Document:

Unassociated Document

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER, THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES (AS THAT TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.  ANY PERSON ACCEPTING ANY INTEREST IN THE SECURITIES REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING SUCH SECURITIES IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 903 OR 904 OF REGULATION S.

 

EMPOWERED PRODUCTS, INC.

COMMON STOCK PURCHASE WARRANT

July 7, 2011

THIS CERTIFIES THAT, for value received, New Kaiser Limited (the “Investor”), or Investor’s assigns (Investor and Investor’s assigns being the “Holder”), is entitled, subject to the terms and conditions of this Warrant, to subscribe for and purchase at any time during the Exercise Period from Empowered Products, Inc., a Nevada corporation, with an office located at 3367 West Oquendo Road, Las Vegas, Nevada 89118 (the “Company”), 2,000,000 shares of Common Stock at a per share price equal to $1.25 (“the Exercise Price”). Both the number of Exercise Shares purchasable upon exercise of this Warrant and the Exercise Price are subject to adjustment and change as provided herein.  This Warrant is issued in conjunction with the shares of the Company’s Common Stock issued pursuant to the Subscription Agreement dated as of June 30, 2011, by and between the Company and the Investor.

1. Definitions. As used herein, the following terms shall have the following respective meanings:

   

(a)  “Common Stock” shall mean the common stock of the Company, $0.001 par value per share, and any other securities at any time receivable or issuable upon exercise of this Warrant.

 

(b)  “Exercise Period” shall mean the period commencing on July 7, 2011, and ending on July 7, 2016.

 

(c)  “Exercise Shares” shall mean any Common Stock acquired upon exercise of this Warrant.

 

  

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2. Exercise of Warrant.

 

2.1  General; Exercise of Warrant .

 

(a)  The rights represented by this Warrant may be exercised as a whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder):

 

(i)           An executed Notice of Exercise in the form attached hereto;

 

(ii)           Payment in cash or by check of an amount equal to the product obtained by multiplying the number of Exercise Shares being purchased upon such exercise by the then effective Exercise Price (the “Exercise Amount”); and

 

(iii)           This Warrant.

 

 

(b)  Upon the exercise of the rights represented by this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates (and such designation is in compliance with applicable securities laws and any stockholders, investor rights or similar agreement), shall be issued and delivered to the Holder as promptly as practicable after the rights represented by this Warrant shall have been so exercised.

 

(c)  The person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Amount was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.

 

2.2  Net Issue Exercise .

 

(a)  In lieu of paying the Exercise Amount in cash or by check as provided in Section 2.1, the Holder may elect a “Net Issue Exercise” pursuant to which the Holder will receive a number of Exercise Shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with an executed Notice of Exercise in the form attached hereto in which event the Company shall issue to the Holder a number of Exercise Shares computed using the following formula:

 

X = Y (A-B) 

                                                               A

 

Where:

 

  

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X = the number of Exercise Shares to be issued to the Holder;

 

Y = the number of Exercise Shares purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (as adjusted to the date of such exercise);

 

A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such exercise); and

 

B = the Exercise Price (as adjusted to the date of such exercise).

 

(b)  For purposes of the above calculation, “Fair Market Value” shall be determined as follows:

 

(i)  If the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, The Nasdaq Stock Market’s Global Select or Global Market, the Fair Market Value of a share of Common Stock will be the average closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock), over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.

 

(ii)  If the Common Stock is quoted on The Nasdaq Stock Market ( but not on The Nasdaq Stock Market’s Global Select or Global Market) or is regularly quoted elsewhere by recognized securities dealers but selling prices are not reported, the Fair Market Value of a share of Common Stock will be the average mean between the high bid and low asked prices for the Common Stock over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.

 

(iii)  If the Common Stock is not traded as set forth above, the Fair Market Value will be determined in good faith by the Board of Directors of the Company.

 

(c)  If this Warrant is not exercised in full by a Net Issue Exercise, then, the number of shares purchasable pursuant to this Warrant in effect immediately after such partial exercise shall be appropriately adjusted to take into account the effect of the Net Issue Exercise.

 

3. Covenants of the Company.

 

3.1  Covenants as to Exercise Shares . The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

 

  

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3.2  No Impairment . Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.

 

3.3  Notices of Record Date . In the event of 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 (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

 

4. Representations of Holder.

 

4.1  Acquisition of Warrant for Personal Account . The Holder represents and warrants that it is acquiring the Warrant and any shares of capital stock issued or issuable upon exercise or conversion of the Warrant for investment purposes only and not with a view to or for resale in connection with any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). The Holder also represents that the entire legal and beneficial interests of the Warrant and Exercise Shares the Holder is acquiring is being acquired for, and will be held for, the account of the Holder only.

 

4.2  Off-Shore Transaction; Not a U.S. Person . The exercise of this Warrant and the transactions contemplated herein constitute an “off-shore transaction,” as that term is defined in Rule 902(h) of Regulations S promulgated under the Securities Act. The Holder represents and warrants that the Holder is not a “U.S. Person,” as that term is defined in Rule 902(k) of Regulation S promulgated under the Securities Act.

 

4.3  Securities Are Not Registered .

 

(a)  The Holder understands that the Warrant and the Exercise Shares have not been registered under the Securities Act, on the basis that no distribution or public offering of the stock of the Company is to be effected, or registered or qualified under any applicable state securities laws. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period and, in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention.

 

  

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(b)  By acceptance of this Warrant, the Holder hereby represents, warrants and covenants that any shares of stock purchased upon exercise of this Warrant shall be acquired for investment only and not with a view to, or for sale in connection with, any distribution thereof; that the Holder has had such opportunity as such Holder has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Holder to evaluate the merits and risks of its investment in the Company; and that the Holder understands that the Exercise Shares acquired pursuant to the exercise of this Warrant will be “restricted securities” within the meaning of Rule 144 under the Securities Act.

(c)  The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Company has no obligation to register the Warrant or the Exercise Shares of the Company, or to comply with any exemption from such registration.

 

(d)  The Holder is aware that neither the Warrant nor the Exercise Shares may be sold except (i) in an offshore transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S or (ii) pursuant to Rule 144 adopted under the Securities Act provided that the conditions of Rule 144 are met.

 

(e)  The Holder is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company. The Holder is experienced in making investments of this type and has such knowledge and background in financial and business matters that the Holder is capable of evaluating the merits and risks of this investment and protecting its own interests. The Holder has had an opportunity to ask questions of, and receive answers from, the Company and its officers and employees regarding the business, financial affairs and other aspects of the Company, and has further had the opportunity to obtain information (to the extent the Company possesses or can acquire such information without unreasonable effort or expense) which the Holder deems necessary to evaluate an investment in the Company and to verify the accuracy of information otherwise provided to the Holder.

 

4.4  Disposition of Warrant and Exercise Shares .

 

(a)  Except for transfers by the Holder in compliance with all applicable securities laws, the Holder further agrees not to make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until:

 

(i)  The Company shall have received a letter secured by the Holder from the Securities and Exchange Commission stating that no action will be recommended to the Commission with respect to the proposed disposition; or

 

  

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(ii)  There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or

 

(iii)  The Holder shall have shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Securities Act or any applicable state securities laws.

 

(b)  The Holder understands and agrees that all certificates evidencing the Exercise Shares to be issued to the Holder may bear the following legend (in addition to any legend required under applicable state securities laws, the Company’s Bylaws, or as provided elsewhere in this Warrant):

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER, THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES (AS THAT TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.  ANY PERSON ACCEPTING ANY INTEREST IN THE SECURITIES REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING SUCH SECURITIES IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 903 OR 904 OF REGULATION S.”.

 

5. Adjustments and Notices. The Exercise Price and the number of Exercise Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time in accordance with this Section 5.

 

5.1  Subdivision, Stock Dividends or Combinations . In case the Company shall at any time after the commencement of the Exercise Period subdivide the outstanding Common Stock or shall issue a stock dividend with respect to the Common Stock, the Exercise Price in effect immediately prior to such subdivision or the issuance of such dividend shall be proportionately decreased, and in case the Company shall at any time after the commencement of the Exercise Period combine the outstanding shares of Common Stock, the Exercise Price in effect immediately prior to such combination shall be proportionately increased, in each case effective at the close of business on the date of such subdivision, dividend, or combination, as the case may be.

 

  

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5.2  Reclassification, Exchange, Substitution, In-Kind Distribution . Upon any reclassification, exchange, substitution or other event after the commencement of the Exercise Period that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant or upon the payment after the commencement of the Exercise Period of a dividend in securities or property other than shares of Common Stock, the Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received if this Warrant had been exercised or converted immediately before the record date for such reclassification, exchange, substitution, or other event or immediately prior to the record date for such dividend. The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property. The new warrant shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5, including, without limitation, adjustments to the Exercise Price and to the number of securities or property issuable upon exercise or conversion of the new warrant. The provisions of this Section 5.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events and successive dividends.

 

5.3  Consolidation, Merger, Sale and the Like . In case of any (i) merger or consolidation of the Company into or with another corporation where the Company is not the surviving corporation (but including a merger for the purpose of reincorporating in a new domicile) (ii) sale, transfer or lease (but not including a transfer or lease by pledge or mortgage to a bona fide lender) of all or substantially all of the assets of the Company or (iii) sale by the Company’s stockholders of 50% or more of the Company’s outstanding securities in one or more related transactions, the Company, or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the Holder hereof a new warrant so that the Holder shall have the right to receive upon exercise or conversion of the unexercised or unconverted portion of this Warrant, at a total purchase price not to exceed that payable upon the exercise or conversion of the unexercised or unconverted portion of this Warrant, and in lieu of shares of Common Stock theretofore issuable upon exercise or conversion of this Warrant, the kind and amount of shares of stock, or other securities, money and other property in lieu of such shares of stock, receivable upon or as a result of such reorganization, merger, or sale by a holder of the number of shares of Common Stock for which this Warrant is exercisable or convertible immediately prior to such event. Such new warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5. The provisions of this Section 5.3 shall similarly apply to successive reorganizations, mergers, and sales.

 

5.4  In each case of an adjustment or readjustment of the Exercise Price pursuant to this Section 5, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Holder at the Holder’s address as shown in the Company’s books. The certificate shall set forth such adjustment or readjustment, showing in reasonable detail the facts upon which such adjustment or readjustment is based, including a statement of, if applicable, the type and amount, if any, of other property which at the time would be received upon exercise of this Warrant.

 

  

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6. Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. No payments shall be made by the Company in respect of any fractional shares otherwise issuable pursuant to this Warrant.

 

7. No Stockholder Rights. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.

 

8. Transfer of Warrant. Subject to compliance with applicable laws, the restriction on transfer set forth on the first page of this Warrant and in Section 4.4 and the terms of any applicable stockholders, investor rights, or similar agreements, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder, provided that the transferee shall have signed an investment letter in form and substance satisfactory to the Company and agreed to be bound by the provisions of this Warrant. Notwithstanding anything to the contrary, no partial transfer of this Warrant shall be permitted.

 

9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated, or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.

 

 

10. Notices, Etc. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by express mail or other form of rapid communications, if possible, and if not then such notice or communication shall be mailed by first-class mail, postage prepaid, addressed in each case to the party entitled thereto at the following addresses: (a) if to the Company, to Empowered Products, Inc., Attention: President, 3367 West Oquendo Road, Las Vegas, Nevada 89118, and (b) if to the Holder, to such address as originally furnished to the Company by the Holder, or at such other address as one party may furnish to the other in writing. Notice shall be deemed effective on the date dispatched if by personal delivery, two days after mailing if by express mail, or three days after mailing if by first-class mail.

 

11. Amendment. This Warrant may be amended or otherwise modified only by a writing signed by the Company and the Holder.

 

12. Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

 

13. Governing Law; Forum. This Warrant and all rights, obligations, and liabilities hereunder shall be governed by the internal laws of the State of Nevada and any actions related hereto shall be brought in a court of competent jurisdiction located in the County of Clark, State of Nevada.

 

[NEXT PAGE IS SIGNATURE PAGE]

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first written above.

 

	  	
EMPOWERED PRODUCTS, INC.

	  	
a Nevada corporation

	  	  
	  	  
	  	
By:  /s/ Scott Fraser

	  	
Name: Scott Fraser

	  	
Title: President

 

 

	Name of Holder: 	New Kaiser Limited	 
	 	 	 
	 	 	 
	Address:   	 	 
	 	 	 
	 	 	 
	Telephone:  	 	 
	Facsimile:	 	 

 

  

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NOTICE OF EXERCISE

 

To:           On Time Filings, Inc.

 

1.  The undersigned hereby elects to purchase ________ shares of the Common Stock of Empowered Products, Inc. (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full pursuant to the terms of Section 2.1 of the attached Warrant, or by net issue exercise pursuant to the terms of Section 2.2 of the attached Warrant, together with all applicable transfer taxes, if any.

 

2.  Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

	  	
________________________

	  	
(Name)

	  	
________________________

	  	
(Address)

 

3.  The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment purposes only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned is an “accredited investor” as defined in Rule 501 under the Securities Act of 1933, as amended (the “ Securities Act ”) and/or is not a “U.S. Person” as such term is defined in Rule 902 of Regulation S promulgated under the Securities Act; (v) the undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (vi) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144; (vii) the undersigned acknowledges that the shares may be sold in an offshore transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S; and (viii) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required.

	
________________________

	
________________________

	
(Date)

	
(Signature)

	  	  
	  	
________________________

	  	
(Print name)

 

  

10Unassociated Document

BUSINESS LENDING

CONFIRMATION LETTER

 

February 09, 2011

Empowered Products, Inc.

3367 W OQUENDO RD

LAS VEGAS, NV 89118

RE:  $500,000.00 Revolving line of Credit

 

Wells Fargo Bank, National Association (“Bank”), agrees to make available to Empowered Products, Inc. (“Borrower”) a Revolving Line of Credit (the “Credit”).  The Credit shall bear interest and be repayable in accordance with the terms and conditions of the Agreement.  The Agreement consists of (1) this Confirmation Letter (this “Letter”), (2) the Business Lending Disclosure dated August 01, 2008 (the ‘Disclosure”) and (3) any Related Documents.  All terms and conditions of the Disclosure and Related Documents are incorporated herein by reference for all purposes, All capitalized terms not defined in this Letter are defined in the Disclosure.

 

This Credit renews, modifies and replaces the Credit previously referred to as account number(s).

 

Promise To Pay.  Borrower promises to pay to Bank, or order, the principal amount of $500,000.00, or so much as may be advanced and outstanding from time to time, together with interest on the outstanding principal balance.  Borrower will pay Bank at Bank’s address shown in this letter or at such other place as Bank may designate in writing.

 

Availability Period.  Subject to applicable terms of the Agreement, advances under the line of credit will be available until January 11, 2012 (the “Availability Period”).  During the Availability Period, Borrower may borrow, repay, and borrow again from time to time under this revolving line of credit up to the Credit Limit.  If at any time, for any reason, the principal balance at any time exceeds the Credit Limit, Borrower shall repay the excess amount immediately.

 

Floating interest Rate.  Interest shall accrue on the unpaid outstanding principal balance of the Credit at the greater of a floating rate equal to the index plus 1.000% (the “Indexed Rate”), or the Floor Rate of 5.000%.  The “Index” is the Prime Rate set by Bank from time to time, which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto.  Each change in the Index shall become effective on the date of each change in the Prime Rata.  The Indexed Rate will change as and when the Index changes.  Interest will be calculated as described in the interest Accrual Basis paragraph below.  The Indexed Rate was approximately 4.250% when this Letter was prepared.

 

Interest Rate Floor.  Notwithstanding anything to the contrary, this Credit shall be subject to an interest rate floor of 5.000% (the “Floor Rate”).  This means during the period of time when the normally applicable interest rate is less than the Floor Rate, then the Floor Rate shall apply in lieu of the normally applicable interest rate.  However, if any financial derivative is provided by Bank with respect to this Credit, the following rules apply:  (a) if a floating to fixed interest rate swap (whether documented by an ISDA Master Agreement or a Rate Management Agreement) is currently effective, the Floor Rate shall not apply, unless the interest rate swap is documented pursuant to an ISDA Master Agreement and contains an embedded floor; and (b) if a rate cap is currently effective, the Floor Rate shall apply.

 

  

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Interest Accrual Basis.  Interest shall be computed on an actual/360 simple interest basis; that is, by multiplying the applicable interest rate, times the outstanding principal balance, times the actual number of days the principal is outstanding and dividing by a year of 380 days.

 

Repayment.  Interest as it accrues shall be due and payable monthly, commencing on April 01, 2011 and continuing on the same day of each month thereafter until maturity.  The Credit shall mature on March 01, 2012, at which time all unpaid principal, accrued interest, and any other unpaid amounts shall be due and payable in full.  Unless otherwise agreed, all sums received from Borrower may be applied to interest, fees, principal, or any other amounts due to Bank in any order at Bank’s sole discretion.

 

Payment and Rate Adjustments.  If Bank falls for any reason to timely or property establish, charge or adjust the interest rate or payment amount, Bank may retroactively correct the interest rate and reamortize and adjust the payment amount at any subsequent time as may be appropriate to restore the intended amortization schedule, Borrower will promptly notify Bank of any such oversight upon discovery of same.  In no event shall Bank’s failure to properly reamortize or adjust payments result in a forgiveness of any portion of the indebtedness.

 

Automatic Debit of Payments.  Borrower agrees to maintain Wells Fargo Bank, National Association deposit account number ____ from which Bank is authorized to debit loan payments, fees and such other sums as may be payable under the Agreement or Related Document as they become due with respect to this Credit and any renewals and extensions of this Credit, and shall keep such deposit account in good standing at all times.  This authorization shall remain in full force and effect until discontinued by Bank, or written revocation from Borrower has been received and processed by Bank at its office at San Antonio Loan Ops, 4101 Wiseman Blvd., Bldg 307, MAC 77422-012, San Antonio, TX 78251, if this authorization is revoked, or if the account is not maintained in good standing, or if Bank is not able to collect such amounts from the account as they become due for any reason, then Bank may increase the pre-maturity interest rate applicable to this Credit immediately and without notice by one quarter percent (1/4%).

 

Disbursement Information.  The proceeds of the Credit shall be disbursed as follows (estimated):

 

	
$449,085.24 Wells Fargo Bank

	
Paydown

Collateral.  Subject to the terms and conditions of the Disclosure, as security for the obligations set forth in Section 2.1 of the Disclosure, including without limitation all indebtedness of Borrower to Bank under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar transaction or arrangement, Scott S Fraser, as Grantor, pledges and grants to Bank a first priority security interest in the following personal property, whether existing or hereafter arising, now owned or hereafter acquired, and wherever located, and all Proceeds of the foregoing (including insurance):

 

  

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The following described accounts, deposit accounts, chattel paper (whether electronic or tangible), instruments, promissory notes, documents, general intangibles, payment intangibles, software, letter of credit rights, health-care insurance receivables and other rights to payment The Wells Fargo Bank, National Association account number  and all renewals thereof, including all securities, guaranties, warranties, indemnity agreements, insurance policies, supporting obligations and other agreements pertaining to the same or the property described therein.

 

The property described in Exhibits Of any) attached hereto and made a part hereof.

 

Fees.  Borrower will pay at closing fees as follows:

 

	
$2,500.00 Commitment Fee

	
From Account

Late Charges.  For each payment of principal, interest, and/or fees which has not been paid in full within fifteen days after its dale due, Borrower will pay to Bank a late charge of $15.00 or five percent (5%) of the amount due, whichever is greater.  Borrower acknowledges end agrees that the amount of this late fee is reasonable with respect to this Credit, taking into account Bank’s expectation of timely receipt of payments with regard to the favorable pricing of this Credit, and the operational, administrative and regulatory burdens flowing from late payments and delinquencies.  To the extent this late fee or any other fee or charge set forth in this Agreement may be prohibited or exceed any limit provided by any present or future applicable law, such fee or charge shall be reduced to the maximum amount allowed.

 

Trade Finance Subfeature.  At Bank’s sole discretion, Bank may make available to Borrower a Letter of Credit Subfeature and/or a Foreign Exchange Subfeature in an amount not to exceed in the aggregate the lesser of $500,000.00 or the available principal amount of the Credit.  Such subfeature(s) shall be subject to the terms of the Disclosure and all additional agreements pertaining to such services.  A Letter of Credit Subfeature simplifies the issuance of commercial arid/or standby letters of credit; however, this is not a commitment to issue letters of credit.  Each letter of credit shall be issued for a term designated by Borrower; provided however, that no letter of credit shall have an expiration subsequent to the maturity of the Credit unless otherwise agreed to by Issuer end Bank.  The issuance of any letter of credit is subject to the Bank’s discretion, the execution of additional letter of credit agreements, end other conditions.

 

Prepayment Penalty.  Borrower may prepay principal of the Credit at any time, in any amount, without penalty.

 

Financial Information.  Borrower agrees to provide to Bank financial statements prepared in a manner and form acceptable to Bank and copies of such tax returns and other financial information and statements that may be requested pursuant to the terms of the Financial Reporting And Condition Addendum, if any.  attached to this Letter, or if otherwise at any time requested by Bank.  Each financial statement shall give a full and complete picture of Borrower’s financial condition as of the statement’s date, with ownership accurately reflected.  Financial statements and tax returns submitted to Bank shall be signed and dated or otherwise authenticated to Bank’s satisfaction.  Borrower shall also furnish to Bank such information regarding the Collateral or the use of loan proceeds as may be requested by Bank.  Borrower warrants that all financial statements and information provided to Bank are and will be accurate, correct and complete.

 

  

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Facsimile and Counterpart.  This document may be signed in any number of separate copies, each of which shall be effective as an original, but all of which taken together shall constitute a single document.  An electronic transmission or other facsimile of this Letter or any signed document shall be deemed an original and shall be admissible as evidence of the document and the signers execution.

 

Applicable Law.  The Agreement shall be governed by the laws of the state of Nevada and applicable Federal Law except to the extent any related document is governed by the law of another state due to the location of the collateral.

 

Purpose.  The proceeds of the Credit shall be used solely for business or commercial purposes.

 

Related Documents.  The Credit also is conditioned upon execution and delivery of this Confirmation Letter and the following Related Documents:

 

Continuing Guaranty

Wells Fargo Privacy Policy for Business Principals

At the time the Agreement is signed and delivered to Bank, the persons signing below.  including without limitation the Borrower(s), any Grantor(s) and any Guarantor(s), acknowledge receipt of the Agreement including the Disclosure and Related Documents, and accept all terms and conditions contained in them.  Unless a fully signed copy of this Letter and all Related Documents is received by Bank within 30 days, this offer to extend credit will expire, This offer is not transferable or assignable, and may be withdrawn or modified at any time prior to Bank’s receipt of the above fully signed documents.

 

Final Agreement.  The persons and entities signing below (“Party”, or collectively, the “Parties”) acknowledge and agree that each Party’s execution of this Agreement constitutes acknowledgment that such Party (i) agrees that there are no oral agreements relating to this Credit (this “Loan”), (ii) agrees that agreements will be binding upon Bank only if in writing and signed by Bank, and (iii) acknowledges receipt of the following Notice, and to the fullest Want allowed by taw, agrees to be bound by the terms of this Agreement and this Notice:

 

NOTICE:  THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THIS LOAN CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL.  AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS LOAN.

 

  

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Please sign and return this original letter to:  Wells Fargo Bank, National Association, 630 Las Vegas Blvd, Las Vegas, NV 85016.  If you have any questions, please contact me at (702) 952-7610.  For future reference, please send all correspondence to the Bank to the following address:  San Antonio Loan Ops, 4101 Wiseman Blvd., Bldg 307, MAC 77422-012, San Antonio, TX 78261.

 

Wells Fargo Bank, National Association

By: /s/ Laurence B. Green                                                                                            

Name:  Laurence B. Green

Title:  Vice President

Date:  February 09, 2011

 

  

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Borrower Acknowledgment and Acceptance:

 

By signing below and intending to be legally bound, Borrower acknowledges receipt of the Agreement, including the Disclosure and Related Documents, and agrees to the terms and provisions contained in them, including without limitation the prepayment penalty described in the Prepayment section of this Letter, if any.  Borrower represents and warrants that the primary business address is 3367 W OQUENDO RD, LAS VEGAS, NV 89118.

 

Empowered Products, Inc.

 

 

By: /s/ Scott Fraser                                                                                   

Name:  Scott S Fraser

Title:  President

 

Grantor Acknowledgment and Acceptance:

 

By signing below and intending to be legally bound, Grantor acknowledges receipt of a copy of the Disclosure and agrees to the terms and provisions of this Letter and Section 2 of the Disclosure.  Grantor represents and warrants that Grantor’s primary business address is .

 

Scott S Fraser

By: /s/ Scott Fraser                                                                                          

Name:  Scott S Fraser

  

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CONTINUING GUARANTY

 

By signing below and intending to be legally bound, the undersigned Guarantor (“Guarantor”) acknowledges receipt of a copy of the Wells Fargo Business Lending Disclosure dated August 01, 2008 (the “Disclosure”), agrees to the terms and provisions of this Guaranty and Section 3 of the Disclosure, and guarantees payment of all Indebtedness of Empowered Products, Inc. (“Borrower”) (the “Guaranteed Indebtedness”), plus interest, costs, fees, and Swap-Derivative Liability as described in the Disclosure.  Guarantor’s address is:   .  Guarantor understands that this Guaranty is effective immediately and will continue to be valid and effective until terminated in the manner set forth in the section of the Disclosure entitled “Duration of Guaranty”.  No formal acceptance by Bank is necessary to make the Guaranty effective.

 

Guarantor acknowledges and agrees that this Guaranty is a continuing unlimited guaranty of all past, present and future Indebtedness of Borrower to Bank.  This Guaranty shall continue in full force and effect without Guarantor’s execution of any subsequent or additional guaranties or other documents and without further notice to Guarantor, or further consent, acknowledgment or reaffirmation of any kind by Guarantor.  All or any portion of the Guaranteed Indebtedness may be continued, increased, decreased or modified in any way, and from time to time new Indebtedness of Borrower to Bank may be created, and all such Indebtedness shall be and remain subject to this Guaranty.  Capitalized terms not defined in this Guaranty are defined in the Disclosure.

 

Scott S Fraser

By: /s/ Scott Fraser                                                                                   

Name:  Scott S Fraser

Date:  February 09, 2011

 

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