pursuant to the Confidential Private Placement Memorandum dated January 12,
2007, (the "Offering Memorandum"), the Company entered into promissory notes
(the "Notes") with the Investors pursuant to which the Company borrowed a total
of $400,000 from the Investors; and
among other things, the Company was obligated to file a registration statement
(the "Registration Statement") registering the Conversion Shares and Warrant
Shares on or before July 2, 2007, and such Registration Statement was not filed
by such date, resulting in certain consequences thereafter; and
the Company and the Investors on August 29, 2007 entered into a Modification
Agreement (the "Modification Agreement") which extended the date to file the
Registration Statement to November 30, 2007; increased the interest rate to
effective August 1, 2007; reduced the Conversion Price to $0.45 per share and
provided for the issuance of Additional Warrants and Delay Warrants each in
amount equal to 50% of the Warrants originally issued. The Additional Warrants
and the Delay Warrants are exercisable immediately upon issuance, shall remain
exercisable for a period of five years from the date of issuance at an exercise
price of $0.45 per share. The Company and the Investors now desire to modify
further certain of the terms and provisions of the Notes as set forth in this
Second Modification Agreement.
THEREFORE, in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is acknowledged, the Company and the Investors agree as
not defined herein shall have the meaning ascribed to them in the Offering
Memorandum and the Modification Agreement dated August 29, 2007.
consideration of this Second Modification Agreement, the Investors agree to
forgive all accrued interest on their Notes, from the date of issuance through
December 14, 2007.
December 14, 2007, the Company shall pay all Investors 50% of the principal
amount of their original Notes which equals to a total cash repayment of
$200,000.00. Additionally, in repayment of the other 50% of the principal amount
of the original Notes, on December 14, 2007 the Company shall issue to Investors
a total of 1,060,000 shares of the Company's Common Stock, $0.001 par value
with the cash payment and the Conversion Share issuance in accordance with
section 3 above, the original of the Notes shall be delivered to the Company,
whereupon they shall be marked and deemed cancelled and of no further force
Company shall not be required to, and shall not, file a Registration Statement
with the Securities and Exchange Commission (the "SEC") or any state securities
agency to register or qualify the Notes, the Warrants, the Conversion Shares
the Warrant Shares. Conversion Shares and Warrant Shares when issued will be
deemed restricted securities and bear appropriate legends.
Warrants Provisions Unaffected.
and conditions of the Warrants, to the extent not expressly amended in this
Second Modification Agreement, shall remain in full force and effect. More
specifically, besides the original Warrant and the Additional Warrants, the
Company shall also issue the Delay Warrants as described in the Modification
Agreement dated August 29, 2007.
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WITNESS WHEREOF, each of the Company and the Investors has caused this Second
Modification Agreement to be executed as of the date first set forth
WORLD AIR, INC.
Charles R. Blum
President and Chief Executive Officer
Phillip A. Cole
Phillip A. Cole
Lois A. Bins