Factoring and Security Agreement

 

FACE AMOUNT

$215,000

INTEREST RATE

3% per month

ISSUANCE DATE

July 2, 2007

MATURITY DATE

September 15, 2007

 

FOR VALUE RECEIVED, Siena Technologies, Inc., Inc., a Nevada corporation (the
“Company”), (OTC BB: SIEN) hereby promises to pay DUTCHESS PRIVATE EQUITIES
FUND, LTD. (the “Holder”) by September 15, 2007 (the “Maturity Date”), or
earlier, the Face Amount of Two Hundred and Fifteen Thousand dollars ($215,000)
U.S., plus accrued interest, in such amounts, at such times and on such terms
and conditions as are specified herein.

 

WHEREAS, the Company desires to sell to the Holder certain of its Accounts, now
existing, which represent amounts due from bona fide sales and delivery of
goods, or the rendering of service, or both, in the regular course of the
Company’s business; and,

 

WHEREAS, Holder desires to purchase those Accounts of the Company that it deems
acceptable upon the terms and conditions set forth in this Agreement.

 

In consideration of the above recitals, the terms and covenants of this
Agreement and other good and valuable consideration, including the payment of
money from Holder to Company, the receipt of which is hereby acknowledged, and
intending to be bound hereby, the Parties agree as follows:

 

Article 1

Method of Payment/Interest

 

The Company shall pay three percent (3%) monthly coupon, compounded daily, on
the unpaid Face Amount, pro rata for partial periods. The Company shall pay a
minimum of two thousand five hundred dollars ($2,500) in interest on the funds
("Minimum Interest").

 

Section 1.2  Prepayment

 

The Company shall make mandatory payments to the Holder as the funds become
available from the invoices listed below in Exhibit A due to the Company’s
wholly owned subsidiary Kelley Communication Company, Inc. (“Kelley”)
("Collateral Accounts" or “Account”) (attached hereto and incorporated herein by
reference). The Company agrees to pay to the Holder, within one (1) day, in
whole or part, that portion of funds from the Collateral Accounts as they become
available in the Company's account. All payments to the Holder shall be made via
wire transfer.

 

The Company may make additional payments (“Prepayment”) without any penalties
provided the Minimum Interest is paid.

 

Article 2  

Collateral

 

 

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The Company will secure the assigned materials and all funds receivable
underlying the Collateral Accounts, due to the Company from the vendors listed
on Collateral Accounts. The Company shall immediately make payment to the Holder
on ANY funds received from the customers listed on Exhibit A. The Company, at
its option, with the consent of the Holder, shall be able to use the funds from
those customers on Exhibit A to pay off the current outstanding Factoring
Agreement dated June 18, 2007.

 

Article 2

Sale; Purchase Price; Assignment and Transfer of Ownership.

 

 

2.1

Offer of Accounts for Sale; Acceptance by Holder.

 

a.           Company shall offer to sell to Holder as absolute owner, with full
recourse, all of Company’s right, title and interest in such of Company’s
Accounts as are listed on the Schedules of Accounts. The current version of the
Schedule of Accounts is attached hereto as Exhibit “A” and may be periodically
revised by Holder.

 

b.           Each Schedule of Accounts shall be accompanied by such
documentation supporting and evidencing the Account, as Holder shall from
time-to-time request.

 

 

2.2

Assignment and Sale

 

For those Accounts that Holder agrees to purchase from Company, Company shall
assign and transfer over to Holder as absolute owner with full recourse all of
Company’s right, title and interest in the Accounts being sold. Company agrees
to execute the Assignment of Accounts substantially in the form attached hereto
as Exhibit “B” for Accounts being sold to Holder.

 

Article 3  

Unpaid Amounts

 

In the event that on the Maturity Date, there is an outstanding balance on the
Face Amount, the Holder can exercise its right to increase the Face Amount by
ten percent (10%) as an initial penalty. The Company shall also continue to pay
the interest rate outlined in this Agreement. If the aforementioned occurs, the
Company will be in Default and remedies as described in Article 4 may be taken
at the Holder’s discretion.

 

Article 4

Defaults and Remedies

 

 

Section 4.1

Events of Default. An “Event of Default” occurs if any of the following occur:

 

(a)          the Company does not make the Payment on the Face Amount of this
Agreement within two (2) business days of the Maturity Date, as applicable, upon
receipt of Collateral or otherwise; or

 

(b)          the Company, pursuant to or within the meaning of any Bankruptcy
Law (as hereinafter defined): (i) commences a voluntary case; (ii) consents to
the entry of an order for relief against it in an involuntary case; (iii)
consents to the appointment of a Custodian (as hereinafter defined) of it or for
all or substantially all of its property; (iv) makes a general assignment for
the benefit of its creditors; or (v) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (A) is for relief against the
Company in an involuntary case; (B) appoints a Custodian of the Company or for
all or substantially all of its

 

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property; or (C) orders the liquidation of the Company, and the order or decree
remains unstayed and in effect for sixty (60) calendar days; or

 

(c)          the Company’s common stock (the "Common Stock") is suspended or is
no longer listed on any recognized exchange, including an electronic
over-the-counter bulletin board, for in excess of two (2) consecutive trading
days; or

 

(d)          any of the Company’s representations or warranties contained in
this Agreement were false when made and such failure continues for a period of
five (5) business days; or,

 

(e)          the Company breaches any covenant or condition of this Agreement,
and such breach, if subject to cure, continues for a period of five (5) business
days.

 

(f)          the Company’s failure to pay any taxes when due unless such taxes
are being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been provided on the Company’s books; provided,
however, that in the event that such failure is curable, the Company shall have
ten (10) business days to cure such failure; or,

 

(g)         an attachment or levy is made upon the Company’s assets having an
aggregate value in excess of twenty-five thousand dollars ($25,000) or a
judgment is rendered against the Company or the Company’s property involving a
liability of more than twenty-five thousand dollars ($25,000) which shall not
have been vacated, discharged, stayed or bonded pending appeal within ninety
(90) days from the entry hereof; or,

 

(h)         any change in the Company’s condition or affairs (financial or
otherwise) which in the Holder’s reasonable, good faith opinion, would have a
Material Adverse Effect; provided, however, that in the event that such failure
is curable, the Company shall have ten (10) business days to cure such failure;
or,

 

(i)          any Lien, except for Permitted Liens, created hereunder or under
any of the Transaction Documents for any reason ceases to be or is not a valid
and perfected Lien having a first priority interest; or,

 

(j)          the indictment or threatened indictment of the Company, any officer
of the Company under any criminal statute, or commencement or threatened
commencement of criminal or civil proceeding against the Company or any officer
of the Company pursuant to which statute or proceeding penalties or remedies
sought or available include forfeiture of any of the property of the Company.

 

As used in this Section 4.1, the term “Bankruptcy Law” means Title 11 of the
United States Code or any similar federal or state law for the relief of
debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.

 

Section 4.2       Remedies. In the Event of Default, the Holder may elect to
secure a portion of the Company's assets as outlined in Article 20 of this
Agreement.

 

For each Event of Default, as outlined in this Agreement, the Holder can
exercise its right to increase the Face Amount ten percent (10%) as an initial
penalty. In addition, the Holder may elect to increase the Face Amount by three
percent (3%) per month paid as a penalty for Liquidated Damages in addition to
the current

 

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Interest being paid on the Note. The Liquated Damages will be compounded daily.
It is the intention and acknowledgement of both parties that the Liquidated
Damages not be deemed as interest.

 

In the event of a Default hereunder, the Holder shall have the right, but not
the obligation, to 1) switch the Residual Amount to a three-year (“Convertible
Maturity Date”), fifteen percent (15%) interest bearing convertible debenture at
the terms described in Section 4.2 (the "Convertible Debenture"). At such time
of Default, the Convertible Debenture shall be considered closed (“Convertible
Closing Date”). If the Holder chooses to convert the Residual Amount to a
Convertible Debenture, the Company shall have forty-five (45) business days
after notice of the same (the "Notice of Convertible Debenture") to file a
registration statement covering an amount of shares equal to three hundred
percent (300%) of the Residual Amount. The Company shall use its best efforts to
require such registration statement to be declared effective under the
Securities Act of 1933, as amended (the “Securities Act”), by the Securities and
Exchange Commission (the “Commission”) within ninety (90) business days of the
date the Company files such Registration Statement. In the event the Company
does not file such registration statement within forty-five (45) business days
of the Holder's request, or such registration statement is not declared by the
Commission to be effective under the Securities Act within the time period
described above , the Residual Amount shall increase by five thousand dollars
($5,000) per day. In the event the Company is given the option for accelerated
effectiveness of the registration statement, it agrees that it shall cause such
registration statement to be declared effective as soon as reasonably
practicable. In the event that the Company is given the option for accelerated
effectiveness of the registration statement, but chooses not to cause such
registration statement to be declared effective on such accelerated basis, the
Residual Amount shall increase by five thousand dollars ($5,000) per day
commencing on the earliest date as of which such registration statement would
have been declared to be effective if subject to accelerated effectiveness.

 

 

Section 4.3

Conversion Privilege

 

(a)          The Holder shall have the right to convert the Convertible
Debenture into shares of Common Stock at any time following the Convertible
Closing Date and which is before the close of business on the Convertible
Maturity Date. The number of shares of Common Stock issuable upon the conversion
of the Convertible Debenture shall be determined pursuant to Section 4.3, but
the number of shares issuable shall be rounded up or down, as the case may be,
to the nearest whole share.

 

(b)          The Convertible Debenture may be converted, whether in whole or in
part, at any time and from time to time.

 

(c)          In the event all or any portion of the Convertible Debenture
remains outstanding on the Convertible Maturity Date (the "Debenture Residual
Amount"), the unconverted portion of such Convertible Debenture will
automatically be converted into shares of Common Stock on such date in the
manner set forth in Section 4.3.

 

 

Section 4.4

Conversion Procedure

 

(a)          The Residual Amount may be converted, in whole or in part any time
and from time to time, following the Convertible Closing Date. Such conversion
shall be effectuated by surrendering to the Company, or its attorney, the
Convertible Debenture to be converted together with a facsimile or original of
the signed notice of conversion (the "Notice of Conversion"). The date on which
the Notice of Conversion is effective (“Conversion Date”) shall be deemed to be
the date on which the Holder has delivered to the Company a facsimile or
original of the signed Notice of Conversion, as long as the original Convertible
Debenture(s) to

 

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be converted are received by the Company within five (5) business days
thereafter. At such time that the original Convertible Debenture has been
received by the Company, the Holder can elect to whether a reissuance of the
Convertible Debenture is warranted, or whether the Company can retain the
Convertible Debenture as to a continual conversion by the Holder.
Notwithstanding the above, any Notice of Conversion received by 4:00 P.M. EST
shall be deemed to have been received the following business day (receipt being
via a confirmation of the time such facsimile to the Company is received).

 

(b)          Common Stock to be Issued.  Upon the conversion of any Convertible
Debentures and upon receipt by the Company or its attorney of a facsimile or
original of the Holder’s signed Notice of Conversion, the Company shall instruct
its transfer agent to issue stock certificates without restrictive legends or
stop transfer instructions, if at that time the aforementioned registration
statement described in Section 4.1 has been declared effective (or with proper
restrictive legends if the registration statement has not as yet been declared
effective), in such denominations to be specified at conversion representing the
number of shares of Common Stock issuable upon such conversion, as applicable.
In the event that the Debenture is aged one year and deemed sellable under Rule
144, the Company shall, upon a Notice of Conversion, instruct the transfer agent
to issue free trading certificates without restrictive legends, subject to other
applicable securities laws. The Company is responsible to provide all costs
associated with the issuance of the shares, including but not limited to the
opinion letter, FedEx of the certificates and any other costs that arise. The
Company shall act as registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Convertible Debenture.
The Company warrants that no instructions, other than these instructions, have
been given or will be given to the transfer agent and that the Common Stock
shall otherwise be freely resold, except as may be set forth herein or subject
to applicable law.

 

(c)          Conversion Rate.  Holder is entitled to convert the Debenture
Residual Amount , plus accrued interest, anytime following the Convertible
Maturity Date, at the lesser of (i) fifty percent (50%) of the lowest closing
bid price during the fifteen (15) trading immediately preceding the Convertible
Maturity Date or (ii) 100% of the lowest bid price for the twenty (20) trading
days immediately preceding the Convertible Maturity Date (“Fixed Conversion
Price”). No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be rounded up or
down, as the case may be, to the nearest whole share.

 

(d)          Nothing contained in the Convertible Debenture shall be deemed to
establish or require the payment of interest to the Holder at a rate in excess
of the maximum rate permitted by governing law. In the event that the rate of
interest required to be paid exceeds the maximum rate permitted by governing
law, the rate of interest required to be paid thereunder shall be automatically
reduced to the maximum rate permitted under the governing law and such excess
shall be returned with reasonable promptness by the Holder to the Company.

 

(e)          It shall be the Company’s responsibility to take all necessary
actions and to bear all such costs to issue the Common Stock as provided herein,
including the responsibility and cost for delivery of an opinion letter to the
transfer agent, if so required. Holder shall be treated as a shareholder of
record on the date Common Stock is issued to the Holder. If the Holder shall
designate another person as the entity in the name of which the stock
certificates issuable upon conversion of the Convertible Debenture are to be
issued prior to the issuance of such certificates, the Holder shall provide to
the Company evidence that either no tax shall be due and payable as a result of
such transfer or that the applicable tax has been paid by the Holder or such
person. Upon surrender of any Convertible Debentures that are to be converted in
part, the Company shall issue to the Holder a new Convertible Debenture equal to
the unconverted amount, if so requested in writing by the Holder.

 

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(f)           Within five (5) business days after receipt of the documentation
referred to above in Section 4.2, the Company shall deliver a certificate, for
the number of shares of Common Stock issuable upon the conversion. In the event
the Company does not make delivery of the Common Stock as instructed by Holder
within five (5) business days after the Conversion Date, then in such event the
Company shall pay to the Holder one percent (1%) in cash of the dollar value of
the Debenture Residual Amount remaining after said conversion, compounded daily,
per each day after the fifth (5th) business day following the Conversion Date
that the Common Stock is not delivered to the Holder.

 

(g)          The Company acknowledges that its failure to deliver the Common
Stock within five (5) business days after the Conversion Date will cause the
Holder to suffer damages in an amount that will be difficult to ascertain.
Accordingly, the parties agree that it is appropriate to include in this
Agreement a provision for liquidated damages. The parties acknowledge and agree
that the liquidated damages provision set forth in this section represents the
parties’ good faith effort to quantify such damages and, as such, agree that the
form and amount of such liquidated damages are reasonable and will not
constitute a penalty. The payment of liquidated damages shall not relieve the
Company from its obligations to deliver the Common Stock pursuant to the terms
of this Convertible Debenture.

 

(h)          The Company shall at all times reserve (or make alternative written
arrangements for reservation or contribution of shares) and have available all
Common Stock necessary to meet conversion of the Convertible Debentures by the
Holder of the entire amount of Convertible Debentures then outstanding. If, at
any time the Holder submits a Notice of Conversion and the Company does not have
sufficient authorized but unissued shares of Common Stock (or alternative shares
of Common Stock as may be contributed by stockholders of the Company) available
to effect, in full, a conversion of the Convertible Debentures (a “Conversion
Default,” the date of such default being referred to herein as the “Conversion
Default Date”), the Company shall issue to the Holder all of the shares of
Common Stock which are available, and the Notice of Conversion as to any
Convertible Debentures requested to be converted but not converted (the
“Unconverted Convertible Debentures”), may be deemed null and void upon written
notice sent by the Holder to the Company. The Company shall provide notice of
such Conversion Default (“Notice of Conversion Default”) to the Holder, by
facsimile within three (3) business days of such default (with the original
delivered by overnight mail or two day courier), and the Holder shall give
notice to the Company by facsimile within five (5) business days of receipt of
the original Notice of Conversion Default (with the original delivered by
overnight mail or two day courier) of its election to either nullify or confirm
the Notice of Conversion.

 

(i)           The Company agrees to pay the Holder payments for a Conversion
Default (“Conversion Default Payments”) in the amount of (N/365) multiplied by
.24 multiplied by the initial issuance price of the outstanding or tendered but
not converted Convertible Debentures held by the Holder where N = the number of
days from the Conversion Default Date to the date (the “Authorization Date”)
that the Company authorizes a sufficient number of shares of Common Stock to
effect conversion of all remaining Convertible Debentures. The Company shall
send notice (“Authorization Notice”) to the Holder that additional shares of
Common Stock have been authorized, the Authorization Date, and the amount of
Holder’s accrued Conversion Default Payments. The accrued Conversion Default
shall be paid in cash or shall be convertible into Common Stock at the
conversion rate set forth in the first sentence of this paragraph, upon written
notice sent by the Holder to the Company, which Conversion Default shall be
payable as follows: (i) in the event the Holder elects to take such payment in
cash, cash payments shall be made to the Holder by the fifth (5th) day of the
following calendar month, or (ii) in the event Holder elects to take such
payment in stock, the Holder may convert such payment amount into Common Stock
at the conversion rate set forth in the first sentence of this paragraph at any
time

 

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after the fifth (5th) day of the calendar month following the month in which the
Authorization Notice was received, until the expiration of the mandatory three
(3) year conversion period.

 

(j)           The Company acknowledges that its failure to maintain a sufficient
number of authorized but unissued shares of Common Stock to effect in full a
conversion of the Convertible Debentures will cause the Holder to suffer damages
in an amount that will be difficult to ascertain. Accordingly, the parties agree
that it is appropriate to include in this Agreement a provision for liquidated
damages. The parties acknowledge and agree that the liquidated damages provision
set forth in this section represents the parties’ good faith effort to quantify
such damages and, as such, agree that the form and amount of such liquidated
damages are reasonable and will not constitute a penalty. The payment of
liquidated damages shall not relieve the Company from its obligations to deliver
the Common Stock pursuant to the terms of this Convertible Debenture.

 

(k)          If, by the third (3rd) business day after the Conversion Date of
any portion of the Convertible Debentures to be converted (the “Delivery Date”),
the transfer agent fails for any reason to deliver the Common Stock upon
conversion by the Holder and after such Delivery Date, the Holder purchases, in
an open market transaction or otherwise, shares of Common Stock (the "Covering
Shares") solely in order to make delivery in satisfaction of a sale of Common
Stock by the Holder (the "Sold Shares"), which delivery such Holder anticipated
to make using the Common Stock issuable upon conversion (a "Buy-In"), the
Company shall pay to the Holder, in addition to any other amounts due to Holder
pursuant to this Convertible Debenture, and not in lieu thereof, the Buy-In
Adjustment Amount (as defined below). The "Buy In Adjustment Amount" is the
amount equal to the excess, if any, of (x) the Holder's total purchase price
(including brokerage commissions, if any) for the Covering Shares over (y) the
net proceeds (after brokerage commissions, if any) received by the Holder from
the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount
to the Holder in immediately available funds within five (5) business days of
written demand by the Holder. By way of illustration and not in limitation of
the foregoing, if the Holder purchases shares of Common Stock having a total
purchase price (including brokerage commissions) of $11,000 to cover a Buy-In
with respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Company will be required to pay to the Holder
will be $1,000.

 

(l)           The Company shall defend, protect, indemnify and hold harmless the
Holder and all of its shareholders, officers, directors, employees, counsel, and
direct or indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Section 4.3(h) Indemnitees") from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Section
4.3(h) Indemnitee is a party to the action for which indemnification hereunder
is sought), and including reasonable attorneys' fees and disbursements (the
“Section 4.3(h) Indemnified Liabilities"), incurred by any Section 4.3(h)
Indemnitee as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (ii) any breach of any covenant,
agreement, or obligation of the Company contained in the Transaction Documents
or any other certificate, instrument, or document contemplated hereby or
thereby, (iii) any cause of action, suit, or claim brought or made against such
Section 4.3(h) Indemnitee by a third party and arising out of or resulting from
the execution, delivery, performance, or enforcement of the Transaction
Documents or any other certificate, instrument, or document contemplated hereby
or thereby, (iv) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Common Stock
underlying the Convertible Debenture (“Securities”), or (v) the status of the
Holder or holder of the Securities as an investor in the Company, except insofar
as any such misrepresentation,

 

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breach or any untrue statement, alleged untrue statement, omission, or alleged
omission is made in reliance upon and in conformity with written information
furnished to the Company by the Holder or the Investor which is specifically
intended by the Holder or the Investor to be relied upon by the Company,
including for use in the preparation of any such registration statement,
preliminary prospectus, or prospectus, or is based on illegal trading of the
Common Stock by the Holder or the Investor. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities that is permissible under applicable law. The
indemnity provisions contained herein shall be in addition to any cause of
action or similar rights the Holder may have, and any liabilities the Holder may
be subject to.

 

Article 5

Additional Financing and Registration Statements

 

Section 5.1        The Company will not enter into any additional financing
agreements, debt or equity, without prior expressed written consent from the
Holder, which shall not be unreasonably withheld. Failure to do so will result
in an Event of Default and the Holder may elect to take the action outlined in
Article 4.

 

Section 5.2        The Company agrees that it shall not file any registration
statement which includes any of its Common Stock, including those on Form S-8,
until such time as the Face Amount is paid off in full ("Lock-Up Period") or
without the prior written consent of the Holder, which shall not be unreasonably
withheld.

 

Section 5.3        The Holder shall also reserve the right to switch to the
terms of the new financing, If at any time while the Face Amount is outstanding,
if the Company issues or agree to issue any common stock or securities
convertible into or exercisable for shares of common stock (or modify any of the
foregoing which may be outstanding) to any person or entity. Additionally, if
the Company shall, issue or agree to issue any of the aforementioned services to
any person, firm or corporation at terms deemed by the Holder to be more
favorable to the other investor than the terms or conditions of this Agreement,
then the Holder is granted the right to modify any such term or condition of the
Agreement to be the same as any such term or condition of any subsequent
offering. The rights of the Holder in this Section 5 are in addition to any
other right the Holder has pursuant to this Agreement and the Security Agreement
of even date between the Holder and the Company.

 

Section 5.4       The Company agrees that any and all its officers, insiders,
affiliates or other related parties shall refrain from selling any Stock, during
the Lock-Up Period.

 

Article 6

Notice

 

Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Siena Technologies, Inc., Inc.

5625 SOUTH ARVILLE STREET

STE. E

 

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LAS VEGAS NV 89118

Telephone: 702-889-8777

 

If to the Holder:

 

 

Dutchess Capital Management

 

Douglas Leighton

 

50 Commonwealth Ave Suite 2

 

Boston, MA 02116

 

Phone: 617-301-4700

 

Facsimile: 617-249-0947

 

Each party shall provide five (5) business days prior notice to the other party
of any change in address, phone number or facsimile number.

 

Article 7

Time

 

Where this Agreement authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Agreement. A “business day” shall
mean a day on which the banks in New York are not required or allowed to be
closed.

 

Article 8

No Assignment

 

This Agreement and the terms and conditions herein, shall not be assignable.

 

Article 9

Rules of Construction

In this Agreement, unless the context otherwise requires, words in the singular
number include the plural, and in the plural include the singular, and words of
the masculine gender include the feminine and the neuter, and when the sense so
indicates, words of the neuter gender may refer to any gender. The numbers and
titles of sections contained in the Agreement are inserted for convenience of
reference only, and they neither form a part of this Agreement nor are they to
be used in the construction or interpretation hereof. Wherever, in this
Agreement, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Agreement.

 

Article 10

Governing Law

The validity, terms, performance and enforcement of this Agreement shall be
governed and construed by the provisions hereof and in accordance with the laws
of the Commonwealth of Massachusetts applicable to agreements that are
negotiated, executed, delivered and performed solely in the State of
Massachusetts.

 

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Article 11

Litigation

 

The parties to this agreement will submit all disputes arising under this
agreement to arbitration in Boston, Massachusetts before a single arbitrator of
the American Arbitration Association (“AAA”). The arbitrator shall be selected
by application of the rules of the AAA, or by mutual agreement of the parties,
except that such arbitrator shall be an attorney admitted to practice law in the
Commonwealth of Massachusetts. No party to this agreement will challenge the
jurisdiction or venue provisions as provided in this section. Nothing in this
section shall limit the Holder's right to obtain an injunction for a breach of
this Agreement from a court of law.

 

Article 12  

Conditions to Closing

 

 

The Company shall have delivered the proper Collateral to the Holder before
Closing.

 

Article 13

Fees & Expenses

 

Section 13.1 Administration Fee. The Company agrees to pay for related expenses
associated with the proposed transaction of $5,000. This amount shall cover, but
is not limited to, the following: due diligence expenses, document creation
expenses, closing costs, and transaction administration expenses. This shall be
deducted from the first closing.

 

13.2       Misdirected Payment Fee. Fifteen percent (15%) of the amount of any
payment (but in no event less than $1,000) on account of a Collateral Account
which has been received by Company and not delivered in kind to Holder on the
next business day following the date of receipt by Company, or thirty percent
(30%) of the amount of any such payment which has been received by Company as a
result of any action taken by Company to cause such payment to be made to
Company.

 

13.4      Out-of-Pocket Expenses. The out-of-pocket expenses directly incurred
by Holder in the administration of this Agreement such as wire transfer fees,
postage and audit fees shall be the responsibility of the Company.

 

Article 16  

Indemnification

 

In consideration of the Holder's execution and delivery of this Agreement and
the acquisition and funding by the Holder hereunder and in addition to all of
the Company's other obligations under the documents contemplated hereby, the
Company shall defend, protect, indemnify and hold harmless the Holder and all of
their shareholders, officers, directors, employees, counsel, and direct or
indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the “INDEMNIFIED LIABILITIES’),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the
Company in the Agreement, or any other certificate, instrument or document
contemplated hereby or thereby (ii) any breach of any covenant, agreement or
obligation of the Company contained in the Agreement or any other certificate,
instrument or document contemplated hereby or thereby, except insofar as any
such misrepresentation, breach or any untrue

 

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statement, alleged untrue statement, omission or alleged omission is made in
reliance upon and in conformity with written information furnished to the
Company by, or on behalf of, the Holder or based on illegal or alleged illegal
trading of the Shares by the Holder. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. The
indemnity provisions contained herein shall be in addition to any cause of
action or similar rights the Holder may have, and any liabilities the Holder may
be subject to.

 

Article 17

Waiver

 

The Holder's delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not
waiver, affect, or diminish any right of the Holder under this Agreement to
demand strict compliance and performance herewith. Any waiver by the Holder of
any Event of Default shall not waive or affect any other Event of Default,
whether such Event of Default is prior or subsequent thereto and whether of the
same or a different type. None of the undertakings, agreements and covenants of
the Company contained in this Agreement, and no Event of Default, shall be
deemed to have been waived by the Holder, nor may this Agreement be amended,
changed or modified, unless such waiver, amendment, change or modification is
evidenced by an instrument in writing specifying such waiver, amendment, change
or modification and signed by the Holder.

 

Article 18

Senior Obligation

 

The Company shall cause this Agreement to be senior in right of payment to all
other Indebtedness of the Company for the Collateral.

 

Article 19

Transactions With Affiliates

 

The Company shall not, and shall cause each of its Subsidiaries not to, enter
into, amend, modify or supplement, or permit any Subsidiary to enter into,
amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any Subsidiary's officers, directors, persons who
were officers or directors at any time during the previous two years,
shareholders who beneficially own five percent (5%) or more of the Common Stock,
or affiliates or with any individual related by blood, marriage or adoption to
any such individual or with any entity in which any such entity or individual
owns a five percent (5%) or more beneficial interest (each a “Related Party”)
during the Lock Up Period

 

Article 20

Security

 

As security for the Face Amount, the Company grants to the Holder a continuing
first priority in the Collateral. Notwithstanding the creation of this security
interest, the relationship of the parties shall be that of purchaser and seller
of accounts, and not that of lender and borrower. Company agrees to execute all
documents appropriate and necessary in order to perfect Holder’s security
interest in the Collateral.

 

Article 21

Use of Proceeds

 

The Company shall use the funds for the purposes as outlined on Exhibit C. Any
misappropriation of funds shall constitute an Event of Default.

 

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Article 22

Disputes on Collateral Accounts

 

Company shall notify Holder promptly of and, if requested by Holder, will settle
all disputes concerning any Collateral Account at Company’s sole cost and
expense. Holder may, but is not required to, attempt to settle, compromise, or
litigate (collectively, “Resolve”) the dispute upon such terms, as Holder in its
sole discretion deems advisable, for Company’s account and risk and at Company’s
sole expense. Upon the occurrence of an Event of Default, Holder may resolve
such issues with respect to any Account of Company.

 

Article 23

Representations and Warranties of the Company

 

 

a.

It is fully authorized to enter into this Agreement and to perform hereunder.

 

 

b.

This Agreement constitutes its legal, valid and binding obligation.

 

 

c.

Company is in good standing in the jurisdiction of its organization and in the
Nevada.

 

 

d.

The Collateral Accounts are and will remain:

 

i.            Bona fide existing obligations created by the sale and delivery of
goods or the rendition of services in the ordinary course of Company’s business
and are valid, fully collectible obligations form the debtors and/or payors to
the Company for the Collateral Accounts (“Account Debtors”).

 

ii.          Unconditionally owed and to the best knowledge of Company will be
paid to Holder without defenses, disputes, offsets, counterclaims, or rights of
return or cancellation.

 

iii.         Not sales to any entity that is affiliated with Company or in any
way not an “arm’s length” transaction.

 

iv.          No person has a lien or ownership interest in, or claim against,
the Collateral Accounts other than Nottingham Mayport, LLC and Robert Unger.

 

 

v.

The Collateral Accounts have not been previously sold or factored by Company.

 

vi.         The Account Debtors have not paid to Company, or Company’s
representatives, or otherwise for Company’s benefit, any part or all of the Face
Amount of the Collateral Account except as reflected in the Statement of
Accounts covering that Collateral Account.

 

vii.        There exist no circumstances, the Company’s best knowledge, that
would entitle the Account Debtors to refuse to pay the amounts due on the
Collateral Accounts, or to reduce the amounts due on the Collateral Accounts
from those amounts shown in the Schedule of Accounts.

 

e.           Company has not received notice or otherwise learned of actual or
imminent bankruptcy, insolvency, or material impairment of the financial
condition of any applicable Account Debtor regarding the Collateral Accounts.

 

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f.            The financial statements, Purchase Order / Invoices, orders,
proofs of delivery, account ledgers and all other documents submitted by Company
to Holder concerning the Collateral Accounts or otherwise required under this
Agreement are true, accurate and genuine.

 

Article 24

Miscellaneous

 

 

a.

All pronouns and any variations thereof used herein shall be deemed to refer to
the masculine, feminine, impersonal, singular or plural, as the identity of the
person or persons may require.

 

 

b.

Neither this Agreement nor any provision hereof shall be waived, modified,
changed, discharged, terminated, revoked or canceled, except by an instrument in
writing signed by the party effecting the same against whom any change,
discharge or termination is sought.

 

 

c.

Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered or sent by
facsimile transmission: (i) if to the Company, at its executive offices or (ii)
if to the Holder, at the address for correspondence set forth in the Article 6,
or at such other address as may have been specified by written notice given in
accordance with this paragraph.

 

 

d.

This Agreement may be executed in two or more counterparts, all of which taken
together shall constitute one instrument. Execution and delivery of this
Agreement by exchange of facsimile copies bearing the facsimile signature of a
party shall constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.

 

 

e.

This Written Agreement represent the FINAL AGREEEMENT between the Company and
the Holders and may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements of the parties, there are no unwritten oral
agreements among the parties.

 

 

f.

The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
will not (i) result in a violation of the Articles of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or the By-laws or (ii) conflict with, or
constitute a material default (or an event which with notice or lapse of time or
both would become a material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
contract, indenture mortgage, indebtedness or instrument to which the Company or
any of its Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree, including United States federal and state
securities laws and regulations and the rules and regulations of the principal
securities exchange or trading market on which the Common Stock is traded or
listed (the “Principal Market”), applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is
in violation of any term of, or in default under, the Articles of Incorporation,
any Certificate of Designations, Preferences and Rights of any outstanding
series of preferred stock of the Company or the By-laws or their organizational
charter or by-laws, respectively, or any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its

 

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Subsidiaries, except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not individually or in
the aggregate have a Material Adverse Effect. The business of the Company and
its Subsidiaries is not being conducted, and shall not be conducted, in
violation of any law, statute, ordinance, rule, order or regulation of any
governmental authority or agency, regulatory or self-regulatory agency, or
court, except for possible violations the sanctions for which either
individually or in the aggregate would not have a Material Adverse Effect. The
Company is not required to obtain any consent, authorization, permit or order
of, or make any filing or registration (except the filing of a registration
statement) with, any court, governmental authority or agency, regulatory or
self-regulatory agency or other third party in order for it to execute, deliver
or perform any of its obligations under, or contemplated by, this Agreement in
accordance with the terms hereof or thereof. All consents, authorizations,
permits, orders, filings and registrations which the Company is required to
obtain pursuant to the preceding sentence have been obtained or effected on or
prior to the date hereof and are in full force and effect as of the date hereof.
The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company is not, and will not be, in
violation of the listing requirements of the Principal Market as in effect on
the date hereof and on each of the Closing Dates and is not aware of any facts
which would reasonably lead to delisting of the Common Stock by the Principal
Market in the foreseeable future.

 

 

g.

The Company and its “Subsidiaries” (which for purposes of this Agreement means
any entity in which the Company, directly or indirectly, owns capital stock or
holds an equity or similar interest) are corporations duly organized and validly
existing in good standing under the laws of the respective jurisdictions of
their incorporation, and have the requisite corporate power and authorization to
own their properties and to carry on their business as now being conducted. Both
the Company and its Subsidiaries are duly qualified to do business and are in
good standing in every jurisdiction in which their ownership of property or the
nature of the business conducted by them makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on the business, properties,
assets, operations, results of operations, financial condition or prospects of
the Company and its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements and instruments to be
entered into in connection herewith, or on the authority or ability of the
Company to perform its obligations under the Agreement.

 

 

h.

Authorization; Enforcement; Compliance with Other Instruments. (i) The Company
has the requisite corporate power and authority to enter into and perform this
Agreement, and to issue the Agreement in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly and validly authorized by the Company's Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors, or its shareholders, (iii) the Agreement has been duly and validly
executed and delivered by the Company, and (iv) the Agreement constitutes the
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.

 

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i.

The execution and delivery of this Agreement shall not alter any prior written
agreements between the Company and the Holder.

 

 

j.

There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants,
auditors and lawyers formerly or presently employed by the Company, including
but not limited to disputes or conflicts over payment owed to such accountants,
auditors or lawyers.

 

 

k.

All representations made by or relating to the Company of a historical nature
and all undertaking described herein shall relate and refer to the Company, its
predecessors, and the Subsidiaries.

 

 

l.

The only officer, director, employee and consultant stock option or stock
incentive plan currently in effect or contemplated by the Company has been
submitted to the Holder or is described with Reports. No other plan will be
adopted nor may any options.

 

 

m.

The Company hereby represent and warrants to the Holder that: (i) it has
voluntarily entered into this Agreement of its own freewill, (ii) it is not
entering into this Agreement under economic duress with this Agreement and
anticipated continued financing, (iii) the terms of this Agreement are
reasonable and fair to the Company, and (iv) the Company has had independent
legal counsel of its own choosing review this Agreement, advise the Company with
respect to this Agreement, and represent the Company in connection with its
entering into this Agreement.

 

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IN WITNESS WHEREOF, the Company has duly executed this Debenture as of the date
first written above.

SIENA TECHNOLOGIES, INC.

 

/s/  Anthony A. DeLise

Name: Anthony A. DeLise

Title: Interim Chief Executive Officer

 

/s/  James Michael Kelley

Name: James Michael Kelley

Title: Director

 

DUTCHESS PRIVATE EQUITIES FUND, LTD.

 

/s/  Douglas H. Leighton

Name: Douglas H. Leighton

Title: Director

 

 

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