LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), is executed as of June 12,
2006, by and among Momentum Biofuels, Inc., a Texas corporation (the "Company"),
and The Elevation Fund, LLC, a Delaware limited liability company (the
"Lender").
WHEREAS, the Company is preparing to conduct a private placement
offering (the "Private Placement") simultaneously with a reverse triangular
merger (the "Merger") with and into a wholly-owned subsidiary of a publicly
traded company (the "Public Company Parent") whereby the Company will survive
such Merger;
WHEREAS, in order to fund the Company's operations until such Offering
and Merger are completed, the Company wishes to borrow up to $500,000 from the
Lender as a short term bridge loan; and
WHEREAS, the Lender is willing to provide such financing on terms and
conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Lender,
intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined terms. Certain capitalized terms used in this Agreement shall
have the specific meanings defined below:
"Additional Loan Closing Date" shall mean the date upon which the
Additional Loan is made to the Company.
"Business Day" shall mean a day other than a Saturday, Sunday, or other
day on which commercial banks are authorized or required by law to close.
"Excluded Securities" shall mean (i) securities issued in connection
with the Private Placement; (ii) securities issued upon conversion of any
securities outstanding on the closing date of the Merger; (iii) securities
issued pursuant to the acquisition of another business or business segment of
any such entity by the Public Company Parent by merger, purchase of
substantially all the assets or other reorganization whereby the Public Company
Parent will own more than fifty percent (50%) of the voting power of such
business entity or business segment of any such entity; (iv) securities issued
to employees, consultants, officers, directors or advisors of the Public Company
Parent pursuant to any stock option, stock purchase or stock bonus plan,
agreement or arrangement approved by the Board of Directors of the Public
Company Parent; (v) securities issued in connection with obtaining lease
financing, whether issued to a lender, lessor, guarantor or other person and
approved by the Board of Directors of the Public Company Parent; (vi) securities
issued to leasing companies, landlords and other providers of goods and services
to the Company and approved by the Board of Directors; (vii) securities issued
in connection with any stock split, stock dividend or recapitalization of the
Public Company Parent; (viii) securities issued in connection with strategic
transactions involving the Public Company Parent and other entities, including
(A) joint ventures, manufacturing, marketing or distribution arrangements or (B)
technology license, transfer or development arrangements; provided that such
strategic transactions and the issuance of shares therein, have been approved by
the Board of Directors of the Public Company Parent; and (ix) any right, option
or warrant to acquire any security convertible into the securities pursuant to
subsections (i) through (viii) above.
"Initial Loan Closing Date" shall mean the date upon which the Initial
Loan is made to the Company.
"Interest Rate" shall mean the highest prime rate of interest per annum
published in the Money Rate Table of the Western Edition of The Wall Street
Journal, as adjusted on a daily basis, plus five percent (5%) per annum,
compounded annually.
ARTICLE 2
THE LOAN
2.1 Initial Loan. According to the terms and subject to the conditions of
this Agreement, the Lender shall make a two-installment loan to the Company on
the Initial Loan Closing Date in the amount of $250,000 (the "Initial Loan"),
any may advance an additional Loan, at the Lender's option and accordance with
the terms set forth in Section 2.2, in the amount of $250,000 (the "Additional
Loan") (the Initial Loan and the Additional Loan, if any, shall be referred to
collectively as the "Loan"). The Initial Loan shall be evidenced by a promissory
note in the form attached hereto as Exhibit A ("Note"), duly executed on behalf
of the Company and dated as of the Initial Loan Closing Date.
2.2 Additional Loan. Provided there is no Event of Default under this
Agreement, the Company may notify the Lender in writing at any time after 30
days from the Initial Loan Closing Date that the Company wishes to borrow the
Additional Loan. The Lender shall have the sole option of making the Additional
Loan. The Additional Loan shall be evidenced by a Note, duly executed on behalf
of the Company and dated as of the Additional Loan Closing Date.
2.3 Interest. The Loan shall bear interest ("Interest") from the date of
payment by the Lender until the Maturity Date at the Interest Rate (calculated
on the basis of the actual number of days elapsed over a year of 360 days).
Interest is payable by the Company on a monthly basis in arrears on the first
Business Day of the month. Notwithstanding anything to the contrary, in no event
shall the Interest Rate be less than 10.75% per annum, nor shall the Interest
Rate be adjusted to exceed the maximum amount permitted by applicable law.
2.4 Prepayment of the Loan. The Company may from time to time prepay all or
any portion of the Loan without premium or penalty of any type. The Company
shall give the Lender at least three Business Day prior written notice of its
intention to prepay the Loan, specifying the date of payment and the total
amount of the Loan to be paid on such date.
2.5 Maturity Date. Unless the Loan is earlier accelerated pursuant to the
terms hereof, the Loan and all accrued Interest thereon shall be due and payable
in full on the earlier of (a) the date that is 90 days following the Initial
Loan Closing Date or (b) the closing date of the Merger. In the event that the
Merger is not consummated within 90 days after the Initial Loan Closing Date,
the Lender may, at the Lender's option, extend the Maturity Date on such terms
and conditions as determined by the Lender in its sole discretion.
2.6 Fees. The Company shall pay a fee (the "Origination Fee") to the Lender
on the Closing Date in the amount of $10,000. Such amount shall be fully earned
by the Lender when paid, and shall not be refundable to the Company under any
circumstances.
ARTICLE 3
CONDITIONS PRECEDENT TO THE LOAN
3.1 Conditions on the Initial Loan Closing Date. The obligation of the
Lender to make the Initial Loan pursuant to Section 2.1 shall be subject to the
satisfaction, on or before the Initial Loan Closing Date, of the conditions set
forth in this Section. If the conditions set forth in this Section are not met
on or prior to the Initial Loan Closing Date, the Lender shall have no
obligation to make the Initial Loan.
(a) The Company shall have duly executed and delivered to the Lender the
Note representing the Initial Loan.
(b) The Company shall have duly authorized, executed, and delivered to the
Lender a security agreement in the form attached hereto as Exhibit B (the
"Security Agreement") to secure the repayment of the Loan and granting the
Lender a continuing security interest in all presently existing and hereafter
acquired assets and property of the Company of whatever nature and wherever
located (except for any such assets for which, by the terms of any agreement in
existence on the date hereof, does not permit the granting of a security
interest, in which case the Company shall grant to the Lender in the Security
Agreement a security interest in all proceeds received by the Company generated
by such assets), which such Security Interest shall be senior to all other
security interests or encumbrances against the assets and property of the
Company, with the exception of the Consignment Agreement between the Company and
Itochu International, Inc.
(c) The Company shall have delivered to the Lender a duly executed opinion
of counsel to the Company in form and substance reasonably acceptable to the
Lender.
(d) The Lender shall have received on or before the Initial Loan Closing
Date an Officer's Certificate in the form attached hereto as Exhibit C, dated as
of the Initial Loan Closing Date.
3.2 Conditions on the Additional Loan Closing Date. The obligation of the
Lender to make the Additional Loan pursuant to Section 2.2 shall be subject to
the satisfaction, on or before the date on which such Loan is made, of the
conditions set forth in this Section. If the conditions set forth in this
Section are not met on or prior to such date, the Lender shall have no
obligation to make the Additional Loan.
(a) The Company shall have duly executed and delivered to the Lender the
Note representing the Additional Loan.
(b) The Company shall have delivered to the Lender a duly executed opinion
of counsel to the Company in form and substance reasonably acceptable to the
Lender.
(c) The Lender shall have received on or before the Additional Loan Closing
Date an Officer's Certificate in the form attached hereto as Exhibit C, dated as
of the Additional Loan Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Due Incorporation and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full and adequate power to carry on and conduct its business as
presently conducted, and is duly licensed or qualified in all foreign
jurisdictions wherein the failure to be so qualified or licensed would
reasonably be expected to have a material adverse effect on the business of the
Company.
4.2 Due Authorization. The Company has full right, power and authority to
enter into this Agreement, to make the borrowings hereunder and execute and
deliver the Note as provided herein and to perform all of its duties and
obligations under this Agreement and the Note. The execution and delivery of
this Agreement will not, nor will the observance or performance of any of the
matters and things herein or therein set forth, violate or contravene any
provision of law or the Company's bylaws or certificate of incorporation. All
necessary and appropriate corporate action on the part of the Company has been
taken to authorize the execution and delivery of this Agreement. Within five
days of the execution of this Agreement, the Company will deliver to the Lender
a copy of the minutes of the meeting of the Company's Board of Directors
authorizing the Company to enter into this Agreement, to make the borrowings as
provided herein, and to perform all of its duties and obligations under this
Agreement.
4.3 Enforceability. This Agreement has been validly executed and delivered
by the Company and constitutes the legal, valid and binding obligations of the
Company enforceable against it in accordance with its respective terms, subject
to applicable bankruptcy, insolvency, reorganization or similar laws relating to
or affecting the enforcement of creditors' right and to the availability of the
remedy of specific performance.
4.4 Capitalization. All of the Company's authorized and outstanding equity
securities (including securities convertible into equity securities) are
identified on Schedule A attached hereto. Other than as set forth on Schedule A,
there are no outstanding shares of capital stock or any options, warrants or
other preemptive rights, rights of first refusal or similar rights to purchase
equity securities of the Company.
4.5 Subsidiaries. The Company owns no securities of any other entity, and,
except as set forth in this Section 4.5, there are no outstanding shares of
capital stock or any options, warrants or other preemptive rights, rights of
first refusal or similar rights to purchase equity securities of any other
entity.
4.6 Compliance with Laws. The nature and transaction of the Company's
business and operations and the use of its properties and assets do not, and
during the term of this Agreement shall not, violate or conflict with in any
material respect any applicable law, statute, ordinance, rule, regulation or
order of any kind or nature.
4.7 Absence of Conflicts. The execution, delivery and performance by the
Company of this Agreement, and the transactions contemplated hereby, do not
constitute a breach or default, or require consents under, any agreement,
permit, contract or other instrument to which the Company is a party, or by
which the Company is bound or to which any of the assets of the Company is
subject, or any judgment, order, writ, decree, authorization, license, rule,
regulation, or statute to which the Company is subject, and, except as set forth
in the Security Agreement, will not result in the creation of any lien upon any
of the assets of the Company.
4.8 Litigation and Taxes. There is no litigation or governmental proceeding
pending, or to the best knowledge of the Company after due inquiry, threatened,
against the Company. The Company has duly filed all applicable income or other
tax returns and has paid all material income or other taxes when due. There is
no controversy or objection pending, or to the best knowledge of the Company
after due inquiry, threatened in respect of any tax returns of the Company.
4.9 No Omissions or Misstatements. None of the information included in this
Agreement, other documents or information furnished or to be furnished by the
Company, or any of its representations, contains any untrue statement of a
material fact or is misleading in any material respect or omits to state any
material fact. Copies of all documents referred to in herein have been delivered
or made available to the Lender and constitute true and complete copies thereof
and include all amendments, schedules, appendices, supplements or modifications
thereto or waivers thereunder.
ARTICLE 5
COVENANTS
5.1 Negative Covenants of the Company. The Company covenants and agrees
that, from the Initial Loan Closing Date until the Maturity Date (and, in any
event, during such time as any portion of the Loan or any Interest thereon is
outstanding), without the consent of the Lender, the Company will not:
(a) create, incur, assume or suffer to exist any indebtedness that is in
any way senior or superior to this Agreement or the indebtedness represented
hereby;
(b) except for the Merger, merge or consolidate with or into any other
corporation or sell or otherwise convey 25% or more of its assets;
(c) in a single transaction or series of related transactions, effect a
significant acquisition of any business or entity (for purposes hereof, a
"significant" acquisition shall be determined in accordance with Instructions 2,
3 and 4 or Item 2 of Form 8-K of the Securities and Exchange Commission);
(d) engage in any business other than the business conducted by the Company
on the Initial Loan Closing Date;
(e) declare, set aside or pay any dividend or other distribution on any of
its capital stock;
(f) engage in any transaction with any Affiliate (as such term is defined
in Rule 501(b) of the Securities Act of 1933, as amended) on terms less
favorable to the Company than could be obtained from an unrelated party; or
(g) amend its Certificate of Incorporation or Bylaws in any manner that
adversely affects the rights associated with this Agreement, the Common Stock or
the Warrant.
The Company will give notice to the Lender of any default
under any provisions of this Agreement within three business days after the
discovery by the Company of such default.
5.2 Affirmative Covenants of the Company. The Company covenants and agrees
that, from the Initial Loan Closing Date until the Maturity Date (and, in any
event, during such time as any portion of the Loan or any Interest thereon is
outstanding), the Company shall:
(a) operate its business only in the ordinary course and maintain its
properties and assets in good repair, working order and condition;
(b) cause to be done all things reasonably necessary to maintain, preserve
and renew its corporate existence and all material licenses, authorizations and
permits necessary to the conduct of its businesses;
(c) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which could reasonably be expected to
have a material adverse effect on its business, properties or prospects;
(d) deliver to the Lender within 10 days after the end of each fiscal month
and within 30 days of the end of each fiscal quarter, unaudited consolidated
financial statements (including balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity) all in
reasonable detail, fairly presenting the financial position and the results of
operations of the Company as of the end of and through such periods, prepared in
accordance with generally accepted accounting principles, consistently applied
in the United States and consistent with past practice;
(e) deliver to the Lender the Company's audited annual financial statements
and the Company's annual budget, and allow the Lender reasonable access during
normal business hours to visit the Company and inspect the financial records of
the Company; and
(f) provide the Lender with at least 10 days' written notice of any meeting
of the Board of Directors of the Company and permit the Lender to designate an
individual to attend such meeting, including any adjournment thereof, as an
observer. In addition, the Lender's designee shall receive all written material
disseminated to the Board of Directors in advance, during or following any
meeting, whether or not the designee was in attendance. The Lender's designee
shall receive the same compensation as is paid to the members of the Board of
Directors in connection with such designee's attendance of meetings of the Board
of Directors.
ARTICLE 6
DEFAULT
6.1 Events of Default. The occurrence of any of the following events (each
an "Event of Default"), not cured in the applicable cure period, if any, shall
constitute and Event of Default of the Company:
(a) a breach of any representation, warranty, covenant or other provision
of this Agreement, the Note, or the Security Agreement, which, if capable of
being cured, is not cured within three days following notice thereof to the
Company;
(b) the failure to make when due any payment described in this Agreement or
the Note, whether on or after the Maturity Date, by acceleration or otherwise;
and
(c) (i) the application for the appointment of a receiver or custodian for
the Company or the property of the Company, (ii) the entry of an order for
relief or the filing of a petition by or against the Company under the
provisions of any bankruptcy or insolvency law, (iii) any assignment for the
benefit of creditors by or against the Company, or (iv) the Company becomes
insolvent.
6.2 Effect of Default. Upon the occurrence of any Event of Default that is
not cured within any applicable cure period, the Lender may elect, by written
notice delivered to the Company, to take any or all of the following actions:
(i) declare this Agreement terminated and the outstanding amounts under the Note
to be forthwith due and payable, whereupon the entire unpaid Loan, together with
accrued and unpaid Interest thereon, 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
Company, anything contained herein or in any of the Note to the contrary
notwithstanding, and (ii) exercise any and all other remedies provided hereunder
or available at law or in equity upon the occurrence and continuation of an
Event of Default. In addition, during the occurrence of any Event of Default,
the Company shall not pay make any payment on any other outstanding indebtedness
of the Company (other than indebtedness of the Company to which the Lender has
agreed in writing to subordinate this Agreement and the Note hereunder).
ARTICLE 7
WARRANT
7.1 Issuance of Warrant. On the closing date of the Merger, the Company
shall cause the Public Company Parent, by including a condition to the closing
of the Merger in the merger agreement, to issue to the Lender a Common Stock
Purchase Warrant (the "Warrant") in the form attached hereto as Exhibit D. The
Warrant shall be immediately convertible into common stock of the Public Company
Parent on a five-to-one basis proportionate to the Loan amount (e.g., if the
Loan amount is $500,000, the Lender shall receive a Warrant to purchase 100,000
shares of common stock) and the exercise price of the Warrant shall be equal to
a 0% discount from the price per share of the securities sold in the Private
Placement (e.g., if the price of securities sold in the Private Placement is
$1.25 per share, the exercise price of the Warrant shall be $1.25 per share).
7.2 Registration of Shares Underlying Warrant.
-----------------------------------------
(a) The Company shall cause the Public Company Parent, by
including a covenant in the merger agreement for the Merger covering the
obligations under this Section 7.2, to prepare and, as soon as practicable, but
in no event later than 120 days following the closing date of the Merger (the
"Filing Deadline"), file with the Securities and Exchange Commission (the "SEC")
a registration statement on Form SB-2 covering the resale of all the shares
underlying the Warrant (the "Registrable Securities"). In the event that Form
SB-2 is unavailable for such a registration, the Public Company Parent shall
register the resale of the Registrable Securities on another appropriate form
reasonably acceptable to the holders of at least a majority of the Registrable
Securities and undertake to register the Registrable Securities on Form SB-2 as
soon as such form is available, provided that the Public Company Parent shall
maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form SB-2 covering the Registrable
Securities has been declared effective by the SEC. The Public Company Parent
shall use its reasonable best efforts to have such registration statement
declared effective by the SEC as soon as practicable, but in no event later than
the date which is 270 days following closing date of the Merger (the
"Effectiveness Deadline").
(b) In the event the registration statement required to be
filed with the SEC pursuant to Section 7.2(a) is not filed with the SEC by the
Filing Deadline, the Company shall cause the Public Company Parent to issue to
the Lender additional warrants ("Additional Warrants") in an amount equal to 10%
of the number of Warrants to be issued to the Lender pursuant to Section 7.1 for
each 30 day period (or a portion thereof) during which time such registration
statement has not been filed with the SEC, which Additional Warrants shall be
issued on the first day of each 30 day period commencing on the Filing Deadline.
In addition, in the event the registration statement required to be filed with
the SEC pursuant to Section 7.2(a) is not declared effective by the SEC by the
Effectiveness Deadline, the Company shall cause the Public Company Parent to
issue to the Lender Additional Warrants in an amount equal to 10% of the number
of Warrants to be issued to the Lender pursuant to Section 7.1 during which time
such registration statement has not been declared effective by the SEC, which
Additional Warrants shall be issued on the first day of each 30 day period and
commencing on the Effectiveness Deadline. The Additional Warrants, if any, will
be issued to the Lender pursuant to a common stock purchase warrant in
substantially the form as the Warrant, except that the exercise price for such
Additional Warrants shall be the price at which securities are sold in the
Private Placement.
(c) All expenses incident to the filing of the registration
statement required by Section 7.1, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Public Company Parent and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other professionals retained by the Public Company Parent will be borne by
the Public Company Parent. In no event shall the Public Company Parent be
obligated to be pay any discounts or commissions with respect to the shares sold
by any holder of Registrable Securities. In connection with any registration
statement, the Company shall cause the Public Company Parent to reimburse the
holders of Registrable Securities covered by such registration for the
reasonable fees and disbursements of one counsel chosen by the holders of a
majority of the Registrable Securities initially requesting such registration.
(d) In the event of an underwritten registered offering the
managing underwriter(s) advise the Public Company Parent in writing that in
their opinion the number of Registrable Securities exceeds the number of
Registrable Securities which can be sold therein without adversely affecting the
marketability of the offering, the Company will cause the Public Company Parent
to include in such registration the number of Registrable Securities requested
to be included which in the opinion of such underwriter(s) can be sold without
adversely affecting the marketability of the offering, pro rata among the
respective holders thereof on the basis of the amount of Registrable Securities
owned by each such holder. In the event the number of shares available under a
registration statement filed pursuant to Section 7.1 is insufficient to cover
100% of the Registrable Securities required to be covered by such registration
statement, the Company shall cause the Public Company Parent to amend the
registration statement, or file a new registration statement (on the short form
available therefor, if applicable), or both, so as to cover 100% of the number
of such Registrable Securities as soon as practicable but in any event not later
than 45 days after the necessity therefor arises. The Company shall cause the
Public Company Parent to use it reasonable best efforts to cause such amendment
or new registration statement to become effective as soon as practicable
following the filing thereof.
ARTICLE 8
MISCELLANEOUS
8.1 Successors and Assigns. Subject to the exceptions specifically set
forth in this Agreement, the terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective executors, administrators,
heirs, successors and assigns of the parties. This Agreement may be assigned
solely by the Lender.
8.2 Titles and Subtitles. The titles and subtitles of the Sections of this
Agreement are used for convenience only and shall not be considered in
construing or interpreting this agreement.
8.3 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:
---------------------
Momentum Biofuels, Inc.
0000 Xxxxxx Xxx Xx.
Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
--------------
Xxxxxxx X. Xxxxxxx Attorney at Law
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
if to the Lender, to:
--------------------
The Elevation Fund, LLC
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
--------------
Xxxxxxxxxx Hyatt & Xxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Fax No.: (000) 000-0000
Either party hereto may change the above specified recipient or mailing address
by notice to the other party given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally or by facsimile, provided that any such facsimile is
received during regular business hours at the recipient's location) or on the
day shown on the return receipt (if delivered by mail or delivery service).
8.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Colorado or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Colorado.
8.5 Waiver and Amendment. Any term of this Agreement may be amended, waived
or modified with the written consent of the Company and the Lender.
8.6 Remedies. No delay or omission by the Lender in exercising any of its
rights, remedies, powers or privileges hereunder or at law or in equity and no
course of dealing between the Lender and the undersigned or any other person
shall be deemed a waiver by the Lender 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 Lender or the exercise of any other
right, remedy, power or privilege by the Lender. The rights and remedies of the
Lender described herein shall be cumulative and not restrictive of any other
rights or remedies available under any other instrument, at law or in equity.
8.7 Expenses. The Company shall pay all costs and expenses incurred by the
Lender in connection with the negotiation and preparation of the documents
contemplated by this Agreement (including reasonable attorneys' fees); provided,
however, that the Company's shall not be required to reimburse the Lender for
any amount in excess of $1,000 in the aggregate.
8.8 Right of Participation. For a period of three years following the date
hereof, the Company shall cause the Public Company Parent, by including a
covenant in the merger agreement for the Merger, to provide the Lender with a
first right to purchase up to 50% of any equity or equity linked securities
(including derivative and convertible securities) to be issued by the Public
Company Parent on the same terms as such securities are offered to all other
parties (related or otherwise) during such three year period. This right of
participation shall not apply to any Excluded Securities.
* * * * *
IN WITNESS WHEREOF, the Company has caused this Note to be signed in
its name on the date first set forth above.
MOMENTUM BIOFUELS, INC.
By: ________________________
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
THE ELEVATION FUND, LLC
By: ________________________
Xxxxx X. Xxxxxx
Fund Manager
SCHEDULE A
CAPITALIZATION
EXHIBIT A
PROMISSORY NOTE
See attached.
EXHIBIT B
SECURITY AGREEMENT
See attached.
EXHIBIT C
OFFICER'S CERTIFCATE
See attached.
EXHIBIT D
COMMON STOCK PURCHASE WARRANT
See attached.
