LOAN AND SECURITY AGREEMENT by and among FEDERATED KAUFMANN FUND as Agent for the benefit of the Lenders, FEDERATED KAUFMANN FUND and SAMSUNG C&T CORPORATION, as Lenders HYDROGEN, L.L.C., as Borrower HYDROGEN CORPORATION as Guarantor Dated: August 22,...
by
and among
FEDERATED
XXXXXXXX FUND
as
Agent for the benefit of the Lenders,
FEDERATED
XXXXXXXX FUND
and
SAMSUNG
C&T CORPORATION,
as
Lenders
HYDROGEN,
L.L.C.,
as
Borrower
HYDROGEN
CORPORATION
as
Guarantor
Dated:
August 22, 2008
LOAN
AND SECURITY AGREEMENT, dated
as
of August 22, 2008, by and among HYDROGEN,
L.L.C., an
Ohio
limited liability company, with its principal place of business located at
0
Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (the “Borrower”),
HYDROGEN
CORPORATION, a
Nevada
corporation, with its principal place of business located at 00 Xxxx
00xx
Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 (“Guarantor”
or
“HYDRO
Corp”),
FEDERATED
XXXXXXXX FUND, a
portfolio of Federated Equity Funds, a Massachusetts business trust, with
offices located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, in
its
capacity as agent for the benefit of the Lenders (together with its successors
and assigns, the “Agent”),
FEDERATED
XXXXXXXX FUND, a
portfolio of Federated Equity Funds, a Massachusetts business trust, with
offices located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, in
its
capacity as a Lender, and SAMSUNG
C & T CORPORATION,
a
corporation organized under the laws of the Republic of Korea, with offices
at
Samsung C&T Corporation Building, 1321-20, Seocho-2 Dong, Seocho-Gu, Seoul,
Korea, in its capacity as a Lender (together with their respective successors
and assigns, the “Lenders”).
R
E C I T A L S:
WHEREAS,
Borrower desires to enter into a term loan with Lenders; and
WHEREAS,
Guarantor desires to provide a certain guaranty as stipulated herein;
and
WHEREAS,
each
Lender is willing to provide such term loan on the terms and conditions
hereinafter set forth;
NOW,
THEREFORE,
in
consideration of the foregoing, the mutual covenants and agreements herein
contained and other good and valuable consideration, Agent, Lenders and Borrower
mutually covenant, warrant and agree as follows:
SECTION
1 DEFINITIONS
AND RULES OF INTERPRETATION AND CONSTRUCTION
Specific
Terms Defined.
The
following terms (including both the singular and plurals thereof) shall have
the
following meanings unless the context indicates otherwise:
1.1 “Account
Debtor”
or
“account
debtor”
shall
have the meaning ascribed to such term in the UCC.
1.2 “Accounts”
or
“accounts” shall mean all “accounts” as defined in the UCC, and, in addition,
any and all obligations of any kind at any time due and/or owing to Borrower,
whether now existing or hereafter arising, and all rights of Borrower to receive
payment or any other consideration including, without limitation, invoices,
contract rights, accounts receivable, general intangibles, choses-in-action,
notes, drafts, acceptances, instruments and all other debts, obligations and
Obligations in whatever form owing to Borrower from any Person, Governmental
Authority or any other entity, all security therefor, and all of Borrower’s
rights to receive payments for goods sold (whether delivered, undelivered,
in
transit or returned), which may be represented thereby, or with respect thereto,
including, but not limited to, all rights as an unpaid vendor (including
stoppage in transit, replevin or reclamation), and all additional amounts due
from any Account Debtor, together with all Proceeds and products of any and
all
of the foregoing.
1.3 “Affiliate”
shall
mean, with respect to any Person, (a) any other Person that, directly or
indirectly, controls, is controlled by, or is under common control with such
Person or (b) any other Person who is a director or officer (i) of such Person,
(ii) of any Subsidiary of such Person or (iii) of any Person described in clause
(a) above. For the purposes of this definition, control of a Person shall mean
the power (direct or indirect) to direct or cause the direction of the
management or the policies of such Person, whether through the ownership of
not
less than 20% of the voting stock or equity of such person or by contract or
otherwise.
1.4 “Agent"
means
Federated Xxxxxxxx, in its capacity as contractual representative of the Lenders
pursuant to Section 13 herein, and not in its individual capacity as a Lender,
and any successor Agent appointed pursuant to Section 13 herein.
1.5 “Agreement”
shall
mean this Loan and Security Agreement (including all Exhibits annexed hereto
and
the Borrower’s Disclosure Schedule) as originally executed or, if amended,
modified, supplemented, renewed or extended from time to time, as so amended,
modified, supplemented, renewed or extended.
1.6 “Aggregate
Term Loan Commitment”
means
the aggregate of the Loan commitments of all the Lenders, which amount equals
$2,000,000.
1.7 “Balance
Sheet” means
the
Borrower’s balance sheet dated as of June 30, 2008.
1.8 “Borrower”
shall
have the meaning set forth in the introductory paragraph hereof.
1.9 “Borrower’s
Accounts”
shall
have the meaning set forth in Section 2.1 hereof.
1.10 “Borrower’s
Disclosure Schedule”
means
the disclosure schedule prepared by Borrower that is being delivered to each
Lender concurrently herewith.
1.11 “Business
Day”
shall
mean any day other than a Saturday, Sunday or any other day on which banks
located in the State of New York are authorized or required to close under
applicable banking laws.
1.12 “Capital
Assets”
shall
mean, in accordance with GAAP, fixed assets, both tangible (such as land,
buildings, fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and goodwill).
1.13 “Change
of Control”
shall
have the meaning as set forth in Section 9.1 hereof.
2
1.14 “Chattel
Paper”
shall
have the meaning ascribed to such term in the UCC.
1.15 “Closing
Date” shall
mean the date of this Agreement.
1.16 “Closing
Date Warrants”
means
the five (5) year warrants to purchase 400,000 shares of Common Stock of HYDRO
Corp, issued to each of the Lenders on the Closing Date having a per share
exercise price equal
to
the volume weighted average price per share for the period starting on the
25th
trading day prior to the respective vesting date and ending on the 10th trading
day prior to such vesting date, in the form annexed hereto as Exhibit
A.
1.17 “Collateral”
shall
have the meaning as set forth in Section 5.1 hereof.
1.18 “Commercial
Tort Claims”
shall
have the meaning ascribed to such term in the UCC.
1.19 “Common
Stock”
shall
mean the Common Stock, par value $0.001 per share, of HYDRO Corp.
1.20 “Default
Interest Rate”
shall
have the meaning set forth in Section 3.1 hereof.
1.21 “Default
Warrants”
means
the five (5) year warrants to purchase 1,000,000 shares of Common Stock of
HYDRO
Corp, issued to each of the Lenders having a per share exercise price equal
to
$0.01 per share, issuable solely after the occurrence and existence of an Event
of Default that remains uncured for a period of fifteen (15) days, in
the
form annexed hereto as Exhibit
B.
1.22 “Deposit
Accounts”
shall
have the meaning ascribed to such term in the UCC. Notwithstanding the
foregoing, said Deposit Accounts shall include the Borrower’s
Account.
1.23 “Document”
or
“document”
shall
have the meaning ascribed to such term in the UCC.
1.24 “Environment”
means
all air, surface water, groundwater or land, including, without limitation,
land
surface or subsurface, including, without limitation, all fish, wildlife, biota
and all other natural resources.
1.25 “Environmental
Law”
or
“Environmental
Laws”
shall
mean all federal, state and local laws, statutes, ordinances and regulations
now
or hereafter in effect, and in each case as amended or supplemented from time
to
time, and any judicial or administrative interpretation thereof, including
any
judicial or administrative order, consent decree or judgment relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
3
1.26 “Environmental
Obligations and Costs”
shall
mean, as to any Person, all Obligations, obligations, responsibilities, remedial
actions, losses, damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all fees, disbursements and expenses
of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of
any
claim or demand by any other Person, whether based in contract, tort, implied
or
express warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental Authority
or
other Person, and which arise from any environmental, health or safety
conditions, or a Release or conditions that are reasonably likely to result
in a
Release, and result from the past, present or future operations of such Person
or any of its Affiliates.
1.27 “Environmental
Lien”
shall
mean any Lien in favor of any Governmental Authority for Environmental
Obligations and Costs.
1.28 “ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as the same now exists
or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.29 “Equipment”
shall
mean “equipment”, as such term is defined in the UCC, now owned or hereafter
acquired by Borrower, wherever located, and shall include, without limitation,
all equipment, machinery, furniture, Fixtures, computer equipment, telephone
equipment, molds, tools, dies, partitions, tooling, transportation equipment,
all other tangible assets used in connection with the manufacture, sale or
lease
of goods or rendition of services, and Borrower’s interests in any leased
equipment, and all repairs, modifications, alterations, additions, controls
and
operating accessories thereof or thereto, and all substitutions and replacements
therefor.
1.30 “Equity
Interests”
shall
mean, with respect to any Person, any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests,
membership interests, units, participations or other equivalents of or interest
in (regardless of how designated) equity of such Person, whether voting or
nonvoting, including common stock, preferred stock, convertible securities
or
any other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC (or any successor thereto)
under the 1934 Act).
1.31 “Event
of Default”
shall
mean the occurrence or existence of any event or condition described in Section
10 of this Agreement.
1.32 “Expenses”
shall
have the meaning set forth in Section 13.6 hereof.
1.33 “Financial
Statements”
shall
have the meaning as set forth in Section 7.9 hereof.
1.34 “Financing
Statements”
shall
mean the Uniform Commercial Code UCC-1 Financing Statements to be filed with
applicable Governmental Authorities of each State or Commonwealth or political
subdivisions thereof pursuant to which Agent (for the benefit of the Lenders)
shall perfect its security interest in the Collateral.
1.35 “Fiscal
Year”
shall
mean that twelve (12) month period commencing on January 1 and ending on
December 31.
1.36 “Fixtures”
shall
have the meaning ascribed to such term in the UCC.
4
1.37 “GAAP”
means
generally accepted accounting principles in effect in the United States of
America at the time of any determination, and which are applied on a consistent
basis. All accounting terms used in this Agreement which are not expressly
defined in this Agreement shall have the meanings given to those terms by GAAP,
unless the context of this Agreement otherwise requires.
1.38 “General
Intangibles”
shall
have the meaning ascribed to such term in the UCC.
1.39 “Goods”
shall
have the meaning ascribed to such term in the UCC.
1.40 “Governmental
Authority”
or
“Governmental
Authorities”
shall
mean any federal, state, county or municipal governmental agency, board,
commission, officer, official or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
1.41 “Guaranty”
shall
mean that certain General Continuing Guaranty of even date herewith made by
the
Guarantor in favor of the Agent (for the benefit of the Lenders) as the same
may
be amended, restated, supplemented or otherwise modified from time to
time.
1.42 “Indebtedness”
shall
mean, with respect to any Person, all of the obligations of such Person which,
in accordance with GAAP, should be classified upon such Person’s balance sheet
as Obligations, or to which reference should be made by footnotes thereto,
including without limitation, with respect to Borrower, in any event and whether
or not so classified:
(a) all
debt
and similar monetary obligations of Borrower, whether direct or
indirect;
(b) all
obligations of Borrower arising or incurred under or in respect of any
guaranties (whether direct or indirect) by Borrower of the indebtedness,
Obligations or obligations of any other Person; and
(c) all
obligations of Borrower arising or incurred under or in respect of any Lien
upon
or in any property owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations.
1.43 “Intellectual
Property”
shall
mean property constituting under any applicable law a registered patent, patent
application, copyright, trademark, service xxxx, trade name, mask work, trade
secret or license or other right to use any of the foregoing
1.44 “Interest
Rate”
shall
have the meaning set forth in Section 3.1 hereof.
1.45 “Instruments”
shall
have the meaning ascribed to such term in the UCC
5
1.46 “Inventory”
shall
mean any “inventory,” as such term is defined in the UCC, now owned or hereafter
acquired by Borrower or Guarantor, wherever located, and, in any event, shall
include, without limitation, all raw materials, work-in-process, finished and
semi-finished Inventory including, without limitation, all materials, parts,
components and supplies relating to the manufacture or assembly thereof,
packaging and shipping supplies relating thereto, and all other inventory,
merchandise, goods and other personal property now or hereafter owned by
Borrower or Guarantor, which are held for sale, exchange or lease or are
furnished or are to be furnished under a contract of service or an exchange
arrangement or which constitute raw materials, work-in-process or materials
used
or consumed or to be used or consumed in Borrower’s or Guarantor’s business, or
the processing, packaging, delivery or shipping of the same, and all finished
goods and the products of the foregoing, whatever form and wherever located;
and
all names or marks affixed to or to be affixed thereto for purposes of selling
same by the seller, manufacturer, lessor or licensor thereof and all right,
title and interest of Borrower or Guarantor therein and thereto.
1.47 “Investment
Property”
shall
have the meaning ascribed to such term in the UCC.
1.48 “Lender
Obligations”
shall
have the meaning set forth in Section 13.6 hereof.
1.49 “Lenders”
shall
have the meaning set forth in the introductory paragraph hereof.
1.50 “Letter-of-Credit
Rights”
means
“letter-of-credit rights” as such term is defined in the UCC, including rights
to payment or performance under a letter of credit, whether or not the
beneficiary thereof has demanded or is entitled to demand payment or
performance.
1.51 “Lien”
or
“lien”
shall
mean any mortgage, deed of trust, pledge, security interest, hypothecation,
assignment, lien (statutory or other), charge or other encumbrance of any kind
or nature whatsoever (including, without limitation, pursuant to any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the UCC or comparable law of any jurisdiction
to evidence any of the foregoing) on personal or real property or
fixtures.
1.52 “Loan” shall
mean the original principal amount as set forth in each Term Loan
Note.
1.53 “Loan
Documents”
shall
mean this Agreement, the Guaranty and the Disclosure Schedules, and any and
all
other agreements, notes, documents, mortgages, financing statements, guaranties,
intercreditor agreements, subordination agreements, certificates and instruments
executed and/or delivered by Borrower or Guarantor or any other Person to Agent
or the Lenders pursuant to and in connection with the Loan and this Agreement,
including, without limitation, the Term Loan Notes, the Closing Date Warrants,
the Default Warrants, the Membership Interest Pledge Agreement, and all other
documents entered into by the parties in connection with the transactions
contemplated hereby.
1.54 “Losses”
shall
have the meaning set forth in Section 13.6 hereof.
1.55 “Material
Adverse Effect”
means a
material adverse effect on (a) the business, assets, Obligations, financial
condition, or results of operations of Borrower, (b) the ability of a
Borrower or Guarantor to pay when due or perform its obligations under any
Loan
Document to which it is a party in accordance with its respective terms,
(c) the value of the Collateral or the priority of the Lender’s Lien
therein, (d) the validity or enforceability of any of the Loan Documents,
(e) the rights and remedies of Lender under any of such Loan Documents. All
determinations of materiality shall be made by the Lender in its reasonable
judgment unless expressly provided otherwise.
6
1.56 “Material
Contract”
means
any contract or other arrangement (other than Loan Documents), whether written
or oral, to which Borrower or Guarantor is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto could
have
a Material Adverse Effect.
1.57 “Maturity
Date”
shall
mean December 15, 2008; provided that if on or before December 15, 2008,
Borrower has executed a definitive agreement with a third-party to consummate
a
transaction with either of the Borrower for an amount that will result in full
repayment of the Loan, and such transaction requires shareholder approval as
a
closing condition, then said maturity date shall be extended until the earlier
of (i) February 1, 2009 and (ii) ten (10) days from the date on which the
transaction was put to a vote of shareholders of HYDRO Corp at a duly called
meeting of such shareholders.
1.58 “Membership
Interest Pledge Agreement”
shall
mean the Membership Interest Pledge Agreement, of even date herewith, between
HYDRO Corp. and Agent for the benefit of the Lenders pursuant to which HYDRO
Corp has pledged 100% of the membership interests of the Borrower to Agent
for
the benefit of the Lenders to secure the Obligations.
1.59 “Minimum
Price”
shall
have the meaning as set forth in Section 2.1(b) hererof.
1.60 “1934
Act” shall
mean the Securities Exchange Act of 1934, as amended.
1.61 “Obligations”
shall
mean all obligations, liabilities and indebtedness of every kind, nature and
description owing by Borrower to Agent and the Lenders pursuant to the Loan
Documents, including, without limitation, principal, interest, repurchase
obligations, charges, fees, reimbursements, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether now existing or hereafter arising, whether arising before, during or
after the Term (solely to the extent not otherwise satisfied by the Borrower)
whether direct or indirect, absolute or contingent, joint or several, due or
not
due, primary or secondary, liquidated or unliquidated, secured or
unsecured.
1.62 “Payment
Intangibles”
shall
have the meaning ascribed to such term in the UCC.
7
1.63 “Permitted
Encumbrances”
shall
mean the following: (a)
Liens
granted to Agent for the benefit of the Lenders; (b) Liens granted to any other
secured lender that are second in priority to the first-priority Liens of the
Agent as provided in a subordination agreement reasonably satisfactory to the
Lender, (c) purchase money security interests in favor of equipment vendors
upon any Capital Assets hereafter acquired (including, without limitation,
capitalized or finance leases); provided, that,
(i)
no such
purchase money security interest or other Lien (or capitalized or finance lease,
as the case may be) with respect to specific future Capital Assets shall extend
to or cover any other property, other than the specific Capital Assets so
acquired, and the proceeds thereof, (ii)
such
mortgage, Lien or security interest secures only the cost or obligation to
pay
the purchase price of such specific Capital Assets only (or the obligations
under the capitalized or finance lease), and (iii)
the
principal amount secured thereby shall not exceed one hundred (100%) percent
of
the lesser of the cost or the fair market value (at the time of the acquisition
of the Capital Assets) of the Capital Assets so acquired, and (iv) the total
indebtedness secured by all such purchase money security interests granted
on or
after the Closing Date shall not exceed $25,000 in the aggregate at any time;
(d) Liens of carriers, warehousemen, artisans, bailees, mechanics and
materialmen incurred in the ordinary course of business securing sums not
overdue; (e) Liens incurred in the ordinary course of business in connection
with worker’s compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (i)
not
overdue or (ii) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of Borrower in
conformity with GAAP; (f) Liens for taxes (i) not yet due or (ii) being
diligently contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of Borrower
in conformity with GAAP, and which have no effect on the priority of Liens
in
favor of Agent for the benefit of the Lenders or the value of the assets in
which Agent has a Lien; and (g) such other Liens as are set forth on
Exhibit
1.63
annexed
hereto and made a part hereof.
1.64 “Person”
or
“person”
shall
mean, as applicable, any individual, sole proprietorship, partnership,
corporation, limited liability company, limited liability partnership, business
trust, unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or political
subdivision thereof.
1.65 “Proceeding”
means
any insolvency, bankruptcy, receivership, custodianship, liquidation,
reorganization, assignment for the benefit of creditors, or other proceeding
for
the liquidation, dissolution or other winding up of Borrower or the Collateral,
whether voluntary or involuntary.
1.66 “Proceeds”
shall
have the meaning ascribed to such term in the UCC and shall also include, but
not be limited to, (a) any and all proceeds of any and all insurance policies
(including, without limitation, life insurance, casualty insurance, business
interruption insurance and credit insurance), indemnity, warranty or guaranty
payable to Borrower from time to time with respect to any of the Collateral
or
otherwise, (b) any and all payments (in any form whatsoever) made or due and
payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental body, authority, bureau or agency or any other
Person (whether or not acting under color of Governmental Authority) and (c)
any
and all other amounts from time to time paid or payable under or in connection
with any of the Collateral.
1.67 “Promissory
Note”
shall
have the meaning ascribed to such term in the UCC.
1.68 “Release”
means
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing of a hazardous substance
into the environment.
1.69 “Required
Lenders”
means,
Lenders in the aggregate having at least 50% of the Aggregate Loan
Commitment.
8
1.70 “Satisfied”
means
with respect to the Senior Debt that all of the Senior Debt shall have been
paid
in full in cash and all financing arrangements and accommodations among
Borrower, Agent and the Senior Lender shall have been terminated and the Senior
Lender and Agent, as applicable, have no obligations to make any loans,
financial accommodations or advance any funds which would constitute Senior
Debt
to Borrower.
1.71 “SEC” shall
mean the United States Securities and Exchange Commission.
1.72 “SEC
Reports”
shall
mean HYDRO Corp’s (1) Annual Report on Form 10-K for the year ended December 31,
2007, and (2) all other periodic and other reports filed by HYDRO Corp with
the
SEC pursuant to the 1934 Act subsequent to December 31, 2007, and prior to
the
date hereof, in each case as filed with the SEC and including the information
and documents (other than exhibits) incorporated therein by
reference.
1.73 “Securities”
shall
have the meaning ascribed to such term in the UCC.
1.74 “Senior
Debt”
shall
have the meaning set forth in Section 13.12 hereof.
1.75 “Senior
Lien”
shall
have the meaning set forth in Section 13.12 hereof.
1.76 “Senior
Lender”
shall
have the meaning set forth in Section 13.12 hereof.
1.77 “Software”
shall
have the meaning ascribed
to
such term in the UCC.
1.78 “Subordinated
Collection Action”
means
any judicial proceeding or other action taken or initiated by the Subordinated
Lender against the Borrower, Guarantor, Agent or any Collateral to collect
the
Subordinated Lender Debt, to foreclose the Subordinated Liens or otherwise
to
enforce the rights or remedies of the Subordinated Lender under the this
Agreement or any of the other Loan Documents or applicable law with respect
to
the Subordinated Lender Debt.
1.79 “Subordinated
Debt”
shall
mean, at any particular time, all Indebtedness of Borrower which is not
expressly by its terms pari passu or senior, in right of payment to the prior
payment in full
of
all of the Obligations.
1.80 “Subordinated
Lien”
shall
have the meaning set forth in Section 13.12 hereof.
1.81 “Subordinated
Lender”
shall
have the meaning set forth in Section 13.12 hereof.
1.82 “Subordinated
Lender Debt”
shall
have the meaning set forth in Section 13.12 hereof.
1.83 “Subordination
Event”
shall
have the meaning set forth in Section 13.12 hereof.
1.84 “Subordination
Event Date”
shall
have the meaning set forth in Section 13.12 hereof.
1.85 “Subordination
Notice”
shall
have the meaning set forth in Section 13.12 hereof.
9
1.86 “Subsidiary”
shall
mean, as to any Person, a corporation, limited liability company or other entity
with respect to which more than fifty (50%) percent of the outstanding Equity
Interests of each class having voting power is at the time owned by such Person
or by one or more Subsidiaries of such Person or by such Person.
1.87 “Tangible
Chattel Paper”
shall
have the meaning ascribed to such term in the UCC.
1.88 “Term”
shall
have the meaning set forth in Section 4.1.
1.89 “Term
Loan Commitment”
means,
the obligation of each Lender to make the Loan in the principal amount of One
Million Dollars
($1,000,000).
1.90 “Term
Loan Note”
shall
have the meaning
set
forth in Section 2.1(a).
1.91 “UCC”
shall
mean the Uniform Commercial Code as presently enacted in the
State
of New York or any successor legislation thereto), and as the same may be
amended from time to time, and the state counterparts thereof as may be enacted
in such states or jurisdictions where any of the Collateral is located or
held.
1.92 “Rules
of Interpretation and Construction.
In this
Agreement unless the context otherwise requires:
(a) All
terms
used herein which are defined in the UCC shall have the meanings given therein
unless otherwise defined in this Agreement;
(b) Sections
mentioned by number only are the respective Sections of this Agreement as so
numbered;
(c) Words
importing a particular gender shall mean and include the other gender and words
importing the singular number mean and include the plural number and vice
versa;
(d) Words
importing persons shall mean and include firms, associations, partnerships
(including limited partnerships), societies, trusts, corporations, limited
liability companies or other legal entities, including public or governmental
bodies, as well as natural persons;
(e) Each
reference in this Agreement to a particular person shall be deemed to include
a
reference to such person's successors and permitted assigns;
(f) Any
headings preceding the texts of any Section of this Agreement, and any table
of
contents or marginal notes appended to copies hereof are intended, solely for
convenience of reference and shall not constitute a part of this Agreement,
nor
shall they affect its meaning, construction or effect;
10
(g) If
any
clause, provision or section of this Agreement shall be ruled invalid or
unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any of the remaining provisions
thereof;
(h) The
terms
“herein”, “hereunder”, “hereby”, “hereto”, and any similar terms as used in this
Agreement refer to this Agreement; the term “heretofore” means before the date
of execution of this Agreement; and the term “hereafter” shall mean after the
date of execution of this Agreement;
(i) If
any
clause, provision or section of this Agreement shall be determined to be
apparently contrary to or conflicting with any other clause, provision or
section of this Agreement, then the clause, provision or section containing
the
more specific provisions shall control and govern with respect to such apparent
conflict;
(j) Unless
otherwise specified, (i)
all
accounting terms used herein or in any Loan Document shall be interpreted in
accordance with GAAP, (ii)
all
accounting determinations and computations hereunder or thereunder shall be
made
in accordance with GAAP and (iii)
all
financial statements required to be delivered hereunder or thereunder shall
be
prepared in accordance with GAAP;
(k) An
Event
of Default that occurs shall exist or continue or be continuing unless such
Event of Default is waived by Agent and the Lenders in accordance with the
terms
of this Agreement; and
(l) The
word
“and” when used from time to time herein shall mean “or” or “and/or” if such
meaning is expansive of the rights or interests of Agent and Lenders in the
given context.
SECTION
2 LOAN
2.1 Loan.
Upon the
terms and provisions and subject to the conditions contained in this Agreement,
on the date hereof, each Lender is willing to extend in one (1) advance term
loans (collectively, the “Loan”)
to the
Borrower in an aggregate principal amount equal to each Term Loan Commitment,
which aggregate amount equals the Aggregate Term Loan Commitment. On the Closing
Date, each Lender shall provide to the Borrower 50% of its respective Term
Loan
Commitment. The remaining 50% of such Term Loan Commitment shall be deposited
into an account in the name of the Borrower and Agent, for the benefit of the
Lenders (the “Borrower’s
Account”).
Upon
the satisfaction of the conditions in this Section 2.1(a) and Section 2.1(b)
and
upon written authorization or instruction of the Agent to release the amount
in
the Borrower’s Account, the amount in the Borrower’s Account shall be released
to the Borrower. The Agent agrees that upon satisfaction of the conditions
in
this Section 2.1(a) and Section 2.1(b), it shall take all necessary action,
including, without limitation, delivering the aforementioned signed
authorization or instruction, to release the amount in the Borrower’s Account to
the Borrower.
(a)
Each
of the Lenders has been notified by the Borrower that the Borrower’s
demonstration facility at ASHTA Chemicals has been successfully
started up to 10 amps and 5 psig, has completed acid addition, and has
achieved stable fuel cell segment voltages sufficient to initiate increased
power level operation; and
11
(b)
(1)
The Agent has received a letter from Triax Capital Advisors or another financial
advisor to the Borrower indicating that one or more Persons has indicated a
willingness to close an equity or loan transaction on or prior to December
15,
2008, which will allow the Loan to be repaid in full on or prior to the Maturity
Date; or (2) the Agent has received a letter from Samsung C&T Corporation
indicating Samsung C&T Corporation’s willingness to close an equity
transaction with the Borrower or Guarantor on or prior to December 15, 2008
and
stating the cash purchase price it is willing to pay in connection with such
transaction in an amount equal to or greater than the minimum cash purchase
price mutually agreed upon by Samsung C&T Corporation and Federated Xxxxxxxx
Fund as an acceptable minimum price (the “Minimum Price”). The Parties
hereto shall keep the Minimum Price as set forth in any such letter from Samsung
C&T Corporation as confidential and shall not disclose it to any person not
a party hereto without the prior written consent of the other parties to this
Agreement. Any such letter from Samsung C&T Corporation shall not (i)
be a binding commitment on Samsung C&T Corporation to consummate any equity
transaction with the Borrower or Guarantor, (ii) be a binding commitment on
Samsung C&T Corporation to pay a cash purchase price equal to or greater
than the Minimum Price in connection with any equity transaction it may
consummate with the Borrower, and (iii) cause Samsung C&T Corporation to
incur any liability to the Borrower, the Guarantor, Federated Xxxxxxxx or any
other Persons unless liability arises as a direct result of gross negligence
or
willful misconduct of Samsung C&T Corporation as determined in a final
non-appealable judgment by a court of competent jurisdiction
(c)
If
the Borrower fails to satisfy the criteria for disbursement as
provided in Sections 2.1(a) and (b) above from
the
Borrower’s Account on or prior to September 30, 2008, then the Agent and
Borrower shall promptly take all necessary action, including delivering signed
authorizations or instructions, to return the Loan proceeds in the Borrower’s
Account to the Lenders without payment of the Prepayment Fee.
(d)
The
obligation of Borrower to repay the Loan shall be evidenced by separate notes
(collectively, the “Term
Loan Notes”)
dated
the date hereof, with appropriate insertions, dated the Closing Date, payable
to
the order of each Lender in the principal amount of each Lender’s Term Loan
Commitment. In case of any discrepancy between this Agreement and the Term
Loan
Notes, this Agreement shall govern.
2.2 Use
of Proceeds. Borrower
shall use the proceeds of the Loan for working capital needs and general
corporate purposes.
2.3 Repayment.
The Loan
and all accrued and unpaid interest owed to the Lenders hereunder shall be
due
and payable on the Maturity Date.
2.4 Subrogation.
(a) Borrower
expressly waives any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution or any other claim which Borrower may now or hereafter
have against the Guarantor or against any other Person directly or contingently
liable for the Obligations until all Obligations have been indefeasibly paid
in
full and this Agreement has been irrevocably terminated.
12
(c) Borrower
represents and warrants to Lenders that (i) Borrower and Guarantor have one
or
more common shareholders, members, directors, managers and/or officers, as
the
case may be, (ii) the businesses and corporate activities of Borrower and
Guarantor are closely related to, and substantially benefit, the business and
corporate activities of the consolidated group of which Borrower and Guarantor
are members, and (iii) Borrower and Guarantor will receive a substantial
economic benefit from entering into Loan Documents and will receive a
substantial economic benefit from the Loan hereunder, in each case, whether
or
not such amount is used directly by Borrower.
SECTION
3 INTEREST,
FEES AND CHARGES
3.1 Interest.
(a) Interest
on the unpaid principal balance of the Loan shall be computed on the basis
of
the actual number of days elapsed and a year of 360 days, shall accrue at a
rate
equal to twelve percent (12%) per annum (the “Interest
Rate”)
and
shall be payable in arrears on October 15, 2008 and on the Maturity Date, or
together with any prepayment of the Loan.
(b) Following
and during the continuation of an Event of Default and as elected by the Lenders
as evidenced by written notice to the Borrower, interest on the unpaid principal
balance of the Loan (from the date of such notice until such Event of Default
has been cured or waived by the Lenders) shall accrue at a rate equal to
eighteen percent (18%) per annum (the “Default
Interest Rate”).
3.2 Fees
and Expenses.
Borrower
shall pay, on Agent’s and each Lender's demand, all reasonable out-of-pocket
costs, reasonable out-of-pocket expenses, filing fees and taxes payable in
connection with the administration, collection, liquidation, defense and
enforcement of the Loan Documents, Agent’s rights in the Collateral, and all
other existing and future agreements or documents contemplated herein or related
hereto, including any amendments, waivers, supplements or consents which may
now
or hereafter be made or entered into in respect hereof, or in any way involving
claims or defenses asserted by Agent on behalf of the Lenders or claims or
defenses against Agent or any Lender asserted by Borrower or any third party
directly or indirectly arising out of or related to the relationship among
Borrower, Agent and Lenders, including, but not limited to the following,
whether incurred before, during or after the Term (solely to the extent any
Obligations remain unsatisfied by Borrower) or after the commencement of any
case with respect to Borrower under the United States Bankruptcy Code or any
similar or successor statute: (a)
all
out-of-pocket costs and expenses of filing or recording (including UCC Financing
Statement filing fees); and (b) all fees relating to the wire transfer of loan
proceeds and other funds and fees for returned checks. In addition to the
foregoing, if Samsung C&T Corporation submits an offer to HYDRO Corp to
consummate an equity transaction with HYDRO Corp at a price no less than the
Minimum Price and such offer by Samsung C&T Corporation is not accepted by
HYDRO Corp or, if accepted, Samsung C&T Corporation does not consummate any
such equity transaction with one or more of the Borrower through no fault of
Samsung C&T Corporation, Samsung C&T Corporation shall be reimbursed by
the Borrower for actual and reasonable expenses incurred by Samsung C&T
Corporation in connection with conducting its due diligence review in connection
with its consideration of such equity transaction involving the Borrower in
an
amount not to exceed $100,000. If any fees, costs or charges payable to Lenders
hereunder are not paid when due (and after reasonable prior notice to the
Borrower), such amounts shall accrue interest at the Default Interest Rate
from
the date when such amounts were due and ending on the date when such amounts
are
paid to Lenders.
13
3.3 Savings
Clause.
It is
intended that the Interest Rate and the Default Interest Rate shall never exceed
the maximum rate, if any, which may be legally charged in the State of New
York
for loans made to corporations (the “Maximum
Rate”).
If
the provisions for interest contained in the Term Loan Notes would result in
a
rate higher than the Maximum Rate, the interest shall nevertheless be limited
to
the Maximum Rate and any amounts which may be paid toward interest in excess
of
the Maximum Rate shall be applied to the reduction of principal, or, at the
option of Lenders, returned to the Borrower.
SECTION
4 TERM.
4.1 Term.
This
Agreement shall continue until all Obligations shall have been indefeasibly
paid
in full (the “Term”).
4.2 Early
Termination.
(a) Agent
(at
the direction of the Required Lenders) shall have the right to terminate this
Agreement at any time upon or after the occurrence of an Event of
Default.
(b) Except
as
set forth in Section 4.2(c) hereof, the Loan shall be prepayable by Borrower
without premium or penalty.
(c) Borrower
may prepay the remaining outstanding Loan without premium or penalty,
provided,
however,
that,
(i)
such prepayment is no less than the amount of the remaining outstanding
principal sum of the Term Loan Note, and (ii) as part of such prepayment,
Borrower pay Lenders all other amounts due to Lenders pursuant to the Loan
Documents, and (iii) in the event Borrower make such prepayment on or before
the
Maturity Date, Borrower shall also pay Lenders an amount equal to two and one
half percent (2.5%) times the amount of the Loan prepaid (the “Prepayment
Fee”).
The
Prepayment Fee is intended to compensate such Lender for committing and
deploying funds for Borrower’s loan pursuant to the Agreement and for such
Lender’s loss of investment of such funds in connection with such early
termination, and is not intended as a penalty.
SECTION
5 COLLATERAL.
5.1 Security
Interests in Borrower’s and Guarantor’s Assets.
As
collateral security for the payment and performance of the Obligations, Borrower
and the Guarantor hereby grant and convey to Agent for the benefit of the
Lenders a first priority continuing security interest in and Lien upon all
now
owned and hereafter acquired property and assets of Borrower and the Guarantor
and the Proceeds and products thereof (which property, assets and Proceeds,
together with all other collateral security for the Obligations now or hereafter
granted to or otherwise acquired by Lenders, are referred to herein collectively
as the “Collateral”),
including, without limitation, all property of Borrower and/or Guarantor now
or
hereafter held or possessed by Lenders, and including the
following:
14
(a) Accounts;
(b) Chattel
Paper;
(c) Commercial
Tort Claims;
(d) Deposit
Accounts;
(e) Documents;
(f) Electronic
Chattel Paper;
(g) Equipment;
(h) Fixtures;
(i) General
Intangibles;
(j) Goods;
(k) Instruments;
(l) Inventory;
(m) Investment
Property;
(n) Letter-of-Credit
Rights;
(o) Payment
Intangibles;
(p) Promissory
Notes;
(q) Software;
(r) Tangible
Chattel Paper;
(s) Securities
(whether certificated or uncertificated), including, without limitation, the
membership interests in Borrower;
(t) Warehouse
receipts;
(u) Cash
monies;
(v) Tax
and
duty refunds;
15
(w) Patents,
patent applications, trademarks, trademark applications, tradenames and
tradestyles, copyrights, copyright applications, trade rights (whether or not
registered), discoveries, improvements, processes, know-how, formulas, trade
secrets, service marks, other rights in intellectual property (whether
patentable or not), goodwill, customer and mailing lists, insurance policies,
licenses (whether as licensor or licensee), franchises and permits;
(x) All
present and future books and records relating to any of the above including,
without limitation, all present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit
files
and other data relating to the Collateral or any Account Debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of Borrower or Guarantor with respect to any of the
foregoing maintained with or by any other Person); and
(y) Any
and
all products and Proceeds of the foregoing in any form including, without
limitation, all insurance claims, warranty claims and proceeds and claims
against third parties for loss or destruction of or damage to any or the
foregoing. Notwithstanding the foregoing, in no event shall the Collateral
include (i) the Equipment listed on Schedule 5.1 attached hereto, (ii) (ii)
cash
on hand as of the Closing Date in an amount of approximately $225,000, or (iii)
any lease, license, contract, property rights or agreement to which a Borrower
is a party (or to any of its rights or interests thereunder) if the grant of
such security interest would constitute or result in either (A) the abandonment,
invalidation or unenforceability of any right, title or interest of Borrower
in
such property, or (B) in a breach or termination pursuant to the terms of,
or a
default under, any lease, license, contract, property rights, agreement, law,
statute or regulation, in each case, evidencing, governing or giving rise to
such property (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
UCC).
5.2 Financing
Statements.
Borrower, on behalf of the Lenders, shall file Financing Statements with respect
to the Collateral in form acceptable to Agent and its counsel, and shall provide
satisfactory evidence of said filing to the Lenders and their counsel promptly
after the said filing. Borrower shall, at all times, do, make, execute, deliver
and record, register or file all Financing Statements and other instruments,
acts, pledges, leasehold or other mortgages, amendments, modifications,
assignments and transfers (or cause the same to be done), and will deliver
to
Agent such instruments and/or documentation evidencing items of Collateral,
as
may be reasonably requested by Agent to better secure or perfect Agent’s
security interest in the Collateral or any Lien with respect
thereto. Borrower
acknowledges that it is not authorized to file any Financing Statement or
amendment or termination statement with respect to any Financing Statement
without the prior written consent of Agent and agrees that it will not do so
without the prior written consent of Agent.
16
5.3 License
Grant. Borrower
hereby grants to Agent, for the benefit of the Lenders and for the sole purpose
of facilitating repayment of the Obligations, an irrevocable, non-exclusive,
worldwide license without payment of royalty or other compensation to Borrower,
upon the occurrence and during the continuance of an Event of Default, to use
or
otherwise exploit in any manner as to which authorization of the holder of
such
Intellectual Property would be required, and to license or sublicense such
rights in to and under, any Intellectual Property now or hereafter owned by
or
licensed to Borrower, and wherever the same may be located, including in such
license access to all media in which any of such Intellectual Property may
be
recorded or stored and to all software and hardware used for the compilation
or
printout thereof, and represent, promise and agree that any such license or
sublicense is not and will not be in conflict with the contractual or commercial
rights of any third Person and subject, in the case of trademarks and service
marks, to sufficient rights to quality control and inspection in favor of
Borrower to avoid the risk of invalidation of said trademarks and service marks.
The foregoing license will terminate on the indefeasible payment in full of
all
Obligations; provided,
however,
that
any license, sublicense, or other rights granted by Lender pursuant to such
license during its term shall remain in effect in accordance with its
terms.
5.4 Representations,
Warranties and Covenants Concerning the Collateral.
Each of
Borrower and Guarantor represents, warrants and covenants as
follows:
(a) All
of
its Collateral (i) is owned by it free and clear of all Liens (including any
claim of infringement) except those in Agent’s favor and Permitted Encumbrances
and (ii) is not subject to any agreement prohibiting the granting of a Lien
or
requiring notice of or consent to the granting of a Lien.
(b) It
shall
not encumber, mortgage, pledge, assign or grant any Lien upon any Collateral
or
any other assets to anyone other than the Agent and except for Permitted
Liens.
(c) The
Liens
granted pursuant to this Agreement, upon the filing of Financing Statements
in
respect of Borrower and Guarantor (as may be applicable) in favor of the Agent
for the benefit of the Lenders in the applicable filing office of the states
of
organization of Borrower and Guarantor (as may be applicable), constitute valid
perfected first priority security interests in all of the Collateral to be
perfected by filing in favor of the Agent for the benefit of the Lenders, as
security for the prompt and complete payment and performance of the Obligations,
enforceable in accordance with the terms hereof.
(d) To
our
best knowledge, no security agreement, mortgage, deed of trust, financing
statement, equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is or will be on file or of record
in
any public office, except those relating to Permitted Encumbrances.
(e) It
shall
not dispose of any of the Collateral whether by sale, lease or otherwise except
for (i) the sale of Inventory in the ordinary course of business and (ii) the
disposition or transfer in the ordinary course of business of Equipment only
to
the extent that the proceeds of any such disposition are used to acquire
replacement Equipment which is subject to the Lender’s security interest or are
used to repay the Obligations.
17
(f) It
shall
defend the right, title and interest of the Agent (for the benefit of the
Lenders) in and to the Collateral against the claims and demands of all Persons
whomsoever, and take such actions, including (i) all actions necessary to grant
the Lender “control” of any Investment Property, Deposit Accounts,
Letter-of-Credit Rights or Electronic Chattel Paper owned by it, with any
agreements establishing control to be in form and substance satisfactory to
the
Agent, (ii) the prompt (but in no event later than three (3) Business Days
following the Agent’s request therefor) delivery to the Agent of all original
Instruments, Chattel Paper, negotiable Documents and certificated Securities
owned by it (in each case, accompanied by stock powers, allonges or other
instruments of transfer executed in blank), (iii) notification to third parties
of the Agent’s interest in Collateral at the Agent’s request, and (iv) the
institution of litigation against third parties as shall be prudent in order
to
protect and preserve its and/or the Agent’s interests in the
Collateral.
(g) It
shall
promptly, and in any event within three (3) Business Days after the same is
acquired by it, notify the Agent of any Commercial Tort Claim acquired by it
and, unless otherwise consented to by the Agent, it shall enter into a
supplement to this Agreement granting to the Agent for the benefit of the
Lenders a Lien in such Commercial Tort Claim for the benefit of
Agent.
(h) It
shall
perform in a reasonable time all other steps reasonably requested by the Agent
to create and maintain in the Agent’s favor a valid perfected first Lien in all
Collateral subject only to Permitted Encumbrances.
(i) It
shall
notify the Agent promptly and in any event within three Business Days after
obtaining knowledge thereof (i) of any material delay in its performance of
any
of its obligations to any Account Debtor; (ii) of any assertion by any Account
Debtor of any material claims, offsets or counterclaims; (iii) of any
allowances, credits and/or monies granted by it to any Account Debtor; (iv)
of
all material adverse information relating to the financial condition of an
Account Debtor; (v) of any material return of Goods; and (vi) of any loss,
damage or destruction of any of the Collateral.
(j) All
Accounts (i) represent complete bona fide transactions which require no further
act under any circumstances on its part to make such Accounts payable by the
Account Debtors and (ii) do not represent xxxx and hold sales, consignment
sales, guaranteed sales, sale or return or other similar understandings or
obligations of any Affiliate or Subsidiary of the applicable Borrower. It has
not made, nor will it make, any agreement with any Account Debtor for any
extension of time for the payment of any Account, any compromise or settlement
for less than the full amount thereof, any release of any Account Debtor from
liability therefor, or any deduction therefrom except a discount or allowance
for prompt or early payment allowed by it in the ordinary course of its business
consistent with historical practice and as previously disclosed to the Agent
in
writing.
(k) It
shall
keep and maintain its Equipment in good operating condition, except for ordinary
wear and tear, and shall make all necessary repairs and replacements thereof
so
that the value and operating efficiency shall at all times be maintained and
preserved. It shall not permit any such items to become a fixture to real estate
or accessions to other personal property.
(l) It
shall
maintain and keep all of its books and records concerning the Collateral at
its
executive offices listed in Section
5.4(l)
of the
Borrower’s Disclosure Schedule.
18
(m) Section
5.4(m)
of the
Borrower’s Disclosure Schedule lists all banks and other financial institutions
at which it maintains deposits and/or other accounts, and such Schedule
correctly identifies the name, address and telephone number of each such
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number. It shall not establish any
depository or other bank account with any financial institution (other than
the
accounts set forth on Section
5.4(m)
of the
Borrower’s Disclosure Schedule) without providing Agent with written
notification thereof and providing similar information related
thereto.
(n) On
the
date hereof, its exact legal name (as indicated in the public record of its
jurisdiction of organization), jurisdiction of organization, organizational
identification number, if any, from the jurisdiction of organization, and the
location of its chief executive office and all other offices or locations out
of
which it conducts business or operations, are specified on Section
5.4(n)
of the
Borrower’s Disclosure Schedule. It has furnished to each Lender a certified
charter, certificate of incorporation or other organization document and
long-form good standing certificate as of a date which is within thirty (30)
days of the date hereof. It is organized solely under the law of the
jurisdiction so specified and has not filed any certificates of domestication,
transfer or continuance in any other jurisdiction. Except as otherwise indicated
on Section
5.4(n)
of the
Borrower’s Disclosure Schedule, the jurisdiction of its organization of
formation is required to maintain a public record showing it to have been
organized or formed. Except as specified on Section
5.4(n)
of the
Borrower’s Disclosure Schedule, it has not changed its name, jurisdiction of
organization, chief executive office or sole place of business or its corporate
structure in any way (e.g., by merger, consolidation, change in corporate form
or otherwise) within the last five years and has not within the last five years
become bound (whether as a result of merger or otherwise) as a grantor under
a
security agreement entered into by another Person, which has not heretofore
been
terminated.
(o) It
will
not, except upon thirty (30) days’ prior written notice to the Agent and
delivery to the Agent of all additional financing statements and other documents
reasonably requested by the Agent to maintain the validity, perfection and
priority of the security interests provided for herein: (i) change its
jurisdiction of organization or the location of its chief executive office
from
that referred to in Section
5.4(n)
of the
Borrower’s Disclosure Schedule; or (ii) change its name, identity or
organizational structure.
(p) Except
as
otherwise provided herein, none of the Collateral is subject to any prohibition
against encumbering, pledging, hypothecating or assigning the same or requires
notice or consent to Borrower doing of the same.
SECTION
6 CONDITIONS
TO LOAN
The
obligation of Lenders to make the Loan shall be subject to the satisfaction
or
waiver by Lenders, prior thereto or concurrently therewith, of each of the
following conditions precedent:
6.1 Loan
Documents.
Each of
the Loan Documents shall have been duly and properly authorized, executed and
delivered by Borrower, the Guarantor and the other parties thereto and shall
be
in full force and effect as of the date hereof.
19
6.2 Representations
and Warranties.
Each of
the representations and warranties made by or on behalf of each of the Borrower
and Guarantor to Lenders in this Agreement and in other Loan Documents shall
be
true and correct in all material respects as of the date hereof, provided that
any such representation or warranty that is qualified by materiality shall
be
true and correct in all respects as of the date hereof.
6.3 Certified
Copies of Corporate Documents.
Lenders
shall have received from each of the Borrower and Guarantor, (a) certified
by a
duly authorized officer to be true and complete on and as of a date which is
not
more than ten (10) Business Days prior to the date hereof, a copy of each of
(i)
the certificate of incorporation or such other formation documents of Borrower
in effect on such date of certification and (ii) the by-laws (or equivalent
document) of Borrower in effect on such date, and (b) a long-form good standing
certificate as of a date which is within thirty (30) days of the date
hereof.
6.4 Proof
of Corporate Action.
Lenders
shall have received from each of the Borrower and Guarantor a copy, certified
by
a duly authorized officer to be true and complete on and as of the date which
is
not more than ten (10) Business Days prior to the date hereof, of the records
of
all corporate and/or limited liability company action taken by Borrower or
Guarantor, as applicable, to authorize (a)
its
execution and delivery of each of the Loan Documents to which it is or is to
become a party as contemplated or required by this Agreement, (b)
its
performance of all of its agreements and obligations under each of such
documents, and (c)
the
incurring, or guaranty, as applicable, of the Obligations contemplated by this
Agreement.
6.5 Insurance.
Agent on
behalf of Lenders shall have received evidence of insurance, additional insured
and loss payee endorsements required hereunder and under the other Loan
Documents, in form and substance satisfactory to Lenders, and certificates
of
insurance policies and/or endorsements naming Agent as additional insured and
lender’s loss payee.
6.6 Warrants.
Each of
the Lenders shall have received the Closing Date Warrant.
6.7 UCC
Filings.
The
Borrower shall have filed the Financing Statements with respect to the
Collateral in favor of the Agent (for the benefit of the Lenders) as stipulated
in Section 5
6.8 Approvals.
Samsung
C&T Corporation shall have obtained the requisite approval from the Bank of
Korea to consummate its Term Loan Commitment hereunder.
SECTION
7 REPRESENTATIONS
AND WARRANTIES.
Each
of
Borrower and Guarantor hereby represents and warrants to Lenders, knowing and
intending that Lenders shall rely thereon in making the Loan contemplated hereby
(each of which representations and warranties shall be continuing unless
expressly made in relation only to a specific date), that:
20
7.1 Corporate
Existence: Good Standing.
(a) It
(i)
is a
corporation or limited liability company duly organized, validly existing and
in
good standing under the laws of the jurisdiction of its organization,
(ii)
is in
good standing in all other jurisdictions in which it is required to be qualified
to do business as a foreign corporation and where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect, and
(iii)
has all
requisite corporate or limited liability company power and authority and full
legal right to own or to hold under lease its properties and to carry on the
business as presently engaged.
(b) It
has
corporate or limited liability company power and authority and has full legal
rights to enter into each of the Loan Documents to which it is a party, to
perform, observe and comply with all of its agreements and obligations under
each of such documents.
7.2 No
Violation, etc. The
execution and delivery by it of the Loan Documents to which it is a party,
the
performance by it of all of its agreements and obligations under each of such
documents, and the incurring by it of all of the Obligations contemplated by
this Agreement, have been duly authorized by all necessary corporate actions
on
the part of it and, if required, its shareholders or members, as applicable,
and
do not and will not (a) contravene any provision of its charter, bylaws or
other
governing documents or this Agreement (each as from time to time in effect),
(b)
conflict with, or result in a breach of the terms, conditions, or provisions
of,
or constitute a default under, or result in the creation of any Lien upon any
of
the property of it under, any agreement, mortgage or other instrument to which
it is or may become a party, (c) violate or contravene any provision of any
law,
regulation, order, ruling or interpretation thereunder or any decree, order
or
judgment or any court or governmental or regulatory authority, bureau, agency
or
official (all as from time to time in effect and applicable to such entity)
except where such conflict or violation would not reasonably be expected to
have
a Material Adverse Effect, or (d) require any approval, consent, order,
authorization, or license by, or giving notice to, or taking any other action
with respect to, any Governmental Authority.
7.3 Binding
Effect of Documents, etc. It
has
duly executed and delivered each of the Loan Documents to which it is a party,
and each of the Loan Documents is valid, binding and in full force and effect.
The agreements and obligations of it as contained in each of the Loan Documents
constitute, or upon execution and delivery thereof will constitute, legal,
valid
and binding obligations of it, enforceable against it in accordance with their
respective terms, subject, as to the enforcement of remedies only, to
limitations imposed by federal and state laws regarding bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights and
remedies generally, and by general principles of law and equity.
7.4 No
Events of Default.
(a) No
Event
of Default has occurred and is continuing and no event has occurred and is
continuing and no condition exists that would, with notice or the lapse of
time,
or both, constitute an Event of Default.
(b) Except
as
set forth on Schedule 7.4, it is not in default under any material contract,
agreement or instrument to which Borrower is a party or by which it or any
property of it is bound which is reasonably expected to have a Material Adverse
Effect.
21
(c) Its
execution, delivery and performance of and compliance with this Agreement and
the other Loan Documents will not, with or without the passage of time or giving
of notice, result in any material violation of law, or be in conflict with
or
constitute a default under any term or provision, or result in the creation
of
any Lien upon any of its properties or assets or the suspension, revocation,
impairment, forfeiture or nonrenewal, of any permit, license, authorization
or
approval applicable to it, or any of its businesses or operations or any of
its
assets or properties that is reasonably expected to have a Material Adverse
Effect.
7.5 No
Governmental Consent Necessary.
No
consent or approval of, giving of notice to, registration with or taking of
any
other action in respect of, any Governmental Authority is required with respect
to the execution, delivery and performance by it of this Agreement and the
other
Loan Documents to which it is a party.
7.6 No
Proceedings.
There
are no actions, suits, or proceedings pending or, to the best of its knowledge,
threatened against or affecting it in any court or before any Governmental
Authority which, if adversely determined, would have an adverse effect on the
ability of it to perform its obligations under this Agreement or the other
Loan
Documents to which they are parties.
7.7 No
Violations of Laws.
It has
conducted, and is conducting, its business, so as to comply in all material
respects with all applicable federal, state, county and municipal statutes
and
regulations. Neither it nor any officer, director or shareholder of it is
charged with, or so far as is known by Borrower, after having made due inquiry,
is under investigation with respect to, any violation of any such statutes,
regulations or orders, which could have a Material Adverse Effect.
7.8 Use
of Proceeds of the Loan. Proceeds
from the Loan shall be used only for those purposes set forth in this
Agreement.
No part
of the proceeds of the Loan shall be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for the purpose of
purchasing or carrying or trading in any stock under such circumstances as
to
involve Borrower in a violation of any statute or regulation. In particular,
without limitation of the foregoing, no part of the proceeds from the Loan
is
intended to be used to acquire any publicly-held stock of any kind.
7.9 Financial
Statements; Indebtedness.
(a) The
audited consolidated balance sheet of the Borrower and Guarantor as of December
31, 2007 and the related consolidated statements of operations, stockholders’
equity and cash flows (together with the related notes) for the year ended
December 31, 2007, as audited by McGladrey & Xxxxxx, LLP, and the unaudited
consolidated balance sheet and the related consolidated statement of income
of
the Borrower and Guarantor as of and for the period beginning January 1, 2008
and ended June 30, 2008 (collectively, the “Financial
Statements”),
(x)
fairly present as of the respective dates thereof, the financial position of
the
Borrower and Guarantor and the results of their operations, cash flows and
stockholders’ equity for each of the periods then ended in all material aspects;
and (y) except for the fact that the unaudited financial statements omit notes
to such statements and year-end adjustments thereto, have been prepared in
accordance with GAAP in conformity with the rules and regulations of the SEC.
22
(b) Except
as
shown on the most recent Financial Statements (i) except for Indebtedness of
it
that has accrued in the ordinary course of business, it has no other
Indebtedness as of the date hereof which would adversely affect the financial
condition of it or the Collateral, (ii) lease commitments of it, and (iii)
except for severance payments and change of control payments that may be owed
to
certain employees of it in the event of termination or a change in control
in
it, it has no Obligations, contingent or otherwise, except those which,
individually or in the aggregate, are not material to the financial condition
or
operating results of Borrower.
7.10 Changes
in Financial Condition.
Since
December 31, 2007, except as disclosed to Lenders or otherwise provided in
this
Agreement, there has been no Material Adverse Effect on it. Since December
31,
2007, it has not (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, outside of the ordinary course of business,
(iii) had capital expenditures outside of the ordinary course of business,
(iv)
engaged in any transaction with any Affiliate or (v) engaged in any other
transaction outside of the ordinary course of business.
7.11 Equipment.
It shall
keep its Equipment in good order and repair, and in running and marketable
condition, ordinary wear and tear excepted.
7.12 Taxes
and Assessments.
(a) It
has
paid and discharged when due all taxes, assessments and other governmental
charges which may lawfully be levied or assessed upon its income and profits,
or
upon all or any portion of any property belonging to it, whether real, personal
or mixed, to the extent that such taxes, assessment and other charges have
become due, except for taxes that may be contested in good faith by it. It
has
filed all tax returns, federal, state and local, and all related information,
required to be filed by it except for extensions for filing that have been
granted to the it.
(b) It
shall
make all payments to be made by it hereunder without any Tax Deduction (as
defined below), unless a Tax Deduction is required by law. If a Borrower is
aware that it must make a Tax Deduction (or
that
there is a change in the rate or the basis of a Tax Deduction), it shall
promptly notify Lenders. If a Tax Deduction is required by law to be made by
it,
the amount of the payment due from Borrower shall be increased to an amount
which (after making the Tax Deduction) leaves an amount equal to the payment
which would have been due if no Tax Deduction had been required. If a Borrower
is required to make a Tax Deduction, Borrower shall make the minimum Tax
Deduction allowed by law and shall make any payment required in connection
with
that Tax Deduction within the time allowed by law. Within thirty (30) days
of
making either a Tax Deduction or a payment required in connection with a Tax
Deduction, Borrower shall deliver to Lenders evidence satisfactory to Lenders
that the Tax Deduction has been made or (as applicable) the appropriate payment
has been paid to the relevant taxing authority.
(c) “Tax
Deduction”
means a
deduction or withholding for or on account of Tax from a payment under a Loan
Document.“Tax”
means
any tax, levy, impost, duty or other charge or withholding of a similar nature,
including any income, franchise, stamp, documentary, excise or property tax,
charge or levy (in each case, including any related penalty or
interest).
23
7.13 ERISA.
It is in
material compliance in all material respects with the applicable provisions
of
ERISA and all regulations issued thereunder by the United States Treasury
Department, the Department of Labor and the Pension Benefit Guaranty
Corporation.
7.14 Environmental
Matters.
(a) To
its
best knowledge, it has duly complied with, and its facilities, business assets,
property, leaseholds and equipment are in compliance in all respects with,
the
provisions of all Environmental Laws, the failure of which would likely result
in a Material Adverse Effect.
(b) To
its
best knowledge, it has been issued all required federal, state and local
licenses, certificates or permits relating to the operation of its business;
and
it and its facilities, business, assets, property and equipment are in
compliance in all material respects with all Environmental Laws.
7.15 United
States Anti-Terrorism Laws; Holding Company Status.
(a) In
this
Section 7.15:
“Anti-Terrorism
Law”
means
each of: (i) Executive Order No. 13224 of September 23, 2001 Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or
Support Terrorism (the “Executive
Order”);
(ii)
the Uniting and Strengthening America by Providing Appropriate Tools Required
to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (commonly known
as the USA Patriot Act); (iii) the Money Laundering Control Act of 1986, Public
Law 99-570; and (iv) any similar law enacted in the United States of America
subsequent to December 31, 2004.
“holding
company”
has
the
meaning given to it in the United States Public Utility Holding Company Act
of
1935, and any successor legislation and rules and regulations promulgated
thereunder.
“investment
company”
has
the
meaning given to it in the United States Investment Company Act of
1940.
“public
utility”
has
the
meaning given to it in the United States Federal Power Act of 1920.
“Restricted
Party”
means
any person listed: (i) in the Annex to the Executive Order; (ii) on the
Specially Designated Nationals and Blocked Persons list maintained by the Office
of Foreign Assets Control of the United States Department of the Treasury;
or
(iii) in any successor list to either of the foregoing.
24
(b) It
is not
(i) a holding company or subject to regulation under the United States Public
Utility Holding Company Act of 1935; (ii) a public utility or subject to
regulation under the United States Federal Power Act of 1920; or (iii) required
to be registered as an investment company or subject to regulation under the
United States Investment Company Act of 1940.
(c) To
the
best of its knowledge, it (i) is not, and is not controlled by, a Restricted
Party; (ii) has not received funds or other property from a Restricted Party;
and (iii) is not in breach of and is not the subject of any action or
investigation under any Anti-Terrorism Law.
7.16 Changes.
Since
the date of the Balance Sheet, except as disclosed in Section
7.16
of
Borrower’s Disclosure Schedule, with respect to it, there has not
been:
(a) any
change in its business, assets, Obligations, condition (financial or otherwise),
properties, operations or prospects, which, individually or in the aggregate,
has had, or could reasonably be expected to have, a Material Adverse
Effect;
(b) any
resignation or termination of any of its officers, key employees or groups
of
employees;
(c) any
material change, except in the ordinary course of business, in its contingent
obligations by way of guaranty, endorsement, indemnity, warranty or
otherwise;
(d) any
damage, destruction or loss, whether or not covered by insurance, which has
had,
or could reasonably be expected to have, individually or in the aggregate,
a
Material Adverse Effect;
(e) any
waiver by it of a valuable right or of a material debt owed to it;
(f) any
direct or indirect material loans made by it to any of its stockholders,
employees, officers or directors, other than advances made in the ordinary
course of business;
(g) any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(h) any
declaration or payment of any dividend or other distribution of its
assets;
(i) any
labor
organization activity related to it;
(j) any
debt,
obligation or liability incurred, assumed or guaranteed by it, except those
for
immaterial amounts and for current Obligations incurred in the ordinary course
of business;
(k) any
sale,
assignment, transfer, abandonment or other disposition of any Collateral other
than Inventory in the ordinary course of business;
25
(l) any
change in any material agreement to which it is a party or by which either
it is
bound which, either individually or in the aggregate, has had, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;
(m) any
other
event or condition of any character that, either individually or in the
aggregate, has had, or could reasonably be expected to have, individually or
in
the aggregate, a Material Adverse Effect; or
(n) any
arrangement or commitment by it to do any of the acts described in subsection
(a) through (m) of this Section 7.16.
7.17 Intellectual
Property. (a)
Except for Permitted Encumbrances, (1) it holds all Intellectual Property that
it owns free and clear of all Liens and restrictions on use or transfer, whether
or not recorded, and has sole title to and ownership of or has the full,
exclusive (subject to the rights of its licensees) right to use in its field
of
business such Intellectual Property; and Borrower holds all Intellectual
Property that it uses but does not own under valid licenses or sub-licenses
from
others; (2) the use of the Intellectual Property by it does not, to the best
knowledge of it, violate or infringe on the rights of any other Person; (3)
it
has not received any notice of any conflict between the asserted rights of
others and Borrower with respect to any Intellectual Property; (4) it has used
its commercially reasonable best efforts to protect its rights in and to all
Intellectual Property; (5) it is in compliance with all material terms and
conditions of its agreements relating to the Intellectual Property; (6) to
the
best knowledge of it, it is not, and since December 31, 2007 has not been,
a
defendant in any action, suit, investigation or proceeding relating to
infringement or misappropriation by it of any Intellectual Property nor has
it
been notified of any alleged claim of infringement or misappropriation by
Borrower of any Intellectual Property; (7) to the best knowledge of it, none
of
the products or services that it is researching, developing, proposes to
research and develop, make, have made, use, or sell, infringes or
misappropriates any Intellectual Property right of any third party; (8) none
of
the trademarks and service marks used by it, to the best knowledge of it,
infringes the trademark or service xxxx rights of any third party; and (9)
to
its best knowledge, none of the material processes and formulae, research and
development results and other know-how relating to its business, the value
of
which to it is contingent upon maintenance of the confidentiality thereof,
has
been disclosed to any Person other than Persons bound by written confidentiality
agreements.
(b) Section
7.17
of
Borrower’s Disclosure Schedule sets forth, to the best knowledge of it, a true
and complete list of (i) all registrations and applications for Intellectual
Property owned by it filed or issued by any Intellectual Property registry
and
(ii) all Intellectual Property licenses which are either material to the
business of it or relate to any material portion of its Inventory, including
licenses for standard software having a replacement value of more than $10,000.
None of such Intellectual Property licenses are reasonably likely to be
construed as an assignment of the licensed Intellectual Property to
it.
7.18 Representations
and Warranties: True, Accurate and Complete. None
of
the representations, certificates, reports, warranties or statements now or
hereafter made or delivered to Agent or Lenders pursuant hereto or in connection
with this Agreement or any other Loan Document or the transactions contemplated
hereby contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances in which
they are made, not misleading.
26
7.19 Internal
Accounting Controls.
To the
extent required, it maintains disclosure controls and procedures (as such term
is defined in Rule 13a-15 under the 0000 Xxx) that are effective, in ensuring
that information required to be disclosed by it in the reports that they file
or
submit under the 1934 Act is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms of the SEC, including,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by it in the reports that they file or submit under
the
1934 Act is accumulated and communicated to its management, including its
principal executive officer or officers and its principal financial officer
or
officers, as appropriate, to allow timely decisions regarding required
disclosure.
7.20 Xxxxxxxx-Xxxxx
Act.
To its
knowledge, it is in compliance with any and all applicable requirements of
the
Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date hereof, and any
and
all applicable rules and regulations promulgated by the SEC thereunder that
are
effective as of the date hereof.
SECTION
8 AFFIRMATIVE
COVENANTS.
Until
the
indefeasible payment and satisfaction in full of all Obligations from and after
the Closing Date, each of Borrower and Guarantor hereby covenants and agrees
as
follows:
8.1 Notify
Lenders.
It shall
promptly, and in any event within three (3) Business Days, inform Lenders and
Agent in writing (a) if any one or more of the representations and warranties
made by it in this Agreement or in any document related hereto shall no longer
be true, accurate and complete in any material respect, (b) of all material
adverse information relating to the financial condition of it; and (c) of any
material loss, damage or destruction of any of the Collateral.
8.2 Change
in Directors or Officers.
It shall
promptly notify Lenders in writing of any changes
in
either of its Directors or Officers.
8.3 Observe
Covenants, etc.
It shall
observe, perform and comply with the covenants, terms and conditions of this
Agreement and the other Loan Documents.
8.4 Information
and Documents to be Furnished to Lenders.
Borrower
shall deliver or cause to be delivered to Lenders:
(a) Weekly
Statement of Cash Position. Not
later
than the close of business (New York Time) on each Tuesday during the Term
of
the Loan, a statement of cash position and projected cash activity of the
Borrower by week as of the previous Friday through the period ending November
30, 2008.
(b) Notice
of Judgments, Environmental, Health or Safety Complaints.
(i) Within
three (3) Business Days thereafter, written notice to Lenders of the entry
of
any judgment or the institution of any lawsuit or of other legal or equitable
proceedings or the assertion of any crossclaim or counterclaim seeking monetary
damages from Borrower in an amount exceeding $50,000; and
27
(ii) Within
three (3) Business Days thereafter, notice or copies if written of all claims,
complaints, orders, citations or notices, whether formal or informal, written
or
oral, from a governmental body or private person or entity, relating to air
emissions, water discharge, noise emission, solid or liquid waste disposal,
hazardous waste or materials, or any other environmental, health or safety
matter, which adversely effect Borrower. Such notices shall include, among
other
information, the name of the party who filed the claim, the potential amount
of
the claim, and the nature of the claim.
(c) Other
Information.
Upon
demand,
(i) Certificates
of insurance for all policies of insurance to be maintained by Borrower pursuant
hereto; and
(ii) All
material information received by Borrower affecting the financial status or
condition of any Account Debtor or the payment of any Account, including but
not
limited to, invoices, original orders, shipping and delivery receipts (to the
extent not subject to any confidentiality provisions).
(d) Additional
Information.
From
time to time, such other information as Lenders may reasonably request,
including financial projections and cash flow analysis to the extent available.
8.5 Comply
with Laws.
It shall
comply with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority, compliance with which is necessary to
maintain its corporate existence or the conduct of its business or
non-compliance with which would result in a Material Adverse
Effect.
8.6 Insurance
Required.
(d) It
shall
cause to be maintained, in full force and effect on all property of it
including, without limitation, all Inventory and Equipment, insurance in such
amounts against such risks as is commercially reasonable given the nature of
the
its business.
Said
policy or policies shall:
(i) Be
in a
form and with insurers which are reasonably satisfactory to
Lenders;
(ii) Be
for
such risks, and for such insured values as Lenders may reasonably require in
order to replace the property in the event of actual or constructive total
loss;
(iii) Designate
Agent for the benefit of the Lenders as additional insured and lender’s loss
payee as Agent’s interest may from time to time appear;
28
(iv) Provide
that they may not be canceled or altered without thirty (30) days prior written
notice to Agent; and
(v) Within
ten (10) Business Days after demand, a copy of said policy shall be delivered
to
Agent.
(e) In
no
event shall Agent be required either to (i) ascertain the existence of or
examine any insurance policy or (iii)
advise
it in the event such insurance coverage shall not comply with the requirements
of this Agreement.
8.7 Condition
of Collateral; No Liens.
It shall
maintain all Collateral in good condition and repair at all times, and preserve
it against any loss, damage, or destruction of any nature whatsoever relating
to
said Collateral or its use, and keep said Collateral free and clear of any
Liens, except for the Permitted Encumbrances, and shall not permit Collateral
to
become a fixture to real estate or accessions to other personal
property.
8.8 Payment
of Proceeds.
Borrower
shall forthwith upon receipt of any proceeds of Collateral, pay such proceeds
(insurance or otherwise) up to the amount of the then-outstanding Obligations
over to Lender for application against the Obligations in such order and manner
as Agent may elect.
8.9 Name
Changes; Location Changes.
(a) It
shall
not change or alter its business names without the express written consent
of
the Lenders.
(b) It
shall
deliver not less than thirty (30) Business Days prior written notice to Lenders
if Borrower intends to conduct any of its business or operations at or out
of
offices or locations other than those set forth in this Agreement, or if it
changes the location of its chief executive office or the address at which
it
maintains its books and records.
8.10 Further
Assurances.
Borrower
shall at any time or from time to time upon request of Lenders take such steps
and execute and deliver such Financing Statements and other documents all in
the
form of substance satisfactory to Lenders relating to the creation, validity
or
perfection of the security interests provided for herein, under the UCC or
which
are reasonably necessary to effectuate the purposes and provisions of this
Agreement. Borrower shall defend the right, title and interest of Agent in
and
to the Collateral against the claims and demands of all Persons whomsoever,
and
take such actions, including (i) all actions necessary to grant Lender “control”
of any Investment Property, Deposit Accounts, Letter-of-Credit Rights or
Electronic Chattel Paper owned by it, with any agreements establishing control
to be in form and substance satisfactory to Agent, (ii) the prompt (but in
no
event later than three (3) days following Agent’s request therefor) delivery to
Agent of all original Instruments, Chattel Paper, negotiable Documents and
certificated Securities owned by it (in each case, accompanied by stock powers,
allonges or other instruments of transfer executed in blank), (iii) notification
of Agent’s interest in Collateral at Agent’s request, and (iv) the institution
of litigation against third parties as shall be prudent in order to protect
and
preserve Borrower’s and/or Agent’s respective and several interests in the
Collateral.
29
8.11 SEC
Reporting Status.
To the
extent required, it shall timely file (which for purposes herein shall include
any extensions) all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the 0000 Xxx.
8.12 Indemnification.
Borrower
shall indemnify, protect, defend and save harmless Lenders, as well as Lenders’
respective directors, officers, trustees, employees, agents, attorneys, members
and shareholders (hereinafter referred to collectively as the “Indemnified
Parties”
and
individually as an “Indemnified
Party”)
from
and against any and all losses, damages, expenses or obligations of any kind
or
nature and from any suits, claims or demands, by third parties (including,
without limitation, claims of brokers and finders), including reasonable counsel
fees incurred in investigating or defending such claim, suffered by any of
them
and caused by, relating to, arising out of, resulting from, or in any way
connected with the Loan, the transactions contemplated herein and the Loan
Documents, except for any such losses, damages, expenses or obligations referred
to above caused by a Lender’s gross negligence or willful misconduct. In case
any action shall be brought against an Indemnified Party based upon any of
the
above and in respect to which indemnity may be sought against Borrower, the
Indemnified Party against whom such action was brought shall promptly notify
Borrower in writing, and Borrower shall assume the defense thereof, including
the employment of counsel selected by Borrower and reasonably satisfactory
to
the Indemnified Party, the payment of all costs and expenses and the right
to
negotiate and consent to settlement. Upon reasonable determination made by
the
Indemnified Party, the Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof; provided,
however, that the Indemnified Party shall pay the costs and expenses incurred
in
connection with the employment of separate counsel. Borrower shall not be liable
for any settlement of any such action effected without its consent, but if
settled with Borrower’s consent, or if there be a final judgment for the
claimant in any such action, Borrower agrees to indemnify and save harmless
said
Indemnified Party against whom such action was brought from and against any
loss
or liability by reason of such settlement or judgment, except as otherwise
provided above. The provisions of this Section shall survive the termination
of
this Agreement and the final repayment of the Obligations
SECTION
9 NEGATIVE
COVENANTS.
Until
payment and satisfaction in full of all Obligations and the termination of
this
Agreement from and after the Closing Date, each of Borrower and Guarantor hereby
covenants and agrees as follows:
9.1 Change
of Control;
No Creation of Subsidiaries.
It will
not consolidate with, merge with, or acquire the stock or a material portion
of
the assets of any person, firm, joint venture, partnership, corporation, or
other entity, whether by merger, consolidation, purchase of stock or otherwise
if any such action results in a Change of Control (as defined below).
It will
not create or permit to exist any Subsidiary unless such new Subsidiary is
a
wholly-owned Subsidiary and is designated by Lenders as either a co-borrower
or
guarantor hereunder and such Subsidiary shall have entered into all such
documentation required by Lenders, including, without limitation, to grant
to
Agent for the benefit of the Lenders a first priority perfected security
interest in substantially all of such Subsidiary’s assets to secure the
Obligations.
A
“Change
of Control”
shall
be deemed to have occurred if:
30
(i) any
“Person,” which shall mean a “person” as such term is used in Sections 13(d) and
14(d) of the 1934 Act, or group of Persons is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
securities of Borrower representing 50% or more of the combined voting power
of
Borrower’s then outstanding voting securities;
(ii) individuals,
who at the Closing Date constitute the Board of Directors (which shall include
any equivalent governing body) of Borrower or Guarantor, and any new director
whose election by the Board of Directors of Borrower or Guarantor, or whose
nomination for election by Borrower’s members or Guarantor’s shareholders, was
approved by a vote of at least one-half (1/2) of the directors then in office
(other than in connection with a contested election), cease for any reason
to
constitute at least a majority of the Board of Directors of Borrower or
Guarantor, as applicable;
(iii) the
stockholders or members of either Borrower or Guarantor approve (I) a plan
of
complete liquidation of Borrower or Guarantor or (II) the sale or other
disposition by Borrower of all or substantially all of Borrower’s assets;
or
(iv) a
merger
or consolidation of either Borrower or Guarantor with any other entity is
consummated, other than:
(A) a
merger
or consolidation which results in the voting securities of Borrower or Guarantor
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the surviving
entity's outstanding voting securities immediately after such merger or
consolidation; or
(B) a
merger
or consolidation which would result in the directors or managers of Borrower
or
Guarantor (who were directors or managers immediately prior thereto) continuing
to constitute more than 50% of all directors or managers of the surviving entity
immediately after such merger or consolidation.
In
this
paragraph (iv), “surviving entity” shall mean only an entity in which all of a
Borrower’s members or Guarantor’s stockholders immediately before such merger or
consolidation (determined without taking into account any stockholders or
members properly exercising appraisal or similar rights) become stockholders
or
members by the terms of such merger or consolidation, and the phrase “directors
or managers of Borrower or Guarantor (who were directors or managers immediately
prior thereto)” shall include only individuals who were directors or managers of
Borrower or Guarantor at the Closing Date.
31
9.2 Disposition
of Assets or Collateral.
Except
for sales of Collateral the proceeds of which will be paid to Agent on behalf
of
the Lenders to permanently reduce the Loan and applied in accordance with the
provisions contained herein, it will not sell, lease, transfer, convey, or
otherwise dispose of any or all of its assets or Collateral, other than the
disposition or transfer in the ordinary course of business, of obsolete and
worn-out Equipment only to the extent that the proceeds of any such disposition
are used to acquire replacement Equipment which is subject to Agent’s first
priority security interest or are used to repay the Loan.
9.3 Other
Liens.
It will
not incur, create or permit to exist any Lien on any of its property or assets,
whether now owned or hereafter acquired, except (a) those
Liens in favor of Agent created by this Agreement and the other Loan Documents;
and (b) for the Permitted Encumbrances.
9.4 Other
Obligations.
It will
not incur, create, assume, or permit to exist, any Indebtedness or liability
on
account of either borrowed money or the deferred purchase price of property,
except (a)
Obligations to Lender, (b) liabilities of it for deferred compensation due
certain of its employees, or (c) Indebtedness incurred in connection with any
of
the Permitted Encumbrances.
9.5 Loans.
It will
not make any loans to any Person, other than advances to employees of Borrower
in the ordinary course of business.
9.6 Guaranties.
It will
not assume, guaranty, endorse, contingently agree to purchase or otherwise
become liable upon the obligation of any Person, except by the endorsement
of
negotiable instruments for deposit or collection or similar transactions in
the
ordinary course of business.
9.7 Transfers
of Notes or Accounts.
It will
not sell, assign, transfer, discount or otherwise dispose of any Accounts or
any
promissory note payable to it, with or without recourse.
9.8 Modification
of Documents.
It will
not change, alter or modify, or permit any change, alteration or modification
of
its certificate of incorporation, by-laws or other governing documents in any
manner that might adversely affect Lenders’ rights hereunder as secured lender s
or its Collateral without each Lender’s prior written consent.
9.9 Change
Business or Name.
It will
not change or alter the nature of its business, or change its name as it appears
in the official filings of its state of organization.
SECTION
10 EVENTS
OF DEFAULT.
The
occurrence of any of the following shall constitute an event of default
(hereinafter referred to as an “Event
of Default”):
10.1 Failure
to Pay.
The
failure by Borrower to pay, within ten (10) days after the due date, any payment
of principal, interest or other charges due and owing to Lenders pursuant to
any
obligations of Borrower to Lenders including, without limitation, those
Obligations arising pursuant to this Agreement or any Loan Document, or under
any other agreement for the payment of monies then due and payable to
Lenders.
32
10.2 Failure
to Perform.
Each of
Borrower’s and/or Guarantor’s failure to perform or observe any covenant, term
or condition of this Agreement for a period of fifteen (15) days or more from
the date the Agent sends written notice to Borrower describing such failure
to
perform.
10.3 Cross
Default.
Each of
Borrower’s and/or Guarantor’s default under any covenant, representation, term
or warranty contained in any other Loan Document after the expiration of any
applicable cure provision (if any).
10.4 False
Representation or Warranty.
Borrower
or Guarantor shall have made any statement, representation or warranty in this
Agreement or in any other Loan Document to which Borrower or Guarantor is a
party or in a certificate executed by Borrower or Guarantor incident to this
Agreement, which is at any time found to have been false in any material respect
at the time such representation or warranty was made.
10.5 Liquidation,
Voluntary Bankruptcy, Dissolution, Assignment to Creditors.
Any
resolution shall be passed or any action (including a meeting of creditors)
shall be taken by either Borrower or Guarantor for the termination, winding
up,
liquidation or dissolution of Borrower or Guarantor, or either Borrower or
Guarantor shall make an assignment for the benefit of creditors, or either
Borrower or Guarantor shall file a petition in voluntary liquidation or
bankruptcy, or either Borrower or Guarantor shall file a petition or answer
or
consent seeking, or consenting to, the reorganization of Borrower or Guarantor
or the readjustment of any of the indebtedness of Borrower or Guarantor under
any applicable insolvency or bankruptcy laws now or hereafter existing
(including the United States Bankruptcy Code), or either Borrower or Guarantor
shall consent to the appointment of any receiver, administrator, liquidator,
custodian or trustee of all or any part of the property or assets of Borrower
or
Guarantor or any corporate action shall be taken by Borrower or Guarantor for
the purposes of effecting any of the foregoing.
10.6 Involuntary
Petition Against Borrower or Guarantor.
Any
petition or application for any relief is filed against either Borrower or
Guarantor under applicable insolvency or bankruptcy laws now or hereafter
existing (including the United States Bankruptcy Code) or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law
or
in equity), and is not discharged or stayed within sixty (60) days of the filing
thereof.
10.7 Judgments;
Levies.
Any
judgments or attachments aggregating in excess of $100,000 at any given time
is
obtained against either Borrower or Guarantor which remains unstayed for a
period of thirty (30) days or is enforced.
10.8 Change
of Control.
Either
Borrower or Guarantor undergoes a Change of Control.
10.9 Dissolution;
Maintenance of Existence.
Either
Borrower or Guarantor is dissolved, or either Borrower fails to maintain its
corporate existence in good standing, or the usual business of Borrower ceases
or is suspended in any respect and Borrower is not reinstated or in good
standing within ten (10) days after such event occurs.
33
SECTION
11 REMEDIES.
11.1 Acceleration;
Other Remedies.
Solely
upon the occurrence and during the continuation of an Event of Default:
(a) Lenders
shall have all rights and remedies provided in this Agreement, any of the other
Loan Documents, the UCC or other applicable law, all of which rights and
remedies may be exercised without notice to Borrower, all such notices being
hereby waived, except such notice as is expressly provided for hereunder or
is
not waivable under applicable law. All rights and remedies of Lenders are
cumulative and not exclusive and are enforceable, in Agent’s discretion,
alternatively, successively, or concurrently on any one or more occasions and
in
any order Agent may determine. Without limiting the foregoing, a Lender may
accelerate the payment of all Obligations and demand immediate payment thereof
to such Lender. The Agent, upon the instruction of the Required Lenders, may
(i)
with or without judicial process or the aid or assistance of others, enter
upon
any premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and repair
of
all or any portion of the Collateral, (ii) require Borrower, at Borrower’s
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (iv)
extend the time of payment of, compromise or settle for cash, credit, return
of
merchandise, and upon any terms or conditions, any and all Accounts or other
Collateral which includes a monetary obligation and discharge or release the
Account Debtor or other obligor, without affecting any of the Obligations,
(v)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including, without limitation, entering into contracts with respect
thereto, by public or private sales at any exchange, broker's board, any office
of Agent or elsewhere) at such prices or terms as Agent may deem reasonable,
for
cash, upon credit or for future delivery, with Agent having the right to
purchase the whole or any part of the Collateral at any such public sale, all
of
the foregoing being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby expressly waived and released
by
Borrower. If any of the Collateral or other security for the Obligations is
sold
or leased by Agent upon credit terms or for future delivery, the Obligations
shall not be reduced as a result thereof until payment therefor is finally
collected by Agent. If notice of disposition of Collateral is required by law,
ten (10) days prior notice by Agent to Borrower designating the time and place
of any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrower waives any other notice. In the event Agent institutes
an
action to recover any Collateral or seeks recovery of any Collateral by way
of
prejudgment remedy, Borrower waives the posting of any bond which might
otherwise be required.
(b) Agent
may
apply the proceeds of Collateral actually received by Agent from any sale,
lease, foreclosure or other disposition of the Collateral to payment of any
of
the Obligations, in whole or in part (including attorneys' fees and legal
expenses incurred by Agent with respect thereto or otherwise chargeable to
Borrower) and in such order as Agent may elect, whether or not then due, in
accordance with the provision of Section 11.6. Borrower shall remain liable
to
Agent for the payment on demand of any deficiency together with interest at
the
Default Interest Rate and all costs and expenses of collection or enforcement,
including reasonable attorneys' fees and legal expenses.
34
(c) Agent
may, with the prior written consent of the Required Lenders, cure any default
by
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, discharge taxes and Liens at any time levied
on or existing with respect to the Collateral, and pay any amount, incur any
expense or perform any act which, in Agent's sole judgment, is necessary or
appropriate to preserve, protect, insure, maintain, or realize upon the
Collateral. Such amounts paid by Agent shall be repayable by Borrower on demand
and added to the Obligations, with interest payable thereon at the Default
Interest Rate. Agent shall be under no obligation to effect such cure, payment,
bonding or discharge, and shall not, by doing so, be deemed to have assumed
any
obligation or liability of Borrower.
(d) Agent
and
Agent’s agents shall have the right to utilize any of Borrower’s customer lists,
registered names, trade names or trademarks to publicly advertise the sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral
and Borrower will be deemed to have waived and voided any confidentiality
agreements by and among Borrower and Agent.
11.2 Costs
and Expenses.
Borrower
shall be liable for all costs, charges and expenses, including attorney's fees
and disbursements, incurred by Lenders by reason of the occurrence of any Event
of Default or the exercise of Agent’s and each Lender's remedies with respect
thereto, each of which shall be repayable by Borrower on demand with interest
at
the Default Interest Rate, and added to the Obligations.
11.3 No
Marshalling.
Except
as provided herein, Agent shall be under no obligation whatsoever to proceed
first against any of the Collateral or other property which is security for
the
Obligations before proceeding against any other of the Collateral. It is
expressly understood and agreed that all of the Collateral or other property
which is security for the Obligations stands as equal security for all
Obligations, and that Agent shall have the right to proceed against any or
all
of the Collateral or other property which is security for the Obligations in
any
order, or simultaneously, as in its sole and absolute discretion it shall
determine. It is further understood and agreed that Agent shall have the right,
subject to the notice provisions in this Agreement, as it in its sole and
absolute discretion shall determine, to sell any or all of the Collateral or
other property which is security for the Obligations in any order or
simultaneously, as Agent shall determine in its sole and absolute
discretion.
11.4 No
Implied Waivers; Rights Cumulative.
No delay
on the part of a Lender or Agent in exercising any right, remedy, power or
privilege hereunder or under any other Loan Document or provided by statute
or
at law or in equity or otherwise shall impair, prejudice or constitute a waiver
of any such right, remedy, power or privilege or be construed as a waiver of
any
Event of Default or as an acquiescence therein. No right, remedy, power or
privilege conferred on or reserved to Lender hereunder or under any other Loan
Document or otherwise is intended to be exclusive of any other right, remedy,
power or privilege. Each and every right, remedy, power or privilege conferred
on or reserved to Agent or a Lender under this Agreement or under any of the
other Loan Documents or otherwise shall be cumulative and in addition to each
and every other right, remedy, power or privilege so conferred on or reserved
to
Agent or a Lender and may be exercised by Agent or a Lender at such time or
times and in such order and manner as Lender shall (in its sole and complete
discretion) deem expedient.
35
11.5 Specific
Performance. The
Borrower acknowledges and agrees that the rights being protected by the terms
of
this Agreement are of a special value, and that the breach of any provision
of
this Agreement or any of the Loan Documents shall cause irreparable injury
and
damage to the Lenders. In such event that the Borrower commits a breach of
any
provision of this Agreement or any of the Loan Documents, the Lenders (or the
Agent, if applicable) shall be entitled to seek specific performance of all
of
the acts and the undertakings required hereunder and to obtain injunctive and
other equitable relief to prevent the violation or threatened violation of
any
of the provisions of this Agreement.
11.6 Application
of Payments and Proceeds.
All
payments remitted to Agent (or Lenders) and all proceeds of Collateral received
by Agent shall be applied as follows:
(A) first,
to pay
any expenses and fees of the Agent (including cost or expense reimbursements)
or
indemnities then due to Agent under the Loan Documents, until paid in
full,
(B) second,
to pay
any expenses
and fees of the Lenders (including cost or expense reimbursements) or
indemnities then
due
to Lenders under the Loan Documents, until paid in full,
(C) third,
ratably
to the Lenders to pay interest due in respect of the Loan until paid in
full,
(D) fourth,
ratably
to the Lenders to pay the outstanding principal balance of the Loan until the
Loan is paid in full, and
(E) fifth,
to
Borrower.
SECTION
12 OTHER
RIGHTS OF LENDERS.
12.1 Agent
Appointed Attorney-in-Fact.
(a) Borrower
hereby irrevocably constitutes and appoints Agent (and any successor Agent
appointed pursuant to Section 13.12 hereof), with full power of substitution,
as
its true and lawful attorney-in-fact, with full irrevocable power and authority
in its place and stead and in its name or otherwise, from time to time in
Agent’s discretion, at Borrower’s sole cost and expense, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which Agent may deem reasonably necessary or advisable to accomplish
the purposes of this Agreement.
(b) Borrower
hereby ratifies, to the extent permitted by law, all that Agent shall lawfully
and in good faith do or cause to be done by virtue of and in compliance with
this Agreement. The powers of attorney granted pursuant to this Agreement are
each a power coupled with an interest and shall be irrevocable until the
Obligations are paid indefeasibly in full.
36
12.2 Bid
Restriction.
Borrower shall not consummate a transaction of a type described in Section
9.1
or Section 9.2 with any Person for an amount that will not result in full
repayment on or prior to the Maturity Date of all Obligations owed to the
Lenders hereunder.
SECTION
13
THE AGENT.
13.1 Appointment;
Nature of Relationship.
Federated Xxxxxxxx (and any successor Agent appointed pursuant to Section 13.12
hereof) is hereby appointed by each of the Lenders as its contractual
representative (herein referred to as the “Agent”)
hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Agent by the terms hereof, together
with such actions and powers as are reasonably incidental thereto. The Agent
shall not have any duties or obligations except those expressly set forth
herein. Without limiting the generality of the foregoing, (a) the Agent shall
not be subject to any fiduciary or other implied duties, regardless of whether
an Event of Default has occurred and is continuing, (b) the Agent shall not
have
any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby that the
Agent is required to exercise in writing as directed by the Required Lenders,
and (c) except as expressly set forth herein, the Agent shall not have any
duty
to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the Agent or any of its Affiliates in any
capacity. The Agent shall not be liable for any action taken or not taken by
it
with the consent or at the request of the Required Lenders or in the absence
of
its own gross negligence or willful misconduct. The Agent shall be deemed not
to
have knowledge of any Event of Default unless and until written notice thereof
is given to the Agent by the Borrower or a Lender, and the Agent 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 Agreement, (ii)
the contents of any certificate, report or other document delivered hereunder
or
in connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or
any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth herein, other than to confirm receipt of items expressly
required to be delivered to the Agent.
13.2 Powers.
The
Agent
shall have and may exercise such powers for the benefit of the Lenders under
the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided
by
the Loan Documents to be taken by the Agent.
13.3 General
Immunity.
Neither
the Agent nor any of its directors, officers, agents or employees shall be
liable to the Borrower, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document
or
in connection herewith or therewith except to the extent such action or inaction
is determined in a final non-appealable judgment by a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct
of
such Person.
37
13.4 No
Responsibility for Loans, Recitals, etc.
Neither
the Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (a)
any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Section
6,
except receipt of items required to be delivered solely to the Agent; (d) the
existence or possible existence of an Event of Default; (e) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in any
Collateral; or (g) the financial condition of the Borrower or any guarantor
of
any of the Obligations or of any of the Borrower’s or any such guarantor’s
respective Subsidiaries.
13.5 Action
on Instructions of Lenders.
The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of
the
Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty
to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Loan Document unless it shall be
requested in writing to do so by the Required Lenders. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction
by
the Lenders pro rata against any and all liability, cost and expense that it
may
incur by reason of taking or continuing to take any such action.
13.6 Agent’s
Reimbursement and Indemnification.
The
Lenders agree to reimburse and indemnify the Agent ratably in proportion to
their respective Term Loan Commitments (or, if the Term Loan Commitments have
been terminated, in proportion to their Term Loan Commitments immediately prior
to such termination), to the extent such is not first reimbursed or indemnified
by the Borrower or the Guarantor, as the case may be, (i) for all actual and
reasonable expenses incurred by the Agent on behalf of the Lenders, in
connection with the administration and enforcement of the Loan Documents (the
forgoing clause (i), collectively, the “Expenses”)
and
(ii) for any Obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may
be
imposed on, incurred by or asserted against the Agent in any way relating to
or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any
of
the terms of the Loan Documents or of any such other documents (the forgoing
clause (ii), collectively, the “Losses”
and
together with the Expenses, the “Lender
Obligations”);
provided that no Lender shall be liable for any Expenses or Losses to the extent
any of the foregoing is found in a final non-appealable judgment by a court
of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Agent. Any amounts owed to the Agent by the Lenders for
reimbursement or indemnification as provided in this Section 13.6 shall be
first
paid by the proceeds of the Collateral as provided in Section 11.6 hereof.
The
Obligations of the Lenders under this Section 13.6 shall survive payment of
the
Obligations and termination of this Agreement.
38
13.7 Notice
of Expenses and Losses.
At such time the Agent has incurred Expenses or Losses in
excess
of $5,000, the Agent shall provide to each Lender (a) within seven (7) days
an
itemized statement of such Expenses and Losses stating the amount of each
such Loss or Expense, the person to whom each such Expense is
owed
or the circumstance under which the Loss was incurred,
and
(b) within seven (7) days after the beginning of each month thereafter
during the Term, a similar itemized statement of total
incurred Expenses and Losses incurred
during
the previous month.
13.8 Notice
of Default.
The
Agent shall not be deemed to have knowledge or notice of the occurrence of
an
Event of Default hereunder unless the Agent has received written notice from
a
Lender or the Borrower referring to this Agreement describing such Event of
Default. In the event that the Agent receives such a notice, the Agent shall
give prompt notice thereof to the Lenders in writing. The Agent agrees and
acknowledges that time is of the essence in giving prompt notice.
13.9 Rights
as a Lender.
In the
event the Agent is a Lender, the Agent shall have the same rights and powers
hereunder and under any other Loan Document with respect to its Loans as any
Lender and may exercise the same as though it were not the Agent, and the term
“Lender” or “Lenders” shall, at any time when the Agent is a Lender, unless the
context otherwise indicates, include the Agent in its individual capacity.
The
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition
to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its subsidiaries in which the Borrower or such subsidiary
is
not restricted hereby from engaging with any other Person.
13.10 Execution
of Collateral Documents.
The
Lenders hereby empower and authorize the Agent to execute and deliver to the
Borrower on their behalf security agreements, pledge agreements and all related
financing statements and any financing statements, agreements, documents or
instruments as shall be necessary or appropriate to effect the purposes of
the
same.
13.11 Collateral
Releases.
The
Lenders hereby empower and authorize the Agent to execute and deliver to the
Borrower on their behalf any agreements, documents or instruments as shall
be
necessary or appropriate to effect any releases of Collateral which shall be
permitted by the terms hereof or of any other Loan Document or which shall
otherwise have been approved by the Required Lenders in writing.
13.12 Right
to Subordinate.
(a) Notwithstanding
anything to the contrary contained herein or in any other Loan Document, each
Lender may, upon not less than five (5) Business Days prior written notice
to
the other Lender, the Borrower and the Guarantor (such notice, the “Subordination
Notice”),
subordinate all of the Obligations due or owing to such Lender (the
“Subordinated
Lender”
and
such Obligations, the “Subordinated
Lender Debt”)
to the
Obligations due or owing to the other Lender (the “Senior
Lender,”
such
Obligations the “Senior
Debt,”
each
such event, a “Subordination
Event”
and
the
date of each such event, the “Subordination
Event Date”).
39
(b) If
a
Subordination Event has occurred, then, on the Subordination Event Date, without
any further action by any party hereto:
(i) Subordinated
Lender subordinates all Subordinated Lender Debt and all claims and demands
arising therefrom to all of the Senior Debt, and the payment of any and all
Subordinated Lender Debt shall be and hereby is expressly made subordinate
and
junior in right and time of the prior payment in full of all Senior
Debt;
(ii) Subordinated
Lender agrees that to the extent herein provided all of the Senior Debt shall
be
Satisfied before Subordinated Lender shall be paid anything (of any kind or
character) on account of any Subordinated Lender Debt; provided, however, prior
to the date the Senior Debt is Satisfied, so long as no Event of Default exists
or would result therefrom, Borrower (or Guarantor) may make and the Subordinated
Lender may receive in respect of the Subordinated Lender Debt, its pro rate
share of regularly scheduled payments of interest pursuant of the terms of
Section 3.1 hereof.
(iii) until
all
of the Senior Debt is Satisfied, neither the Borrower nor Guarantor shall make,
and Subordinated Lender shall not demand, receive, retain, or accept, either
directly or indirectly, payment (of any kind or character) of all or any part
of
the Subordinated Lender Debt without the prior written consent of the
Agent;
(iv) the
Subordinated Lender hereby subordinates any and all Liens in favor of the
Subordinated Lender to secure the Subordinated Lender Debt (each a “Subordinated
Lien”)
to all
Liens in favor of the Senior Lender to secure the Senior Debt (each a
“Senior
Lien”)
and
agrees that all Senior Liens shall have priority over all Subordinated Liens,
regardless of the time or order of attachment, the time, order or manner of
perfection, or the time or order filing of any mortgage, debenture, deed or
trust assignment, security agreement, financing statement or other
document;
(v) in
the
event of a Proceeding, all Senior Debt first shall be Satisfied before any
payment of or with respect to the Subordinated Lender Debt shall be made and
this Agreement shall remain in full force and effect notwithstanding any
Proceeding commenced by or against any party hereto;
(vi) if
Subordinated Lender receives any distribution or payment prohibited under this
Section
13.12,
or
receives any payment (of any kind or character) of any Subordinated Lender
Debt
in violation of this Agreement, Subordinated Lender shall (A) notify the Agent
immediately in writing thereof and (B) receive the same in trust for the Agent
and Subordinated Lender shall immediately pay and deliver the same to Agent
in
precisely the form received, except for any requisite endorsement or assignment;
(vii) Subordinated
Lender agrees not to interfere with any disposition of Collateral by or at
the
direction of the Agent;
(viii) until
the
Senior Indebtedness is Satisfied and notwithstanding anything to the contrary
contained herein or in any other Loan Document, Subordinated Lender shall not
take any Subordinated Collection Action;
40
(ix) if
the
Subordinated Lender is the Agent prior to the Subordination Event, (A) the
Subordinated Lender shall automatically cease to be the Agent hereunder and
(B)
the Senior Lender shall, in the Senior Lender’s sole and absolute discretion,
either (1) elect to become the Agent by delivering prior written notice to
the
Subordinated Lender, Borrower and Guarantor or (ii) appoint any other Person
reasonably acceptable to the Borrower or Guarantor as the Agent hereunder
(Senior Lender may make each of the foregoing actions at any time on or after
receiving the Subordination Notice); and
(x) On
and
after the Subordination Event Date, the Subordinated Lender shall cease to
be
responsible for any and all Lender Obligations (other than any Lender
Obligations that are proved by the Agent to have arisen or resulted from any
action or inaction of the Agent prior to the applicable Subordination Event
Date).
SECTION
14 SETOFF;
RATABLE PAYMENTS.
14.1 Setoff.
In
addition to, and without limitation of, any rights of the Lenders under
applicable law, if the Borrower becomes insolvent, however evidenced, or any
Event of Default occurs, any and all deposits (including all account balances,
whether provisional or final and whether or not collected or available) and
any
other Indebtedness at any time held or owing by any Lender or any Affiliate
of
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether
or
not the Obligations, or any part thereof, shall then be due.
14.2 Ratable
Payments.
Except
as otherwise agreed in writing by the Lenders, if any Lender, whether by setoff
or otherwise, has payment made to it upon its Loan in a greater proportion
than
that received by any other Lender, such Lender agrees, promptly upon demand,
to
purchase a portion of the Loan held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Loan. If any Lender,
whether in connection with setoff or amounts which might be subject to setoff
or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loan. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
SECTION
15 PROVISIONS
OF GENERAL APPLICATION.
15.1 Transactional
Expenses. The
Borrower shall pay, and hold the Agent harmless against liability for the
payment of reasonable attorneys fees and the out-of-pocket expenses of Agent
arising in connection with the negotiation and execution of this Agreement
and
any other Loan Document and the consummation of the transactions contemplated
by
this Agreement and any other Loan Document, to be paid promptly on the Closing
Date. If the closing does not occur due to a decision by the Borrower not to
proceed with the transactions contemplated hereunder, the reasonable attorneys
fees plus the out of pocket expenses of Agent arising in connection with the
negotiation and execution of this Agreement and any other Loan Document, shall
be paid promptly by Borrower after the termination of this
Agreement.
41
15.2 Waivers.
Borrower
waive demand, presentment, notice of dishonor protest and notice of protest
of
any instrument of Borrower or others which may be included in the
Collateral.
15.3 Survival.
All
covenants, agreements, representations and warranties made by Borrower herein
or
in any other Loan Document or in any certificate, report or instrument
contemplated hereby shall survive any independent investigation made by each
Lender and the execution and delivery of this Agreement, and such certificates,
reports or instruments and shall continue so long as any Obligations are
outstanding and unsatisfied, applicable statutes of limitations to the contrary
notwithstanding.
15.4 Notices.
All
notices, requests and demands to or upon the respective parties hereto shall
be
in writing and either (a) delivered by hand or (b) delivered by national
overnight courier service, and shall be deemed to have been duly given or made
upon receipt by the receiving party. All notices, requests and demands are
to be
given or made to the respective parties at the following addresses (or to such
other addresses as either party may designate by notice in accordance with
the
provisions of this paragraph):
If
to Borrower:
|
Hydrogen
L.L.C.
|
|
0
Xxxxxxx Xxxxxx
|
||
Xxxxxxxxxx,
Xxxxxxxxxxxx 00000
|
||
Attention:
Chief Executive Officer
|
||
With
a copy to:
|
HydroGen
Corporation
|
|
00
Xxxx 00xx Xxxxxx, Xxxxx 0000
|
||
Xxx
Xxxx, Xxx Xxxx 00000
|
||
Attention:
General Counsel
|
||
With
a copy to:
|
Xxxxx
Xxxxxx LLP
|
|
000
Xxxxx XxXxxxx Xxxxxx
|
||
Xxxxx
0000
|
||
Xxxxxxx,
Xxxxxxxx 00000
|
||
Attention:
Xxxxxxx X. Xxxxxx, Esq.
|
||
If
to Lenders
|
||
or
Agent:
|
Federated
Xxxxxxxx Fund
|
|
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
|
||
Xxx
Xxxx, XX 00000
|
||
Attention:
Xxxxxxxx X. Gold
|
42
With
a copy to:
|
Xxxx
Xxxxx LLP
|
|
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
|
||
Xxx
Xxxx, Xxx Xxxx 00000
|
||
Attention:
Xxxxxx X. XxXxxxx, Esq.
|
||
If
to Samsung
|
||
C&T Corporation:
|
Samsung
C&T Corporation
|
|
30th
Floor Samsung C&T Corporation Building
|
||
0000-00,
Xxxxxx-0 Xxxx, Xxxxxx-Xx
|
||
Xxxxx,
Xxxxx
|
||
Attention:
Hachull Xxxxx
|
||
With
a copy to:
|
Samsung
C&T Corporation
|
|
32nd
Floor Samsung C&T Corporation Building
|
||
0000-00,
Xxxxxx-0 Xxxx, Xxxxxx-Xx
|
||
Xxxxx,
Xxxxx
|
||
Attention:
XxxxXxx Xxx, Esq.
|
Notwithstanding
the foregoing, that parties expressly acknowledge and agree that foregoing
provisions of notice by Lenders to Borrower’s counsel is an accommodation only,
and that Lender shall have fulfilled its notice obligation hereunder if notice
shall have been received by Borrower at the address set forth above,
irrespective of whether such notice is received by Borrower’s counsel.
15.5 Amendments;
Waiver of Defaults.
The
terms of this Agreement shall not be amended, waived, altered, modified,
supplemented or terminated in any manner whatsoever except by a written
instrument signed by the Required Lenders, Agent, and Borrower. Any default
or
Event of Default by Borrower may only be waived by a written instrument
specifically describing such default or Event of Default and signed by the
Lender.
15.6 Binding
on Successors.
(a) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided, however, that Borrower
may not assign any of its rights or obligations under this Agreement or the
other Loan Documents to any Person without the prior written consent of each
Lender.
(b) A
Lender
may assign any or all of the Obligations together with any or all of the
security therefor to any Person and any such assignee shall succeed to all
of
such Lender’s rights with respect thereto upon the consent of the Borrower. Such
Lender shall notify the other Lender and Borrower of any such assignment. Upon
such assignment, such assigning Lender shall have no further obligations under
the Loan Documents.
43
15.7 Invalidity.
Any
provision of this Agreement which may be determined by competent authority
to be
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.
15.8 Section
or Paragraph Headings.
Section
and paragraph headings are for convenience only and shall not be construed
as
part of this Agreement.
15.9 APPLICABLE
LAW:
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, THE LAWS OF WHICH THE BORROWER HEREBY
EXPRESSLY ELECTS TO APPLY TO THIS AGREEMENT, WITHOUT GIVING EFFECT TO PROVISIONS
FOR CHOICE OF LAW HEREUNDER. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING
BROUGHT TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT.
15.10 WAIVER
OF JURY TRIAL:
BORROWER HEREBY WAIVES ANY AND ALL RIGHTS THAT IT MAY NOW OR HEREAFTER HAVE
UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE TO A TRIAL BY JURY
OF ANY AND ALL ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR
PROCEEDING BETWEEN BORROWER, AGENT, EACH LENDER OR ITS SUCCESSORS AND ASSIGNS,
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS,
THE OBLIGATIONS AND/OR THE COLLATERAL. IT IS INTENDED THAT SAID WAIVER SHALL
APPLY TO ANY AND ALL DEFENSES, RIGHTS, AND/OR COUNTERCLAIMS IN ANY ACTION OR
PROCEEDINGS BETWEEN BORROWER AND AGENT OR ANY LENDER. BORROWER WAIVES ALL RIGHTS
TO INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND,
NATURE OR DESCRIPTION IN ANY ACTION OR PROCEEDING INSTITUTED BY EACH LENDER
WITH
RESPECT TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS, THE
COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO, EXCEPT
COMPULSORY COUNTERCLAIMS.
15.11 CONSENT
TO JURISDICTION:
BORROWER HEREBY (a)
IRREVOCABLY SUBMITS AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND
FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, WITH RESPECT TO ANY ACTION
OR
PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE
OBLIGATIONS AND/OR THE COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING
THERETO, AND (b)
WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS
WITH RESPECT THERETO. IN ANY SUCH ACTION OR PROCEEDING, BORROWER WAIVES PERSONAL
SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS AND PAPERS THEREIN AND
AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO BORROWER AT ITS OFFICES SET FORTH HEREIN OR OTHER ADDRESS
THEREOF OF WHICH LENDER HAS RECEIVED NOTICE AS PROVIDED IN THIS
AGREEMENT.
44
15.12 Entire
Agreement.
This
Agreement, the other Loan Documents, any supplements or amendments hereto or
thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
15.13 Counterparts.
This
Agreement may be executed in counterparts and by facsimile or other electronic
signatures, each of which when so executed, shall be deemed an original, but
all
of which shall constitute but one and the same instrument.
45
IN
WITNESS WHEREOF,
this
Loan and Security Agreement has been duly executed as of the day and year first
above written.
BORROWER:
|
|
HYDROGEN,
L.L.C.
|
|
By:
|
/s/ Xxxx X. Xxxxx |
Name:
|
Xxxx
X. Xxxxx
|
Title:
|
Chief Executive Officer |
GUARANTOR:
|
|
HYDROGEN
CORPORATION
|
|
By:
|
/s/ Xxxx X. Xxxxx |
Name:
|
Xxxx X. Xxxxx |
Title:
|
Chief Executive Officer |
AGENT:
|
|
FEDERATED
XXXXXXXX FUND
|
|
a
portfolio of Federated Equity Funds
|
|
By:
|
/s/ Xxxxxxxx Xxxxxxx |
Name:
|
Xxxxxxxx Xxxxxxx |
Title:
|
Vice President |
LENDERS:
|
|
FEDERATED
XXXXXXXX FUND
|
|
a
portfolio of Federated Equity Funds
|
|
By:
|
/s/ Xxxxxxxx Xxxxxxx |
Name:
|
Xxxxxxxx Xxxxxxx |
Title:
|
Vice President |
[Signature
Page to Loan and Security Agreement]
S-1
/s/ Xxxxx-Xxx Xxx | |
Name:
|
Xxxxx-Xxx Xxx |
Title:
|
Senior Executive Vice President |
[Signature
Page to Loan and Security Agreement]
EXHIBIT
A
[FORM
OF WARRANT]
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED
OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
HYDROGEN
CORPORATION
WARRANT
Warrant
No. XXXX
|
Original
Issue Date: August 22, 2008
|
HYDROGEN
CORPORATION, a Nevada corporation (the “Company”),
hereby certifies that, for value received, [NAME OF LENDER] or its permitted
registered assigns (the “Holder”),
is
entitled to purchase from the Company up to a total of 400,000 shares of
common
stock, $0.001 par value (the “Common
Stock”),
of
the Company (each such share, a “Warrant
Share”
and
all
such shares, the “Warrant
Shares”)
at an
exercise price per share equal to the Exercise Price (as defined herein),
at
such time and in such amount as more fully described herein, and subject
to the
following terms and conditions:
This
Warrant is issued pursuant to that certain Loan and Security Agreement, dated
August 22, 2008, by and among the Company, HydroGen L.L.C., Federated Xxxxxxxx
Fund, a portfolio of Federated Equity Fund, as Agent for Federated Xxxxxxxx
Fund
and Samsung C&T Corporation (the “Loan
and Security Agreement”).
The
Warrants and Warrant Shares shall be referred to herein collectively as the
“Securities.”
1.
Definitions.
In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein have the meanings given to such terms in
the
Security and Loan Agreement.
2. List
of Warrant Holders.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder (which shall include the initial Holder or,
as the
case may be, any registered assignee to which this Warrant is permissibly
assigned hereunder from time to time). The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
3.
List
of Transfers.
(a) This
Warrant is subject to the restrictions noted in the legend set forth on the
first page of this Warrant.
-1-
(b) The
Company shall register any such transfer of all or any portion of this Warrant
in the Warrant Register, upon (i) surrender of this Warrant, with the Form
of
Assignment attached hereto duly completed and signed, to the Company at its
address specified in Section 13 hereof and (ii) if a registration statement
is
not effective, (x) delivery, at the request of the Company, of an opinion
of
counsel reasonably satisfactory to the Company, to the effect that the transfer
of such portion of this Warrant may be made pursuant to an available exemption
from the registration requirements of the Securities Act and all applicable
state securities or blue sky laws and (y) delivery by the transferee of a
written statement to the Company certifying that the transferee is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and
making the representations and certifications set forth below in Section
3(c),
to the Company at its address specified herein. Upon any such registration
or
transfer, a new Warrant to purchase Common Stock, in substantially the form
of
this Warrant (any such new Warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to
the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations in respect
of
the New Warrant that the Holder has in respect of this Warrant. Notwithstanding
the foregoing, to the extent a Holder desires to transfer this Warrant to
a
non-affiliate after the effectiveness of any registration statement filed
by the
Company to register for offer and sale the Warrant Shares, then such transferee
shall not be entitled to the registration rights associated with the underlying
Warrant Shares but shall be entitled to all other rights as a Holder hereunder,
including the right to exercise this Warrant on a “cashless” exercise basis
pursuant to Section 10(b) hereof.
(c) Any
transferee of the Warrant shall represent and warrant to the Company the
following:
(i)
Investment
Intent.
Such
transferee understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities and, upon exercise of the Warrant will
acquire the Warrant Shares issuable upon exercise thereof, as principal for
its
own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such transferee's right, subject to the provisions
of
this Agreement, at all times to sell or otherwise dispose of all or any part
of
such Securities pursuant to an effective registration statement under the
Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a representation
or
warranty by such transferee to hold the Securities for any period of time.
Such
transferee is acquiring the Securities hereunder in the ordinary course of
its
business. Such transferee does not have any agreement, plan or understanding,
directly or indirectly, with any Person to distribute any of the
Securities.
(ii)
Purchaser
Status.
At the
time such transferee was offered the Securities, it was, and at the date
hereof
it is, and on each date on which it exercises the Warrants it will be, an
“accredited investor” as defined in Rule 501(a) under the Securities Act. Such
transferee is not a registered broker-dealer under Section 15 of the Exchange
Act.
(iii)
General
Solicitation.
Such
transferee is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published
in any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
4.
Exercise,
Price and Duration of Warrants.
(a)
This
Warrant shall be exercisable by the registered Holder in the amounts and
at the
times as stated below:
(i)
At
any time and from time to time on or after the Closing Date and through and
including the Expiration Date, the registered Holder of this Warrant may
exercise this Warrant by purchasing up to 200,000 Warrant Shares at the Exercise
Price.
-2-
(ii)
At
any time and from time to time on or after the date on which the amount in
the
Borrower’s Account is released to the Borrowers pursuant to Section 2.1 of the
Loan and Security Agreement (such date a “Vesting Date” and together with the
Closing Date, the “Vesting Dates”) and through and including the Expiration
Date, the registered Holder of this Warrant may exercise this Warrant by
purchasing up to 200,000 Warrant Shares at the Exercise Price.
(b)
As
used
in this Agreement, the following terms shall have their respective
meaning:
(i)
“Exercise Price” shall mean the per share price equal to the volume weighted
average sale price (regular way) for each trade for
the
period starting on the 25th trading day prior to the respective Vesting Date
and
ending on the 10th trading day prior to such Vesting
Date.
(ii)
“Expiration Date” shall mean August 22, 2013.
(c)
Subject
to Section 11 hereof, at 5:00 p.m., New York City time, on the Expiration
Date,
the portion of this Warrant not exercised prior thereto shall be and become
void
and of no value and this Warrant shall be terminated and no longer outstanding.
(d) The
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the “Exercise
Notice”),
completed and duly signed, together with the aggregate Exercise Price for
the
number of Warrant Shares to be issued pursuant to such exercise, and (ii)
if
such Holder is not utilizing the cashless exercise provisions set forth in
this
Warrant, payment of the Exercise Price for the number of Warrant Shares as
to
which this Warrant is being exercised, and the date such items are delivered
to
the Company (as determined in accordance with the notice provisions hereof)
is
an “Exercise
Date.”
The
delivery by (or on behalf of) the Holder of the Exercise Notice and the
applicable Exercise Price shall be accompanied by a statement by the Holder
certifying to the Company the representations and warranties contained in
Section 3(c) hereof. The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery
of the
Exercise
Notice
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.
5.
Delivery
of Warrant Shares.
(a)
Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
three Trading Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate (provided that, if a registration
statement is not effective and the Holder directs the Company to deliver
a
certificate for the Warrant Shares in a name other than that of the Holder
or an
Affiliate of the Holder, it shall deliver to the Company on the Exercise
Date an
opinion of counsel reasonably satisfactory to the Company to the effect that
the
issuance of such Warrant Shares in such other name may be made pursuant to
an
available exemption from the registration requirements of the Securities
Act and
all applicable state securities or blue sky laws), a certificate for the
Warrant
Shares issuable upon such exercise, free of restrictive legends unless a
registration statement covering the resale of the Warrant Shares and naming
the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable pursuant to Rule 144 under the Securities
Act. The Holder, or any Person permissibly so designated by the Holder to
receive Warrant Shares, shall be deemed to have become the holder of record
of
such Warrant Shares as of the Exercise Date.
(b)
If
by the
close of the third Trading Day after delivery of an Exercise Notice, the
Company
fails to deliver to the Holder a certificate representing the required number
of
Warrant Shares in the manner required pursuant to Section 5(a), and if after
such third Trading Day and prior to the receipt of such Warrant Shares, the
Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares
which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then
the Company shall, within three Trading Days after the Holder’s request and in
the Holder’s sole discretion, either (1) pay in cash to the Holder an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such Warrant Shares) shall terminate or (2) promptly honor its obligation
to
deliver to the Holder a certificate or certificates representing such Warrant
Shares and pay cash to the Holder in an amount equal to the excess (if any)
of
the Buy-In Price over the product of (A) such number of Warrant Shares, times
(B) the closing bid price of a share of Common Stock on the date of the event
giving rise to the Company’s obligation to deliver such certificate.
-3-
(c)
To
the
extent permitted by law, the Company’s obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same,
any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company
or any
violation or alleged violation of law by the Holder or any other Person,
and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant
to the
terms hereof.
6.
Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue
or
transfer tax, withholding tax, transfer agent fee or other incidental tax
or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in
respect
of any transfer involved in the registration of any certificates for Warrant
Shares or Warrants in a name other than that of the Holder. The Holder shall
be
responsible for all other tax liability that may arise as a result of holding
or
transferring this Warrant or receiving Warrant Shares upon exercise hereof.
7.
Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue
or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity (which shall
not
include a surety bond), if requested. Applicants for a New Warrant under
such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company
may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company
as
a condition precedent to the Company’s obligation to issue the New Warrant.
8.
Reservation
of Warrant Shares.
The
Company covenants that it will initially reserve and keep available out of
the
aggregate of its authorized but unissued and otherwise unreserved Common
Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise
of
this Warrant as herein provided, [one hundred twenty percent (120%)] of the
number of Warrant Shares which are initially issuable and deliverable upon
the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder. The Company
further
covenants that it will at all times reserve and keep available out of the
aggregate of its authorized but unissued and otherwise unreserved Common
Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise
of
this Warrant as herein provided, the number of Warrant Shares which are then
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of persons other
than
the Holder (taking into account the adjustments and restrictions of Section
9).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable.
-4-
9.
Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
its
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines its outstanding shares of Common Stock into a smaller number of
shares,
then in each such case the Exercise Price shall be multiplied by 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. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to
clause
(ii) or (iii) of this paragraph shall become effective immediately after
the
effective date of such subdivision or combination.
(b)
Pro
Rata Distributions.
If the
Company, at any time while this Warrant is outstanding, distributes to all
holders of Common Stock (i) evidences of its indebtedness, (ii) any security
(other than a distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or (iv)
any
other asset (in each case, “Distributed
Property”),
then,
upon any exercise of this Warrant that occurs after the record date fixed
for
determination of stockholders entitled to receive such distribution, the
Holder
shall be entitled to receive, in addition to the Warrant Shares otherwise
issuable upon such exercise (if applicable), the Distributed Property that
such
Holder would have been entitled to receive in respect of such number of Warrant
Shares had the Holder been the record holder of such Warrant Shares immediately
prior to such record date.
(c) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding (i) the Company effects any merger
or
consolidation of the Company with or into another Person, in which the Company
is not the survivor, (ii) the Company effects any sale of all or substantially
all of its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, or (iv) the Company
effects
any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property (each, a “Fundamental
Transaction”),
then
the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in
full
of this Warrant (the “Alternate
Consideration”).
(d)
Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
(a) of this Section 9, the number of Warrant Shares that may be purchased
upon
exercise of this Warrant shall be increased or decreased proportionately,
so
that after such adjustment the aggregate Exercise Price payable hereunder
for
the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.
(e)
Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th
of a
share, as applicable. The number of shares of Common Stock outstanding at
any
given time shall not include shares owned or held by or for the account of
the
Company, and the disposition of any such shares shall be considered an issue
or
sale of Common Stock.
-5-
(f)
Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
9,
the
Company at its expense will, at the written request of the Holder, promptly
compute such adjustment, in good faith, in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment, including
a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments
and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate
to
the Holder and to the Company’s Transfer Agent.
(g)
Notice
of Corporate Events.
If,
while this Warrant is outstanding, the Company (i) declares a dividend or
any
other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants
to
subscribe for or purchase any capital stock of the Company or any Subsidiary,
(ii) authorizes or approves, enters into any agreement contemplating, or
solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company, then, except if such notice and the contents thereof shall
be
deemed to constitute material non-public information, the Company shall deliver
to the Holder a notice describing the material terms and conditions of such
transaction at least ten (10) Trading Days prior to the applicable record
or
effective date on which a Person would need to hold Common Stock in order
to
participate in or vote with respect to such transaction, and the Company
will
take all reasonable steps to give the Holder the practical opportunity to
exercise this Warrant prior to such time; provided,
however,
that
the failure to deliver such notice or any defect therein shall not affect
the
validity of the corporate action required to be described in such notice.
10.
Payment
of Exercise Price.
The
Holder may pay the Exercise Price in one of the following manners:
(a)
Cash
Exercise.
The
Holder may deliver immediately available funds; or
(b)
Cashless
Exercise.
If an
Exercise Notice is delivered at a time when a registration statement permitting
the Holder to resell the Warrant Shares is required to be effective and is
not
then effective or the prospectus forming a part thereof is not then available
to
the Holder for the resale of the Warrant Shares, then the Holder may notify
the
Company in an Exercise Notice of its election to utilize cashless exercise,
in
which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
number of Warrant Shares with respect to which this Warrant is being exercised.
A
= the
average of the closing prices of a share of Common Stock for the five Trading
Days immediately prior to (but not including) the Exercise Date.
B
= the
Exercise Price.
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder,
and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued.
-6-
11.
No
Fractional Shares.
No
fractional Warrant Shares will be issued in connection with any exercise
of this
Warrant. In lieu of any fractional shares which would otherwise be issuable,
the
Company shall pay cash equal to the product of such fraction multiplied by
the
closing price of one Warrant Share as reported by the applicable Trading
Market
on the Exercise Date.
12.
Registration
Rights and SEC Reporting Obligations of Company.
(a)
Piggy
Back Registration Rights. If
the
Investor exercises any portion of the Warrant, and thereafter the Company
proposes to file a registration statement under the Securities Act with respect
to an offering for its own account of any class of its equity securities
(other
than a registration statement on Form S-8 (or any
successor
form) or any other registration statement relating solely to employee benefit
plans or filed in connection with an exchange offer, then the Company shall
in
each case give written notice of such proposed filing to the Holder as soon
as
practicable (but no later than 20 business days) before the anticipated filing
date, and such notice shall offer each Holder the opportunity to register
such
number of shares of Warrant Shares as such Holder may request. Each Holder
desiring to have Warrant Shares included in such registration statement shall
so
advise the Company in writing within 10 business days after the date on which
the Company’s notice is so given, setting forth the number of shares of Warrant
Shares for which registration is requested. If the Company's offering is
to be
an underwritten offering, the Company shall use its reasonable best efforts
to
cause the managing underwriter or underwriters to permit the Holders of the
Warrant Shares requested to be included in the registration for such offering
to
include such Warrant Shares in such offering on the same terms and conditions
as
any similar securities of the Company included therein.
(b)
SEC
Reporting Obligation.
The
Company agrees to make publicly available adequate public information necessary
for the Holder to transfer the Warrant Shares pursuant to Rule 144 promulgated
under the Securities Act (“Rule
144”)
by
providing the following:
(i)
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For
so long at the Company is subject to the reporting requirements
of Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended,
(the
“Exchange
Act”),
the Company shall timely file (inclusive of any extensions) all
required
reports under Section 13 or 15(d) of the Exchange Act, as applicable,
(other than Form 8-K reports).
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(ii)
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If
the Company is not subject to the reporting requirements of Section
13 or
15(d) of the Exchange Act, the Company shall make publicly available
that
information specified in Rule 144 necessary for the Holder to transfer
the
Warrant Shares pursuant to Rule 144.
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13.
Notices.
Any and
all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed
given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 5:00 p.m. (New York City time) on a Trading Day, (ii)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 5:00 p.m. (New York City time)
on
any Trading Day, (iii) the Trading Day following the date of mailing, if
sent by
nationally recognized overnight courier service, or (iv) upon actual receipt
by
the party to whom such notice is required to be given. The addresses for
such
notices or communications shall be: (i) if to the Company, to HydroGen
Corporation, 00 Xxxx 00xx
Xxxxxx,
Xxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attn: Chief Executive Officer or to
facsimile number (000) 000-0000 (or such other address as the Company shall
indicate in writing in accordance with this Section) or (ii) if to the Holder,
to the address or facsimile number appearing on the Warrant Register (or
such
other address as the Company shall indicate in writing in accordance with
this
Section).
-7-
14.
Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon thirty (30)
days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged
or any
corporation resulting from any consolidation to which the Company or any
new
warrant agent shall be a party or any corporation to which the Company or
any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
15.
Miscellaneous.
(a)
This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by
the
Company and the Holder, or their successors and assigns.
(b)
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceedings”)
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the New York Courts. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the New
York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim
that
it is not personally subject to the jurisdiction of any New York Court, or
that
such Proceeding has been commenced in an improper or inconvenient forum.
Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such Proceeding by mailing a copy thereof
via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant
and
agrees that such service shall constitute good and sufficient service of
process
and notice thereof. Nothing contained herein shall be deemed to limit in
any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable
law,
any and all right to trial by jury in any legal proceeding arising out of
or
relating to this Warrant or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its attorney’s fees and other costs and expenses incurred in
connection with the investigation, preparation and prosecution of such
Proceeding.
(c)
The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d)
In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon
a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e)
Other
than as otherwise set forth herein, prior to exercise of this Warrant, the
Holder hereof shall not, by reason of by being a Holder, be entitled to any
rights of a stockholder with respect to the Warrant Shares
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
-8-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its
authorized officer as of the date first indicated above.
HYDROGEN
CORPORATION
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By:
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Name:
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Xxxx
X. Xxxxx
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Title:
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Chief
Executive Officer
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EXERCISE
NOTICE
HYDROGEN
CORPORATION
WARRANT
DATED _________________, 2008
Ladies
and Gentlemen:
(1) The
undersigned hereby elects to purchase ______ shares of Common Stock pursuant
to
the above-referenced Warrant. Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
o
Cash
Exercise under
Section 10
o
Cashless
Exercise under Section
10
(3) If
the
Holder has elected a Cash Exercise, the holder shall pay the sum of $_______
to
the Company in accordance with the terms of the Warrant.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder ______ Warrant
Shares in accordance with the terms of the Warrant.
(5) By
its
delivery of this Exercise Notice, the undersigned represents and warrants
to the
Company that in giving effect to the exercise evidenced hereby the Holder
will
not beneficially own in excess of the number of shares of Common Stock (as
determined in accordance with Section 13(d) of the Securities Exchange Act
of
1934) permitted to be owned under Section 11 of this Warrant to which this
notice relates.
Dated:_______________,
_____
Name
of
Holder:
Name:
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(Signature
must conform in all respects to name of Holder as specified on the face of
the
Warrant)
HYDROGEN
CORPORATION
WARRANT
ORIGINALLY ISSUED August 22, 2008
WARRANT
NO.
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
the
right represented by the within Warrant to purchase
shares
of Common Stock to which the within Warrant relates and appoints ___________
attorney to transfer said right on the books of the Company with full power
of
substitution in the premises.
Dated:
_________, ___
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(Signature
must conform in all respects to name of holder as specified on
the face of
the Warrant)
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Address
of Transferee
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In
the presence of:
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EXHIBIT
B
[FORM
OF DEFAULT WARRANT]
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED
OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
HYDROGEN
CORPORATION
WARRANT
Warrant
No. XXXX
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Original
Issue Date: __________________
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HYDROGEN
CORPORATION, a Nevada corporation (the “Company”),
hereby certifies that, for value received, [Lender] or its permitted registered
assigns (the “Holder”),
is
entitled to purchase from the Company up to a total of 1,000,000 shares of
common stock, $0.001 par value (the “Common
Stock”),
of
the Company (each such share, a “Warrant
Share”
and
all
such shares, the “Warrant
Shares”)
at an
exercise price per share equal to $0.01 (the “Exercise
Price”),
at
any time and from time to time from and after the Trigger Date (as defined
below) and through and including [FIVE YEARS FROM THE ORIGINAL ISSUE DATE]
(the
“Expiration
Date”),
and
subject to the following terms and conditions:
This
Warrant is issued pursuant to that certain Loan and Security Agreement, dated
August 22, 2008, by and among the Company, HydroGen L.L.C., Federated Xxxxxxxx
Fund, a portfolio of Federated Equity Funds, as Agent for Federated Xxxxxxxx
Fund and Samsung C&T Corporation (the “Loan
and Security Agreement”).
The
Warrants and Warrant Shares shall be referred to herein collectively as the
“Securities.”
1.
Definitions.
In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein have the meanings given to such terms in
the
Security and Loan Agreement.
2. List
of Warrant Holders.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder (which shall include the initial Holder or,
as the
case may be, any registered assignee to which this Warrant is permissibly
assigned hereunder from time to time). The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
3.
List
of Transfers.
(a) This
Warrant is subject to the restrictions noted in the legend set forth on the
first page of this Warrant.
(b) The
Company shall register any such transfer of all or any portion of this Warrant
in the Warrant Register, upon (i) surrender of this Warrant, with the Form
of
Assignment attached hereto duly completed and signed, to the Company at its
address specified in Section 13 hereof and (ii) if a registration statement
is
not effective, (x) delivery, at the request of the Company, of an opinion
of
counsel reasonably satisfactory to the Company, to the effect that the transfer
of such portion of this Warrant may be made pursuant to an available exemption
from the registration requirements of the Securities Act and all applicable
state securities or blue sky laws and (y) delivery by the transferee of a
written statement to the Company certifying that the transferee is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and
making the representations and certifications set forth below in Section
3(c),
to the Company at its address specified herein. Upon any such registration
or
transfer, a new Warrant to purchase Common Stock, in substantially the form
of
this Warrant (any such new Warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to
the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations in respect
of
the New Warrant that the Holder has in respect of this Warrant. Notwithstanding
the foregoing, to the extent a Holder desires to transfer this Warrant to
a
non-affiliate after the effectiveness of any registration statement filed
by the
Company to register for offer and sale the Warrant Shares, then such transferee
shall not be entitled to the registration rights associated with the underlying
Warrant Shares but shall be entitled to all other rights as a Holder hereunder,
including the right to exercise this Warrant on a “cashless” exercise basis
pursuant to Section 10(b) hereof.
-1-
(c) Any
transferee of the Warrant shall represent and warrant to the Company the
following:
(i)
Investment
Intent.
Such
transferee understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities and, upon exercise of the Warrant will
acquire the Warrant Shares issuable upon exercise thereof, as principal for
its
own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such transferee's right, subject to the provisions
of
this Agreement, at all times to sell or otherwise dispose of all or any part
of
such Securities pursuant to an effective registration statement under the
Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a representation
or
warranty by such transferee to hold the Securities for any period of time.
Such
transferee is acquiring the Securities hereunder in the ordinary course of
its
business. Such transferee does not have any agreement, plan or understanding,
directly or indirectly, with any Person to distribute any of the
Securities.
(ii)
Purchaser
Status.
At the
time such transferee was offered the Securities, it was, and at the date
hereof
it is, and on each date on which it exercises the Warrants it will be, an
“accredited investor” as defined in Rule 501(a) under the Securities Act. Such
transferee is not a registered broker-dealer under Section 15 of the Exchange
Act.
(iii)
General
Solicitation.
Such
transferee is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published
in any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
4.
Exercise
and Duration of Warrants.
(a)
All
or
any part of this Warrant shall be exercisable by the registered Holder at
any
time and from time to time on or after the Trigger Date (as defined below)
and
through and including the Expiration Date.
(b)
As
used
in this Agreement, the following term shall have the respective
meaning:
(i)
“Trigger Date” shall mean the day following the occurrence and existence of
an Event of Default (as defined in the Loan and Security Agreement) that
is
either not cured by the Borrower or Guarantor (as defined in the Loan and
Security Agreement) nor waived by the Lenders (as defined in the Loan and
Security Agreement) within the applicable cure period.
-2-
(c)
At
5:00
p.m., New York City time, on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value and
this
Warrant shall be terminated and no longer outstanding.
(d) The
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the “Exercise
Notice”),
completed and duly signed, together with the aggregate Exercise Price for
the
number of Warrant Shares to be issued pursuant to such exercise, and (ii)
if
such Holder is not utilizing the cashless exercise provisions set forth in
this
Warrant, payment of the Exercise Price for the number of Warrant Shares as
to
which this Warrant is being exercised, and the date such items are delivered
to
the Company (as determined in accordance with the notice provisions hereof)
is
an “Exercise
Date.”
The
delivery by (or on behalf of) the Holder of the Exercise Notice and the
applicable Exercise Price shall be accompanied by a statement by the Holder
certifying to the Company the representations and warranties contained in
Section 3(c) hereof. The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery
of the
Exercise
Notice
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.
5.
Delivery
of Warrant Shares.
(a)
Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
three Trading Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate (provided that, if a registration
statement is not effective and the Holder directs the Company to deliver
a
certificate for the Warrant Shares in a name other than that of the Holder
or an
Affiliate of the Holder, it shall deliver to the Company on the Exercise
Date an
opinion of counsel reasonably satisfactory to the Company to the effect that
the
issuance of such Warrant Shares in such other name may be made pursuant to
an
available exemption from the registration requirements of the Securities
Act and
all applicable state securities or blue sky laws), a certificate for the
Warrant
Shares issuable upon such exercise, free of restrictive legends unless a
registration statement covering the resale of the Warrant Shares and naming
the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable pursuant to Rule 144 under the Securities
Act. The Holder, or any Person permissibly so designated by the Holder to
receive Warrant Shares, shall be deemed to have become the holder of record
of
such Warrant Shares as of the Exercise Date.
(b)
If
by the
close of the third Trading Day after delivery of an Exercise Notice, the
Company
fails to deliver to the Holder a certificate representing the required number
of
Warrant Shares in the manner required pursuant to Section 5(a), and if after
such third Trading Day and prior to the receipt of such Warrant Shares, the
Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares
which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then
the Company shall, within three Trading Days after the Holder’s request and in
the Holder’s sole discretion, either (1) pay in cash to the Holder an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such Warrant Shares) shall terminate or (2) promptly honor its obligation
to
deliver to the Holder a certificate or certificates representing such Warrant
Shares and pay cash to the Holder in an amount equal to the excess (if any)
of
the Buy-In Price over the product of (A) such number of Warrant Shares, times
(B) the closing bid price of a share of Common Stock on the date of the event
giving rise to the Company’s obligation to deliver such certificate.
-3-
(c)
To
the
extent permitted by law, the Company’s obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same,
any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company
or any
violation or alleged violation of law by the Holder or any other Person,
and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant
to the
terms hereof.
6.
Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue
or
transfer tax, withholding tax, transfer agent fee or other incidental tax
or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in
respect
of any transfer involved in the registration of any certificates for Warrant
Shares or Warrants in a name other than that of the Holder. The Holder shall
be
responsible for all other tax liability that may arise as a result of holding
or
transferring this Warrant or receiving Warrant Shares upon exercise hereof.
7.
Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue
or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity (which shall
not
include a surety bond), if requested. Applicants for a New Warrant under
such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company
may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company
as
a condition precedent to the Company’s obligation to issue the New Warrant.
8.
Reservation
of Warrant Shares.
The
Company covenants that it will initially reserve and keep available out of
the
aggregate of its authorized but unissued and otherwise unreserved Common
Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise
of
this Warrant as herein provided, [one hundred twenty percent (120%)] of the
number of Warrant Shares which are initially issuable and deliverable upon
the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder. The Company
further
covenants that it will at all times reserve and keep available out of the
aggregate of its authorized but unissued and otherwise unreserved Common
Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise
of
this Warrant as herein provided, the number of Warrant Shares which are then
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of persons other
than
the Holder (taking into account the adjustments and restrictions of Section
9).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable.
9.
Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
its
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines its outstanding shares of Common Stock into a smaller number of
shares,
then in each such case the Exercise Price shall be multiplied by 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. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to
clause
(ii) or (iii) of this paragraph shall become effective immediately after
the
effective date of such subdivision or combination.
-4-
(b)
Pro
Rata Distributions.
If the
Company, at any time while this Warrant is outstanding, distributes to all
holders of Common Stock (i) evidences of its indebtedness, (ii) any security
(other than a distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or (iv)
any
other asset (in each case, “Distributed
Property”),
then,
upon any exercise of this Warrant that occurs after the record date fixed
for
determination of stockholders entitled to receive such distribution, the
Holder
shall be entitled to receive, in addition to the Warrant Shares otherwise
issuable upon such exercise (if applicable), the Distributed Property that
such
Holder would have been entitled to receive in respect of such number of Warrant
Shares had the Holder been the record holder of such Warrant Shares immediately
prior to such record date.
(c) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding (i) the Company effects any merger
or
consolidation of the Company with or into another Person, in which the Company
is not the survivor, (ii) the Company effects any sale of all or substantially
all of its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, or (iv) the Company
effects
any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property (each, a “Fundamental
Transaction”),
then
the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in
full
of this Warrant (the “Alternate
Consideration”).
(d)
Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
(a) of this Section 9, the number of Warrant Shares that may be purchased
upon
exercise of this Warrant shall be increased or decreased proportionately,
so
that after such adjustment the aggregate Exercise Price payable hereunder
for
the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.
(e)
Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th
of a
share, as applicable. The number of shares of Common Stock outstanding at
any
given time shall not include shares owned or held by or for the account of
the
Company, and the disposition of any such shares shall be considered an issue
or
sale of Common Stock.
(f)
Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
9,
the
Company at its expense will, at the written request of the Holder, promptly
compute such adjustment, in good faith, in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment, including
a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments
and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate
to
the Holder and to the Company’s Transfer Agent.
-5-
(g)
Notice
of Corporate Events.
If,
while this Warrant is outstanding, the Company (i) declares a dividend or
any
other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants
to
subscribe for or purchase any capital stock of the Company or any Subsidiary,
(ii) authorizes or approves, enters into any agreement contemplating, or
solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company, then, except if such notice and the contents thereof shall
be
deemed to constitute material non-public information, the Company shall deliver
to the Holder a notice describing the material terms and conditions of such
transaction at least ten (10) Trading Days prior to the applicable record
or
effective date on which a Person would need to hold Common Stock in order
to
participate in or vote with respect to such transaction, and the Company
will
take all reasonable steps to give the Holder the practical opportunity to
exercise this Warrant prior to such time; provided,
however,
that
the failure to deliver such notice or any defect therein shall not affect
the
validity of the corporate action required to be described in such notice.
10.
Payment
of Exercise Price.
The
Holder may pay the Exercise Price in one of the following manners:
(a)
Cash
Exercise.
The
Holder may deliver immediately available funds; or
(b)
Cashless
Exercise.
If an
Exercise Notice is delivered at a time when a registration statement permitting
the Holder to resell the Warrant Shares is required to be effective and is
not
then effective or the prospectus forming a part thereof is not then available
to
the Holder for the resale of the Warrant Shares, then the Holder may notify
the
Company in an Exercise Notice of its election to utilize cashless exercise,
in
which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
number of Warrant Shares with respect to which this Warrant is being exercised.
A
= the
average of the closing prices of a share of Common Stock for the five Trading
Days immediately prior to (but not including) the Exercise Date.
B
= the
Exercise Price.
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder,
and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued.
11.
No
Fractional Shares.
No
fractional Warrant Shares will be issued in connection with any exercise
of this
Warrant. In lieu of any fractional shares which would otherwise be issuable,
the
Company shall pay cash equal to the product of such fraction multiplied by
the
closing price of one Warrant Share as reported by the applicable Trading
Market
on the Exercise Date.
-6-
12.
Registration
Rights and SEC Reporting Obligations of Company.
(a)
Piggy
Back Registration Rights. If
the
Investor exercises any portion of the Warrant, and thereafter the Company
proposes to file a registration statement under the Securities Act with respect
to an offering for its own account of any class of its equity securities
(other
than a registration statement on Form S-8 (or any
successor
form) or any other registration statement relating solely to employee benefit
plans or filed in connection with an exchange offer, then the Company shall
in
each case give written notice of such proposed filing to the Holder as soon
as
practicable (but no later than 20 business days) before the anticipated filing
date, and such notice shall offer each Holder the opportunity to register
such
number of shares of Warrant Shares as such Holder may request. Each Holder
desiring to have Warrant Shares included in such registration statement shall
so
advise the Company in writing within 10 business days after the date on which
the Company’s notice is so given, setting forth the number of shares of Warrant
Shares for which registration is requested. If the Company's offering is
to be
an underwritten offering, the Company shall use its reasonable best efforts
to
cause the managing underwriter or underwriters to permit the Holders of the
Warrant Shares requested to be included in the registration for such offering
to
include such Warrant Shares in such offering on the same terms and conditions
as
any similar securities of the Company included therein.
(b)
SEC
Reporting Obligation.
The
Company agrees to make publicly available adequate public information necessary
for the Holder to transfer the Warrant Shares pursuant to Rule 144 promulgated
under the Securities Act (“Rule
144”)
by
providing the following:
(i)
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For
so long at the Company is subject to the reporting requirements
of Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended,
(the
“Exchange
Act”),
the Company shall timely file (inclusive of any extensions) all
required
reports under Section 13 or 15(d) of the Exchange Act, as applicable,
(other than Form 8-K reports).
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(ii)
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If
the Company is not subject to the reporting requirements of Section
13 or
15(d) of the Exchange Act, the Company shall make publicly available
that
information specified in Rule 144 necessary for the Holder to transfer
the
Warrant Shares pursuant to Rule 144.
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13.
Notices.
Any and
all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed
given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 5:00 p.m. (New York City time) on a Trading Day, (ii)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 5:00 p.m. (New York City time)
on
any Trading Day, (iii) the Trading Day following the date of mailing, if
sent by
nationally recognized overnight courier service, or (iv) upon actual receipt
by
the party to whom such notice is required to be given. The addresses for
such
notices or communications shall be: (i) if to the Company, to HydroGen
Corporation, 00 Xxxx 00xx
Xxxxxx,
Xxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attn: Chief Executive Officer or to
facsimile number (000) 000-0000 (or such other address as the Company shall
indicate in writing in accordance with this Section) or (ii) if to the Holder,
to the address or facsimile number appearing on the Warrant Register (or
such
other address as the Company shall indicate in writing in accordance with
this
Section).
14.
Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon thirty (30)
days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged
or any
corporation resulting from any consolidation to which the Company or any
new
warrant agent shall be a party or any corporation to which the Company or
any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
-7-
15.
Miscellaneous.
(a)
This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by
the
Company and the Holder, or their successors and assigns.
(b)
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceedings”)
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the New York Courts. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the New
York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim
that
it is not personally subject to the jurisdiction of any New York Court, or
that
such Proceeding has been commenced in an improper or inconvenient forum.
Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such Proceeding by mailing a copy thereof
via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant
and
agrees that such service shall constitute good and sufficient service of
process
and notice thereof. Nothing contained herein shall be deemed to limit in
any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable
law,
any and all right to trial by jury in any legal proceeding arising out of
or
relating to this Warrant or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its attorney’s fees and other costs and expenses incurred in
connection with the investigation, preparation and prosecution of such
Proceeding.
(c)
The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d)
In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon
a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e)
Other
than as otherwise set forth herein, prior to exercise of this Warrant, the
Holder hereof shall not, by reason of by being a Holder, be entitled to any
rights of a stockholder with respect to the Warrant Shares
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
-8-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its
authorized officer as of the date first indicated above.
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HYDROGEN
CORPORATION
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By:
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Name:
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Title:
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EXERCISE
NOTICE
HYDROGEN
CORPORATION
WARRANT
DATED _________________, 2008
Ladies
and Gentlemen:
(1) The
undersigned hereby elects to purchase ______ shares of Common Stock pursuant
to
the above-referenced Warrant. Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
o
Cash
Exercise under Section 10
o
Cashless
Exercise under Section 10
(3) If
the
Holder has elected a Cash Exercise, the holder shall pay the sum of $_______
to
the Company in accordance with the terms of the Warrant.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder ______ Warrant
Shares in accordance with the terms of the Warrant.
(5) By
its
delivery of this Exercise Notice, the undersigned represents and warrants
to the
Company that in giving effect to the exercise evidenced hereby the Holder
will
not beneficially own in excess of the number of shares of Common Stock (as
determined in accordance with Section 13(d) of the Securities Exchange Act
of
1934) permitted to be owned under Section 11 of this Warrant to which this
notice relates.
Dated:_______________,
_____
Name
of
Holder:
(Signature
must conform in all respects to name of Holder as specified on the face of
the
Warrant)
HYDROGEN
CORPORATION
WARRANT
ORIGINALLY ISSUED August __, 2008
WARRANT
NO.
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
the
right represented by the within Warrant to purchase
shares
of Common Stock to which the within Warrant relates and appoints ___________
attorney to transfer said right on the books of the Company with full power
of
substitution in the premises.
Dated:
_________, ___
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(Signature
must conform in all respects to name of holder as specified on
the face of
the Warrant)
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Address
of Transferee
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In
the presence of:
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EXHIBIT
1.63
Permitted
Encumbrances
The
following is a list of Capital Assets encumbered by purchase money security
interests (including, without limitation, capitalized or finance leases) in
favor of equipment vendors and the remaining payments on such finance
leases:
Equipment
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Remaining Payments
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5000
lb Nissan Forklift
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2,026.81
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Pacific
Scrub Master floor scrubber
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1,618.83
|
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(4)
Retrofit Control Systems
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4,014.34
|
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(1)
Xxxxxxxxx Model 4/MM80VD50.M Conveyor Oven
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29,922.87
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(2)
Blue M 11MT-243618-21-AM-SPL's with floor stands
(2)
Blue M 11MT-243618-21-SPL Atmosphere Standard Retorts including
steel
surcharge
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22,778.63
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(2)
Blue M 11MT-243618-21-AM-SPL's with floor stands
(2)
Blue M 11MT-243618-21-SPL Atmosphere Standard Retorts including
steel
surcharge
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18,094.88
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(1)
Blue M 11MT-243618-21-AM-SPL's with floor stands
(1)
Blue M 11MT-243618-21-SPL Atmosphere Standard Retorts including
steel
surcharge
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49,581.00
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770
Ton Hydraulic Slab Side Press, Heater Control System, Safety Door,
Cooling
& Filtration Unit, Quiet Package & Bellows Boot
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78,948.00
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