EXHIBIT 4.1
SECOND OMNIBUS AMENDMENT
THIS SECOND OMNIBUS AMENDMENT (this "Amendment"), dated as of July 31, 2008 (the
"Amendment Date"), is made
BY AND BETWEEN:
PALA INVESTMENTS HOLDINGS LIMITED, of 00 Xxxxxx Xxxxxx, Xx Xxxxxx, Xxxxxx,
XX0 0XX (the "Lender");
AND:
ALDEROX, INC. (formerly known as Reclamation Consulting and Applications,
Inc.), a company organized under the laws of the State of Colorado, of 000
Xxxxx Xxxxxxxx, Xxxxx X, Xxx Xxxxxxxx, XX 00000 (the "Borrower").
WHEREAS, the Lender and the Borrower are parties to a Secured Convertible
Debenture, dated as of December 12, 2007 (the "Original Debenture"), pursuant to
which the Lender loaned the Borrower Three Million Dollars ($3,000,000) and,
under the terms and subject to the conditions set forth therein, provided for
the potential further loan of Two Million Dollars ($2,000,000);
WHEREAS, pursuant to an Omnibus Amendment, dated as of March 28, 2008 (the
"First Omnibus Amendment"), the Lender loaned the Borrower an additional Two and
One-half Million Dollars ($2,500,000) (the Original Debenture, as amended by
such Omnibus Amendment, the "Debenture");
WHEREAS, in connection with the Debenture, the Lender and the Borrower entered
into a Voting and Right of First Refusal Agreement, dated as of December 12,
2007 (the "Voting Agreement"), a Registration Rights Agreement, dated as of
December 12, 2007 (as amended by the First Omnibus Amendment, the "Registration
Rights Agreement"), and a Patent and Trademark Security Agreement, dated as of
December 12, 2007 (as amended by the First Omnibus Amendment, the "Security
Agreement"; the Debenture, the Voting Agreement, the Registration Rights
Agreement and the Security Agreement are referred to collectively as the
"Debenture Agreements"); and
WHEREAS, the Lender is willing to lend to the Borrower an additional Seven
Hundred Thousand Dollars ($700,000) (the "Fourth Tranche") which shall be
extended to the Borrower on the Amendment Date following the mutual execution of
this Amendment and an additional Three Hundred Thousand Dollars ($300,000) (the
"Fifth Tranche") on a future date, in each case pursuant to the terms and
subject to the conditions of the Debenture Agreements, in each case as amended
by this Amendment.
OMNIBUS AMENDMENT
July 31, 2008
Page 1 of 12
NOW, THEREFORE, THIS AGREEMENT WITNESSES that in consideration of the premises
and the mutual covenants and agreements hereinafter set forth, the parties
hereto agree as follows:
1. DEFINITIONS
Unless a definition is provided for a capitalized term in this Amendment, each
such term shall have the meaning provided to it in the Debenture.
2. INTERPRETATION
The provisions of Section 2 of the Debenture shall apply to this Amendment as if
set forth herein, in each case with references to "this Agreement" being
replaced with "this Amendment."
3. THE AMENDMENTS
3.1 AMENDMENTS TO THE DEBENTURE
The follow amendments are hereby made to the Debenture:
3.1.1 For the avoidance of doubt, the term "Principal" in the
Debenture shall include the principal amount of the Fourth
Tranche and the Fifth Tranche, the indebtedness comprising the
Fourth Tranche and the Fifth Tranche shall be included in the
term "Loan" in the Debenture, each of the Fourth Tranche Note
(as defined below) and the Fifth Tranche Note (as defined
below) shall constitute a "Note" under the Debenture and each
of the Fourth Tranche Warrant (as defined below) and Fifth
Tranche Warrant (as defined below) shall constitute a
"Warrant" under the Debenture.
3.1.2 The term "Conversion Price" is amended in its entirety to
provide as follows:
""Conversion Price" means, with respect to the Principal
amount of the First Tranche, Second Tranche, Third Tranche,
Fourth Tranche and Fifth Tranche, $0.13 per share, provided
that if Borrower, at any time while the Principal is
outstanding, (i) pays a stock dividend on its common stock,
(ii) subdivides outstanding shares of common stock into a
larger number of shares, or (iii) combines outstanding shares
of common stock into a smaller number of shares, then in each
such case the applicable Conversion Price shall be adjusted by
multiplying (a) such Conversion Price in effect immediately
prior to such event, by (b) a fraction of which the numerator
shall be the number of shares of common stock outstanding
immediately before such event and of which the denominator
shall be the number of shares of common stock outstanding
immediately after such event;"
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July 31, 2008
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3.1.3 Each reference to "Conversion Price" shall refer to the
Conversion Price applicable to the relevant Principal amount
of the First Tranche, Second Tranche, Third Tranche, Fourth
Tranche or Fifth Tranche, as the case may be.
3.1.4 A new Section 6.2.14 of the Debenture is added as follows:
"6.1.23 Provide the Lender with a reasonably detailed calculation of
the Borrower's compliance or non-compliance with the covenant set
forth in Section 6.2.14(a) within 15 days of January 31, 2009, with
the covenant set forth in Section 6.2.14(b) within 15 days of March
31, 2009, and with the covenant set forth in Section 6.2.14(c) at
the end of each Period to which such covenant applies and such other
information relating to such calculation as the Lender shall
request.
3.1.5 A new Section 6.2.14 of the Debenture is added as follows:
"6.2.14 (a) Permit the Borrower's Consolidated Adjusted EBITDA for
the month ended January 31, 2009 to be less than zero; (b) permit
the Borrower's Consolidated Adjusted EBITDA for the Fiscal Quarter
ended March 31, 2009 to be less than zero; (c) permit the Leverage
Ratio as of the last day of any Period, beginning with the Period
ending June 30, 2009, to exceed the correlative ratio indicated:
======================================== =========================
PERIOD LEVERAGE RATIO
---------------------------------------- -------------------------
Two Fiscal Quarters ended 6/30/09 20.00 :1.00
Three Fiscal Quarters ended 9/30/09 10.00 :1.00
Four Fiscal Quarters ended 12/31/09 5.00 :1.00
Four Fiscal Quarters ended 3/31/10 4.00 :1.00
Four Fiscal Quarters ended 6/30/10 4.00 :1.00
Four Fiscal Quarters ended 9/30/10 3.00 :1.00
======================================== =========================
; or (d) change the Fiscal Year of the Borrower and its
Subsidiaries.
For purposes of this covenant, the following terms have the meanings
indicated:
OMNIBUS AMENDMENT
July 31, 2008
Page 3 of 12
"Consolidated Adjusted EBITDA" means, for any period, an amount
determined for the Borrower and its Subsidiaries on a consolidated
basis equal to (i) Consolidated Net Income, plus, to the extent
reducing Consolidated Net Income, the sum, without duplication, of
amounts for (a) consolidated interest expense, (b) provisions for
taxes based on income, (c) total depreciation expense, (d) total
amortization expense, and (e) other non-cash charges reducing
Consolidated Net Income (excluding any such non-cash charge to the
extent that it represents an accrual or reserve for potential cash
charge in any future period or amortization of a prepaid cash charge
that was paid in a prior period), minus (ii) other non-cash gains
increasing Consolidated Net Income for such period (excluding any
such non-cash gain to the extent it represents the reversal of an
accrual or reserve for potential cash gain in any prior period).
"Consolidated Net Income" means, for any period, (i) the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period determined
in conformity with GAAP, minus (ii) (a) the income (or loss) of any
entity (other than a Subsidiary of the Borrower) in which any other
entity (other than the Borrower or any of its Subsidiaries) has a
joint interest, except to the extent of the amount of dividends or
other distributions actually paid to the Borrower or any of its
Subsidiaries by such entity during such period, (b) the income (or
loss) of any entity accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with
the Borrower or any of its Subsidiaries or that entity's assets are
acquired by the Borrower or any of its Subsidiaries, (c) the income
of any Subsidiary of the Borrower to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Subsidiary, (d) any after-tax gains or losses attributable to asset
sales, and (e) (to the extent not included in clauses (a) through
(d) above) any net extraordinary gains or net extraordinary losses.
"Consolidated Total Debt" means, as at any date of determination,
the aggregate stated balance sheet amount of all indebtedness of the
Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of the Borrower and its
Subsidiaries ending on June 30 of each calendar year.
"GAAP" means United States generally accepted accounting principles
in effect as of the date of determination thereof.
OMNIBUS AMENDMENT
July 31, 2008
Page 4 of 12
"Leverage Ratio" means the ratio as of the last day of any Period of
(i) Consolidated Total Debt as of such day to (ii) Consolidated
Adjusted EBITDA for the Period ending on such date.
"Period" means the number of Fiscal Quarters ending on the date
indicated.
3.2 AMENDMENTS TO THE REGISTRATION RIGHTS AGREEMENT
The follow amendments are hereby made to the Registration Rights Agreement:
3.2.1 For the avoidance of doubt, the term "Registrable Securities"
in the Registration Rights Agreement shall include the shares
of Common Stock issuable upon conversion of the Fourth Tranche
Note and Fifth Tranche Note and upon exercise of the Fourth
Tranche Warrant and Fifth Tranche Warrant.
3.3 AMENDMENTS TO THE SECURITY AGREEMENT
The follow amendments are hereby made to the Security Agreement:
3.3.1 For the avoidance of doubt, the term "Indebtedness" in the
Security Agreement shall include indebtedness comprising the
Fourth Tranche and Fifth Tranche.
3.4 LIMITED AMENDMENT
Any future reference to any Debenture Agreement (including any reference to any
particular Debenture Agreement in any other Debenture Agreement) and any
document or instrument delivered in connection therewith shall, from and after
the date of this Amendment, be deemed to be a reference to such Debenture
Agreement as modified by this Amendment. Except as expressly modified by this
Amendment, each of the Debenture Agreements shall continue to be and remain in
full force and effect in accordance with their respective terms and the Borrower
hereby reaffirms its obligations under each such agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE BORROWER
The Borrower hereby represents and warrants to the Lender that, except as
provided on Annex A hereto, each of the representations and warranties set forth
in Section 5.1 of the Debenture are true and correct as of the Amendment Date,
in each case with references to "this Agreement" referring to the Debenture as
amended by this Amendment.
OMNIBUS AMENDMENT
July 31, 2008
Page 5 of 12
4.2 REPRESENTATIONS OF THE LENDER
The Lender hereby represents and warrants to the Borrower that each of the
representations and warranties set forth in Section 5.2 of the Debenture (as
amended by this Amendment) are true and correct as of the Amendment Date, in
each case with references to "this Agreement" referring to the Debenture as
amended by this Amendment.
5. CONDITIONS PRECEDENT TO FOURTH TRANCHE
The Lender's obligation to advance the Fourth Tranche and the amendments
contemplated hereby shall be subject to the following conditions precedent:
5.1 DOCUMENTS
The Lender shall have received each of the following, each properly executed by
the Borrower and in form and substance satisfactory to the Lender:
5.1.1 This Amendment;
5.1.2 A Note substantially in the form of Schedule O attached to the
First Omnibus Amendment (the "Fourth Tranche Note"); provided
such Note shall be made by Borrower under the name "Alderox,
Inc.," shall have a principal amount of Seven Hundred Thousand
Dollars ($700,000) and shall be dated the date of issuance;
and
5.1.3 A Warrant certificate, substantially in the form of Schedule P
attached to the First Omnibus Amendment (the "Fourth Tranche
Warrant"), evidencing Seven Hundred Thousand (700,000)
warrants for the purchase of an aggregate of Seven Hundred
Thousand (700,000) shares of Borrower's common stock,
representing one (1) warrant for every One Dollar ($1.00) of
Principal provided to Borrower pursuant to the Fourth Tranche.
The Fourth Tranche Warrants shall be exercisable until 5:00 PM
Pacific Time three (3) years from the Amendment Date. The
Fourth Tranche Warrants shall have an exercise price of Forty
Two Cents ($0.42) per share.
5.2 SECRETARY'S CERTIFICATE
The Lender shall have received a certificate of the Secretary of the Borrower,
dated as of the Amendment Date, (a) attesting to the corporate action taken by
the Borrower with respect to this Amendment, including resolutions of the Board
of Directors authorizing (i) the execution of this Amendment, (ii) the issuance
of the Fourth Tranche Note and Fourth Trance Warrant, (iii) the execution of,
delivery, and performance by the Borrower of all other agreements or matters
contemplated hereby or executed in connection herewith, (b) certifying the names
and true signatories of the officers of the Borrower authorized to sign this
Agreement, the Fourth Tranche Note, the Fourth Tranche Warrant and other
documents, instruments or certificates to be delivered pursuant hereto and
thereto, together with the true signatures of such officers and (c) verifying
that the Articles of Incorporation and the By-Laws of the Borrower attached
thereto are true, correct and complete as of the Amendment Date.
OMNIBUS AMENDMENT
July 31, 2008
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5.3 OFFICER'S CERTIFICATE
The Lender shall have received a certificate of the President of the Borrower,
dated as of the Amendment Date, which shall certify that the representations and
warranties contained in Section 4.1 of this Amendment are true and correct as of
the Amendment Date and that all conditions required to be performed prior to the
Amendment Date have been so performed.
5.4 GOOD STANDING CERTIFICATES
The Lender shall have received a certificate dated as of a recent date of the
appropriate public official in the jurisdiction of incorporation of the Borrower
and each Subsidiary certifying the due incorporation and good standing of the
Borrower and such Subsidiary together with, in the case of the Borrower, a
certified copy of the Articles of Incorporation of the Borrower.
5.5 NO PROCEEDINGS OF LITIGATION
No action, suit or proceeding before any arbitrator or any governmental
authority shall have been commenced, and no investigation by any governmental
authority shall have been threatened, against the Borrower or any Subsidiary, or
any of the officers or directors of the Borrower or any Subsidiary seeking to
restrain, prevent or change the transactions contemplated by the Debenture, as
amended by this Amendment Agreement, or seeking damages in connection with such
transactions.
5.6 NO EVENT OF DEFAULT
No event shall have occurred and be continuing, or would result from the advance
of the Fourth Tranche, as the case may be, which constitutes an Event of
Default.
6. CONDITIONS PRECEDENT TO FIFTH TRANCHE
Any time following the Amendment Date, the Borrower may request that the Lender
advance the Loans represented by the Fifth Tranche by providing the Lender not
less than [15 business days] prior written notice of the date requested for such
advance (the "Drawdown Notice"). The Drawdown Notice shall set forth in
sufficient detail; (a) the reasons for the requested Fifth Tranche, (b) the uses
of the Fifth Tranche, (c) a cash flow statement from the Amendment Date, setting
forth all cash flows until the requested Fifth Tranche, and (d), such other
information that may be necessary for the Lender to consider the Fifth Tranche.
The date on which the conditions set forth in this Section 6 are satisfied and
the Fifth Tranche is funded is referred to as the "Fifth Tranche Funding Date".
The Lender's obligation to advance the Fifth Tranche shall be subject to the
following conditions precedent:
OMNIBUS AMENDMENT
July 31, 2008
Page 7 of 12
6.1 DOCUMENTS
The Lender shall have received each of the following, each properly executed by
the Borrower and in form and substance satisfactory to the Lender:
6.1.1 This Amendment;
6.1.2 A Note substantially in the form of Schedule O attached to the
First Omnibus Amendment (the "Fifth Tranche Note"); provided
such Note shall be made by Borrower under the name "Alderox,
Inc.," shall have a principal amount of Three Hundred Thousand
Dollars ($300,000) and shall be dated the date of issuance;
6.1.3 A Warrant certificate, substantially in the form of Schedule P
attached to the First Omnibus Amendment (the "Fifth Tranche
Warrant"), evidencing Three Hundred Thousand (300,000)
warrants for the purchase of an aggregate of Three Hundred
Thousand (300,000) shares of Borrower's common stock,
representing one (1) warrant for every One Dollar ($1.00) of
Principal provided to Borrower pursuant to the Fifth Tranche.
The Fifth Tranche Warrants shall be exercisable until 5:00 PM
Pacific Time three (3) years from the Fifth Tranche Funding
Date. The Fifth Tranche Warrants shall have an exercise price
of Forty Two Cents ($0.42) per share.
6.2 SECRETARY'S CERTIFICATE
The Lender shall have received a certificate of the Secretary of the Borrower,
dated as of the Fifth Tranche Funding Date, (a) attesting to the corporate
action taken by the Borrower with respect to this Amendment, including
resolutions of the Board of Directors authorizing (i) the execution of this
Amendment, (ii) the issuance of the Fifth Tranche Note and Fifth Trance Warrant,
(iii) the execution of, delivery, and performance by the Borrower of all other
agreements or matters contemplated hereby or executed in connection herewith,
(b) certifying the names and true signatories of the officers of the Borrower
authorized to sign this Agreement, the Fifth Tranche Note, the Fifth Tranche
Warrant and other documents, instruments or certificates to be delivered
pursuant hereto and thereto, together with the true signatures of such officers
and (c) verifying that the Articles of Incorporation and the By-Laws of the
Borrower attached thereto are true, correct and complete as of the Fifth Tranche
Funding Date.
OMNIBUS AMENDMENT
July 31, 2008
Page 8 of 12
6.3 OFFICER'S CERTIFICATE
The Lender shall have received a certificate of the President of the Borrower,
dated as of the Fifth Tranche Funding Date, which shall certify that the
representations and warranties contained in Section 4.1 of this Amendment are
true and correct as of the Fifth Tranche Funding Date and that all conditions
required to be performed prior to the Fifth Tranche Funding Date have been so
performed.
6.4 GOOD STANDING CERTIFICATES
The Lender shall have received a certificate dated as of a recent date of the
appropriate public official in the jurisdiction of incorporation of the Borrower
and each Subsidiary certifying the due incorporation and good standing of the
Borrower and such Subsidiary together with, in the case of the Borrower, a
certified copy of the Articles of Incorporation of the Borrower.
6.5 NO PROCEEDINGS OF LITIGATION
No action, suit or proceeding before any arbitrator or any governmental
authority shall have been commenced, and no investigation by any governmental
authority shall have been threatened, against the Borrower or any Subsidiary, or
any of the officers or directors of the Borrower or any Subsidiary seeking to
restrain, prevent or change the transactions contemplated by the Debenture, as
amended by this Amendment Agreement, or seeking damages in connection with such
transactions.
6.6 NO EVENT OF DEFAULT
No event shall have occurred and be continuing, or would result from the advance
of the Fifth Tranche, as the case may be, which constitutes an Event of Default.
6.7 LENDER APPROVAL
The Fifth Tranche shall be used by the Borrower to finance the fulfillment of
contracted sales, and shall not be used to finance the Borrower's operating
losses or general administrative expenditure. The advance of the Fifth Tranche
shall be subject to the Lender's approval based on the information contained in
the Drawdown Notice, which approval shall be at the Lender's sole and absolute
discretion.
7. GENERAL
7.1 COUNTERPART AND FAX EXECUTION
This Amendment may be executed in two or more counterparts and by fax
transmission, each of which will be deemed to be an original and all of which
will constitute one agreement, effective as of the date given above.
OMNIBUS AMENDMENT
July 31, 2008
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SIGNATURES ON NEXT PAGE
OMNIBUS AMENDMENT
July 31, 2008
Page 10 of 12
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
Amendment Date.
LENDER
PALA INVESTMENTS HOLDINGS LIMITED
/s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx
BORROWER
ALDEROX, INC.,
a Colorado corporation
/s/ Xxxxxxx Xxxxxx
------------------------------
By: Xxxxxxx X. Xxxxxx
Its: Chief Executive Officer
OMNIBUS AMENDMENT
July 31, 2008
Page 11 of 12
ANNEX A
SCHEDULE OF EXCEPTIONS
SHARES OUTSTANDING
Current Fully Diluted
---------------------------------------------- ---------------------------------
65,627,796 167,851,520
---------------------------------------------- ---------------------------------
EXISTING INDEBTEDNESS (PRINCIPAL AND INTEREST)
Current ($) Post-Financing ($)
--------------------------------------------------------------------------------
Convertibles Notes 1,426,525 1,426,525
Secured Convertible Debentures(1) 5,834,684 6,534,684
Unsecured Convertible Debentures 1,029,987 1,029,987
Line of Credit 86,146 86,146
Other Loans 397,316 397,316
--------------------------------------------------------------------------------
Total 8,774,658 9,474,658
(1) Includes the $700,000 Fourth Tranche
At Maturity
Convertible Notes At Maturity Current Post-Financing
Convertible Notes 1,426,525 1,552,453
Secured Convertible Debentures 5,834,684 7,759,424
Unsecured Convertible Debentures 1,029,987 1,141,083
Shares Outstanding At Maturity
Post-Financing 193,171,191
OMNIBUS AMENDMENT
March 28, 2008
Page 12 of 12
