to the Holder shall be rounded to the nearest whole
share. Upon conversion of this Note pursuant to this Section 7, the
Holder shall surrender this Note, duly endorsed, at the principal offices of the
Promisor or any transfer agent of the Promisor. At its expense, the
Promisor will, as soon as practicable thereafter, issue and deliver to such
Holder, at such principal office, a certificate or certificates for the number
of shares to which such Holder is entitled upon such conversion, together with
any other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the Holder
for any cash amounts payable as described herein. Upon conversion of
this Note, the Promisor will be forever released from all of its obligations and
liabilities under this Note with regard to that portion of the principal amount
and accrued interest being converted including without limitation the obligation
to pay such portion of the principal amount and accrued interest.
7.2 At
any time upon the written election at their discretion of holders of 70% or more
of the aggregate principal amount of Notes then outstanding, the principal
amount and all Interest due under each Note shall be converted into shares of
Securities in the same manner described in Section 7.1 above.
8. Miscellaneous.
8.1 Successors and
Assigns. The terms and conditions of this Note shall inure to
the benefit of and be binding upon the respective executors, administrators,
heirs, successors and permitted assigns of the parties. This Note (or
a portion hereof) may be assigned by the Holder without the consent of the
Promisor. This Note may not be assigned by the Promisor without the
prior written consent of the Promisee.
8.2 Loss or Mutilation of
Note. Upon receipt by the Promisor of evidence reasonably
satisfactory to the Promisor of the loss, theft, destruction or mutilation of
this Note, together with indemnity reasonably satisfactory to the Promisor, in
the case of loss, theft or destruction, or the surrender and cancellation of
this Note, in the case of mutilation, the Promisor shall execute and deliver to
the Holder a new promissory note of like tenor and denomination as this
Note.
8.3 Notices. Any
notice or other communication required or permitted to be given pursuant to the
terms of this Note shall be in writing and shall be deemed effectively given the
earlier of, (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate
confirmation), or (iv) one (1) business day after being deposited with an
overnight courier service, and addressed to the recipient at the addresses set
forth below unless another address is provided to the other party in
writing:
If to Promisee,
to:
____________________
____________________
____________________
Attn: ____________________
Fax: ____________________
If to the Promisor,
to:
ECO2 Plastics,
Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx,
XX 00000
Attn: Xxxxxx
X. Xxxxxxxx
Fax: (000)
000-0000
with a copy
to:
The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Xxxxx
X. Xxxx
Fax: (000)
000-0000
8.4 Governing
Law. This Note shall be governed in all respects by the laws
of the State of California as applied to agreements entered into and performed
entirely within the State of California by residents thereof, without regard to
any provisions thereof relating to conflicts of laws among different
jurisdictions.
8.5 Waiver and
Amendment. Any term of this Note may be amended, waived or
modified with the written consent of the Promisor and the Holder; provided
however, that (a) the terms of this Note may be amended or modified, and
any obligations of Promisor and the rights of Holder may be waived, in each case
upon the written consent of Promisor and the holders of at least 70% of the
aggregate principal amount of Notes then outstanding, and (b) this Note may
be converted as set forth herein or subordinated without any action of Holder
upon approval by holders of at least 70% of the aggregate principal amount of
Notes then outstanding.
8.6 Remedies. No
delay or omission by the Holder in exercising any of its rights, remedies,
powers or privileges hereunder or at law or in equity and no course of dealing
between the Holder and the undersigned or any other person shall be deemed a
waiver by the Holder of any such rights, remedies, powers or privileges, even if
such delay or omission is continuous or repeated, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise thereof by the Holder or the exercise of any other right,
remedy, power or privilege by the Holder. The rights and remedies of
the Holder described herein shall be cumulative and not restrictive of any other
rights or remedies available under any other instrument, at law or in equity
provided that such rights or remedies are not inconsistent with the express
provisions hereof.
8.7 Usury Savings
Clause. In the event any interest is paid on this Note which
is deemed to be in excess of the then legal maximum rate, then that portion of
the interest payment representing an amount in excess of the then legal maximum
rate shall be deemed a payment of principal and applied against the principal of
this Note.
8.8 Severability. If
any provision hereof is found by a court of competent jurisdiction to be
prohibited or unenforceable, it shall be ineffective only to the extent of such
prohibition or unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is not prohibited
or unenforceable, nor invalidate the other provisions hereof, all of which shall
be liberally construed in favor of the Promisee in order to effect the
provisions of this Note.
8.9 Setoff. Notwithstanding
the absence of an Event of Default, the Promisee shall have the right to set-off
any amounts owed by the Promisee or any Affiliate of the Promisee (each of which
is an intended third party beneficiary hereunder) to the Promisor whatsoever
against any amounts owed by the Promisor to the Promisee
hereunder.
IN
WITNESS WHEREOF, the Promisor has caused this Note to be signed on the Effective
Date.
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ECO2
PLASTICS, INC.
|
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
Title:
Chief Executive Officer
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STATE OF
_______________________ :
:ss
COUNTY OF
_____________________ :
On the ______ day of December, 2008
before me personally came Xxxxxx X. Xxxxxxxx who, being by me duly sworn, did
depose and say that he is the Chief Executive Officer of ECO2 Plastics,
Inc., and being authorized so to do, executed the foregoing instrument for the
purpose of binding said entity and that he acknowledged said instrument to be
his act and deed.
|
|
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Notary
Public
|
Exhibit
B
Forms of
Warrants
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
Warrant
To Purchase 50,100,822 Shares of Common Stock
Void
after April 14, 2015
ECO2 PLASTICS,
INC.
(f.k.a.,
Itec Environmental Group, inc.)
Date of
Issuance: December 17, 2008
No. 394
THIS CERTIFIES that, for value
received, Peninsula Packaging, LLC, a California limited liability company or
its assigns (in either case, the “Holder”) is entitled to
purchase, subject to the provisions of this Warrant, from ECO2 Plastics,
Inc., a Delaware corporation (the “Company”), at the price per
share set forth in Section 9 hereof, that number of shares of the Company’s
common stock (the “Common
Stock”) set forth in Section 8 hereof. This Warrant is
referred to herein as the “Warrant” and the shares of
Common Stock issuable pursuant to the terms hereof are sometimes referred to
herein as “Warrant
Shares.”
This Warrant is one of a series of
warrants issued by the Company pursuant to that certain Convertible Note and
Warrant Purchase Agreement, dated as of December 17, 2008, by and among the
Company and the parties named therein (the “Purchase
Agreement”). This Warrant and such other warrants issued by
the Company pursuant to the Purchase Agreement are herein collectively referred
to as the “Warrants.” Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
1. Holder
Exercise of Warrant. This Warrant shall be
exercisable in whole or in part. To exercise this Warrant, the Holder
shall deliver to the Company at its principal office, (a) a written notice, in
substantially the form of the exercise notice attached hereto as Exhibit
A (the “Exercise
Notice”), of the Holder’s
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, (b) this Warrant and (c) (except in the
case of exercise on a net issue basis pursuant to Section 9(b) of this Warrant)
the payment to the Company, by check or wire, of an amount equal to the then
applicable Exercise Price (as defined below) per share multiplied by the number
of Warrant Shares then being purchased. The Company shall as promptly as
practicable, and in any event within twenty (20) days after delivery to the
Company of (a), (b) and (c) above, execute and deliver or cause to be executed
and delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in such
notice. Each certificate representing Warrant Shares shall bear the
legend or legends required by applicable securities laws as well as such other
legend(s) the Company requires to be included on certificates for its Common
Stock. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of such stock
certificates except that, in case such stock certificates shall be registered in
a name or names other than the name of the Holder, funds sufficient to pay all
stock transfer taxes that are payable upon the issuance of such stock
certificate or certificates shall be paid by the Holder at the time of
delivering the Exercise Notice. All shares of Common Stock issued
upon the exercise of this Warrant shall be validly issued, fully paid, and
nonassessable. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. If this
Warrant is exercised in part, the Company shall, upon surrender of this Warrant,
execute and deliver, within 20 days of the date of exercise, a new Warrant
evidencing the rights of the Holder, or such other person as shall be designated
in the Notice of Exercise, to purchase the balance of the Warrant Shares
purchasable hereunder.
The
Warrant shall expire on April 14, 2015 (the “Expiration
Date”). The Investor may exercise the warrant in whole or in
part at any time prior to the Expiration Date. The Company has no
restriction on the sale or transfer of the Warrant or Warrant Shares; however,
the Investor is required to comply with all state and U.S. laws and regulations
relating to security sales and transfers. This Warrant shall
automatically be exercised in full as of immediately prior to termination of the
Warrant on the Expiration Date, on a net issue basis pursuant to Section 9(b),
to the extent the Warrant shall not have previously been exercised in
full.
2. Reservation of
Shares. The Company hereby covenants that at all times during the term of
this Warrant there shall be reserved for issuance such number of shares of its
Common Stock as shall be required to be issued upon exercise of this
Warrant.
3. Fractional
Shares. This Warrant may be exercised only for a whole number
of shares of Common Stock, and no fractional shares or scrip representing
fractional shares shall be issuable upon the exercise of this
Warrant.
4. Representations of the
Company. The Company represents that all corporate actions on the part of
the Company, its officers, directors and shareholders necessary for the sale and
issuance of the Warrant Shares pursuant hereto and the performance of the
Company's obligations hereunder were taken prior to and are effective as of the
effective date of this Warrant.
5. Transfer of Warrant and
Warrant Shares. The Holder may sell, pledge, hypothecate, or
otherwise transfer this Warrant, in whole, in accordance with and subject to the
terms and conditions set forth in this Warrant and then only if such sale,
pledge, hypothecation, or transfer is made in compliance with the 1933 Act or
pursuant to an available exemption from registration under the 1933 Act relating
to the disposition of securities.
6. Loss of
Warrant. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, or destruction of this Warrant, and of indemnification
satisfactory to it, or upon surrender and cancellation of this Warrant, if
mutilated, the Company will execute and deliver a new warrant of like
tenor.
7. Rights of the
Holder. No provision of this Warrant shall be construed as
conferring upon the Holder the right to vote, consent, receive dividends or
receive notice other than as expressly provided herein. Prior to
exercise, no provision hereof, in the absence of affirmative action by the
Holder to exercise this Warrant, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
8. Number of Warrant
Shares. This Warrant shall be exercisable for 50,100,822
shares (as originally determined pursuant to the Purchase Agreement) of the
Company’s Common Stock, as adjusted in accordance with this
Warrant.
9. Exercise Price; Adjustment
of Warrants.
a. Determination of Exercise
Price. The per share purchase price (the “Exercise Price”) for each of
the Warrant Shares purchasable under this Warrant shall be equal to $0.015, as
adjusted in accordance with this Warrant.
b. Net Issue Exercise.
In lieu of exercising this Warrant pursuant to Section 1 above, the Holder may
elect to receive a number of Warrant Shares equal to the value of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with notice of such election, in which
event the Company shall issue to the Holder a number of Warrant Shares computed
using the following formula:
|
Where
X
|
=
|
the
number of Warrant Shares to be issued to the Holder.
|
|
Y
|
=
|
the
number of Warrant Shares purchasable under this
Warrant.
|
|
A
|
=
|
the
fair market value of one Warrant Share on the date of
determination.
|
|
B
|
=
|
the
per share Exercise Price (as adjusted to the date of such
calculation).
|
Fair Market Value.
For purposes of this section, the per share fair market value of the Warrant
Shares shall mean:
(i) If
the Company's Common Stock is publicly traded, the per share fair market value
of the Warrant Shares shall be the average of the closing prices of the Common
Stock as quoted on the Nasdaq National Market or the principal exchange on which
the Common Stock is listed, or if not so listed then the fair market value shall
be the average of the closing bid prices of the Common Stock as published in The
Wall Street Journal, in each case for the fifteen (15) trading days ending five
(5) trading days prior to the date of determination of fair market
value;
(ii) If
the Company's Common Stock is not so publicly traded, the per share fair market
value of the Warrant Shares shall be such fair market value as is determined in
good faith by the Board of Directors of the Company after taking into
consideration factors it deems appropriate, including, without limitation,
recent sale and offer prices of the capital stock of the Company in private
transactions negotiated at arm's length.
c. Reclassification. In
the case of any reclassification or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or
into another corporation (other than a merger with another corporation in which
the Company is the acquiring and the surviving corporation and which does not
result in any reclassification or change of outstanding securities issuable upon
exercise of this Warrant), or in case of any sale of all or substantially all of
the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder of
this Warrant a new Warrant (in form and substance reasonably satisfactory to the
holder of this Warrant), or the Company shall make appropriate provision without
the issuance of a new Warrant, so that the holder of this Warrant shall have the
right to receive, at a total purchase price not to exceed that payable upon the
exercise of the unexercised portion of this Warrant, and in lieu of the shares
of Common Stock theretofore issuable upon exercise of this Warrant, (i) the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, merger or sale by a holder of the number of
shares of Common Stock then purchasable under this Warrant, or (ii) in the case
of such a merger or sale in which the consideration paid consists all or in part
of assets other than securities of the successor or purchasing corporation, at
the option of the Holder of this Warrant, the securities of the successor or
purchasing corporation having a value at the time of the transaction equivalent
to the fair market value of the Common Stock at the time of the transaction. The
provisions of this subparagraph (c) shall similarly apply to successive
reclassifications, changes, mergers and transfers.
d. Stock
Splits, Dividends and Combinations. In the event that the Company shall
at any time subdivide the outstanding shares of Common Stock or shall issue a
stock dividend on its outstanding shares of Common Stock the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
subdivision or to the issuance of such stock dividend shall be proportionately
increased, and the Exercise Price shall be proportionately decreased, and in the
event that the Company shall at any time combine the outstanding shares of
Common Stock the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately decreased, and
the Exercise Price shall be proportionately increased, effective at the close of
business on the date of such subdivision, stock dividend or combination, as the
case may be.
e. NO
IMPAIRMENT. THE COMPANY WILL NOT, THROUGH ANY REORGANIZATION,
TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE OR SALE OF
SECURITIES OR ANY OTHER VOLUNTARY ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE
OR PERFORMANCE OF ANY OF THE TERMS TO BE OBSERVED OR PERFORMED HEREUNDER BY THE
COMPANY, BUT WILL AT ALL TIMES IN GOOD FAITH ASSIST IN THE CARRYING OUT OF ALL
THE PROVISIONS OF THIS SECTION AND IN THE TAKING OF ALL SUCH ACTION AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO PROTECT THE EXERCISE RIGHTS OF THE HOLDER
OF THIS WARRANT AGAINST IMPAIRMENT.
f. Issue
Taxes. The Company shall pay issue taxes that may be payable
in respect of any issue or delivery of shares of Common Stock on exercise of
this Warrant, in whole; provided, however, that the Company
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such exercise.
g. Stock
Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
h. Stock Fully
Paid. All of the shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefore, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof.
i. Reservation of Stock
Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
exercise of this Warrant, the Company will take all appropriate corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
10. Certain
Distributions. In case the Company shall, at any time, prior
to the Expiration Date, declare any distribution of its assets to holders of its
Common Stock as a partial liquidation, distribution or by way of return of
capital, other than as a dividend payable out of earnings or any surplus legally
available for dividends, then the Holder shall be entitled, upon the proper
exercise of this Warrant in whole prior to the effecting of such declaration, to
receive, in addition to the shares of Common Stock issuable on such exercise,
the amount of such assets (or at the option of the Company a sum equal to the
value thereof at the time of such distribution to holders of Common Stock as
such value is determined by the Board of Directors of the Company in good
faith), which would have been payable to the Holder had it been a holder of
record of such shares of Common Stock on the record date for the determination
of those holders of Common Stock entitled to such distribution.
11. Dissolution or
Liquidation. In case the Company shall, at any time prior to
the Expiration Date, dissolve, liquidate or wind up its affairs, the Holder
shall be entitled, upon the proper exercise of this Warrant in whole and prior
to any distribution associated with such dissolution, liquidation, or winding
up, to receive on such exercise, in lieu of the shares of Common Stock to which
the Holder would have been entitled, the same kind and amount of assets as would
have been distributed or paid to the Holder upon any such dissolution,
liquidation or winding up, with respect to such shares of Common Stock had the
Holder been a holder of record of such share of Common Stock on the record date
for the determination of those holders of Common Stock entitled to receive any
such dissolution, liquidation, or winding up distribution.
12. Notice of
Adjustments. Whenever the number of Warrant Shares purchasable hereunder
or the Exercise Price thereof shall be adjusted pursuant to Section 9 hereof,
the Company shall provide notice to the Holder setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the number and class of
shares which may be purchased thereafter and the Exercise Price therefor after
giving effect to such adjustment.
13. Registration Rights.
The Holder hereof shall be entitled, with respect to the Warrant Shares issued
upon exercise hereof, to all of the registration rights set forth in the
Company’s Investor Rights Agreement, dated as of June 4, 2008, as amended
September 15, 2008 (the “Rights Agreement”),
to the same extent and on the same terms and conditions as possessed by the
investors thereunder and as if the Warrant Shares were included in the
definition of “Registrable Securities” in the Rights Agreement. The
Company shall take such action as may be reasonably necessary to (a) amend the
Rights Agreement to effect the foregoing and (b) assure that the granting of
such registration rights to the Holder does not violate the provisions of the
Rights Agreement or any of the Company’s charter documents or rights of prior
grantees of registration rights.
14. Miscellaneous.
a. Successors and
Assigns. The terms and conditions of this Warrant shall inure
to the benefit of, and be binding upon, the respective successors and assigns of
the parties, except to the extent otherwise provided herein. Nothing
in this Warrant, express or implied, is intended to confer upon any party, other
than the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant, except
as expressly provided in this Warrant.
b. Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California without regard to the
principles of conflict of laws thereof.
c. Counterparts; Delivery by
Facsimile. This Warrant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of
this Warrant may be effected by facsimile.
d. Titles and
Subtitles. The titles and subtitles used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.
e. Notices. Unless
otherwise provided, any notice required or permitted hereunder shall be given by
personal service upon the party to be notified by certified mail, return receipt
requested and: (i) if to the Company, addressed to ECO2 Plastics,
Inc., 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other address as the Company may
designate by notice to each of the Investors in accordance with the provisions
of this Section; and (ii) if to the Warrant holder, at the address indicated in
the Purchase Agreement, or at such other addresses as such Holder may designate
by notice to the Company in accordance with the provisions of this
Section.
f. Amendments and
Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either prospectively or retroactively), only with the
written consent of the Company and the Holder; provided,
however, that the terms of this Warrant may also be amended,
modified or terminated upon the written consent of the Company and the initial
holders of at least 70% in interest of the Warrants issued pursuant to the
Purchase Agreement (based on the number of Warrant Shares initially exercisable
thereunder) if at the same time all such Warrants issued to the Purchase
Agreement are so amended, modified or terminated in a similar
manner.
g. Entire
Agreement. This Warrant and the Purchase Agreement constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties
hereto.
[Signature
Page Follows]
IN WITNESS WHEREOF, the undersigned
hereby sets his hand and seal on the date set forth above.
ECO2 Plastics,
Inc.
|
By:
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
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Title:
Chief Executive Officer
|
EXHIBIT
A
NOTICE OF
EXERCISE
(To be
signed only upon exercise of the Warrant)
To: ECO2 Plastics,
Inc.
The
undersigned, hereby irrevocably elects to exercise the purchase rights
represented by the Warrant granted to the undersigned on December 17, 2008 and
to purchase thereunder __________* shares of Common Stock of ECO2 Plastics,
Inc. (the “Company”).
NET ISSUE EXERCISE
ELECTION: If applicable, the undersigned elects to purchase
the Warrant Shares by net issue exercise pursuant to Section 9(b) of the
Warrant, by initialing in the following space (please initial only if net issue
exercise chosen):
Net issue
exercise election chosen (INITIAL):
________
Dated:
________________
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
Warrant
To Purchase 1,808,608 Shares of Common Stock
Void
after April 14, 2015
ECO2 PLASTICS,
INC.
(f.k.a.,
Itec Environmental Group, inc.)
Date of
Issuance: December 17, 2008
No. 395
THIS CERTIFIES that, for value
received, Trident Capital Fund-VI Principals Fund, LLC or its assigns (in either
case, the “Holder”) is
entitled to purchase, subject to the provisions of this Warrant, from ECO2 Plastics,
Inc., a Delaware corporation (the “Company”), at the price per
share set forth in Section 9 hereof, that number of shares of the Company’s
common stock (the “Common
Stock”) set forth in Section 8 hereof. This Warrant is
referred to herein as the “Warrant” and the shares of
Common Stock issuable pursuant to the terms hereof are sometimes referred to
herein as “Warrant
Shares.”
This Warrant is one of a series of
warrants issued by the Company pursuant to that certain Convertible Note and
Warrant Purchase Agreement, dated as of December 17, 2008, by and among the
Company and the parties named therein (the “Purchase
Agreement”). This Warrant and such other warrants issued by
the Company pursuant to the Purchase Agreement are herein collectively referred
to as the “Warrants.” Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
1. Holder Exercise of
Warrant. This Warrant shall be exercisable in whole or in
part. To exercise this Warrant, the Holder shall deliver to the
Company at its principal office, (a) a written notice, in substantially the form
of the exercise notice attached hereto as Exhibit A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant, which notice shall specify the
number of shares of Common Stock to be purchased, (b) this Warrant and (c)
(except in the case of exercise on a net issue basis pursuant to Section 9(b) of
this Warrant) the payment to the Company, by check or wire, of an amount equal
to the then applicable Exercise Price (as defined below) per share multiplied by
the number of Warrant Shares then being purchased. The Company shall as promptly
as practicable, and in any event within twenty (20) days after delivery to the
Company of (a), (b) and (c) above, execute and deliver or cause to be executed
and delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in such
notice. Each certificate representing Warrant Shares shall bear the
legend or legends required by applicable securities laws as well as such other
legend(s) the Company requires to be included on certificates for its Common
Stock. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of such stock
certificates except that, in case such stock certificates shall be registered in
a name or names other than the name of the Holder, funds sufficient to pay all
stock transfer taxes that are payable upon the issuance of such stock
certificate or certificates shall be paid by the Holder at the time of
delivering the Exercise Notice. All shares of Common Stock issued
upon the exercise of this Warrant shall be validly issued, fully paid, and
nonassessable. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. If this
Warrant is exercised in part, the Company shall, upon surrender of this Warrant,
execute and deliver, within 20 days of the date of exercise, a new Warrant
evidencing the rights of the Holder, or such other person as shall be designated
in the Notice of Exercise, to purchase the balance of the Warrant Shares
purchasable hereunder.
The
Warrant shall expire on April 14, 2015 (the “Expiration
Date”). The Investor may exercise the warrant in whole or in
part at any time prior to the Expiration Date. The Company has no
restriction on the sale or transfer of the Warrant or Warrant Shares; however,
the Investor is required to comply with all state and U.S. laws and regulations
relating to security sales and transfers. This Warrant shall
automatically be exercised in full as of immediately prior to termination of the
Warrant on the Expiration Date, on a net issue basis pursuant to Section 9(b),
to the extent the Warrant shall not have previously been exercised in
full.
2. Reservation of
Shares. The Company hereby covenants that at all times during the term of
this Warrant there shall be reserved for issuance such number of shares of its
Common Stock as shall be required to be issued upon exercise of this
Warrant.
3. Fractional
Shares. This Warrant may be exercised only for a whole number
of shares of Common Stock, and no fractional shares or scrip representing
fractional shares shall be issuable upon the exercise of this
Warrant.
4. Representations of the
Company. The Company represents that all corporate actions on the part of
the Company, its officers, directors and shareholders necessary for the sale and
issuance of the Warrant Shares pursuant hereto and the performance of the
Company's obligations hereunder were taken prior to and are effective as of the
effective date of this Warrant.
5. Transfer of Warrant and
Warrant Shares. The Holder may sell, pledge, hypothecate, or
otherwise transfer this Warrant, in whole, in accordance with and subject to the
terms and conditions set forth in this Warrant and then only if such sale,
pledge, hypothecation, or transfer is made in compliance with the 1933 Act or
pursuant to an available exemption from registration under the 1933 Act relating
to the disposition of securities.
6. Loss of
Warrant. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, or destruction of this Warrant, and of indemnification
satisfactory to it, or upon surrender and cancellation of this Warrant, if
mutilated, the Company will execute and deliver a new warrant of like
tenor.
7. Rights of the
Holder. No provision of this Warrant shall be construed as
conferring upon the Holder the right to vote, consent, receive dividends or
receive notice other than as expressly provided herein. Prior to
exercise, no provision hereof, in the absence of affirmative action by the
Holder to exercise this Warrant, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
8. Number of Warrant
Shares. This Warrant shall be exercisable for 1,808,608 shares
(as originally determined pursuant to the Purchase Agreement) of the Company’s
Common Stock, as adjusted in accordance with this Warrant.
9. Exercise Price; Adjustment
of Warrants.
a. Determination of Exercise
Price. The per share purchase price (the “Exercise Price”) for each of
the Warrant Shares purchasable under this Warrant shall be equal to $0.015, as
adjusted in accordance with this Warrant.
b. Net Issue Exercise.
In lieu of exercising this Warrant pursuant to Section 1 above, the Holder may
elect to receive a number of Warrant Shares equal to the value of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with notice of such election, in which
event the Company shall issue to the Holder a number of Warrant Shares computed
using the following formula:
X = Y
(A-B)
-------
A
|
Where
X
|
=
|
the
number of Warrant Shares to be issued to the Holder.
|
|
Y
|
=
|
the
number of Warrant Shares purchasable under this
Warrant.
|
|
A
|
=
|
the
fair market value of one Warrant Share on the date of
determination.
|
|
B
|
=
|
the
per share Exercise Price (as adjusted to the date of such
calculation).
|
Fair Market Value.
For purposes of this section, the per share fair market value of the Warrant
Shares shall mean:
(i) If
the Company's Common Stock is publicly traded, the per share fair market value
of the Warrant Shares shall be the average of the closing prices of the Common
Stock as quoted on the Nasdaq National Market or the principal exchange on which
the Common Stock is listed, or if not so listed then the fair market value shall
be the average of the closing bid prices of the Common Stock as published in The
Wall Street Journal, in each case for the fifteen (15) trading days ending five
(5) trading days prior to the date of determination of fair market
value;
(ii) If
the Company's Common Stock is not so publicly traded, the per share fair market
value of the Warrant Shares shall be such fair market value as is determined in
good faith by the Board of Directors of the Company after taking into
consideration factors it deems appropriate, including, without limitation,
recent sale and offer prices of the capital stock of the Company in private
transactions negotiated at arm's length.
c. Reclassification. In
the case of any reclassification or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or
into another corporation (other than a merger with another corporation in which
the Company is the acquiring and the surviving corporation and which does not
result in any reclassification or change of outstanding securities issuable upon
exercise of this Warrant), or in case of any sale of all or substantially all of
the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder of
this Warrant a new Warrant (in form and substance reasonably satisfactory to the
holder of this Warrant), or the Company shall make appropriate provision without
the issuance of a new Warrant, so that the holder of this Warrant shall have the
right to receive, at a total purchase price not to exceed that payable upon the
exercise of the unexercised portion of this Warrant, and in lieu of the shares
of Common Stock theretofore issuable upon exercise of this Warrant, (i) the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, merger or sale by a holder of the number of
shares of Common Stock then purchasable under this Warrant, or (ii) in the case
of such a merger or sale in which the consideration paid consists all or in part
of assets other than securities of the successor or purchasing corporation, at
the option of the Holder of this Warrant, the securities of the successor or
purchasing corporation having a value at the time of the transaction equivalent
to the fair market value of the Common Stock at the time of the transaction. The
provisions of this subparagraph (c) shall similarly apply to successive
reclassifications, changes, mergers and transfers.
d. Stock
Splits, Dividends and Combinations. In the event that the Company shall
at any time subdivide the outstanding shares of Common Stock or shall issue a
stock dividend on its outstanding shares of Common Stock the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
subdivision or to the issuance of such stock dividend shall be proportionately
increased, and the Exercise Price shall be proportionately decreased, and in the
event that the Company shall at any time combine the outstanding shares of
Common Stock the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately decreased, and
the Exercise Price shall be proportionately increased, effective at the close of
business on the date of such subdivision, stock dividend or combination, as the
case may be.
e. NO
IMPAIRMENT. THE COMPANY WILL NOT, THROUGH ANY REORGANIZATION,
TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE OR SALE OF
SECURITIES OR ANY OTHER VOLUNTARY ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE
OR PERFORMANCE OF ANY OF THE TERMS TO BE OBSERVED OR PERFORMED HEREUNDER BY THE
COMPANY, BUT WILL AT ALL TIMES IN GOOD FAITH ASSIST IN THE CARRYING OUT OF ALL
THE PROVISIONS OF THIS SECTION AND IN THE TAKING OF ALL SUCH ACTION AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO PROTECT THE EXERCISE RIGHTS OF THE HOLDER
OF THIS WARRANT AGAINST IMPAIRMENT.
f. Issue
Taxes. The Company shall pay issue taxes that may be payable
in respect of any issue or delivery of shares of Common Stock on exercise of
this Warrant, in whole; provided, however, that the Company
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such exercise.
g. Stock
Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
h. Stock Fully
Paid. All of the shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefore, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof.
i. Reservation of Stock
Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
exercise of this Warrant, the Company will take all appropriate corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
10. Certain
Distributions. In case the Company shall, at any time, prior
to the Expiration Date, declare any distribution of its assets to holders of its
Common Stock as a partial liquidation, distribution or by way of return of
capital, other than as a dividend payable out of earnings or any surplus legally
available for dividends, then the Holder shall be entitled, upon the proper
exercise of this Warrant in whole prior to the effecting of such declaration, to
receive, in addition to the shares of Common Stock issuable on such exercise,
the amount of such assets (or at the option of the Company a sum equal to the
value thereof at the time of such distribution to holders of Common Stock as
such value is determined by the Board of Directors of the Company in good
faith), which would have been payable to the Holder had it been a holder of
record of such shares of Common Stock on the record date for the determination
of those holders of Common Stock entitled to such distribution.
11. Dissolution or
Liquidation. In case the Company shall, at any time prior to
the Expiration Date, dissolve, liquidate or wind up its affairs, the Holder
shall be entitled, upon the proper exercise of this Warrant in whole and prior
to any distribution associated with such dissolution, liquidation, or winding
up, to receive on such exercise, in lieu of the shares of Common Stock to which
the Holder would have been entitled, the same kind and amount of assets as would
have been distributed or paid to the Holder upon any such dissolution,
liquidation or winding up, with respect to such shares of Common Stock had the
Holder been a holder of record of such share of Common Stock on the record date
for the determination of those holders of Common Stock entitled to receive any
such dissolution, liquidation, or winding up distribution.
12. Notice of
Adjustments. Whenever the number of Warrant Shares purchasable hereunder
or the Exercise Price thereof shall be adjusted pursuant to Section 9 hereof,
the Company shall provide notice to the Holder setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the number and class of
shares which may be purchased thereafter and the Exercise Price therefor after
giving effect to such adjustment.
13. Registration Rights.
The Holder hereof shall be entitled, with respect to the Warrant Shares issued
upon exercise hereof, to all of the registration rights set forth in the
Company’s Investor Rights Agreement, dated as of June 4, 2008, as amended
September 15, 2008 (the “Rights Agreement”),
to the same extent and on the same terms and conditions as possessed by the
investors thereunder and as if the Warrant Shares were included in the
definition of “Registrable Securities” in the Rights Agreement. The
Company shall take such action as may be reasonably necessary to (a) amend the
Rights Agreement to effect the foregoing and (b) assure that the granting of
such registration rights to the Holder does not violate the provisions of the
Rights Agreement or any of the Company’s charter documents or rights of prior
grantees of registration rights.
14. Miscellaneous.
a. Successors and
Assigns. The terms and conditions of this Warrant shall inure
to the benefit of, and be binding upon, the respective successors and assigns of
the parties, except to the extent otherwise provided herein. Nothing
in this Warrant, express or implied, is intended to confer upon any party, other
than the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant, except
as expressly provided in this Warrant.
b. Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California without regard to the
principles of conflict of laws thereof.
c. Counterparts; Delivery by
Facsimile. This Warrant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of
this Warrant may be effected by facsimile.
d. Titles and
Subtitles. The titles and subtitles used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.
e. Notices. Unless
otherwise provided, any notice required or permitted hereunder shall be given by
personal service upon the party to be notified by certified mail, return receipt
requested and: (i) if to the Company, addressed to ECO2 Plastics,
Inc., 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other address as the Company may
designate by notice to each of the Investors in accordance with the provisions
of this Section; and (ii) if to the Warrant holder, at the address indicated in
the Purchase Agreement, or at such other addresses as such Holder may designate
by notice to the Company in accordance with the provisions of this
Section.
f. Amendments and
Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either prospectively or retroactively), only with the
written consent of the Company and the Holder; provided,
however, that the terms of this Warrant may also be amended,
modified or terminated upon the written consent of the Company and the initial
holders of at least 70% in interest of the Warrants issued pursuant to the
Purchase Agreement (based on the number of Warrant Shares initially exercisable
thereunder) if at the same time all such Warrants issued to the Purchase
Agreement are so amended, modified or terminated in a similar
manner.
h. Entire
Agreement. This Warrant and the Purchase Agreement constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties
hereto.
[Signature
Page Follows]
IN WITNESS WHEREOF, the undersigned
hereby sets his hand and seal on the date set forth above.
|
ECO2
Plastics, Inc.
|
|
|
By:
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive
Officer
|
|
EXHIBIT
A
NOTICE OF
EXERCISE
(To be
signed only upon exercise of the Warrant)
To: ECO2 Plastics,
Inc.
The
undersigned, hereby irrevocably elects to exercise the purchase rights
represented by the Warrant granted to the undersigned on December [__], 2008 and
to purchase thereunder __________* shares of Common Stock of ECO2 Plastics,
Inc. (the “Company”).
NET ISSUE EXERCISE
ELECTION: If applicable, the undersigned elects to purchase
the Warrant Shares by net issue exercise pursuant to Section 9(b) of the
Warrant, by initialing in the following space (please initial only if net issue
exercise chosen):
Net issue
exercise election chosen (INITIAL):
________
Dated:
________________________________
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
Warrant
To Purchase 46,633,583 Shares of Common Stock
Void
after April 14, 2015
ECO2 PLASTICS,
INC.
(f.k.a.,
Itec Environmental Group, inc.)
Date of
Issuance: December 17, 2008
No. 396
THIS CERTIFIES that, for value
received, Trident Capital Fund-VI, L.P. or its assigns (in either case, the
“Holder”) is entitled to
purchase, subject to the provisions of this Warrant, from ECO2 Plastics,
Inc., a Delaware corporation (the “Company”), at the price per
share set forth in Section 9 hereof, that number of shares of the Company’s
common stock (the “Common
Stock”) set forth in Section 8 hereof. This Warrant is
referred to herein as the “Warrant” and the shares of
Common Stock issuable pursuant to the terms hereof are sometimes referred to
herein as “Warrant
Shares.”
This Warrant is one of a series of
warrants issued by the Company pursuant to that certain Convertible Note and
Warrant Purchase Agreement, dated as of December 17, 2008, by and among the
Company and the parties named therein (the “Purchase
Agreement”). This Warrant and such other warrants issued by
the Company pursuant to the Purchase Agreement are herein collectively referred
to as the “Warrants.” Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
1. Holder Exercise of
Warrant. This Warrant shall be exercisable in whole or in
part. To exercise this Warrant, the Holder shall deliver to the
Company at its principal office, (a) a written notice, in substantially the form
of the exercise notice attached hereto as Exhibit A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant, which notice shall specify the
number of shares of Common Stock to be purchased, (b) this Warrant and (c)
(except in the case of exercise on a net issue basis pursuant to Section 9(b) of
this Warrant) the payment to the Company, by check or wire, of an amount equal
to the then applicable Exercise Price (as defined below) per share multiplied by
the number of Warrant Shares then being purchased. The Company shall as promptly
as practicable, and in any event within twenty (20) days after delivery to the
Company of (a), (b) and (c) above, execute and deliver or cause to be executed
and delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in such
notice. Each certificate representing Warrant Shares shall bear the
legend or legends required by applicable securities laws as well as such other
legend(s) the Company requires to be included on certificates for its Common
Stock. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of such stock
certificates except that, in case such stock certificates shall be registered in
a name or names other than the name of the Holder, funds sufficient to pay all
stock transfer taxes that are payable upon the issuance of such stock
certificate or certificates shall be paid by the Holder at the time of
delivering the Exercise Notice. All shares of Common Stock issued
upon the exercise of this Warrant shall be validly issued, fully paid, and
nonassessable. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. If this
Warrant is exercised in part, the Company shall, upon surrender of this Warrant,
execute and deliver, within 20 days of the date of exercise, a new Warrant
evidencing the rights of the Holder, or such other person as shall be designated
in the Notice of Exercise, to purchase the balance of the Warrant Shares
purchasable hereunder.
The
Warrant shall expire on April 14, 2015 (the “Expiration
Date”). The Investor may exercise the warrant in whole or in
part at any time prior to the Expiration Date. The Company has no
restriction on the sale or transfer of the Warrant or Warrant Shares; however,
the Investor is required to comply with all state and U.S. laws and regulations
relating to security sales and transfers. This Warrant shall
automatically be exercised in full as of immediately prior to termination of the
Warrant on the Expiration Date, on a net issue basis pursuant to Section 9(b),
to the extent the Warrant shall not have previously been exercised in
full.
2. Reservation of
Shares. The Company hereby covenants that at all times during the term of
this Warrant there shall be reserved for issuance such number of shares of its
Common Stock as shall be required to be issued upon exercise of this
Warrant.
3. Fractional
Shares. This Warrant may be exercised only for a whole number
of shares of Common Stock, and no fractional shares or scrip representing
fractional shares shall be issuable upon the exercise of this
Warrant.
4. Representations of the
Company. The Company represents that all corporate actions on the part of
the Company, its officers, directors and shareholders necessary for the sale and
issuance of the Warrant Shares pursuant hereto and the performance of the
Company's obligations hereunder were taken prior to and are effective as of the
effective date of this Warrant.
5. Transfer of Warrant and
Warrant Shares. The Holder may sell, pledge, hypothecate, or
otherwise transfer this Warrant, in whole, in accordance with and subject to the
terms and conditions set forth in this Warrant and then only if such sale,
pledge, hypothecation, or transfer is made in compliance with the 1933 Act or
pursuant to an available exemption from registration under the 1933 Act relating
to the disposition of securities.
6. Loss of
Warrant. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, or destruction of this Warrant, and of indemnification
satisfactory to it, or upon surrender and cancellation of this Warrant, if
mutilated, the Company will execute and deliver a new warrant of like
tenor.
7. Rights of the
Holder. No provision of this Warrant shall be construed as
conferring upon the Holder the right to vote, consent, receive dividends or
receive notice other than as expressly provided herein. Prior to
exercise, no provision hereof, in the absence of affirmative action by the
Holder to exercise this Warrant, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
8. Number of Warrant
Shares. This Warrant shall be exercisable for 46,633,583
shares (as originally determined pursuant to the Purchase Agreement) of the
Company’s Common Stock, as adjusted in accordance with this
Warrant.
9. Exercise Price; Adjustment
of Warrants.
a. Determination of Exercise
Price. The per share purchase price (the “Exercise Price”) for each of
the Warrant Shares purchasable under this Warrant shall be equal to $0.015, as
adjusted in accordance with this Warrant.
b. Net Issue Exercise.
In lieu of exercising this Warrant pursuant to Section 1 above, the Holder may
elect to receive a number of Warrant Shares equal to the value of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with notice of such election, in which
event the Company shall issue to the Holder a number of Warrant Shares computed
using the following formula:
X = Y
(A-B)
-------
A
|
Where
X
|
=
|
the
number of Warrant Shares to be issued to the Holder.
|
|
Y
|
=
|
the
number of Warrant Shares purchasable under this
Warrant.
|
|
A
|
=
|
the
fair market value of one Warrant Share on the date of
determination.
|
|
B
|
=
|
the
per share Exercise Price (as adjusted to the date of such
calculation).
|
Fair Market Value.
For purposes of this section, the per share fair market value of the Warrant
Shares shall mean:
(i) If
the Company's Common Stock is publicly traded, the per share fair market value
of the Warrant Shares shall be the average of the closing prices of the Common
Stock as quoted on the Nasdaq National Market or the principal exchange on which
the Common Stock is listed, or if not so listed then the fair market value shall
be the average of the closing bid prices of the Common Stock as published in The
Wall Street Journal, in each case for the fifteen (15) trading days ending five
(5) trading days prior to the date of determination of fair market
value;
(ii) If
the Company's Common Stock is not so publicly traded, the per share fair market
value of the Warrant Shares shall be such fair market value as is determined in
good faith by the Board of Directors of the Company after taking into
consideration factors it deems appropriate, including, without limitation,
recent sale and offer prices of the capital stock of the Company in private
transactions negotiated at arm's length.
c. Reclassification. In
the case of any reclassification or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or
into another corporation (other than a merger with another corporation in which
the Company is the acquiring and the surviving corporation and which does not
result in any reclassification or change of outstanding securities issuable upon
exercise of this Warrant), or in case of any sale of all or substantially all of
the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder of
this Warrant a new Warrant (in form and substance reasonably satisfactory to the
holder of this Warrant), or the Company shall make appropriate provision without
the issuance of a new Warrant, so that the holder of this Warrant shall have the
right to receive, at a total purchase price not to exceed that payable upon the
exercise of the unexercised portion of this Warrant, and in lieu of the shares
of Common Stock theretofore issuable upon exercise of this Warrant, (i) the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, merger or sale by a holder of the number of
shares of Common Stock then purchasable under this Warrant, or (ii) in the case
of such a merger or sale in which the consideration paid consists all or in part
of assets other than securities of the successor or purchasing corporation, at
the option of the Holder of this Warrant, the securities of the successor or
purchasing corporation having a value at the time of the transaction equivalent
to the fair market value of the Common Stock at the time of the transaction. The
provisions of this subparagraph (c) shall similarly apply to successive
reclassifications, changes, mergers and transfers.
d. Stock
Splits, Dividends and Combinations. In the event that the Company shall
at any time subdivide the outstanding shares of Common Stock or shall issue a
stock dividend on its outstanding shares of Common Stock the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
subdivision or to the issuance of such stock dividend shall be proportionately
increased, and the Exercise Price shall be proportionately decreased, and in the
event that the Company shall at any time combine the outstanding shares of
Common Stock the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately decreased, and
the Exercise Price shall be proportionately increased, effective at the close of
business on the date of such subdivision, stock dividend or combination, as the
case may be.
e. NO
IMPAIRMENT. THE COMPANY WILL NOT, THROUGH ANY REORGANIZATION,
TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE OR SALE OF
SECURITIES OR ANY OTHER VOLUNTARY ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE
OR PERFORMANCE OF ANY OF THE TERMS TO BE OBSERVED OR PERFORMED HEREUNDER BY THE
COMPANY, BUT WILL AT ALL TIMES IN GOOD FAITH ASSIST IN THE CARRYING OUT OF ALL
THE PROVISIONS OF THIS SECTION AND IN THE TAKING OF ALL SUCH ACTION AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO PROTECT THE EXERCISE RIGHTS OF THE HOLDER
OF THIS WARRANT AGAINST IMPAIRMENT.
f. Issue
Taxes. The Company shall pay issue taxes that may be payable
in respect of any issue or delivery of shares of Common Stock on exercise of
this Warrant, in whole; provided, however, that the Company
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such exercise.
g. Stock
Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
h. Stock Fully
Paid. All of the shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefore, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof.
i. Reservation of Stock
Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
exercise of this Warrant, the Company will take all appropriate corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
10. Certain
Distributions. In case the Company shall, at any time, prior
to the Expiration Date, declare any distribution of its assets to holders of its
Common Stock as a partial liquidation, distribution or by way of return of
capital, other than as a dividend payable out of earnings or any surplus legally
available for dividends, then the Holder shall be entitled, upon the proper
exercise of this Warrant in whole prior to the effecting of such declaration, to
receive, in addition to the shares of Common Stock issuable on such exercise,
the amount of such assets (or at the option of the Company a sum equal to the
value thereof at the time of such distribution to holders of Common Stock as
such value is determined by the Board of Directors of the Company in good
faith), which would have been payable to the Holder had it been a holder of
record of such shares of Common Stock on the record date for the determination
of those holders of Common Stock entitled to such distribution.
11. Dissolution or
Liquidation. In case the Company shall, at any time prior to
the Expiration Date, dissolve, liquidate or wind up its affairs, the Holder
shall be entitled, upon the proper exercise of this Warrant in whole and prior
to any distribution associated with such dissolution, liquidation, or winding
up, to receive on such exercise, in lieu of the shares of Common Stock to which
the Holder would have been entitled, the same kind and amount of assets as would
have been distributed or paid to the Holder upon any such dissolution,
liquidation or winding up, with respect to such shares of Common Stock had the
Holder been a holder of record of such share of Common Stock on the record date
for the determination of those holders of Common Stock entitled to receive any
such dissolution, liquidation, or winding up distribution.
12. Notice of
Adjustments. Whenever the number of Warrant Shares purchasable hereunder
or the Exercise Price thereof shall be adjusted pursuant to Section 9 hereof,
the Company shall provide notice to the Holder setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the number and class of
shares which may be purchased thereafter and the Exercise Price therefor after
giving effect to such adjustment.
13. Registration Rights.
The Holder hereof shall be entitled, with respect to the Warrant Shares issued
upon exercise hereof, to all of the registration rights set forth in the
Company’s Investor Rights Agreement, dated as of June 4, 2008, as amended
September 15, 2008 (the “Rights Agreement”),
to the same extent and on the same terms and conditions as possessed by the
investors thereunder and as if the Warrant Shares were included in the
definition of “Registrable Securities” in the Rights Agreement. The
Company shall take such action as may be reasonably necessary to (a) amend the
Rights Agreement to effect the foregoing and (b) assure that the granting of
such registration rights to the Holder does not violate the provisions of the
Rights Agreement or any of the Company’s charter documents or rights of prior
grantees of registration rights.
14. Miscellaneous.
a. Successors and
Assigns. The terms and conditions of this Warrant shall inure
to the benefit of, and be binding upon, the respective successors and assigns of
the parties, except to the extent otherwise provided herein. Nothing
in this Warrant, express or implied, is intended to confer upon any party, other
than the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant, except
as expressly provided in this Warrant.
b. Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California without regard to the
principles of conflict of laws thereof.
c. Counterparts; Delivery by
Facsimile. This Warrant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of
this Warrant may be effected by facsimile.
d. Titles and
Subtitles. The titles and subtitles used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.
e. Notices. Unless
otherwise provided, any notice required or permitted hereunder shall be given by
personal service upon the party to be notified by certified mail, return receipt
requested and: (i) if to the Company, addressed to ECO2 Plastics,
Inc., 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other address as the Company may
designate by notice to each of the Investors in accordance with the provisions
of this Section; and (ii) if to the Warrant holder, at the address indicated in
the Purchase Agreement, or at such other addresses as such Holder may designate
by notice to the Company in accordance with the provisions of this
Section.
f. Amendments and
Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either prospectively or retroactively), only with the
written consent of the Company and the Holder; provided,
however, that the terms of this Warrant may also be amended,
modified or terminated upon the written consent of the Company and the initial
holders of at least 70% in interest of the Warrants issued pursuant to the
Purchase Agreement (based on the number of Warrant Shares initially exercisable
thereunder) if at the same time all such Warrants issued to the Purchase
Agreement are so amended, modified or terminated in a similar
manner.
i. Entire
Agreement. This Warrant and the Purchase Agreement constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties
hereto.
[Signature
Page Follows]
IN WITNESS WHEREOF, the undersigned
hereby sets his hand and seal on the date set forth above.
|
ECO2
Plastics, Inc.
|
|
|
By:
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive
Officer
|
|
EXHIBIT
A
NOTICE OF
EXERCISE
(To be
signed only upon exercise of the Warrant)
To: ECO2 Plastics,
Inc.
The
undersigned, hereby irrevocably elects to exercise the purchase rights
represented by the Warrant granted to the undersigned on December [__], 2008 and
to purchase thereunder __________* shares of Common Stock of ECO2 Plastics,
Inc. (the “Company”).
NET ISSUE EXERCISE
ELECTION: If applicable, the undersigned elects to purchase
the Warrant Shares by net issue exercise pursuant to Section 9(b) of the
Warrant, by initialing in the following space (please initial only if net issue
exercise chosen):
Net issue
exercise election chosen (INITIAL):
________
Dated:
________________________________
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
Warrant
To Purchase 1,677,626 Shares of Common
Stock
Void
after April 14, 2015
ECO2 PLASTICS,
INC.
(f.k.a.,
Itec Environmental Group, inc.)
Date of
Issuance: December 17, 2008
No. 397
THIS CERTIFIES that, for value
received, Xxxxxx Living Trust dated 12/10/1996 or its assigns (in either
case, the “Holder”) is
entitled to purchase, subject to the provisions of this Warrant, from ECO2 Plastics,
Inc., a Delaware corporation (the “Company”), at the price per
share set forth in Section 9 hereof, that number of shares of the Company’s
common stock (the “Common
Stock”) set forth in Section 8 hereof. This Warrant is
referred to herein as the “Warrant” and the shares of
Common Stock issuable pursuant to the terms hereof are sometimes referred to
herein as “Warrant
Shares.”
This Warrant is one of a series of
warrants issued by the Company pursuant to that certain Convertible Note and
Warrant Purchase Agreement, dated as of December 17, 2008, by and among the
Company and the parties named therein (the “Purchase
Agreement”). This Warrant and such other warrants issued by
the Company pursuant to the Purchase Agreement are herein collectively referred
to as the “Warrants.” Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
1. Holder Exercise of
Warrant. This Warrant shall be exercisable in whole or in
part. To exercise this Warrant, the Holder shall deliver to the
Company at its principal office, (a) a written notice, in substantially the form
of the exercise notice attached hereto as Exhibit A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant, which notice shall specify the
number of shares of Common Stock to be purchased, (b) this Warrant and (c)
(except in the case of exercise on a net issue basis pursuant to Section 9(b) of
this Warrant) the payment to the Company, by check or wire, of an amount equal
to the then applicable Exercise Price (as defined below) per share multiplied by
the number of Warrant Shares then being purchased. The Company shall as promptly
as practicable, and in any event within twenty (20) days after delivery to the
Company of (a), (b) and (c) above, execute and deliver or cause to be executed
and delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in such
notice. Each certificate representing Warrant Shares shall bear the
legend or legends required by applicable securities laws as well as such other
legend(s) the Company requires to be included on certificates for its Common
Stock. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of such stock
certificates except that, in case such stock certificates shall be registered in
a name or names other than the name of the Holder, funds sufficient to pay all
stock transfer taxes that are payable upon the issuance of such stock
certificate or certificates shall be paid by the Holder at the time of
delivering the Exercise Notice. All shares of Common Stock issued
upon the exercise of this Warrant shall be validly issued, fully paid, and
nonassessable. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. If this
Warrant is exercised in part, the Company shall, upon surrender of this Warrant,
execute and deliver, within 20 days of the date of exercise, a new Warrant
evidencing the rights of the Holder, or such other person as shall be designated
in the Notice of Exercise, to purchase the balance of the Warrant Shares
purchasable hereunder.
The
Warrant shall expire on April 14, 2015 (the “Expiration
Date”). The Investor may exercise the warrant in whole or in
part at any time prior to the Expiration Date. The Company has no
restriction on the sale or transfer of the Warrant or Warrant Shares; however,
the Investor is required to comply with all state and U.S. laws and regulations
relating to security sales and transfers. This Warrant shall
automatically be exercised in full as of immediately prior to termination of the
Warrant on the Expiration Date, on a net issue basis pursuant to Section 9(b),
to the extent the Warrant shall not have previously been exercised in
full.
2. Reservation of
Shares. The Company hereby covenants that at all times during the term of
this Warrant there shall be reserved for issuance such number of shares of its
Common Stock as shall be required to be issued upon exercise of this
Warrant.
3. Fractional
Shares. This Warrant may be exercised only for a whole number
of shares of Common Stock, and no fractional shares or scrip representing
fractional shares shall be issuable upon the exercise of this
Warrant.
4. Representations of the
Company. The Company represents that all corporate actions on the part of
the Company, its officers, directors and shareholders necessary for the sale and
issuance of the Warrant Shares pursuant hereto and the performance of the
Company's obligations hereunder were taken prior to and are effective as of the
effective date of this Warrant.
5. Transfer of Warrant and
Warrant Shares. The Holder may sell, pledge, hypothecate, or
otherwise transfer this Warrant, in whole, in accordance with and subject to the
terms and conditions set forth in this Warrant and then only if such sale,
pledge, hypothecation, or transfer is made in compliance with the 1933 Act or
pursuant to an available exemption from registration under the 1933 Act relating
to the disposition of securities.
6. Loss of
Warrant. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, or destruction of this Warrant, and of indemnification
satisfactory to it, or upon surrender and cancellation of this Warrant, if
mutilated, the Company will execute and deliver a new warrant of like
tenor.
7. Rights of the
Holder. No provision of this Warrant shall be construed as
conferring upon the Holder the right to vote, consent, receive dividends or
receive notice other than as expressly provided herein. Prior to
exercise, no provision hereof, in the absence of affirmative action by the
Holder to exercise this Warrant, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
8. Number of Warrant
Shares. This Warrant shall be exercisable for 1,677,626 shares
(as originally determined pursuant to the Purchase Agreement) of the Company’s
Common Stock, as adjusted in accordance with this Warrant.
9. Exercise Price; Adjustment
of Warrants.
a. Determination of Exercise
Price. The per share purchase price (the “Exercise Price”) for each of
the Warrant Shares purchasable under this Warrant shall be equal to $0.015, as
adjusted in accordance with this Warrant.
b. Net Issue Exercise.
In lieu of exercising this Warrant pursuant to Section 1 above, the Holder may
elect to receive a number of Warrant Shares equal to the value of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with notice of such election, in which
event the Company shall issue to the Holder a number of Warrant Shares computed
using the following formula:
X = Y
(A-B)
-------
A
|
Where
X
|
=
|
the
number of Warrant Shares to be issued to the Holder.
|
|
Y
|
=
|
the
number of Warrant Shares purchasable under this
Warrant.
|
|
A
|
=
|
the
fair market value of one Warrant Share on the date of
determination.
|
|
B
|
=
|
the
per share Exercise Price (as adjusted to the date of such
calculation).
|
Fair Market Value.
For purposes of this section, the per share fair market value of the Warrant
Shares shall mean:
(i) If
the Company's Common Stock is publicly traded, the per share fair market value
of the Warrant Shares shall be the average of the closing prices of the Common
Stock as quoted on the Nasdaq National Market or the principal exchange on which
the Common Stock is listed, or if not so listed then the fair market value shall
be the average of the closing bid prices of the Common Stock as published in The
Wall Street Journal, in each case for the fifteen (15) trading days ending five
(5) trading days prior to the date of determination of fair market
value;
(ii) If
the Company's Common Stock is not so publicly traded, the per share fair market
value of the Warrant Shares shall be such fair market value as is determined in
good faith by the Board of Directors of the Company after taking into
consideration factors it deems appropriate, including, without limitation,
recent sale and offer prices of the capital stock of the Company in private
transactions negotiated at arm's length.
c. Reclassification. In
the case of any reclassification or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or
into another corporation (other than a merger with another corporation in which
the Company is the acquiring and the surviving corporation and which does not
result in any reclassification or change of outstanding securities issuable upon
exercise of this Warrant), or in case of any sale of all or substantially all of
the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder of
this Warrant a new Warrant (in form and substance reasonably satisfactory to the
holder of this Warrant), or the Company shall make appropriate provision without
the issuance of a new Warrant, so that the holder of this Warrant shall have the
right to receive, at a total purchase price not to exceed that payable upon the
exercise of the unexercised portion of this Warrant, and in lieu of the shares
of Common Stock theretofore issuable upon exercise of this Warrant, (i) the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, merger or sale by a holder of the number of
shares of Common Stock then purchasable under this Warrant, or (ii) in the case
of such a merger or sale in which the consideration paid consists all or in part
of assets other than securities of the successor or purchasing corporation, at
the option of the Holder of this Warrant, the securities of the successor or
purchasing corporation having a value at the time of the transaction equivalent
to the fair market value of the Common Stock at the time of the transaction. The
provisions of this subparagraph (c) shall similarly apply to successive
reclassifications, changes, mergers and transfers.
d. Stock
Splits, Dividends and Combinations. In the event that the Company shall
at any time subdivide the outstanding shares of Common Stock or shall issue a
stock dividend on its outstanding shares of Common Stock the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
subdivision or to the issuance of such stock dividend shall be proportionately
increased, and the Exercise Price shall be proportionately decreased, and in the
event that the Company shall at any time combine the outstanding shares of
Common Stock the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately decreased, and
the Exercise Price shall be proportionately increased, effective at the close of
business on the date of such subdivision, stock dividend or combination, as the
case may be.
e. NO
IMPAIRMENT. THE COMPANY WILL NOT, THROUGH ANY REORGANIZATION,
TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE OR SALE OF
SECURITIES OR ANY OTHER VOLUNTARY ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE
OR PERFORMANCE OF ANY OF THE TERMS TO BE OBSERVED OR PERFORMED HEREUNDER BY THE
COMPANY, BUT WILL AT ALL TIMES IN GOOD FAITH ASSIST IN THE CARRYING OUT OF ALL
THE PROVISIONS OF THIS SECTION AND IN THE TAKING OF ALL SUCH ACTION AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO PROTECT THE EXERCISE RIGHTS OF THE HOLDER
OF THIS WARRANT AGAINST IMPAIRMENT.
f. Issue
Taxes. The Company shall pay issue taxes that may be payable
in respect of any issue or delivery of shares of Common Stock on exercise of
this Warrant, in whole; provided, however, that the Company
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such exercise.
g. Stock
Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
h. Stock Fully
Paid. All of the shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefore, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof.
i. Reservation of Stock
Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
exercise of this Warrant, the Company will take all appropriate corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
10. Certain
Distributions. In case the Company shall, at any time, prior
to the Expiration Date, declare any distribution of its assets to holders of its
Common Stock as a partial liquidation, distribution or by way of return of
capital, other than as a dividend payable out of earnings or any surplus legally
available for dividends, then the Holder shall be entitled, upon the proper
exercise of this Warrant in whole prior to the effecting of such declaration, to
receive, in addition to the shares of Common Stock issuable on such exercise,
the amount of such assets (or at the option of the Company a sum equal to the
value thereof at the time of such distribution to holders of Common Stock as
such value is determined by the Board of Directors of the Company in good
faith), which would have been payable to the Holder had it been a holder of
record of such shares of Common Stock on the record date for the determination
of those holders of Common Stock entitled to such distribution.
11. Dissolution or
Liquidation. In case the Company shall, at any time prior to
the Expiration Date, dissolve, liquidate or wind up its affairs, the Holder
shall be entitled, upon the proper exercise of this Warrant in whole and prior
to any distribution associated with such dissolution, liquidation, or winding
up, to receive on such exercise, in lieu of the shares of Common Stock to which
the Holder would have been entitled, the same kind and amount of assets as would
have been distributed or paid to the Holder upon any such dissolution,
liquidation or winding up, with respect to such shares of Common Stock had the
Holder been a holder of record of such share of Common Stock on the record date
for the determination of those holders of Common Stock entitled to receive any
such dissolution, liquidation, or winding up distribution.
12. Notice of
Adjustments. Whenever the number of Warrant Shares purchasable hereunder
or the Exercise Price thereof shall be adjusted pursuant to Section 9 hereof,
the Company shall provide notice to the Holder setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the number and class of
shares which may be purchased thereafter and the Exercise Price therefor after
giving effect to such adjustment.
13. Registration Rights.
The Holder hereof shall be entitled, with respect to the Warrant Shares issued
upon exercise hereof, to all of the registration rights set forth in the
Company’s Investor Rights Agreement, dated as of June 4, 2008, as amended
September 15, 2008 (the “Rights Agreement”),
to the same extent and on the same terms and conditions as possessed by the
investors thereunder and as if the Warrant Shares were included in the
definition of “Registrable Securities” in the Rights Agreement. The
Company shall take such action as may be reasonably necessary to (a) amend the
Rights Agreement to effect the foregoing and (b) assure that the granting of
such registration rights to the Holder does not violate the provisions of the
Rights Agreement or any of the Company’s charter documents or rights of prior
grantees of registration rights.
14. Miscellaneous.
a. Successors and
Assigns. The terms and conditions of this Warrant shall inure
to the benefit of, and be binding upon, the respective successors and assigns of
the parties, except to the extent otherwise provided herein. Nothing
in this Warrant, express or implied, is intended to confer upon any party, other
than the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant, except
as expressly provided in this Warrant.
b. Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California without regard to the
principles of conflict of laws thereof.
c. Counterparts; Delivery by
Facsimile. This Warrant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of
this Warrant may be effected by facsimile.
d. Titles and
Subtitles. The titles and subtitles used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.
e. Notices. Unless
otherwise provided, any notice required or permitted hereunder shall be given by
personal service upon the party to be notified by certified mail, return receipt
requested and: (i) if to the Company, addressed to ECO2 Plastics,
Inc., 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other address as the Company may
designate by notice to each of the Investors in accordance with the provisions
of this Section; and (ii) if to the Warrant holder, at the address indicated in
the Purchase Agreement, or at such other addresses as such Holder may designate
by notice to the Company in accordance with the provisions of this
Section.
f. Amendments and
Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either prospectively or retroactively), only with the
written consent of the Company and the Holder; provided,
however, that the terms of this Warrant may also be amended,
modified or terminated upon the written consent of the Company and the initial
holders of at least 70% in interest of the Warrants issued pursuant to the
Purchase Agreement (based on the number of Warrant Shares initially exercisable
thereunder) if at the same time all such Warrants issued to the Purchase
Agreement are so amended, modified or terminated in a similar
manner.
j. Entire
Agreement. This Warrant and the Purchase Agreement constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties
hereto.
[Signature
Page Follows]
IN WITNESS WHEREOF, the undersigned
hereby sets his hand and seal on the date set forth above.
|
ECO2
Plastics, Inc.
|
|
|
By:
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive
Officer
|
|
EXHIBIT
A
NOTICE OF
EXERCISE
(To be
signed only upon exercise of the Warrant)
To: ECO2 Plastics,
Inc.
The
undersigned, hereby irrevocably elects to exercise the purchase rights
represented by the Warrant granted to the undersigned on December 17, 2008 and
to purchase thereunder __________* shares of Common Stock of ECO2 Plastics,
Inc. (the “Company”).
NET ISSUE EXERCISE
ELECTION: If applicable, the undersigned elects to purchase
the Warrant Shares by net issue exercise pursuant to Section 9(b) of the
Warrant, by initialing in the following space (please initial only if net issue
exercise chosen):
Net issue
exercise election chosen (INITIAL):
________
Dated:
________________________________
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF
ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
Warrant
To Purchase ______________ Shares of Common Stock
Void
after April 14, 2015
ECO2 PLASTICS,
INC.
(f.k.a.,
Itec Environmental Group, inc.)
Date of
Issuance: December ____, 2008
No. _______
THIS CERTIFIES that, for value
received, _______________________ or its assigns (in either case, the “Holder”) is entitled to
purchase, subject to the provisions of this Warrant, from ECO2 Plastics,
Inc., a Delaware corporation (the “Company”), at the price per
share set forth in Section 9 hereof, that number of shares of the Company’s
common stock (the “Common
Stock”) set forth in Section 8 hereof. This Warrant is
referred to herein as the “Warrant” and the shares of
Common Stock issuable pursuant to the terms hereof are sometimes referred to
herein as “Warrant
Shares.”
This Warrant is one of a series of
warrants issued by the Company pursuant to that certain Convertible Note and
Warrant Purchase Agreement, dated as of December 17, 2008, by and among the
Company and the parties named therein (the “Purchase
Agreement”). This Warrant and such other warrants issued by
the Company pursuant to the Purchase Agreement are herein collectively referred
to as the “Warrants.” Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
1. Holder Exercise of
Warrant. This Warrant shall be exercisable in whole or in
part. To exercise this Warrant, the Holder shall deliver to the
Company at its principal office, (a) a written notice, in substantially the form
of the exercise notice attached hereto as Exhibit A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant, which notice shall specify the
number of shares of Common Stock to be purchased, (b) this Warrant and (c)
(except in the case of exercise on a net issue basis pursuant to Section 9(b) of
this Warrant) the payment to the Company, by check or wire, of an amount equal
to the then applicable Exercise Price (as defined below) per share multiplied by
the number of Warrant Shares then being purchased. The Company shall as promptly
as practicable, and in any event within twenty (20) days after delivery to the
Company of (a), (b) and (c) above, execute and deliver or cause to be executed
and delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in such
notice. Each certificate representing Warrant Shares shall bear the
legend or legends required by applicable securities laws as well as such other
legend(s) the Company requires to be included on certificates for its Common
Stock. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of such stock
certificates except that, in case such stock certificates shall be registered in
a name or names other than the name of the Holder, funds sufficient to pay all
stock transfer taxes that are payable upon the issuance of such stock
certificate or certificates shall be paid by the Holder at the time of
delivering the Exercise Notice. All shares of Common Stock issued
upon the exercise of this Warrant shall be validly issued, fully paid, and
nonassessable. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. If this
Warrant is exercised in part, the Company shall, upon surrender of this Warrant,
execute and deliver, within 20 days of the date of exercise, a new Warrant
evidencing the rights of the Holder, or such other person as shall be designated
in the Notice of Exercise, to purchase the balance of the Warrant Shares
purchasable hereunder.
The
Warrant shall expire on April 14, 2015 (the “Expiration
Date”). The Investor may exercise the warrant in whole or in
part at any time prior to the Expiration Date. The Company has no
restriction on the sale or transfer of the Warrant or Warrant Shares; however,
the Investor is required to comply with all state and U.S. laws and regulations
relating to security sales and transfers. This Warrant shall
automatically be exercised in full as of immediately prior to termination of the
Warrant on the Expiration Date, on a net issue basis pursuant to Section 9(b),
to the extent the Warrant shall not have previously been exercised in
full.
2. Reservation of
Shares. The Company hereby covenants that at all times during the term of
this Warrant there shall be reserved for issuance such number of shares of its
Common Stock as shall be required to be issued upon exercise of this
Warrant.
3. Fractional
Shares. This Warrant may be exercised only for a whole number
of shares of Common Stock, and no fractional shares or scrip representing
fractional shares shall be issuable upon the exercise of this
Warrant.
4. Representations of the
Company. The Company represents that all corporate actions on the part of
the Company, its officers, directors and shareholders necessary for the sale and
issuance of the Warrant Shares pursuant hereto and the performance of the
Company's obligations hereunder were taken prior to and are effective as of the
effective date of this Warrant.
5. Transfer of Warrant and
Warrant Shares. The Holder may sell, pledge, hypothecate, or
otherwise transfer this Warrant, in whole, in accordance with and subject to the
terms and conditions set forth in this Warrant and then only if such sale,
pledge, hypothecation, or transfer is made in compliance with the 1933 Act or
pursuant to an available exemption from registration under the 1933 Act relating
to the disposition of securities.
6. Loss of
Warrant. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, or destruction of this Warrant, and of indemnification
satisfactory to it, or upon surrender and cancellation of this Warrant, if
mutilated, the Company will execute and deliver a new warrant of like
tenor.
7. Rights of the
Holder. No provision of this Warrant shall be construed as
conferring upon the Holder the right to vote, consent, receive dividends or
receive notice other than as expressly provided herein. Prior to
exercise, no provision hereof, in the absence of affirmative action by the
Holder to exercise this Warrant, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
8. Number of Warrant
Shares. This Warrant shall be exercisable for
____________________ shares (as originally determined pursuant to the Purchase
Agreement) of the Company’s Common Stock, as adjusted in accordance with this
Warrant.
9. Exercise Price; Adjustment
of Warrants.
a. Determination of Exercise
Price. The per share purchase price (the “Exercise Price”) for each of
the Warrant Shares purchasable under this Warrant shall be equal to $0.015, as
adjusted in accordance with this Warrant.
b. Net Issue Exercise.
In lieu of exercising this Warrant pursuant to Section 1 above, the Holder may
elect to receive a number of Warrant Shares equal to the value of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with notice of such election, in which
event the Company shall issue to the Holder a number of Warrant Shares computed
using the following formula:
X = Y
(A-B)
-------
A
|
Where
X
|
=
|
the
number of Warrant Shares to be issued to the Holder.
|
|
Y
|
=
|
the
number of Warrant Shares purchasable under this
Warrant.
|
|
A
|
=
|
the
fair market value of one Warrant Share on the date of
determination.
|
|
B
|
=
|
the
per share Exercise Price (as adjusted to the date of such
calculation).
|
Fair Market Value.
For purposes of this section, the per share fair market value of the Warrant
Shares shall mean:
(i) If
the Company's Common Stock is publicly traded, the per share fair market value
of the Warrant Shares shall be the average of the closing prices of the Common
Stock as quoted on the Nasdaq National Market or the principal exchange on which
the Common Stock is listed, or if not so listed then the fair market value shall
be the average of the closing bid prices of the Common Stock as published in The
Wall Street Journal, in each case for the fifteen (15) trading days ending five
(5) trading days prior to the date of determination of fair market
value;
(ii) If
the Company's Common Stock is not so publicly traded, the per share fair market
value of the Warrant Shares shall be such fair market value as is determined in
good faith by the Board of Directors of the Company after taking into
consideration factors it deems appropriate, including, without limitation,
recent sale and offer prices of the capital stock of the Company in private
transactions negotiated at arm's length.
c. Reclassification. In
the case of any reclassification or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or
into another corporation (other than a merger with another corporation in which
the Company is the acquiring and the surviving corporation and which does not
result in any reclassification or change of outstanding securities issuable upon
exercise of this Warrant), or in case of any sale of all or substantially all of
the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder of
this Warrant a new Warrant (in form and substance reasonably satisfactory to the
holder of this Warrant), or the Company shall make appropriate provision without
the issuance of a new Warrant, so that the holder of this Warrant shall have the
right to receive, at a total purchase price not to exceed that payable upon the
exercise of the unexercised portion of this Warrant, and in lieu of the shares
of Common Stock theretofore issuable upon exercise of this Warrant, (i) the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, merger or sale by a holder of the number of
shares of Common Stock then purchasable under this Warrant, or (ii) in the case
of such a merger or sale in which the consideration paid consists all or in part
of assets other than securities of the successor or purchasing corporation, at
the option of the Holder of this Warrant, the securities of the successor or
purchasing corporation having a value at the time of the transaction equivalent
to the fair market value of the Common Stock at the time of the transaction. The
provisions of this subparagraph (c) shall similarly apply to successive
reclassifications, changes, mergers and transfers.
d. Stock
Splits, Dividends and Combinations. In the event that the Company shall
at any time subdivide the outstanding shares of Common Stock or shall issue a
stock dividend on its outstanding shares of Common Stock the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
subdivision or to the issuance of such stock dividend shall be proportionately
increased, and the Exercise Price shall be proportionately decreased, and in the
event that the Company shall at any time combine the outstanding shares of
Common Stock the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately decreased, and
the Exercise Price shall be proportionately increased, effective at the close of
business on the date of such subdivision, stock dividend or combination, as the
case may be.
e. NO
IMPAIRMENT. THE COMPANY WILL NOT, THROUGH ANY REORGANIZATION,
TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE OR SALE OF
SECURITIES OR ANY OTHER VOLUNTARY ACTION, AVOID OR SEEK TO AVOID THE OBSERVANCE
OR PERFORMANCE OF ANY OF THE TERMS TO BE OBSERVED OR PERFORMED HEREUNDER BY THE
COMPANY, BUT WILL AT ALL TIMES IN GOOD FAITH ASSIST IN THE CARRYING OUT OF ALL
THE PROVISIONS OF THIS SECTION AND IN THE TAKING OF ALL SUCH ACTION AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO PROTECT THE EXERCISE RIGHTS OF THE HOLDER
OF THIS WARRANT AGAINST IMPAIRMENT.
f. Issue
Taxes. The Company shall pay issue taxes that may be payable
in respect of any issue or delivery of shares of Common Stock on exercise of
this Warrant, in whole; provided, however, that the Company
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such exercise.
g. Stock
Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
h. Stock Fully
Paid. All of the shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefore, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof.
i. Reservation of Stock
Issuable Upon Conversion. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
exercise of this Warrant, the Company will take all appropriate corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
10. Certain
Distributions. In case the Company shall, at any time, prior
to the Expiration Date, declare any distribution of its assets to holders of its
Common Stock as a partial liquidation, distribution or by way of return of
capital, other than as a dividend payable out of earnings or any surplus legally
available for dividends, then the Holder shall be entitled, upon the proper
exercise of this Warrant in whole prior to the effecting of such declaration, to
receive, in addition to the shares of Common Stock issuable on such exercise,
the amount of such assets (or at the option of the Company a sum equal to the
value thereof at the time of such distribution to holders of Common Stock as
such value is determined by the Board of Directors of the Company in good
faith), which would have been payable to the Holder had it been a holder of
record of such shares of Common Stock on the record date for the determination
of those holders of Common Stock entitled to such distribution.
11. Dissolution or
Liquidation. In case the Company shall, at any time prior to
the Expiration Date, dissolve, liquidate or wind up its affairs, the Holder
shall be entitled, upon the proper exercise of this Warrant in whole and prior
to any distribution associated with such dissolution, liquidation, or winding
up, to receive on such exercise, in lieu of the shares of Common Stock to which
the Holder would have been entitled, the same kind and amount of assets as would
have been distributed or paid to the Holder upon any such dissolution,
liquidation or winding up, with respect to such shares of Common Stock had the
Holder been a holder of record of such share of Common Stock on the record date
for the determination of those holders of Common Stock entitled to receive any
such dissolution, liquidation, or winding up distribution.
12. Notice of
Adjustments. Whenever the number of Warrant Shares purchasable hereunder
or the Exercise Price thereof shall be adjusted pursuant to Section 9 hereof,
the Company shall provide notice to the Holder setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the number and class of
shares which may be purchased thereafter and the Exercise Price therefor after
giving effect to such adjustment.
13. Registration Rights.
The Holder hereof shall be entitled, with respect to the Warrant Shares issued
upon exercise hereof, to all of the registration rights set forth in the
Company’s Investor Rights Agreement, dated as of June 4, 2008, as amended
September 15, 2008 (the “Rights Agreement”),
to the same extent and on the same terms and conditions as possessed by the
investors thereunder and as if the Warrant Shares were included in the
definition of “Registrable Securities” in the Rights Agreement. The
Company shall take such action as may be reasonably necessary to (a) amend the
Rights Agreement to effect the foregoing and (b) assure that the granting of
such registration rights to the Holder does not violate the provisions of the
Rights Agreement or any of the Company’s charter documents or rights of prior
grantees of registration rights.
14. Miscellaneous.
a. Successors and
Assigns. The terms and conditions of this Warrant shall inure
to the benefit of, and be binding upon, the respective successors and assigns of
the parties, except to the extent otherwise provided herein. Nothing
in this Warrant, express or implied, is intended to confer upon any party, other
than the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant, except
as expressly provided in this Warrant.
b. Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California without regard to the
principles of conflict of laws thereof.
c. Counterparts; Delivery by
Facsimile. This Warrant may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of
this Warrant may be effected by facsimile.
d. Titles and
Subtitles. The titles and subtitles used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant.
e. Notices. Unless
otherwise provided, any notice required or permitted hereunder shall be given by
personal service upon the party to be notified by certified mail, return receipt
requested and: (i) if to the Company, addressed to ECO2 Plastics,
Inc., 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other address as the Company may
designate by notice to each of the Investors in accordance with the provisions
of this Section; and (ii) if to the Warrant holder, at the address indicated in
the Purchase Agreement, or at such other addresses as such Holder may designate
by notice to the Company in accordance with the provisions of this
Section.
f. Amendments and
Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either prospectively or retroactively), only with the
written consent of the Company and the Holder; provided,
however, that the terms of this Warrant may also be amended,
modified or terminated upon the written consent of the Company and the initial
holders of at least 70% in interest of the Warrants issued pursuant to the
Purchase Agreement (based on the number of Warrant Shares initially exercisable
thereunder) if at the same time all such Warrants issued to the Purchase
Agreement are so amended, modified or terminated in a similar
manner.
k. Entire
Agreement. This Warrant and the Purchase Agreement constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties
hereto.
[Signature
Page Follows]
IN WITNESS WHEREOF, the undersigned
hereby sets his hand and seal on the date set forth above.
|
By:
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive
Officer
|
|
EXHIBIT
A
NOTICE OF
EXERCISE
(To be
signed only upon exercise of the Warrant)
To: ECO2 Plastics,
Inc.
The
undersigned, hereby irrevocably elects to exercise the purchase rights
represented by the Warrant granted to the undersigned on December [__], 2008 and
to purchase thereunder __________* shares of Common Stock of ECO2 Plastics,
Inc. (the “Company”).
NET ISSUE EXERCISE
ELECTION: If applicable, the undersigned elects to purchase
the Warrant Shares by net issue exercise pursuant to Section 9(b) of the
Warrant, by initialing in the following space (please initial only if net issue
exercise chosen):
Net issue
exercise election chosen (INITIAL):
________
Dated:
________________________________
Exhibit
C
Form of
Certificate of Designations setting forth the Rights, Preferences and Privileges
of
Series C
Convertible Preferred Stock
of
ECO2
Plastics, Inc.
[Incorporated by Reference
with the Form 8-K filed by the Company on 09/19/08]
Exhibit
D
Form of
Legal Opinion
(To be
Delivered to Purchasers at the Closing)
1. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, with corporate power to own
its properties and to conduct its business. The Company is qualified
to do business and is in good standing in the State of California.
2. The
Company has the corporate power to execute, deliver and perform each of the
Agreement, the Notes, the Warrants, the Security Agreements and the
Subordination Agreement (collectively, the “Transaction
Documents”). Each of the Transaction Documents has been duly
authorized by all requisite corporate action of the Company and has been duly
executed and delivered by the Company. Each of the Transaction
Documents constitutes the legally valid and binding obligation of the Company,
enforceable in accordance with its terms (subject to bankruptcy, equitable
principles and other customary exceptions).
(a) As
of the date hereof, in accordance with its certificate of incorporation on file
with the Secretary of State of Delaware, the authorized capital stock of the
Company consists of 1,500,000,000 shares of Common Stock and 700,000,000 shares
of Preferred Stock, of which 152,843,414 shares are Series A Stock,
336,240,039 shares
are Series B-1 Stock and 10,916,547 shares are Series B-2 Stock.
(b) The
shares of the Company’s Series C Convertible Preferred Stock (and the shares of
the Company’s Common Stock issuable upon conversion thereof (the “Series C Conversion Shares”))
initially issuable upon conversion of the Notes shall be duly authorized and
reserved for issuance and, upon issuance and delivery upon conversion of the
Notes in accordance with the terms of the Notes and the Agreement, shall be
validly issued, fully paid and nonassessable and issued free of preemptive
rights or similar contractual rights against the Company.
(c) The
shares of the Company’s Common Stock initially issuable upon exercise of the
Warrants have been duly authorized and reserved for issuance and, upon issuance,
delivery and payment therefor in accordance with the Warrants (the “Warrant Conversion Shares,”
and together with the Series C Conversion Shares, the “Conversion Shares”), will be
validly issued, fully paid and nonassessable and issued free of preemptive
rights or similar contractual rights against the Company.
3. The
execution and delivery of each of the Transaction Documents, the issuance and
sale of the Notes and the Warrants by the Company to the Purchasers pursuant to
the Agreement and the performance of the Company’s obligations under the
Transaction Documents will not: (a) violate the Company’s
certificate of incorporation or bylaws; (b) violate any federal or California
statute, rule or regulation applicable to the Company, or the Delaware General
Corporation Law (“the DGCL”); (c) require any
consents, approvals, or authorizations to be obtained by the Company from, or
any registrations, declarations or filings to be made by the Company with, any
governmental authority under any federal or California statute, rule or
regulation applicable to the Company or the DGCL; or (d) result in the breach of
or a default under any of the Company’s material agreements (which agreements
shall include, without limitation, all instruments, documents and agreements
filed as exhibits to the Company’s most recently filed Form 10-K, as well as any
subsequently filed Exchange Act reports).
4. No
consent, approval, order or authorization of, and no notice to or filing with,
any governmental agency or body or any court is required to be obtained or made
by the Company for the issuance and sale of the Notes and the Warrants pursuant
to the Transaction Documents, except such as have been obtained or made and such
as may be required under applicable securities laws.
5. On
the assumption that the representations of the Company and the Purchasers in the
Agreement are correct and complete, (a) the offer and sale of the Notes and the
Warrants pursuant to the terms of the Agreement are exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, (b) the
issuance of the Company’s Series C Convertible Preferred Stock, when designated,
upon conversion of the Notes would also be exempt from such registration, and
(c) the issuance of the Conversion Shares would also be exempt from such
registration.
6. To
such counsel’s knowledge, there is no action, suit, proceeding or governmental
investigation pending, or threatened in writing, against the Company with
respect to the transactions contemplated by the Transaction Documents or which
questions the right of the Company to enter into the Transaction
Documents.
7. The
Series C Certificate of Designations will be duly filed in the State of Delaware
and, when filed, will be in full force and effect.
8. The
rights, preferences, privileges, designations powers and limitations of the
Series C Convertible Preferred Stock included in the Series C Certificate of
Designations, when filed with the State of Delaware, and the Company’s
certificate of incorporation are permitted by, and will be made in accordance
with, the DGCL.
9. The
Company is not, and immediately after giving effect to the issuance and sale of
the Notes and the Warrants in accordance with Agreement, will not be, required
to register as an “investment company” or a company “controlled by” an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
Exhibit
E-1
Amended
and Restated Security Agreement
ECO2
PLASTICS, INC.
AMENDED
AND RESTATED SECURITY AGREEMENT
December
17, 2008
This
Amended and Restated Security Agreement is dated as of December 17, 2008
(the “Effective
Date”), by and between ECO2 Plastics
Inc., a Delaware corporation (the “Company”) and
Peninsula Packaging, LLC, a California limited liability company (“Peninsula”).
WHEREAS,
the Company borrowed from J. Xxxxxxx Xxxx (“Buff”) six hundred
thousand dollars ($600,000) together with interest thereon pursuant to a certain
Promissory Note dated as of November 21, 2008 (the “Original Note”);
and
WHEREAS,
on the date hereof, Buff assigned all of his right, title and interest in, under
and to the Original Note and certain documents related thereto to Peninsula;
and
WHEREAS,
on the date hereof, the Company intends to borrow an additional nine hundred
thousand dollars ($900,000) from Peninsula; and
WHEREAS,
in connection with such additional loan, and as contemplated by the Purchase
Agreement (defined below), the Company and Peninsula intend to amend and restate
the Original Note (as so amended, the “Note”) in order to
evidence the entire approximately one million five hundred thousand ($1,500,000)
loan which shall be owed to Peninsula; and
WHEREAS,
the Company has agreed to execute and deliver this Amended and Restated Security
Agreement to Peninsula.
NOW,
THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Defined
Terms. The following terms shall have the following meanings,
unless the context otherwise requires:
“Code” shall mean the
Uniform Commercial Code as in effect in the State of California on the Effective
Date.
“Encumbrance” shall
mean any security interest, mortgage, pledge, lien, claim, charge, encumbrance,
title retention agreement, lessor’s interest under a financing lease or any
analogous arrangements in any of properties or assets of the Company, intended
as, or having the effect of, security.
“Event of Default”
shall have the meaning assigned in the Note.
“Financing Documents”
shall mean the Note, the Purchase Agreement, the Subordination Agreement, and
all other documents, instruments or agreements relating to the financing
transactions contemplated by such documents.
“Obligations” shall
mean the obligations of the Company to Peninsula under the Note, this Security
Agreement and the other Financing Documents, including all costs of
collection.
“Person” shall mean an
individual, partnership, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture or other
entity, whether public or private.
“Purchase Agreement”
shall mean the Convertible Note and Warrant Purchase Agreement dated as of the
date hereof to which the Company and Peninsula are a party.
“Security Agreement”
means this Amended and Restated Security Agreement, as amended, supplemented,
restated or otherwise modified from time to time.
“Senior Debt” shall
mean all indebtedness for all principal, fees, expenses, interest, penalties,
post bankruptcy petition interest, and all other amounts payable for money
borrowed in connection with the $2,000,000 loan from the California Integrated
Waste Management Board.
“Subordination
Agreement” shall mean that certain Amended and Restated Subordination and
Intercreditor Agreement dated as of the date hereof to which Peninsula is a
party.
2. Grant of Security
Interest. As collateral security for the prompt and complete
payment and performance when due of all the Obligations, the Company grants to
Peninsula a security interest in all of the Company's right, title and interest
in, to and under the following, whether now existing or hereafter acquired (all
of which collateral being hereinafter collectively called the “Collateral”); provided, however, that the
security interest hereunder shall be subordinate to any perfected security
interest granted by the Company in connection with the Senior
Debt. Peninsula is entitled to a security interest in the
following:
ACCOUNTS
All
present and future accounts owned by the Company, including accounts receivable,
including and together with any and all contract rights, security deposits
(where not otherwise prohibited by law or agreement), together with agreements,
customer lists, client lists, and accounts, invoices, agings, verification
reports and other records relating in any way to such accounts;
CONTRACTS
All
contracts, contract rights, royalties, license rights, leases, instruments,
undertakings, documents or other agreements in or under which the Company may
now or hereafter have any right, title or interest whether now existing or
hereinafter created and all forms of obligations owing to the Company arising
out of the sale or lease of goods, the licensing of technology or the rendering
of services by the Company, whether or not earned by performance, and any and
all credit insurance, guaranties, and other security therefore, as well as all
merchandise returned to or reclaimed by the Company;
EQUIPMENT, FURNISHINGS AND
MISCELLANEOUS PERSONAL PROPERTY
All
presently owned and hereafter acquired furniture, furnishings, equipment,
machinery, inventory, vehicles (including motor vehicles and trailers) computer
hardware and software, accounting or bookkeeping systems, client or customer
lists and information, data sheets and other records of any kind, wherever
located, stored or inventoried, which are used or which may be used in the
Company’s business;
FIXTURES
All
materials used by the Company in connection with its business operations,
including, but not limited to, supplies, trade equipment, appliances, apparatus
and any other items, now owned or hereafter acquired by the Company, and now or
hereafter attached to, or installed in (temporarily or permanently) any real
property now or in the future owned or leased by the Company;
GENERAL
INTANGIBLES
All
general intangibles and other personal property of the Company, now owned or
hereinafter acquired, including, without limitation, the
following: (a) permits, authorizations and approvals presently and
hereafter issued by any federal, state, municipal or local governmental or
regulatory authority in favor of the Company; (b) all plans, specifications,
renderings and other similar materials presently owned or hereafter acquired by
the Company; (c) all presently existing and hereafter created contracts, leases,
licenses and agreements to which the Company is a party; (d) all presently and
hereafter existing policies and agreements of insurance in favor of the Company;
(e) all presently and hereafter existing equity contribution agreements and
other equity financing arrangements in favor of the Company; (f) all copyrights,
chattel paper, electronic chattel paper, licenses, money, insurance proceeds,
contract rights, subscription lists, mailing lists, licensing agreements,
patents, trademarks, service marks, trade styles, patents, patent applications,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer discs, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kinds, trade names,
refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of the Company
with any governmental agencies, boards, corporations, providers of utility
services, public or private; (g) all presently existing and hereafter acquired
computer programs, computer software and other electronic systems and materials
of any kind of the Company; (h) goodwill; and (i) all other presently existing
and hereafter acquired documents, accounts, general intangibles and intangible
personal property of any kind;
DOCUMENTS
All
documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments, chattel paper, and electronic chattel
paper now owned or hereafter acquired and the Company’s books relating to the
foregoing;
INTELLECTUAL
PROPERTY
All
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all rights in and to
issued patents and patents pending; all trade secret rights, including all
rights to unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired; all
mask work or similar rights available for the protection of semiconductor chips,
now owned or hereafter acquired; all trade marks and trade names and associated
goodwill; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
PROCEEDS
All of
the Company’s books and records relating to the foregoing and any and all
present and future accounts, general intangibles, chattel paper, electronic
chattel paper, products, accessions, replacements, betterments and substitutions
for any of the foregoing described property, and all proceeds arising from or by
virtue of, or from the sale or disposition of, or collections with respect to,
or insurance proceeds payable with respect to, or claims against any other
Person with respect to, all or any part of the foregoing described property and
interests.
3. Rights of Peninsula;
Limitations on Peninsula’s Obligations. It is expressly agreed
by the Company that, anything herein to the contrary notwithstanding, the
Company shall remain liable under each of its contracts and documents to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with and pursuant to the terms and provisions
of its contracts and documents. Peninsula shall have no obligation or
liability under any of the Company’s contracts and documents by reason of or
arising out of this Security Agreement or the granting to Peninsula of a
security interest therein or the receipt by Peninsula of any payment relating to
any of the Company’s contracts and documents pursuant hereto, nor shall
Peninsula be required or obligated in any manner to perform or fulfill any of
the obligations of the Company under or pursuant to any of its contracts and
documents, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any of its contracts and documents, or to present
or file any claim, or to take any action to collect or enforce any performance
or the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.
6. Representations and
Warranties. The Company hereby represents and warrants that
the chief executive office and chief place of business of the Company is 000
Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, XX 00000, and the Company will not
change such chief executive office and chief place of business or remove such
records unless the Company shall have given Peninsula at least 10 days prior
written notice thereof. The Company hereby represents and warrants
that the execution, delivery and performance of this Agreement shall not
conflict with, constitute a breach or default under, or result in the
termination of, any agreement executed by the Company in connection with the
Senior Debt.
7. Covenants. The
Company covenants and agrees with Peninsula that from and after the date of this
Security Agreement and until the Obligations are fully satisfied:
a. Further
Documentation. At any time and from time to time, upon the
written request of Peninsula, and at the sole expense of the Company, the
Company will promptly and duly execute and deliver any and all such further
documents and take such further action as Peninsula may reasonably request in
carrying out the terms and conditions of this Security Agreement and the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the security interests granted
hereby. The Company also hereby authorizes Peninsula to file a
financing statement under the Uniform Commercial Code in any jurisdiction with
respect to the security interests granted hereby.
b. Continuous
Perfection. The Company will not change its name, identity or
corporate structure in any manner unless the Company shall have given Peninsula
at least 10 days' prior written notice thereof and shall have taken all action
(or made arrangements to take such action substantially simultaneously with such
change if it is impossible to take such action in advance) necessary or
reasonably requested by Peninsula to amend any financing statement or
continuation statement filed with respect to the Collateral so that it is not
misleading.
c. Insurance. The
Company will insure the Collateral against such risks and hazards as other
companies similarly situated insure against, in amounts and under policies which
it currently holds and under such additional or substituted amounts or policies
as it may from time to time determine, which shall be reasonably acceptable to
Peninsula (providing that no cancellation of such insurance shall be effective
without 30 days written notice to Peninsula and containing loss payable clauses
to Peninsula as its interest may appear) and all premiums thereon shall be paid
by the Company.
d. Limitation on Encumbrances
on Collateral. The Company will not create, incur or permit to exist,
will defend the Collateral against, and will take such other action as is
necessary to remove, any Encumbrance or claim on or to the Collateral, other
than the Encumbrances created hereby or otherwise permitted pursuant to the
Purchase Agreement, and will defend the right, title and interest of Peninsula
in and to any of the Collateral against other claims and demands of all Persons
whomsoever.
e. Limitations on Dispositions
of Collateral. The Company will not sell, transfer, lease or otherwise
dispose of any of the Collateral, or attempt, offer or contract to do so except
for (x) sales of inventory in the ordinary course of its business and
(y) so long as no Event of Default has occurred, the disposition in the
ordinary course of business of property not material to the conduct of its
business.
8. Remedies, Event of
Default. If any dissolution, liquidation, winding up of the affairs of
the Company or other Event of Default shall occur and be continuing and subject
to (a) the subordination provisions of the preceding Section 2 and (b) the terms
of the Subordination Agreement, Peninsula may exercise in addition to all other
rights and remedies granted in this Security Agreement or in any other
instrument or agreement securing, evidencing or relating to the Obligations or
at law or in equity, all rights and remedies of Peninsula under the
Code. Peninsula shall be deemed not to have knowledge of any Event of
Default unless and until notice thereof is given to Peninsula by the
Company. Without limiting the generality of the foregoing, the
Company expressly agrees that in any such event, Peninsula, without demand of
performance or other demand (except the notice specified below of time and place
of public or private sale) to or upon the Company or any other Person may
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange broker's board or at any of Peninsula’s
offices or elsewhere at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit
risk. Peninsula shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of said Collateral so sold, free of any right
or equity of redemption, which equity of redemption the Company hereby
releases. The Company further agrees, at Peninsula’s request, to
assemble the Collateral, make it available to Peninsula at places which
Peninsula shall reasonably select, whether at the Company's premises or
elsewhere. Peninsula shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care, safe keeping or otherwise of any or all of the
Collateral or in any way relating to the rights of Peninsula hereunder,
including reasonable attorneys' fees and legal expenses, to the payment in whole
or in part of the Obligations, the Company remaining liable for any deficiency
remaining unpaid after the application, and only after so paying over such net
proceeds and after the payment by Peninsula of any other amount required by any
provision of law. To the extent permitted by applicable law, the
Company waives all claims, damages, and demands against Peninsula arising out of
the repossession, retention or sale of the Collateral. The Company
agrees that Peninsula need not give more than 10 days notice of the time and
place of any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such
matters. The Company shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to pay
all amounts to which Peninsula is entitled.
The
Company hereby waives presentment, demand, protest or any notice (to the extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any collateral.
9. Application of
Proceeds. Subject to the subordination provisions contained in
the preceding Section 2, and subject to the terms of the Subordination
Agreement, the proceeds of all sales and collections in respect of any
Collateral shall be applied as follows:
First, to
the payment of the costs and expenses of such sales and collections, the
expenses of Peninsula and the reasonable fees and expenses of counsel to
Peninsula;
Second,
any surplus then remaining to the payment of the Obligations in such order and
manner as Peninsula may in its sole discretion determine; and
Third,
any surplus then remaining shall be paid to the Company.
10. Limitation on Peninsula’s
Duty in Respect of Collateral. Beyond the use of reasonable
care in the custody thereof, Peninsula shall have no duty as to any Collateral
in its possession or control or in the possession or control of any agent or
nominee of it or any income thereon or as to the preservation of rights against
prior secured parties or any other rights pertaining thereto.
11. Notices. Any
notice, request or other communication required or permitted hereunder shall be
in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or by
certified mail, postage prepaid with return receipt requested, addressed as
follows:
if to the Company,
to:
ECO2 Plastics,
Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx
X. Xxxxxxxx
Fax: (000)
000-0000
with a copy to:
The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Xxxxx X.
Xxxx
Fax: (000)
000-0000
if to Peninsula,
to:
Peninsula Packaging, LLC
c/o
Stradley Ronon Xxxxxxx & Xxxxx,
LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx,
Esquire
Fax: (000)
000-0000
All such
notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered;
(ii) five business days after being deposited in the mail, postage prepaid,
if mailed certified mail, return receipt requested; (iii) one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; (iv) the date of transmission if sent via facsimile to the
facsimile number as set forth in this Section prior to 5:00 pm in the time zone
of the recipient on a business day, with confirmation of successful transmission
or (v) the business day following the date of transmission if sent via
facsimile to the facsimile number as set forth in this Section after 5:00 p.m.
in the time zone of the recipient or on a date that is not a business
day. Change of a party’s address, facsimile number or specified
recipient may be designated hereunder by giving notice to all of the other
parties hereto in accordance with this Section.
12. Severability. Any
provision of this Security Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. No Waiver; Cumulative
Remedies. Peninsula shall not, by any act, delay, omission or
otherwise, be deemed to have waived any of its rights or remedies hereunder and
no waiver shall be valid unless in writing, signed by Peninsula, and then only
to the extent therein set forth. A waiver by Peninsula shall not be
construed as a bar to any right or remedy which Peninsula would otherwise have
had on any future occasion. No failure to exercise nor any delay by
Peninsula in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or future exercise thereof or the
exercise or any other right, power or privilege. The rights and
remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by
law.
14. Successors and
Assigns. This Security Agreement and all obligations of the
Company hereunder shall be binding upon the successors and permitted assigns of
the Company, and shall, together with the rights and remedies of Peninsula
hereunder, inure to the benefit of Peninsula and its successors and permitted
assigns; provided that
the Company may not assign any of its rights or obligations hereunder without
the prior written consent of Peninsula.
15. Amendment. None
of the terms or provisions of this Security Agreement may be altered, modified
or amended except by an instrument in writing, duly executed by the Company and
the holders of at least 70% of the aggregate principal amount of promissory
notes then outstanding under the Purchase Agreement. This Agreement
amends and restates the Security Agreement by and between Buff and the Company
dated as of November 21, 2008, as assigned by Buff to Peninsula on the date
hereof, but nothing herein shall discharge the obligations of, nor constitute a
novation with respect to, the indebtedness of the Company to Buff pursuant to
the Original Note, which such document was assigned by Buff to Peninsula on the
date hereof.
16. Governing
Law. This Security Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California.
17. Counterparts. This
Security Agreement may be executed in separate counterparts each of which will
be an original and all of which taken together will constitute one and the same
agreement.
18 Facsimile. This
Security Agreement may be executed using facsimiles of signatures, and a
facsimile of a signature shall be deemed to be the same, and equally
enforceable, as an original of such signature.
19. Termination. At
such time all Obligations have been fully satisfied, the security interest
created hereby shall automatically terminate. Peninsula shall take
all such actions as may be requested by the Company to evidence such termination
and to release the liens created hereby, at the Company's expense.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Security Agreement to be duly executed and delivered as of the Effective
Date.
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ECO2
PLASTICS, INC.
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By:
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Xxxxxx
X. Xxxxxxxx
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Chief
Executive
Officer
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PENINSULA
PACKAGING, LLC
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By:
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Xxxx
Xxxxxx
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Managing
Director
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Exhibit
E-2
Amended
and Restated Security Agreement
ECO2
PLASTICS, INC.
AMENDED
AND RESTATED SECURITY AGREEMENT
December
17, 2008
This
Amended and Restated Security Agreement is dated as of December 17, 2008
(the “Effective
Date”), by and between ECO2 Plastics
Inc., a Delaware corporation (the “Company”), Trident
Capital Fund-VI, L.P. and Trident Capital Fund-VI Principals, L.P.
(collectively, “Trident”), Xxxxxx
Living Trust dated 12/10/1996 (”Xxxxxx”) and the
other Investors listed on Schedule A attached
hereto (collectively with Trident and Xxxxxx, the “Investors”) and
Trident Capital, Inc. as collateral agent for the Investors (in such capacity as
collateral agent, the “Collateral
Agent”).
WHEREAS,
the Company (i) borrowed from Trident the aggregate principal amount of five
hundred fifty thousand dollars ($550,000) and (ii) borrowed from Xxxxxx the
principal amount of fifty thousand dollars ($50,000), pursuant to certain
Promissory Notes dated as of November 17, 2008 and November 21, 2008
(collectively, the “Original Notes”);
and
WHEREAS,
on the date hereof, the Company is borrowing from Trident an additional nine
hundred thousand dollars ($900,000); and
WHEREAS,
on the date hereof the Company is borrowing from Investors other than Trident
the additional amounts indicated on Schedule A hereto;
and
WHEREAS,
in connection with such additional loans from Trident and the other Investors,
and as contemplated by the Purchase Agreement (defined below), the Company and
Trident intend to amend and restate Trident’s Original Notes in order to
evidence the entire amount of the respective loans from Trident on November 17,
2008 and November 21, 2008 (including principal and interest accrued from the
dates of Trident’s Original Notes) plus the amount of loans from Trident on
December 17, 2008 (such new notes evidencing Trident’s loans on November 17,
2008 and November 21, 2008 as well as Trident’s additional loans on the date
hereof being referred to as the “New Trident Notes”);
and
WHEREAS,
the Company has agreed to execute and deliver this Amended and Restated Security
Agreement to the Investors and the Collateral Agent.
NOW,
THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Defined
Terms. The following terms shall have the following meanings,
unless the context otherwise requires:
“Code” shall mean the
Uniform Commercial Code as in effect in the State of California on the Effective
Date.
“Encumbrance” shall
mean any security interest, mortgage, pledge, lien, claim, charge, encumbrance,
title retention agreement, lessor’s interest under a financing lease or any
analogous arrangements in any of properties or assets of the Company, intended
as, or having the effect of, security.
“Event of Default”
shall have the meaning assigned in the Notes.
“Financing Documents”
shall mean the Notes, the Purchase Agreement, the Subordination Agreement, this
Security Agreement and all other documents, instruments or agreements relating
to the financing transactions contemplated by such documents.
“Notes” shall mean (i)
the New Trident Notes, (ii) the Xxxxxx Original Note, and (iii) the notes issued
to the Investors other than Trident under the Purchase Agreement.
“Obligations” shall
mean the obligations of the Company to the Investors under the Notes, this
Security Agreement and the other Financing Documents, including all costs of
collection.
“Person” shall mean an
individual, partnership, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture or other
entity, whether public or private.
“Purchase Agreement”
shall mean the Convertible Note and Warrant Purchase Agreement dated as of the
date hereof to which the Company and certain Investors are parties.
“Security Agreement”
means this Amended and Restated Security Agreement, as amended, supplemented,
restated or otherwise modified from time to time.
“Senior Debt” shall
mean all indebtedness for all principal, fees, expenses, interest, penalties,
post bankruptcy petition interest, and all other amounts payable for money
borrowed in connection with the $2,000,000 loan from the California Integrated
Waste Management Board.
“Subordination
Agreement” shall mean that certain Amended and Restated Subordination and
Intercreditor Agreement dated as of the date hereof to which the Investors are
party.
2. Grant of Security
Interest. As collateral security for the prompt and complete
payment and performance when due of all the Obligations, the Company grants to
the Collateral Agent as collateral agent on behalf of the Investors a security
interest in all of the Company's right, title and interest in, to and under the
following, whether now existing or hereafter acquired (all of which collateral
being hereinafter collectively called the “Collateral”); provided, however, that the
security interest hereunder shall be subordinate to any perfected security
interest granted by the Company in connection with the Senior
Debt. Collateral Agent is entitled to a security interest in the
following:
ACCOUNTS
All
present and future accounts owned by the Company, including accounts receivable,
including and together with any and all contract rights, security deposits
(where not otherwise prohibited by law or agreement), together with agreements,
customer lists, client lists, and accounts, invoices, agings, verification
reports and other records relating in any way to such accounts;
CONTRACTS
All
contracts, contract rights, royalties, license rights, leases, instruments,
undertakings, documents or other agreements in or under which the Company may
now or hereafter have any right, title or interest whether now existing or
hereinafter created and all forms of obligations owing to the Company arising
out of the sale or lease of goods, the licensing of technology or the rendering
of services by the Company, whether or not earned by performance, and any and
all credit insurance, guaranties, and other security therefore, as well as all
merchandise returned to or reclaimed by the Company;
EQUIPMENT, FURNISHINGS AND
MISCELLANEOUS PERSONAL PROPERTY
All
presently owned and hereafter acquired furniture, furnishings, equipment,
machinery, inventory, vehicles (including motor vehicles and trailers) computer
hardware and software, accounting or bookkeeping systems, client or customer
lists and information, data sheets and other records of any kind, wherever
located, stored or inventoried, which are used or which may be used in the
Company’s business;
FIXTURES
All
materials used by the Company in connection with its business operations,
including, but not limited to, supplies, trade equipment, appliances, apparatus
and any other items, now owned or hereafter acquired by the Company, and now or
hereafter attached to, or installed in (temporarily or permanently) any real
property now or in the future owned or leased by the Company;
GENERAL
INTANGIBLES
All
general intangibles and other personal property of the Company, now owned or
hereinafter acquired, including, without limitation, the
following: (a) permits, authorizations and approvals presently and
hereafter issued by any federal, state, municipal or local governmental or
regulatory authority in favor of the Company; (b) all plans, specifications,
renderings and other similar materials presently owned or hereafter acquired by
the Company; (c) all presently existing and hereafter created contracts, leases,
licenses and agreements to which the Company is a party; (d) all presently and
hereafter existing policies and agreements of insurance in favor of the Company;
(e) all presently and hereafter existing equity contribution agreements and
other equity financing arrangements in favor of the Company; (f) all copyrights,
chattel paper, electronic chattel paper, licenses, money, insurance proceeds,
contract rights, subscription lists, mailing lists, licensing agreements,
patents, trademarks, service marks, trade styles, patents, patent applications,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer discs, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kinds, trade names,
refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of the Company
with any governmental agencies, boards, corporations, providers of utility
services, public or private; (g) all presently existing and hereafter acquired
computer programs, computer software and other electronic systems and materials
of any kind of the Company; (h) goodwill; and (i) all other presently existing
and hereafter acquired documents, accounts, general intangibles and intangible
personal property of any kind;
DOCUMENTS
All
documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments, chattel paper, and electronic chattel
paper now owned or hereafter acquired and the Company’s books relating to the
foregoing;
INTELLECTUAL
PROPERTY
All
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all rights in and to
issued patents and patents pending; all trade secret rights, including all
rights to unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired; all
mask work or similar rights available for the protection of semiconductor chips,
now owned or hereafter acquired; all trade marks and trade names and associated
goodwill; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
PROCEEDS
All of
the Company’s books and records relating to the foregoing and any and all
present and future accounts, general intangibles, chattel paper, electronic
chattel paper, products, accessions, replacements, betterments and substitutions
for any of the foregoing described property, and all proceeds arising from or by
virtue of, or from the sale or disposition of, or collections with respect to,
or insurance proceeds payable with respect to, or claims against any other
Person with respect to, all or any part of the foregoing described property and
interests.
3. Pro Rata Distributions Among
Investors. It is expressly agreed by each Investor that all
payments received by the Company under or in connection with the sale or
liquidation of the Collateral, subject to any Senior Debt, shall be divided
pari passu among all
holders of promissory notes issued under the Purchase Agreement, consistent with
the terms of the Subordination Agreement. Each Investor further
agrees that if any Investor shall obtain payment in respect of any principal of
or interest on any of its Notes resulting in such Investor’s receiving payment
greater than the pro rata share contemplated by the Subordination Agreement,
then the Investor receiving such greater proportion shall (i) notify the
Collateral Agent of such fact and (ii) hold the amount exceeding its pro rata
share and promptly pay such amount to the Collateral Agent, or make such other
adjustments as shall be equitable in order to effectuate the terms of the
Subordination Agreement.
4. Collateral
Agent.
a. Appointment and
Authority. Trident Capital, Inc. is hereby appointed Collateral Agent
hereunder, and each Investor hereby authorizes Collateral Agent to act as its
agent in accordance with the terms hereof. Each Investor authorizes
Collateral Agent to take such actions on its behalf and to exercise such powers
as are delegated to Collateral Agent by the terms hereof, together with such
actions and powers as are reasonably incidental thereto.
b. Exculpatory
Provisions. Collateral Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting
the generality of the foregoing, Collateral Agent:
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i.
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shall
not be subject to any fiduciary or other implied duties, regardless of
whether an Event of Default has occurred and is
continuing,
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ii.
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shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that Collateral Agent is required to exercise as
directed in writing (as shall be expressly provided for herein); provided that
Collateral Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose Collateral Agent to
liability or that is contrary to this Security Agreement, any Financing
Document or applicable law,
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iii.
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shall
not, except as expressly set forth herein, have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating
to the Company or any of its affiliates that is communicated to or
obtained by Collateral Agent or any of its affiliates in any
capacity,
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iv.
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shall
not be liable for any action taken or not taken by it with the consent or
at the request of the holders of at least 60% of the aggregate principal
amount of Notes then outstanding,
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v.
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shall
not be liable for any action taken or not taken by it in accordance with
the advice of any legal counsel (who may be counsel for the Company),
independent accountants and other experts selected by
it,
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vi.
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shall
not be liable for any action taken or not taken by it in accordance with
an order from a court of competent
jurisdiction,
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vii.
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shall
not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in
connection with this Security Agreement or any Financing Document, (ii)
the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other
terms or conditions set forth herein or therein or the occurrence of any
Event of Default, or (iv) the validity, enforceability, effectiveness or
genuineness of this Security Agreement, any Financing Document or any
other agreement, instrument or document,
and
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viii.
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shall
be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or
intranet website posting or other distribution) believed by it to be
genuine and to have been signed, sent or otherwise authenticated by the
proper Person. Collateral Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not incur any liability for
relying thereon.
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c. Replacement of Collateral
Agent. With the consent or at the request of the holders of at
least 60% of the aggregate principal amount of Notes then outstanding,
Collateral Agent shall be replaced with a successor to be appointed by such
holders. Upon the acceptance of a successor’s appointment as
Collateral Agent hereunder, such successor shall succeed to and become vested
with all of the rights, powers, privileges and duties of the retiring Collateral
Agent, and the retiring Collateral Agent shall be discharged from all of its
duties and obligations hereunder or under the Financing Documents.
5. Rights of Investors;
Limitations on Investor’s Obligations. It is expressly agreed
by the Company that, anything herein to the contrary notwithstanding, the
Company shall remain liable under each of its contracts and documents to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with and pursuant to the terms and provisions
of its contracts and documents. Collateral Agent and Investors shall
have no obligation or liability under any of the Company’s contracts and
documents by reason of or arising out of this Security Agreement or the granting
to the Collateral Agent on behalf of the Investors of a security interest
therein or the receipt by Collateral Agent or any Investor of any payment
relating to any of the Company’s contracts and documents pursuant hereto, nor
shall Collateral Agent or any Investor be required or obligated in any manner to
perform or fulfill any of the obligations of the Company under or pursuant to
any of its contracts and documents, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any of its contracts and
documents, or to present or file any claim, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6. Representations and
Warranties. The Company hereby represents and warrants that
the chief executive office and chief place of business of the Company is 000
Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, XX 00000, and the Company will not
change such chief executive office and chief place of business or remove such
records unless the Company shall have given Investor at least 10 days prior
written notice thereof. The Company hereby represents and warrants
that the execution, delivery and performance of this Agreement shall not
conflict with, constitute a breach or default under, or result in the
termination of, any agreement executed by the Company in connection with the
Senior Debt.
7. Covenants. The
Company covenants and agrees with Investors and Collateral Agent that from and
after the date of this Security Agreement and until the Obligations are fully
satisfied:
a. Further
Documentation. At any time and from time to time, upon the
written request of the Collateral Agent, and at the sole expense of the Company,
the Company will promptly and duly execute and deliver any and all such further
documents and take such further action as Collateral Agent may reasonably
request in carrying out the terms and conditions of this Security Agreement and
the rights and powers herein granted, including, without limitation, the filing
of any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the security interests granted
hereby. The Company also hereby authorizes Collateral Agent to file a
financing statement under the Uniform Commercial Code in any jurisdiction with
respect to the security interests granted hereby.
b. Continuous
Perfection. The Company will not change its name, identity or
corporate structure in any manner unless the Company shall have given Collateral
Agent at least 10 days' prior written notice thereof and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary
or reasonably requested by Collateral Agent to amend any financing statement or
continuation statement filed with respect to the Collateral so that it is not
misleading.
c. Insurance. The
Company will insure the Collateral against such risks and hazards as other
companies similarly situated insure against, in amounts and under policies which
it currently holds and under such additional or substituted amounts or policies
as it may from time to time determine, which shall be reasonably acceptable to
the Collateral Agent (providing that no cancellation of such insurance shall be
effective without 30 days written notice to Collateral Agent containing loss
payable clauses to Collateral Agent as its interests may appear) and all
premiums thereon shall be paid by the Company.
d. Limitation on Encumbrances
on Collateral. The Company will not create, incur or permit to exist,
will defend the Collateral against, and will take such other action as is
necessary to remove, any Encumbrance or claim on or to the Collateral, other
than the Encumbrances created hereby or otherwise permitted pursuant to the
Purchase Agreement, and will defend the right, title and interest of Collateral
Agent and Investors in and to any of the Collateral against other claims and
demands of all Persons whomsoever.
e. Limitations on Dispositions
of Collateral. The Company will not sell, transfer, lease or otherwise
dispose of any of the Collateral, or attempt, offer or contract to do so except
for (x) sales of inventory in the ordinary course of its business and
(y) so long as no Event of Default has occurred, the disposition in the
ordinary course of business of property not material to the conduct of its
business.
8. Remedies, Event of
Default. If any dissolution, liquidation, winding up of the affairs of
the Company or other Event of Default shall occur and be continuing and subject
to (a) the subordination provisions of the preceding Section 2 and (b) the terms
of the Subordination Agreement, Collateral Agent may exercise in addition to all
other rights and remedies granted in this Security Agreement or in any other
instrument or agreement securing, evidencing or relating to the Obligations or
at law or in equity, all rights and remedies of Collateral Agent under the Code.
Collateral Agent shall be deemed not to have knowledge of any Event of Default
unless and until notice thereof is given to Collateral Agent by the
Company. Without limiting the generality of the foregoing, the
Company expressly agrees that in any such event, the Collateral Agent, without
demand of performance or other demand (except the notice specified below of time
and place of public or private sale) to or upon the Company or any other Person
may forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange broker's board or at any of the
Collateral Agent’s offices or elsewhere at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Collateral Agent shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption the Company hereby
releases. The Company further agrees, at Collateral Agent’s request,
to assemble the Collateral, make it available to Collateral Agent at places
which Collateral Agent shall reasonably select, whether at the Company's
premises or elsewhere. Collateral Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care, safe keeping or otherwise of any or all of the
Collateral or in any way relating to the rights of the Collateral Agent or
Investors hereunder, including reasonable attorneys' fees and legal expenses, to
the payment in whole or in part of the Obligations, the Company remaining liable
for any deficiency remaining unpaid after the application, and only after so
paying over such net proceeds and after the payment by the Collateral Agent of
any other amount required by any provision of law. To the extent
permitted by applicable law, the Company waives all claims, damages, and demands
against Collateral Agent arising out of the repossession, retention or sale of
the Collateral. The Company agrees that the Collateral Agent need not
give more than 10 days notice of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. The Company shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all amounts to which the Collateral Agent and
the Investors are entitled.
The
Company hereby waives presentment, demand, protest or any notice (to the extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any collateral.
9. Application of
Proceeds. Subject to the subordination provisions contained in
the preceding Section 2, and subject to the terms of the Subordination
Agreement, the proceeds of all sales and collections in respect of any
Collateral shall be applied as follows:
First, to
the payment of the costs and expenses of such sales and collections, the
expenses of Collateral Agent and the reasonable fees and expenses of counsel to
Collateral Agent;
Second,
any surplus then remaining to the payment of the Obligations in such order and
manner consistent with the provisions of Section 3 above as the Collateral Agent
may in its sole discretion determine; and
Third,
any surplus then remaining shall be paid to the Company.
10. Limitation on Collateral
Agent’s and Investor’s Duty in Respect of Collateral. Beyond
the use of reasonable care in the custody thereof, Collateral Agent and
Investors shall have no duty as to any Collateral in their possession or control
or in the possession or control of any agent or nominee of them or any income
thereon or as to the preservation of rights against prior secured parties or any
other rights pertaining thereto.
11. Notices. Any
notice, request or other communication required or permitted hereunder shall be
in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or by
certified mail, postage prepaid with return receipt requested, addressed as
follows:
if to the Company,
to:
ECO2 Plastics,
Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx
X. Xxxxxxxx
Fax: (000)
000-0000
with a copy to:
The Xxxx Law Group, PLLC
000 Xxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Xxxxx
X. Xxxx
Fax: (000)
000-0000
if to Collateral Agent,
to:
Trident
Capital, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx
000
Xxxx Xxxx, XX 00000
Attn: Xxxxxx
X. Xxxxxx, Chief Administrative Officer and General Counsel
Fax: (000)
000-0000
if to the Investors,
to:
The addresses of such Investors set
forth on the signature pages hereto.
All such
notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered;
(ii) five business days after being deposited in the mail, postage prepaid,
if mailed certified mail, return receipt requested; (iii) one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; (iv) the date of transmission if sent via facsimile to the
facsimile number as set forth in this Section prior to 5:00 pm in the time zone
of the recipient on a business day, with confirmation of successful transmission
or (v) the business day following the date of transmission if sent via
facsimile to the facsimile number as set forth in this Section after 5:00 p.m.
in the time zone of the recipient or on a date that is not a business
day. Change of a party’s address, facsimile number or specified
recipient may be designated hereunder by giving notice to all of the other
parties hereto in accordance with this Section.
12. Severability. Any
provision of this Security Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. No Waiver; Cumulative
Remedies. Neither Collateral Agent nor any Investor shall, by
any act, delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder and no waiver shall be valid unless in writing,
signed by Collateral Agent or such Investor, as the case may be, and then only
to the extent therein set forth. A waiver by Collateral Agent or an
Investor shall not be construed as a bar to any right or remedy which Collateral
Agent or such Investor would otherwise have had on any future
occasion. No failure to exercise nor any delay by Collateral Agent or
an Investor in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or future exercise thereof or
the exercise or any other right, power or privilege. The rights and
remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by
law.
14. Successors and
Assigns. This Security Agreement and all obligations of the
Company hereunder shall be binding upon the successors and permitted assigns of
the Company, and shall, together with the rights and remedies of Collateral
Agent and Investors hereunder, inure to the benefit of Collateral Agent and
Investors and their successors and permitted assigns; provided that the Company may
not assign any of its rights or obligations hereunder without the prior written
consent of Collateral Agent.
15. Amendment. None
of the terms or provisions of this Security Agreement may be altered, modified
or amended except by an instrument in writing, duly executed by the Company and
the holders of at least 70% of the aggregate principal amount of promissory
notes then outstanding under the Purchase Agreement. This Agreement
amends and restates the Security Agreement by and among Trident, Xxxxxx and the
Company dated as of November 21, 2008, but nothing herein shall discharge the
obligations of, nor constitute a novation with respect to, the indebtedness of
the Company to Trident and Xxxxxx pursuant to the Original Notes.
16. Governing
Law. This Security Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California.
17. Counterparts. This
Security Agreement may be executed in separate counterparts each of which will
be an original and all of which taken together will constitute one and the same
agreement.
18 Facsimile. This
Security Agreement may be executed using facsimiles of signatures, and a
facsimile of a signature shall be deemed to be the same, and equally
enforceable, as an original of such signature.
19. Termination. At
such time all Obligations have been fully satisfied, the security interest
created hereby shall automatically terminate. Collateral Agent shall
take all such actions as may be requested by the Company to evidence such
termination and to release the liens created hereby, at the Company's
expense.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Security Agreement to be duly executed and delivered as of the Effective
Date.
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ECO2
PLASTICS, INC.
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By:
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Xxxxxx
X. Xxxxxxxx
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Chief
Executive
Officer
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Trident
Capital, Inc.,
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as
Collateral Agent
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| Executed by the undersigned as an authorized signatory of Trident Capital, Inc. | |
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(signature)
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(print
name)
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INVESTORS:
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Trident
Capital Fund-VI, L.P.
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Trident
Capital Fund-VI Principals Fund, L.L.C.
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Executed
by the undersigned as an authorized signatory of the General Partner of
Trident Capital Fund-VI, L.P. and of the Managing Member of Trident
Capital Fund-VI Principals Fund, L.L.C.
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(signature)
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(print
name)
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Address:
000 Xxxxxxxx Xxxxxx, Xxxxx 000
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Xxxx
Xxxx, XX 00000
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Attn: Xxxxxx
X. Xxxxxx
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Chief
Administrative Officer and General Counsel
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Fax: x0
(000)
000-0000
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INVESTORS:
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Xxxxxx
Living Trust, dated 12-10-96
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By:
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X.
Xxxxxxxx Xxxxxx, Trustee
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Address: 0
Xxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
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E-Mail: xxx@xxxxxxxxxxxxxxx.xxx
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INVESTORS:
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By:
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Name:
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Title:
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Address:
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Fax:
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E-Mail:
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Schedule
A
Investors
- 28 -
Exhibit
F
Amended
and Restated Subordination and Intercreditor Agreement
AMENDED AND RESTATED
SUBORDINATION AND INTERCREDITOR AGREEMENT
This
Amended and Restated Subordination and Intercreditor Agreement (this “Agreement”)
is made as of this 17th day of December, 2008, among certain holders of
promissory notes issued pursuant to the Prior Purchase Agreement (defined below)
that are signatories hereto (collectively, the “Investors”),
TRIDENT CAPITAL, INC., as collateral agent on behalf of the Investors (together
with the Investors, individually and collectively, the “Current
Lender”), TRIDENT CAPITAL FUND-VI, L.P. (“Trident
Capital I”), TRIDENT CAPITAL FUND-VI PRINCIPALS FUND, L.L.C. (“Trident
Capital II”), XXXXXX LIVING TRUST DATED 12/10/1996 (“Xxxxxx”),
each other party listed as an additional senior lender on the signature page
hereto and each other party who becomes bound by this Agreement as a senior
lender pursuant to Section 21 of the Purchase Agreement, as defined below (each,
an “Additional
Investor” and, collectively with Trident Capital I, Trident Capital II
and Xxxxxx, the “December
Investors”), TRIDENT CAPITAL, INC., as collateral agent on behalf of the
December Investors (together with the December Investors, individually and
collectively, the “New
Lender”), and PENINSULA PACKAGING, LLC, a California limited liability
company (“Peninsula”
and, each of Peninsula and New Lender, a “Senior
Lender” and collectively the “Senior
Lenders”).
WITNESSETH
WHEREAS
on November 21, 2008, J. Xxxxxxx Xxxx (“Buff”)
loaned Six Hundred Thousand Dollars ($600,000) to ECO2 Plastics
Inc., a Delaware corporation (“Borrower”), pursuant
to a certain promissory note dated as of the date thereof (the “Buff
Note”).
WHEREAS,
on November 17 and November 21, 2008, Trident Capital Fund-VI, L.P. and Trident
Capital Fund-VI Principals Fund, L.L.C. (collectively, the “Trident
Lenders”) loaned an aggregate of Five Hundred Fifty Thousand Dollars
($550,000) to the Borrower pursuant to certain promissory notes dated as of
November 17 or November 21, 2008 (collectively, the “Trident
Notes”).
WHEREAS,
on November 17, 2008, the Xxxxxx Living Trust Dated 12/10/1996 loaned Fifty
Thousand Dollars ($50,000) to the Borrower pursuant to a certain promissory note
dated as of such date (the “Xxxxxx
Note” and, collectively with the Trident Notes and the Buff Note, the
“Nov08
Notes”).
WHEREAS,
the Investors are holders of certain indebtedness and liabilities owing from
Borrower to the Investors pursuant to (a) those certain Convertible Secured
Promissory Notes dated August 22, 2008, August 28, 2008, September 2, 2008 and
September 15, 2008 (the “Earlier
Investor Notes”), and (b) that certain Convertible Note and Warrant
Purchase Agreement dated as of September 2, 2008 (the “Prior
Purchase Agreement”; together with the Earlier Investor Notes, the “Existing
Subordinated Debt Documents”). The Existing Subordinated Debt Documents
and the Subordinated Security Agreement referenced below, together with all
other documents, agreements, instruments and/or certificates relating thereto,
are hereinafter collectively referred to as the “Subordinated
Debt Documents.”
- 29
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WHEREAS,
all indebtedness, liabilities and obligations of Borrower to the Investors under
the Subordinated Debt Documents, together with all interest and other monies due
or to become due thereunder, and any fees, costs and expenses in connection
therewith, and any amounts payable by Borrower in connection with any purchase
rights, are hereinafter referred to as the “Subordinated
Debt.”
WHEREAS,
the payment and performance of all of the Subordinated Debt is secured by a
security interest in certain assets of the Borrower, some or all of which
constitute the Collateral, pursuant to an Amended and Restated Security
Agreement dated as of September 2, 2008, given by Borrower in favor of Trident
Capital, Inc., as collateral agent for the Investors (as amended, the “Subordinated
Security Agreement”).
WHEREAS,
on November 21, 2008, the Current Lender, Buff and the Trident Lenders entered
into a Subordination and Intercreditor Agreement (the “Original
Subordination Agreement”) pursuant to which the parties agreed that the
Subordinated Debt would be subordinated to the indebtedness under the Nov08
Notes.
WHEREAS,
on the date hereof, Buff assigned all of his right, title and interest in, under
and to the Buff Note, the Original Subordination Agreement and certain documents
related thereto to Peninsula.
WHEREAS,
Peninsula, on the one hand, and the New Lender, on the other hand, each intend
to lend at least an additional Nine Hundred Thousand Dollars ($900,000) to the
Borrower, totaling at least One Million Eight Hundred Thousand Dollars
($1,800,000) in the aggregate.
WHEREAS,
in connection with the foregoing additional loans and pursuant to a certain
Convertible Note and Warrant Purchase Agreement dated as of the date hereof by
and among the Borrower, Senior Lenders and certain other parties (the “Purchase
Agreement”), Borrower has executed and delivered to Senior Lenders
promissory notes in the aggregate amount of at least $3,000,000, including
amounts originally represented by the Nov08 Notes (individually, a “Senior
Note” and collectively the “Senior
Notes”) evidencing certain of Borrower’s obligations, liabilities and
indebtedness to Senior Lenders and as secured by Security Agreements dated as of
the date hereof made by Borrower in favor of Senior Lenders (each, a “Security
Agreement” and collectively the “Security
Agreements”) (the Security Agreements, the Senior Notes and the Purchase
Agreement, together with the other documents, instruments and agreements
executed in connection therewith, as they may from time to time be modified,
amended, restated or replaced, are hereinafter collectively referred to as the
“Senior
Loan Documents”), pursuant to which Senior Lenders have loaned to
Borrower the aggregate principal amount of at least $3,000,000 (collectively the
“Loans”),
upon and subject to the terms of, the Senior Loan
Documents. Capitalized terms used and not otherwise defined herein
shall have the meanings given to such terms in the Senior Loan
Documents.
- 30
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WHEREAS,
all of the indebtedness, liabilities and obligations of Borrower to Senior
Lenders in connection with the Senior Loan Documents, including all extensions
thereof and all debt issued to the Senior Lenders in respect thereof, are
hereinafter collectively called the “Senior
Debt.”
WHEREAS,
the payment and performance of the Senior Debt is secured by security
interests in, among other things, all of the present and future goods,
equipment, inventory, investment property, instruments, chattel paper,
documents, letter-of-credit rights, accounts, deposit accounts, commercial tort
claims and general intangibles of Borrower, wherever located, and the products
and proceeds thereof (collectively, the “Collateral”).
WHEREAS,
it is a condition precedent to the obligation of certain of the Senior Lenders
to make the Loans provided for in the Senior Loan Documents that Current Lender
and Borrower execute and deliver this Agreement to and with Senior
Lenders.
NOW,
THEREFORE, in order to induce Senior Lenders to make the Loans provided for in
the Senior Loan Documents and in consideration therefor, and in consideration of
the mutual covenants set forth herein, the parties hereto hereby agree as
follows:
- 31
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1. CONSENT. CURRENT
LENDER HEREBY CONSENTS TO AND APPROVES OF THE EXECUTION, DELIVERY AND
PERFORMANCE BY BORROWER OF THE SENIOR LOAN DOCUMENTS AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREBY, NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN ANY OF THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS EXECUTED IN
CONNECTION WITH THE SUBORDINATED DEBT. THE INVESTORS EXECUTING THIS
AGREEMENT HEREBY REPRESENT AND WARRANT TO SENIOR LENDERS THAT THEY HOLD AT LEAST
SIXTY PERCENT (60%) OF THE PRINCIPAL AMOUNT OF THE OUTSTANDING NOTES, AS SUCH
TERM IS DEFINED IN THE PRIOR PURCHASE AGREEMENT.
2. SUBORDINATION.
Section
2.01 Subordination
of Payment. Except as set forth in Section 2.2 below, the
payment of any and all of the principal amount of, interest on and any fees,
costs and expenses on the Subordinated Debt is hereby expressly subordinated and
made junior to the payment of the principal amount, all interest, all liquidated
damages, fees, costs, expenses and any other amounts due on the Senior
Debt.
Section
2.02 Payments. Anything
in any other agreement, instrument or document executed and delivered in
connection with the Subordinated Debt to the contrary notwithstanding, Borrower
shall not make, and Current Lender shall not receive, accept or retain, any
direct or indirect payment, or prepayment on account, or any reduction (whether
by way of loan, set-off or otherwise) in respect of the principal of, premium
on, or interest on the Subordinated Debt until the Termination Date (as defined
in Section 6.11); provided, however, that so long
as at the time of and after giving effect to any such payment, no Event of
Default has occurred under the Senior Loan Documents, or would occur as a result
thereof, Borrower may make, and Current Lender may accept, regularly scheduled
payments of principal and interest on the Subordinated Debt, without
acceleration.
- 32
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Section
2.03 Subordination
of Lien. Notwithstanding the date, manner or order of
creation, attachment or perfection of (i) those security interests and liens in
favor of Senior Lenders now or hereafter existing in the Collateral or (ii)
those security interests and liens in favor of Current Lender now or hereafter
existing in the Collateral, and notwithstanding any provisions of the Uniform
Commercial Code or other applicable law or of any agreement(s) granting such
security interests or liens to Current Lender and Senior Lenders, Senior Lenders
and Current Lender hereby agree that: (a) any security interests and liens in
and/or on the Collateral securing the Subordinated Debt shall be, in all
respects, subject to and subordinate to the security interests and liens in
and/or on the Collateral securing the Senior Debt, to the full extent thereof;
and (b) any security interests and liens in and/or on the Collateral securing
Senior Debt shall be, in all respects, of equal lien priority to any security
interests and liens in and/or on the Collateral securing other Senior Debt, and
any payments or proceeds of Collateral received under the Senior Loan Documents
shall be made pro rata to the Senior Lenders on a pari passu basis until such
time as all obligations under the Senior Loan Documents have been paid in full;
provided, that
each Senior Lender shall first be entitled to recover any expenses or fees
incurred in connection with the exercise of its rights and remedies with respect
to the Collateral under this Agreement. Current Lender will indicate
in any financing statement filed (whether before or after the date hereof,
including if necessary by amendment) in connection with the Subordinated Debt
that its security interests and liens in the Collateral are subordinated to the
security interests and liens of Senior Lenders in the Collateral, subject to the
terms of this Agreement.
Section
2.04 Default/Remedies. In
the event of (a) the application for the appointment of a receiver or custodian
for Borrower or the property of Borrower, (b) the entry of an order for relief
or the filing of a petition by or against Borrower under the provisions of the
Bankrupcty Code (as defined below), (c) any assignment for the benefit of
creditors by or against Borrower, or (d) Borrower’s insolvency (which term is
defined for purposes of this paragraph as the failure or inability of Borrower
to meet its obligations as the same fall due) (collectively, an “Insolvency
Event”), then and in any such event:
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(i)
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All
of the Senior Debt shall first be paid in full before any payment or
distribution of any character, whether in cash, securities, obligations or
other property, shall be made in respect of the Subordinated
Debt;
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(ii)
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Any
payment or distribution of any character, which would otherwise (but for
the terms hereof) be payable or deliverable in respect of the Subordinated
Debt (including any payment or distribution of any other indebtedness of
Borrower being subordinated to the Subordinated Debt), shall be paid or
delivered directly to Senior Lenders, or their representatives, until the
Termination Date, and Current Lender irrevocably authorizes, empowers and
directs all receivers, custodians, trustees, liquidators, conservators and
others having authority in the property and premises of Current Lender to
effect all such payments and deliveries;
and
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(iii)
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Notwithstanding
any statute, including, without limitation, the United States Bankruptcy
Code (the “Bankruptcy
Code”), any rule of law or bankruptcy procedures to the contrary,
the right of Senior Lenders hereunder to have all of the Senior Debt paid
and satisfied in full prior to the payment of any of the Subordinated Debt
shall include, without limitation, the right of Senior Lenders to be paid
in full all interest accruing on the Senior Debt due to the Senior Lenders
after the filing of any petition by or against Borrower in connection with
any bankruptcy or similar proceeding or any other proceeding referred to
in this paragraph, hereof, prior to the payment of any amounts in respect
to the Subordinated Debt, including, without limitation, any interest due
to Current Lender accruing after such
date.
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- 33
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Section
2.05 Power of
Attorney. In the event of any Insolvency Event involving
Borrower prior to the Termination Date, the Senior Lenders are hereby appointed
as the attorney-in-fact for Current Lender with respect to the Subordinated Debt
to take the following actions if Senior Lenders choose to do so and if the
Current Lender has failed to take any such actions at least ten (10) days in
advance of any applicable bar date: (a) demand, xxx for, collect and receive any
and all such cash or other assets, file any claim, proof of claim or similar
instrument, and institute such other proceedings which Senior Lenders may in
their sole and absolute discretion deem necessary, advisable or appropriate to
have the Subordinated Debt claim allowed in such Insolvency Event, to collect
the Subordinated Debt, and to enforce the terms of this Agreement, and (b) to
vote for Current Lender with respect to the Subordinated Debt in connection with
any matter before a bankruptcy court requiring approval by Current Lender,
provided that Senior Lenders shall have no right to compromise the rights of
Current Lender with respect to any creditor junior to Current
Lenders.
Section
2.06 Payments
in Trust. If, notwithstanding the provisions of this
Agreement, any payment or distribution of any character (whether in cash,
securities, or other property) or any security shall be received by any Senior
Lender or by Current Lender in contravention of the terms of this Agreement,
such payment, distribution or security shall not be commingled with any asset of
a Senior Lender or Current Lender, shall be held in trust for the benefit of,
and shall be paid over or delivered and transferred to the other party, or its
representative, for application to the payment of the applicable debt remaining
unpaid.
Section
2.07 Transfer/Assignment
of Senior Debt. This Agreement, without further reference,
shall pass to and may be relied on and enforced by any transferee or subsequent
holder of any Senior Debt. In the event of any sale, assignment,
disposition or other transfer of any Subordinated Debt, Current Lender shall
cause the transferee thereof to execute and deliver to the Senior Lenders an
agreement (substantially identical with this Agreement or otherwise in form and
substance satisfactory to Senior Lenders) providing for the continued
subordination of the Subordinated Debt to the Senior Debt as provided herein and
for the continued effectiveness of all of the rights of Senior Lenders arising
under this Agreement.
3. CONTINUED
EFFECTIVENESS OF THIS AGREEMENT. THE TERMS OF THIS AGREEMENT,
THE SUBORDINATION EFFECTED HEREBY, AND THE RIGHTS OF SENIOR LENDERS AND THE
OBLIGATIONS OF CURRENT LENDER ARISING HEREUNDER, SHALL NOT BE AFFECTED, MODIFIED
OR IMPAIRED IN ANY MANNER OR TO ANY EXTENT BY:
|
(a)
|
any
amendment, modification or termination of or supplement to the Senior Loan
Documents or any other agreement, instrument or document executed or
delivered pursuant thereto;
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(b)
|
the
validity or enforceability of any such
documents;
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|
(c)
|
the
release, sale, exchange or surrender, in whole or in part, of any
collateral security, now or hereafter existing, for any of the Senior Debt
or any other indebtedness, liability or obligation of Borrower to Senior
Lenders, now existing or hereafter
arising;
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|
(d)
|
any
exercise or failure to exercise any right, power or remedy under or in
respect of the Senior Debt or any of such instruments and documents
referred to in clause (a) above or arising at law;
or
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(e)
|
any
waiver, consent, release, indulgence, extension, renewal, modifications,
delay or other action, inaction or omission in respect of the Senior Debt
or any of the agreements instruments or documents executed and delivered
in respect of any collateral security for the Senior Debt or any other
indebtedness, liability or obligation of Borrower to Senior Lenders, now
existing or hereafter arising, all whether or not Current Lender shall
have had notice or knowledge of any of the foregoing and whether or not it
shall have consented thereto.
|
4. RESTRICTIONS;
RIGHTS AND REMEDIES; WAIVER OF CLAIMS.
Section
4.01 Restrictions. Prior
to the Termination Date and notwithstanding anything contained in any
Subordinated Debt Documents to the contrary, Current Lender shall not, without
the prior written consent of Senior Lenders, do any of the
following:
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(a)
|
amend,
modify or supplement or agree to any amendment, modification or supplement
of, or to, the Subordinated Debt or any of the Subordinated Debt Documents
in any manner;
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(b)
|
accelerate
the maturity of all or any portion of the Subordinated Debt, or take any
action towards collection of all or any portion of the Subordinated Debt
or enforcement of any rights, powers or remedies under the Subordinated
Debt Documents against any of the property, real or personal, of Borrower,
or any interest therein or under other agreements entered into pursuant
thereto or against any of the property, real or personal, of Borrower or
any interest therein upon the occurrence of any event of default under the
Subordinated Debt or as defined in the Subordinated Debt Documents or any
event, which with the passage of time, or giving of notice, or both would
constitute such a default (including, without limitation, the occurrence
of an Event of Default under any of the Senior Loan
Documents);
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(c)
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contest,
protest or object to any foreclosure proceeding, post petition financing,
use of cash collateral or action brought by a Senior Lender or any other
exercise by a Senior Lender of any rights or remedies under the Senior
Loan Documents or applicable law;
or
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(d)
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obtain
any additional security interest in or liens upon any of Borrower’s
existing or hereafter acquired real or personal property including,
without limitation, the Collateral without the Senior Lenders’ prior
written consent. In the event that Current Lender shall,
despite the provisions of this paragraph, obtain any such additional
security interest or lien, then without any further action any such
security interest or lien shall be deemed assigned to Senior Lenders as
collateral security for the Senior
Debt.
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4.2 Senior
Lenders’ Rights and Remedies. The Senior Lenders shall have
the exclusive right to enforce rights and exercise remedies with respect to the
Collateral and the Senior Lenders shall not be required to marshal any
Collateral. In exercising rights and remedies with respect to the
Collateral, the Senior Lenders may enforce the provisions of the Senior Loan
Documents and exercise remedies thereunder, all in such order and in such manner
as they may determine in the exercise of their sole business judgment. Such
exercise and enforcement shall include, without limitation, the rights to sell
or otherwise dispose of Collateral, to incur expenses in connection with such
sale or disposition and to exercise all the rights and remedies of a secured
lender under the Uniform Commercial Code of any applicable
jurisdiction.
4.3 Right to
Release. The Senior Lenders’ rights with respect to the
Collateral include the right to release any or all of the Collateral from the
security interest and lien of any Senior Loan Documents or Subordinated Debt
Documents in connection with the sale of such Collateral, notwithstanding that
the net proceeds of any such sale may not be used to permanently prepay any
Senior Debt or Subordinated Debt. If Senior Lenders shall determine,
in connection with any sale of Collateral, that the release of such security
interest and lien of any Subordinated Debt Document on such Collateral in
connection with such sale is necessary or advisable, Current Lender shall
execute such release documents and instruments and shall take such further
actions as Senior Lenders shall request. Current Lender hereby irrevocably
constitutes and appoints the Senior Lenders and any officer thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of Current Lender
and in the name of Current Lender or in Senior Lenders’ own names, from time to
time in Senior Lenders’ discretion, for the purpose of carrying out the terms of
this paragraph, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this paragraph, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer or
release.
4.4 Waiver of
Claims. To the maximum extent permitted by law, Current Lender
waives any claim it might have against Senior Lenders with respect to, or
arising out of, any action or failure to act or any error of judgment,
negligence, or mistake or oversight whatsoever on the part of Senior Lenders, or
their respective directors, officers, employees or agents with respect to any
exercise of rights or remedies under the Senior Loan Documents or any
transaction relating to the Collateral. No Senior Lender nor any of
its directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of Borrower or Current Lender or any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof.
4.5 Senior
Lender Restrictions. Until the
Termination Date, no Senior Lender shall obtain any additional security
interests in or liens upon any of Borrower’s existing or hereafter acquired real
or personal property including, without limitation, the Collateral, without the
prior written consent of Senior Lenders holding at least 70% of the principal
amount of the outstanding Senior Notes. No Senior Lender shall
challenge the enforceability of another Senior Lender’s claim with respect to
Senior Debt or challenge the enforceability of any lien or security interest
granted under the Senior Loan Documents.
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5. PROVISIONS
APPLICABLE AFTER BANKRUPTCY. THE PROVISIONS OF THIS AGREEMENT
SHALL CONTINUE IN FULL FORCE AND EFFECT NOTWITHSTANDING THE OCCURRENCE OF ANY
INSOLVENCY EVENT. TO THE EXTENT THAT CURRENT LENDER HAS OR ACQUIRES
ANY RIGHTS UNDER SECTION 362, 363 OR 364 OF THE BANKRUPTCY CODE WITH RESPECT TO
THE COLLATERAL, CURRENT LENDER HEREBY AGREES NOT TO ASSERT SUCH RIGHTS WITHOUT
THE PRIOR WRITTEN CONSENT OF SENIOR LENDERS; PROVIDED THAT, IF
REQUESTED BY SENIOR LENDERS, CURRENT LENDER SHALL SEEK TO EXERCISE SUCH RIGHTS
IN THE MANNER REQUESTED BY SENIOR LENDERS, INCLUDING THE RIGHTS IN PAYMENTS IN
RESPECT OF SUCH RIGHTS. CURRENT LENDER (BOTH IN ITS CAPACITY AS CURRENT LENDER
AND IN ITS CAPACITY AS A PARTY WHICH MAY BE OBLIGATED TO BORROWER OR ANY OF
BORROWER’S AFFILIATES WITH RESPECT TO CONTRACTS WHICH ARE PART OF SENIOR
LENDERS’ COLLATERAL) AGREES NOT TO INITIATE OR PROSECUTE OR ENCOURAGE ANY OTHER
PERSON TO INITIATE OR PROSECUTE ANY CLAIM, ACTION, OBJECTION OR OTHER PROCEEDING
(I) CHALLENGING THE ENFORCEABILITY OF A SENIOR LENDER'S CLAIM WITH RESPECT TO
SENIOR DEBT, (II) CHALLENGING THE ENFORCEABILITY OF ANY LIENS OR SECURITY
INTERESTS IN ASSETS SECURING THE SENIOR DEBT, (III) ASSERTING ANY CLAIMS WHICH
BORROWER MAY HOLD WITH RESPECT TO A SENIOR LENDER, OR (IV) OBJECTING TO ANY SALE
OR OTHER DISPOSITION OF BORROWER’S ASSETS CONSENTED TO BY SENIOR LENDERS IN ANY
BANKRUPTCY OR OTHER PROCEEDING OR ANY BORROWING OR GRANT OF ANY LIEN BY BORROWER
CONSENTED TO BY SENIOR LENDERS IN ANY SUCH PROCEEDING.
6. GENERAL
PROVISIONS.
Section
6.01 Successors
and Assigns. This Agreement is entered into for the benefit of
the parties hereto and their successors and permitted assigns. It
shall be binding upon and shall inure to the benefit of the parties, their
successors and assigns. Current Lender shall not assign this
Agreement, or its rights and obligations hereunder, without the prior written
consent of Senior Lenders. Any Senior Lender may only assign this
Agreement to any assignee of its Senior Note from Borrower.
Section
6.02 Subrogation. No
payment or distribution to a Senior Lender pursuant to the provisions of this
Agreement shall entitle Current Lender to exercise any rights of subrogation in
respect thereof prior to the Termination Date. After the Termination
Date, and provided that no payments are voidable, Current Lender shall be
subrogated to the rights of Senior Lenders to receive distributions applicable
to Senior Debt to the extent that distributions otherwise payable to Current
Lender have been applied to the payment of Senior Debt. A
distribution made under this Agreement to Senior Lenders, which otherwise would
have been made to Current Lender, is not, as between Current Lender and
Borrower, a payment by Borrower on the Subordinated Debt.
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Section
6.03 Reinstatement. The
obligations of Current Lender under this Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time any payment in
respect of any Senior Debt is rescinded or must otherwise be restored or
returned by Senior Lenders by reason of any bankruptcy, reorganization,
arrangement, composition or similar proceeding or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar officer for,
the Borrower or any substantial part of Borrower’s property, or otherwise, all
as though such payment had not been made.
Section
6.04 Notice. Wherever
this Agreement provides for notice to any party (except as expressly provided to
the contrary), it shall be given by messenger, facsimile, certified U.S. mail
with return receipt requested, or nationally recognized overnight courier with
receipt requested, effective when received or receipt rejected by the party to
whom addressed, and shall be addressed as follows, or to such other address as
the party affected may hereafter designate:
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If
to a Senior Lender:
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As
set on the signature page for such Senior Lender
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If
to any Investor or
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||
|
Additional
Investor:
|
As
set on the signature page for such party
|
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|
If
to Trident
|
||
|
Capital,
Inc.:
|
Trident
Capital, Inc.
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|
|
000
Xxxxxxxx Xxxxxx, Xxxxx 000
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||
|
Xxxx
Xxxx, XX 00000
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||
|
Attn:
|
Xxxxxx
X. Xxxxxx, Chief Administrative
Officer
and General Counsel
|
|
|
Fax:
|
(000)
000-0000
|
|
- 38
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Section
6.05 Conflicts
of Terms. In the event of any conflict between any term,
covenant or condition of this Agreement and any term, covenant or condition of
the Subordinated Debt, or any document executed in connection therewith or the
indebtedness evidenced thereby, the provisions of this Agreement shall control
and govern. In the event of any conflict between any term, covenant
or condition of this Agreement and any term, covenant or condition of the
Security Agreements, the provisions of this Agreement shall control and
govern.
Section
6.06 Further
Assurances. Current Lender and Borrower, at their own expense and at any
time from time to time, upon the written request of Senior Lenders will promptly
and duly execute and deliver such further instruments and documents and take
such further actions as Senior Lenders reasonably may request for the purposes
of obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted. Each Senior Lender agrees, at its own
expense, to execute and deliver such further instruments and documents and take
such further actions as may be reasonably necessary in order to effectuate the
terms of this Agreement.
Section
6.07 Expenses. Borrower
will pay or reimburse a Senior Lender, upon demand, for all its costs and
expenses in connection with the enforcement or preservation of any rights under
this Agreement, including, without limitation, fees and disbursements of counsel
to such Senior Lender. Borrower will pay, indemnify, and hold each
Senior Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions (whether sounding in contract,
tort or on any other ground), judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of, or in any other way arising out
of or relating to this Agreement or any action taken or omitted to be taken by
any Senior Lender with respect to any of the foregoing.
Section
6.08 Legend. Current Lender
and Borrower will cause any promissory note evidencing the Subordinated Debt to
bear upon its face a legend referring to this Agreement and indicating that such
promissory note is subordinated as provided herein.
Section
6.09 Entire
Agreement; Amendments. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof. This Agreement may not be amended or modified orally but may
be amended or modified in writing if signed by Trident Capital, Inc., holders of
at least sixty percent (60%) of the principal amount of the outstanding Notes
under the Prior Purchase Agreement, and Senior Lenders holding at least 70% of
the principal amount of the outstanding Senior Notes. This Agreement
amends and restates the Original Subordination Agreement, as assigned by Buff to
Peninsula on the date hereof, but nothing herein shall discharge the obligations
of, nor constitute a novation with respect to, the indebtedness of the Borrower
to Buff pursuant to that certain Promissory Note issued by the Borrower in favor
of Buff dated as of November 21, 2008, which such document was assigned by Buff
to Peninsula on the date hereof. No amendment or waiver of provision of this
Agreement shall in any event be effective unless it is in writing, making
specific reference to this Agreement and signed by the party against whom such
waiver is sought to be enforced.
Section
6.10 No
Third-Party Beneficiaries. Notwithstanding anything contained
herein to the contrary, no provision of this Agreement is intended to benefit
any party other than the signatories hereto, nor shall any such provision be
enforceable by any other party.
- 39
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Section
6.11 Termination. This
Agreement shall terminate upon the indefeasible payment in full of the Senior
Debt and termination of the Senior Loan Documents (such date being referred to
as the “Termination
Date”).
Section
6.12 Counterparts;
Facsimile. This Agreement may be executed in any number of
counterparts (each of which may be transmitted via facsimile or pdf), each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement.
Section
6.13 Action by
Senior Lenders. Except as otherwise expressly set forth
herein, any action or consent required or permitted hereunder on the part of the
Senior Lenders (including, without limitation, the exercise of any remedies
under the Senior Loan Documents on the part of the Senior Lenders) may only be
taken on behalf of the Senior Lenders by (a) Peninsula, in the event that such
party holds at least 30% of the principal amount of the outstanding Senior
Notes, or (b) by Senior Lenders holding a majority in interest of the Senior
Notes, in the event that Peninsula does not hold at least 30% of the principal
amount of the outstanding Senior Notes; provided, however,
that in either case, if any Senior Lender would be affected by any such action
in a manner materially and adversely different than other Senior Lenders (solely
in respect of each such party’s holdings of Senior Notes), regardless of whether
such action was taken by a majority in interest of the Senior Notes, then the
consent of such adversely affected Senior Lender shall also be
required. No Senior Lender shall owe any duty to the other Senior
Lenders except as expressly set forth herein; provided, that the foregoing shall
not abrograte any duties that Trident Capital, Inc. may have in its capacity as
collateral agent.
7. GOVERNING
LAW; CONSENT TO JURISDICTION.
(A) THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN CALIFORNIA, THE LAWS
OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF SENIOR LENDERS’ LIENS UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
SENIOR LENDERS’ OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT
THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS
OF CALIFORNIA.
(B) EACH
PARTY HEREBY CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT LOCATED IN ANY
COUNTY IN THE STATE OF CALIFORNIA, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PARTIES PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT;
PROVIDED, HOWEVER, THAT A SENIOR LENDER MAY, AT ITS OPTION, COMMENCE ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION TO OBTAIN
POSSESSION OF OR FORECLOSE UPON ANY COLLATERAL, TO OBTAIN EQUITABLE RELIEF OR TO
ENFORCE ANY JUDGMENT OR ORDER OBTAINED BY SUCH SENIOR LENDER AGAINST CURRENT
LENDER OR WITH RESPECT TO ANY COLLATERAL, OR TO ENFORCE ANY OTHER RIGHT OR
REMEDY OR OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY SUCH LENDER WITH RESPECT
TO ANY COLLATERAL. EACH PARTY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS
CONSENT TO JURISDICTION PROVISION WITH ITS LEGAL COUNSEL, AND HAS MADE THIS
WAIVER KNOWINGLY AND VOLUNTARILY.
[Signature
Pages Follow]
- 40
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IN WITNESS WHEREOF, the
undersigned have executed this Agreement on the day and year first above
written.
|
Peninsula
Packaging, LLC
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|
|
By:
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|
|
Xxxx
Xxxxxx, Managing Director
|
|
| c/o Stradley Ronon Xxxxxxx & Xxxxx, LLP | |
| 0000 Xxx Xxxxxxxx Xxxxxx | |
| Xxxxxxxxxxxx, XX 00000 | |
| Attn: Xxxx X. Xxxxxx, Esquire | |
| Fax: (000) 000-0000 | |
|
Trident
Capital Fund-VI, L.P.
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Trident
Capital Fund-VI Principals Fund, L.L.C.
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Executed
by the undersigned as an authorized signatory of the General Partner of
Trident Capital Fund-VI, L.P. and of the Managing Member of Trident
Capital Fund-VI Principals Fund, L.L.C.
|
|
|
(signature)
|
|
|
(print
name)
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|
|
c/o
Trident Capital, Inc.
|
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000
Xxxxxxxx Xxxxxx, Xxxxx 000
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|
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Xxxx
Xxxx, XX 00000
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|
|
Attn: Xxxxxx
X. Xxxxxx, Chief
Administrative
Officer and General Counsel
|
|
|
Fax: (000)
000-0000
|
|
|
Xxxxxx
Living Trust Dated 12/10/1996
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By:
|
|
|
X.
Xxxxxxxx Xxxxxx, Trustee
|
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Xxx
Xxxxxxxx Xxxxxx
|
|
|
Xxxxxxxx,
XX 00000
|
|
|
Fax:
(000)
000-0000
|
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- 2
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ADDITIONAL
SENIOR LENDERS:
|
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If
an entity:
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(Company
name)
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By:
|
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Name:
|
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Title:
|
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|
Address:
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Fax:
|
|
If
an individual:
|
|
(Signature
of individual)
|
|
Printed
Name:
|
|
Address:
|
|
|
Fax:
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- 3
-
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TRIDENT
CAPITAL, INC., as collateral
agent
on behalf of the Investors
|
|
|
By:
|
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|
Name:
|
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|
Title:
|
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TRIDENT
CAPITAL, INC., as collateral
agent
on behalf of the December Investors
|
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By:
|
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|
Name:
|
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|
Title:
|
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- 4
-
|
INVESTORS:
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Trident
Capital Fund-VI, L.P.
|
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Trident
Capital Fund-VI Principals Fund, L.L.C.
|
|
|
Executed
by the undersigned as an authorized signatory of the General Partner of
Trident Capital Fund-VI, L.P. and of the Managing Member of Trident
Capital Fund-VI Principals Fund, L.L.C.
|
|
|
Xxxx
X. Xxxxxxx
|
|
|
c/o
Trident Capital, Inc.
|
|
|
000
Xxxxxxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxx
Xxxx, XX 00000
|
|
|
Attn: Xxxxxx
X. Xxxxxx, CAO and GC
|
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|
Fax: (000)
000-0000
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Xxxxxx
Living Trust Dated 12/10/1996
|
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|
By:
|
|
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X.
Xxxxxxxx Xxxxxx, Trustee
|
|
|
Xxx
Xxxxxxxx Xxxxxx
|
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|
Xxxxxxxx,
XX 00000
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Fax:
(000) 000-0000
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Xxxxx-Xxxxx
1997 Trust
|
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|
By:
|
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Xxxxx
X. Xxxxx, Trustee
|
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|
0000
0xx
Xxxxxx
|
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Xxx
Xxxxxxxxx, XX 00000
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Xxxxxxx
and Xxxxxxx Xxxxxxxxx Trust UTD 6/25/03
|
|
|
By:
|
|
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0000
Xx Xxxxx Xxxxxx Xxxxx #000
|
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|
Xx
Xxxxx, XX 00000
|
|
|
Attn:
Xxxxxxx
Xxxxxxxxx
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- 5
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|
Xxxxxx
X. Xxxxxxxx
|
|
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By:
|
|
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000
00xx
Xxx.
|
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|
Xxx
Xxxxxxxxx, XX 00000
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|
|
Fax:
(000) 000-0000
|
|
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Xxxxx
X. Xxxxxxxx Family Trust
|
|
|
By:
|
|
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Xxxxxx
X. Xxxxxxxx, Trustee
|
|
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000
00xx
Xxx.
|
|
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Xxx
Xxxxxxxxx, XX 00000
|
|
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Fax:
(000) 000-0000
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Saratoga
Capital Partner, L.L.C.
|
|
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By:
|
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Xxxxx
Xxxx
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000
Xxxxx Xx Xxx 0000
|
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Xxxxxxx,
XX 00000
|
|
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Attn:
Xxxxx Xxxxxxx
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Fax: (000)
000-0000
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Email: xxxxx.xxxxxxx@xx.xxx
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- 6
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BORROWER
AGREEMENT
The
undersigned, the Borrower mentioned in the foregoing Amended and Restated
Subordination and Intercreditor Agreement, hereby acknowledges receipt of a copy
thereof, acknowledges that the Subordinated Debt mentioned therein is payable as
stated therein. Borrower shall make no payment of principal of or
interest on the Subordinated Debt, other than as expressly permitted under
Section 2.2 of the Amended and Restated Subordination and Intercreditor
Agreement.
Dated as
of December 17, 2008
|
ECO2
PLASTICS, INC.
|
|
|
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