Document:

ex10x2.htm

    Exhibit
10.2

     

    THE
SECURITIES REPRESENTED BY THIS NOTE AND ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS,
BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR PURPOSES OF
INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER
ANY APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES AND THE
SECURITIES ISSUED UPON EXERCISE HEREOF MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED, NOR MAY THIS NOTE BE EXERCISED, EXCEPT IN A TRANSACTION WHICH IS
EXEMPT UNDER THE PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT.

     

    SECURED
CONVERTIBLE PROMISSORY NOTE

    

    San
Diego, California As of March 23, 2010

    

    FOR VALUE
RECEIVED, PepperBall Technologies, Inc., a Colorado corporation (the "Company"), hereby
promises to pay to the order of [_________________________________]
(the "Holder"),
in lawful money of the United States at the address of the Holder set forth
herein, the principal amount of $[____________] ("Principal Amount"),
together with Interest (as defined in Section 2).  This
Promissory Note (this "Note") has been
executed by the Company on the date set forth above (the "Effective Date")
pursuant to the Securities Purchase Agreement entered into on the Effective Date
by and between the Company and the Holder (the "Purchase
Agreement").  Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Purchase
Agreement.

     

    1.  Principal
Amount.  The Company hereby promises to pay to the order of the
Holder, in lawful money of the United States at the address of the Holder set
forth below, the Principal Amount, together with Interest, which shall accrue
from the date hereof (less any amounts paid under Section 2 below) until
December 31, 2010 the date of payment in full of the aggregate Principal Amount
together with any unpaid Interest, or the conversion of this Note pursuant to
the terms hereof.  The Principal Amount shall be paid by the Company
on the Maturity Date (as defined in Section 3), unless earlier paid or
converted.

     

    2.  Interest.  The
outstanding Principal Amount shall bear simple interest ("Interest") at the
rate of 10% per annum (calculated on the basis of the actual number of days
elapsed in a 360-day year) payable on the Maturity Date (unless earlier paid or
converted).  Interest shall be paid quarterly in arrears beginning
with the quarter ended March 31, 2010, with such Interest to be paid by the
tenth day of the month following quarter end.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.  Maturity.  Unless
this Note is earlier accelerated, prepaid or converted as set forth below, the
outstanding Principal Amount and all unpaid Interest thereon shall be paid in
full on December 31, 2010 (the "Maturity
Date").

     

    4.  Security Interest. As
security for all present and future indebtedness of the Company to Holder, the
Holder grants to Holder a security interest in all of Company’s personal
property located in California, now owned or subsequently acquired, including
without limitation all of the following: all accounts, cash, patents,
copyrights, trademarks, goodwill, general intangibles, deposit accounts,
inventory, fixtures and equipment, as such terms are defined in Division 9 of
the Uniform Commercial Code in effect on the date hereof, but excluding any
equipment subject to existing equipment leases and such other equipment or motor
vehicles acquired hereafter under such facilities (collectively, the
“Collateral”).  Company authorizes Holder to execute such documents
and take such actions a Holder reasonably deems appropriate from time to time to
perfect or continue the security interest granted hereunder.  Company
shall take such steps as Holder may reasonable request to perfect the security
interest granted hereunder.  In all cases, such security interest
shall be subject to the Subordination Agreement between the Company, its secured
bridge or  bank lender or lenders (“Senior Debt”) and Holder, executed
as of the date of this Note.

     

    5.  Application of
Payments.

     

    5.1  Except as
otherwise expressly provided herein, each payment under this Note shall be
applied (i) first to the repayment of any sums incurred by the Holder for
the payment of any expenses in enforcing the terms of this Note, (ii) then
to the payment of Interest, and (iii) then to the reduction of the
Principal Amount.

     

    5.2  Upon
payment in full of the Principal Amount and applicable accrued and unpaid
Interest thereon or the conversion of such amount pursuant to Section 6,
this Note shall be marked "Paid in Full" and returned to the
Company.

     

    6.  Prepayment.  This
Note (including the Principal Amount and all accrued Interest thereon) may be
prepaid in full or in part at any time with thirty days Notice by the Company to
the Holder.

     

    7.  Subordination. The
Holder hereby acknowledges and agrees that this Note is subject to and limited
by the terms of a Subordination Agreement with Simpson Trust and Simpson
Foundation. To the extent that the Simpson obligation is paid off, Holder agrees
to execute a new subordination agreement at the Company’s reasonable request, to
allow the Company to secure Senior Debt.

     

    8.  Note
Conversion.

     

    8.1  Conversion.  At
the sole discretion of the Holder, the outstanding Principal Amount and any
accrued but unpaid Interest thereon shall be convertible into shares of the
Company's Common Stock (or at the sole option of the Holder, shares of
non-voting Series C Preferred Stock, no par value per share ("Preferred Stock"), at
a conversion price per share of Common Stock equal to $0.10 (the "Conversion Price") on
the date of such conversion (the "Conversion
Date").  Conversion requests would be made in minimum
increments of the greater of $50,000 or the remaining balance of the Holder’s
Note.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    8.2  Conversion
Procedures.  As promptly as practicable after the Conversion
Date, the Company, at its expense, will issue and deliver to the Holder a
certificate(s) for the number of full shares of Common Stock, or if applicable
Series C Preferred Stock issuable upon such conversion.  Upon the
conversion of this Note, the Holder shall surrender this Note, duly endorsed, at
the principal office of the Company and the Company shall be forever released
from all its obligations and liabilities under this Note.  No
fractional shares of the Company's Common Stock shall be issued upon conversion
of this Note.  In lieu of the Company issuing any fractional shares to
the Holder upon the conversion of this Note, the number of shares of Common
Stock to be issued shall be rounded to the nearest whole number of
shares.

     

    9.  Waiver of
Notice.  The Company hereby waives diligence, notice,
presentment, protest and notice of dishonor.

     

    10.  Covenants of the
Company.

     

    10.1  No Amendment of Preferred
Stock.  The Company shall not amend the terms of the Preferred
Stock prior to the Conversion Date without the written approval of the
Holder.

     

    10.2  Notice of Certain
Events.  Prior to the earlier of (a) the conversion of
this Note to Common Stock or as applicable Series C Preferred Stock or (b) the
payment of all amounts due hereunder, upon (i) any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, (ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, any
sale of all or substantially all the assets of the Company (an "Asset Transfer") or
any voluntary or involuntary dissolution, liquidation or winding up of the
Company or (iii) an acquisition by an individual or legal entity or "group"
(as defined in Section 13(d) of the Exchange Act) of more than 50% of the voting
rights or equity interests in the Company, whether in one transaction or in a
series of related transactions (an "Acquisition"), in
each case the Company shall, subject to the Company's requirements under the
disclosure requirements of federal and state securities laws, furnish to the
Holder at least 20 days prior to the record date specified therein a notice
specifying (1) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (2) the date on which any such Acquisition, reorganization,
reclassification, transfer, consolidation, merger, Asset Transfer, dissolution,
liquidation or winding up is expected to become effective and (3) the date,
if any, that is to be fixed for determining the holders of record of Common
Stock (or other securities) that shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such Acquisition, reorganization, reclassification, transfer,
consolidation, merger, Asset Transfer, dissolution, liquidation or winding
up.

     

    11.  Events of
Default.  The occurrence of any of the following events (each
an "Event of
Default"), not cured in the applicable cure period, if any, shall
constitute an Event of Default of the Company:

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11.1  a
material breach of any covenant or other provision of this Note, which, if
capable of being cured, is not cured within five days following notice thereof
to the Company;

     

    11.2  the
failure to make when due any payment described in this Note, whether on or after
the Maturity Date, by acceleration or otherwise;

     

    11.3  (i) the
application for the appointment of a receiver or custodian for the Company or
the property of the Company, (ii) the entry of an order for relief or the
filing of a petition by or against the Company under the provisions of any
bankruptcy or insolvency law, (iii) any assignment for the benefit of
creditors by or against the Company, or (iv) the Company becomes insolvent;
or

     

    11.4  the
Company is in material breach of any representation, warranty or covenant
provided set forth in any other agreement between the Holder and the Company
contained in the Purchase Agreement or any ancillary agreement between the
parties referenced therein.

     

    Upon the
occurrence of any Event of Default that is not cured within any applicable cure
period, the Holder may elect, by written notice delivered to the Company, to
take any or all of the following actions:  (i) declare this Note
to be forthwith due and payable, whereupon the entire unpaid Principal Amount,
together with accrued and unpaid Interest thereon, and all other cash
obligations hereunder, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Company, anything contained herein or in any of
the Note to the contrary notwithstanding, and (ii) exercise any and all
other remedies provided hereunder or available at law or in equity upon the
occurrence and continuation of an Event of Default.

     

    12.  Miscellaneous.

     

    12.1  Successors and
Assigns.  This Note and the securities into which this Note is
convertible may not transferred by the Holder without compliance with applicable
securities laws.  Subject to the terms and conditions contained
herein, this Note shall be binding on the Company and its successors and shall
inure to the benefit of the original Holder, its successors and
assigns.  This Note may not be assigned by the Company without the
written consent of the Holder.

     

    12.2  Loss or Mutilation of
Note.  Upon receipt by the Company of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Note, together
with indemnity reasonably satisfactory to the Company, in the case of loss,
theft or destruction, or the surrender and cancellation of this Note, in the
case of mutilation, the Company shall execute and deliver to the Holder a new
Note of like tenor and denomination as this Note.

     

    12.3  Titles and
Subtitles.  The titles and subtitles of the Sections of this
Note are used for convenience only and shall not be considered in construing or
interpreting this agreement.

     

    12.4  Legend.  Any
certificate representing shares of the Company's Common Stock or at the option
of the Holder Series C Preferred Stock issued upon conversion of this Note or
otherwise issued hereunder shall be stamped or otherwise imprinted with a legend
substantially in the following form:

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE
STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF
FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE
1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES LAWS.  THESE
SECURITIES AND THE SECURITIES ISSUED UPON EXERCISE HEREOF MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED, NOR MAY THIS NOTE BE EXERCISED, EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT.

     

    12.5  Notices.  Any
notice, request or other communication required or permitted hereunder shall be
in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or by
certified mail, postage prepaid with return receipt requested, addressed as
follows:

     

    if to the Company,
to:

    PepperBall Technologies,
Inc.

    6142 Nancy Ridge Drive, Suite
101

    San Diego, CA 92121

    Attn.:  President

    

    if to the Holder,
to:

    

    

    Attn:                                                      

    Fax
No.:                                                      

    with a copy
to:

    

    

    Attn:                                                      

    Fax
No.:                                                      

    

     

    Either
party hereto may change the above specified recipient or mailing address by
notice to the other party given in the manner herein prescribed.  All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by facsimile, provided that any such facsimile
is received during regular business hours at the recipient's location) or on the
day shown on the return receipt (if delivered by mail or delivery
service).

     

    12.6  Note Holder Not
Shareholder.  This Note does not confer upon the Holder any
right to vote or to consent to or to receive notice as a shareholder of the
Company, as such, in respect of any matters whatsoever, or any other rights or
liabilities as a shareholder, prior to the conversion hereof.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    12.7  Governing
Law.  This Note shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of California.

     

    12.8  Waiver and
Amendment.  Any term of this Note may be amended, waived or
modified only with the written consent of the Company and the Holder of this
Note.

     

    12.9  Remedies; Attorneys
Fees.  No delay or omission by the Holder in exercising any of
its rights, remedies, powers or privileges hereunder or at law or in equity and
no course of dealing between the Holder and the undersigned or any other person
shall be deemed a waiver by the Holder of any such rights, remedies, powers or
privileges, even if such delay or omission is continuous or repeated, nor shall
any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise thereof by the Holder or the exercise of any other
right, remedy, power or privilege by the Holder.  The rights and
remedies of the Holder described herein shall be cumulative and not restrictive
of any other rights or remedies available under any other instrument, at law or
in equity.  If an Event of Default occurs, the Company agrees to pay,
in addition to the Principal Amount and Interest payable thereon, reasonable
attorneys' fees and any other costs incurred by the Holder in connection with
its pursuit of its remedies under this Note.

     

    *  *  *  *  *

    IN
WITNESS WHEREOF, the Company has caused this Note to be signed in its name on
the Effective Date.

     

    PEPPERBALL
TECHNOLOGIES, INC.

    By: 
/s/ Christin
Lewis                                                                           

    Name:
Christin Lewis

    Title:
Asst Secretaryexh4-1.htm

EXHIBIT 4.1

 

AMENDMENT NO. 1 TO

EQUITY COMMITMENT AGREEMENT

THIS AMENDMENT NO. 1 TO EQUITY COMMITMENT AGREEMENT (“Amendment”) is made and entered into as of March 23, 2010 by and between BERKSHIRE HATHAWAY INC., a corporation duly organized and validly existing under the laws of the State of Delaware (“Berkshire”), and MIDAMERICAN ENERGY HOLDINGS COMPANY, a corporation duly organized and validly existing under the laws of the State of Iowa (“MEHC”). Berkshire and MEHC are collectively referred to as the “Parties.”

RECITALS

WHEREAS, Berkshire and MEHC entered into that certain Equity Commitment Agreement (“Agreement”) dated as of March 1, 2006 pursuant to which Berkshire agreed to contribute up to the Maximum Equity Amount to the equity of MEHC until the Termination Date for the purposes set forth in Section 3 of the Agreement; and

WHEREAS, Berkshire and MEHC each desire to extend the term of the Agreement to February 28, 2014; and

 

WHEREAS, Berkshire and MEHC desire to reduce the Maximum Equity Amount from $3,500,000,000 to $2,000,000,000 effective as of March 1, 2011;

 

AGREEMENT

NOW THEREFORE, in consideration of the foregoing recitals and the covenants and agreements as hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto hereby agrees as follows:

Section 1.  Definitions.  Capitalized terms used herein not otherwise defined herein have the meanings set forth in Agreement.

Section 2.  Extension of Equity Contribution Commitment.  The Parties hereby agree that the term “Termination Date” shall be amended to mean “February 28, 2014.”

Section 3.  Revised Maximum Equity Amount.  The Parties agree that the definition of the term “Maximum Equity Amount” shall be amended to read in its entirety as follows:  “’Maximum Equity Amount’ means $3,500,000,000 until February 28, 2011 and $2,000,000,000 from and after March 1, 2011.”

Section 4.  Berkshire Representations and Warranties.  Berkshire hereby confirms that the representations and warranties set forth in Section 5 of the Agreement are true and correct on and as of the date hereof and that, for purposes of these representations and warranties, the term “the Agreement” as used in Section 5 shall mean “the Agreement, as amended by this Amendment.”

 

 

  

  

  

 

 

Section 5.  Exhibit A.  The Parties hereby agree that Exhibit A to the Agreement shall be deleted in its entirety and replaced with Exhibit A annexed hereto.

Section 6.  Notices. Effective as of the date hereof, all notices to be given to MEHC shall be addressed as follows:

	
MEHC:

	
MidAmerican Energy Holdings Company

1111 South 103rd Street

Omaha, Nebraska 68124-1000

	  	
Telephone: (402) 231-1642

Fax: (402) 231-1658

Attn:  General Counsel

Section 7.  Agreement Remains Effective.  Except as modified herein or amended hereby, the terms and conditions contained in the Agreement shall continue in full force and effect.

Section 8.  Counterparts.  This Amendment may be executed in several counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Amendment No. 1 to Equity Commitment Agreement as of the date first above written.

 

	 	
BERKSHIRE HATHAWAY INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/    Marc D. Hamburg	 
	 	 	Name:  Marc D. Hamburg	 
	 	 	Title:    Senior Vice President	 
	 	 	 	 

 

	 	 	 
	 	 	
MIDAMERICAN ENERGY HOLDINGS COMPANY

	 
	
 

	
By: 

	/s/   Douglas L. Anderson	 
	 	 	Name:  Douglas L. Anderson	 
	 	 	Title:    Senior Vice President	 
	 	 	 	 

 

 

 

  

  2

  

EXHIBIT A

FORM OF EQUITY REQUISITION CERTIFICATE

[DATE]

Berkshire Hathaway Inc.

1440 Kiewit Plaza

3555 Farnam Street

Omaha, NE 68131

Attention:

Ladies and Gentlemen:

This Equity Requisition Certificate is delivered to you pursuant to Section 2 of that certain Equity Commitment Agreement, dated as of March 1, 2006, as amended by that certain Amendment No. 1 dated as of _____________ (the “Equity Commitment Agreement”), by and between you and MEHC.  This request has been authorized by the MEHC Board of Directors. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to them in the Equity Commitment Agreement.

We hereby request that, in exchange for issuance of Equivalent Common Shares, you contribute an Equity Contribution to MEHC in the amount and on or prior to the date set forth below:

Amount of Equity Contribution:  $_________________

Date of Equity Contribution:  _____________________

Very truly yours,

MIDAMERICAN ENERGY HOLDINGS COMPANY

	
  

	
By:

	
_________________________

   Name:

   Title:

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