Document:

jrcc_10q-ex1022.htm

     

    Exhibit 10.22

    
 

    General
Electric Capital Corporation

    401
Merritt Seven, First Floor

    Norwalk,
Connecticut  06851

    

    July 8,
2008

    

    

    James
River Coal Company

    901 E.
Byrd Street, Suite 1600

    Richmond,
Virginia  23219

    Attention:
Samuel M. Hopkins II

    

    Re:
Consent

    

    Ladies
and Gentlemen:

    

    Reference is hereby made to that
certain Revolving Credit Agreement, dated as of February 26, 2007 (as it may be
amended, restated, modified, supplemented or extended from time to time,
including all exhibits and schedules thereto, or otherwise modified, the “Credit Agreement”), by and
among JAMES RIVER COAL COMPANY, a corporation organized under the laws of
Virginia (“JRCC”), and certain
of JRCC’s Subsidiaries identified on the title and signature pages thereof, as
borrowers (such Subsidiaries, together with JRCC, are referred to hereinafter
each individually as a “Borrower”, and
collectively, jointly and severally, as the “Borrowers”), and the
other credit parties thereto from time to time, as Guarantors (together, the
Borrowers and Guarantors, the “Credit Parties”), the
lenders party hereto from time to time (the “Lenders”), GENERAL
ELECTRIC CAPITAL CORPORATION (“GECC”), a corporation
formed under the laws of Delaware, as co-lead arranger and as administrative
agent for the Lenders (in such capacity, together with its successors and
assigns, if any, the “Administrative
Agent”) and as collateral agent for the Lenders (in such capacity, the
“Collateral
Agent”),with MORGAN STANLEY SENIOR FUNDING, INC., having acted as co-lead
arranger for the Lenders with GECC.  Capitalized terms used herein
without definition shall have the meanings assigned to such terms in the Credit
Agreement.

    

    The Borrowers have requested that the
Administrative Agent and the undersigned Lenders consent to (a) JRCC’s issuance
and/or sale of shares of JRCC common stock (the “Cheyenne Equity
Issuance”), as part of the purchase price under that certain Asset
Purchase Agreement, dated as of the date thereof, by and among JRCC, Leeco,
Inc., a Kentucky corporation, as buyer, Cheyenne Resources, Inc., a Kentucky
corporation, as seller, and the stockholders signatory thereto (the “Cheyenne Asset Purchase
Agreement”) relating to the acquisition of certain assets pursuant to the
Cheyenne Asset Purchase Agreement (the “Cheyenne
Acquisition”); (b) JRCC’s issuance and/or sale of shares of JRCC common
stock (each an “Equity
Issuance”) in an aggregate amount not to exceed $150,000,000 for all such
Equity Issuances after the date hereof, under the Shelf Registration and any
amendment, increase and/or replacement to such Shelf Registration; and (c) the prepayment
of certain Term Loan Obligations under the Term Credit Agreement and/or Senior
Notes with the Net Offering Proceeds of any such Equity Issuance (other than the
Cheyenne Equity Issuance).  Section 9.05 of the Credit Agreement
prohibits the Borrowers from (1) issuing equity in connection with the
acquisition contemplated under the Cheyenne Asset Purchase Agreement, and (2)
conducting Equity Issuances for purposes of prepaying Term Loan Obligations
under the Term Credit Agreement or Senior Notes without the consent of the
Administrative Agent and the Required Lenders.  Section 9.02 of the
Credit Agreement prohibits the Borrowers from prepaying any (x) Term Loan
Obligations unless on a pro forma basis after giving effect to such prepayment
the Credit Parties shall have Availability in excess of twenty million Dollars
($20,000,000) and (y) principal of the Senior Notes (except pursuant to a
Permitted Refinancing), in each case, without the consent of the Administrative
Agent and the Required Lenders.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    Notwithstanding the restrictions
contained in Sections 9.02 and 9.05 of the Credit Agreement, the Administrative
Agent and the undersigned Lenders hereby consent to the Cheyenne Equity Issuance
and Equity Issuances under the Shelf Registration; provided that at
least fifty percent (50%) of the Net Offering Proceeds of any Equity Issuance
(other than the Cheyenne Equity Issuance) shall be, upon receipt, segregated
into a Cash Management Account and offered as a prepayment to the Term Lenders
(the “Equity
Repayment”).  In the event any Term Lender does not accept its
pro rata share of such Equity Prepayment, such Term Lender’s pro rata share of
the Equity Repayment may be retained by JRCC, or used by the Borrowers for any
corporate purpose (including, without limitation, to prepay the Senior
Notes).  Notwithstanding the foregoing, no prepayment of Indebtedness,
other than the Obligations and the Term Loan Obligations, shall be permitted if,
after giving effect to such prepayment on a pro forma basis, any Default or
Event of Default shall have occurred.

    

    The Administrative Agent and the
Lenders hereby agree that the Cheyenne Acquisition shall not be deemed to
constitute a Capital Expenditure under the Credit Agreement solely for the
purpose of calculating compliance under Section 10.03 of the Credit
Agreement.

    

    The Borrowers and Guarantors hereby
represent that the Cheyenne Equity Issuance, the Cheyenne Acquisition, any
Equity Issuance under the Shelf Registration and any other transaction
contemplated thereby (including the financing thereof) do not and will not
contravene any Material Contract, any Coal Supply Agreement or Mining Permit, or
any other agreement between the Borrowers or Guarantors and any third party, and
will not require any waiver, consent, approval or authorization under any
Material Contract that has not been obtained.

    

    The Borrowers and Guarantors hereby
agree to promptly take any action and execute and deliver any such documents as
may be required under Sections 8.07 and 8.08 of the Credit Agreement to obtain
and perfect the Collateral Agent’s first-priority Liens (subject to the
Intercreditor Agreement) on the assets acquired pursuant to the Cheyenne Asset
Purchase Agreement.

    

    The effectiveness of this consent
letter is subject to the following conditions: (i) that it shall be executed and
delivered by the Administrative Agent, the Required Lenders, the Borrowers and
the Guarantors; and (ii) that the Administrative Agent shall have received a
copy of a consent letter, in form and substance satisfactory to the
Administrative Agent, duly executed by the Term Loan Agent, the Required Lenders
(as defined in the Term Credit Agreement), the Borrowers and the
Guarantors.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    None of the Administrative Agent or the
Lenders shall have any obligation to issue any further consent, waiver or
release with respect to the subject matter of this consent letter or any other
matter.  Except as specifically provided above, nothing contained in
this consent letter shall be deemed to be a waiver of, or shall in any way
impair or prejudice, any rights of the Agent or the Lenders under the Credit
Agreement or any other Loan Document.

    

    This consent letter may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
instrument.

    

    THIS CONSENT LETTER SHALL FOR ALL
PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.

    

    [remainder
of page intentionally left blank]

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    Kindly acknowledge your agreement with
the terms of this consent letter by signing where indicated below and returning
it to the Administrative Agent.

    

    
      	
              LENDER, ADMINISTRATIVE AGENT AND COLLATERAL
      AGENT:

            
	 
	
              GENERAL
      ELECTRIC CAPITAL CORPORATION

            
	 
	 
	
              By:
      /s/ James
      DeSantis                               
      

            
	
              Name: 
      James DeSantis

            
	
              Title:
      Duly Authorized Signatory

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    
      	
              BORROWERS:

            
	 
	
              JAMES
      RIVER COAL COMPANY

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              JAMES
      RIVER COAL SERVICE COMPANY

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              LEECO,
      INC.

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              TRIAD
      MINING, INC.

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    
      	
              TRIAD
      UNDERGROUND MINING, LLC

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      Member

            
	 
	 
	
              BLEDSOE
      COAL CORPORATION

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              JOHNS
      CREEK ELKHORN COAL CORPORATION

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              JAMES
      RIVER COAL SALES, INC.

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              BLEDSOE
      COAL LEASING COMPANY

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            

    

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    
      	
              BLUE
      DIAMOND COAL COMPANY

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              MCCOY
      ELKHORN COAL CORPORATION

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              GUARANTORS:

            
	 
	 
	
              BDCC
      HOLDING COMPANY, INC.

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              EOLIA
      RESOURCES, INC.

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              SHAMROCK
      COAL COMPANY, INCORPORATED

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    
       

      	
              JOHNS
      CREEK COAL COMPANY

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            
	 
	 
	
              JOHNS
      CREEK PROCESSING COMPANY

            
	 
	 
	
              By:   /s/ Samuel M. Hopkins
      II                          
      

            
	
              Name: 
      Samuel M. Hopkins II

            
	
              Title: 
      V.P.

            

    

    

    

     

     

     

     

     

     

     

     

     

     

     

     

     

    8<PAGE>
EXHIBIT 4.1

                            SECOND OMNIBUS AMENDMENT

THIS SECOND OMNIBUS AMENDMENT (this "Amendment"), dated as of July 31, 2008 (the
"Amendment Date"), is made

BY AND BETWEEN:

      PALA INVESTMENTS HOLDINGS LIMITED, of 12 Castle Street, St Helier, Jersey,
      JE2 3RT (the "Lender");

AND:

      ALDEROX, INC. (formerly known as Reclamation Consulting and Applications,
      Inc.), a company organized under the laws of the State of Colorado, of 940
      Calle Amanecer, Suite E, San Clemente, CA 92673 (the "Borrower").

WHEREAS, the Lender and the Borrower are parties to a Secured Convertible
Debenture, dated as of December 12, 2007 (the "Original Debenture"), pursuant to
which the Lender loaned the Borrower Three Million Dollars ($3,000,000) and,
under the terms and subject to the conditions set forth therein, provided for
the potential further loan of Two Million Dollars ($2,000,000);

WHEREAS, pursuant to an Omnibus Amendment, dated as of March 28, 2008 (the
"First Omnibus Amendment"), the Lender loaned the Borrower an additional Two and
One-half Million Dollars ($2,500,000) (the Original Debenture, as amended by
such Omnibus Amendment, the "Debenture");

WHEREAS, in connection with the Debenture, the Lender and the Borrower entered
into a Voting and Right of First Refusal Agreement, dated as of December 12,
2007 (the "Voting Agreement"), a Registration Rights Agreement, dated as of
December 12, 2007 (as amended by the First Omnibus Amendment, the "Registration
Rights Agreement"), and a Patent and Trademark Security Agreement, dated as of
December 12, 2007 (as amended by the First Omnibus Amendment, the "Security
Agreement"; the Debenture, the Voting Agreement, the Registration Rights
Agreement and the Security Agreement are referred to collectively as the
"Debenture Agreements"); and

WHEREAS, the Lender is willing to lend to the Borrower an additional Seven
Hundred Thousand Dollars ($700,000) (the "Fourth Tranche") which shall be
extended to the Borrower on the Amendment Date following the mutual execution of
this Amendment and an additional Three Hundred Thousand Dollars ($300,000) (the
"Fifth Tranche") on a future date, in each case pursuant to the terms and
subject to the conditions of the Debenture Agreements, in each case as amended
by this Amendment.

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 1 of 12
<PAGE>

NOW, THEREFORE, THIS AGREEMENT WITNESSES that in consideration of the premises
and the mutual covenants and agreements hereinafter set forth, the parties
hereto agree as follows:

1. DEFINITIONS

Unless a definition is provided for a capitalized term in this Amendment, each
such term shall have the meaning provided to it in the Debenture.

2. INTERPRETATION

The provisions of Section 2 of the Debenture shall apply to this Amendment as if
set forth herein, in each case with references to "this Agreement" being
replaced with "this Amendment."

3. THE AMENDMENTS

      3.1 AMENDMENTS TO THE DEBENTURE

The follow amendments are hereby made to the Debenture:

            3.1.1 For the avoidance of doubt, the term "Principal" in the
                  Debenture shall include the principal amount of the Fourth
                  Tranche and the Fifth Tranche, the indebtedness comprising the
                  Fourth Tranche and the Fifth Tranche shall be included in the
                  term "Loan" in the Debenture, each of the Fourth Tranche Note
                  (as defined below) and the Fifth Tranche Note (as defined
                  below) shall constitute a "Note" under the Debenture and each
                  of the Fourth Tranche Warrant (as defined below) and Fifth
                  Tranche Warrant (as defined below) shall constitute a
                  "Warrant" under the Debenture.

            3.1.2 The term "Conversion Price" is amended in its entirety to
                  provide as follows:

                  ""Conversion Price" means, with respect to the Principal
                  amount of the First Tranche, Second Tranche, Third Tranche,
                  Fourth Tranche and Fifth Tranche, $0.13 per share, provided
                  that if Borrower, at any time while the Principal is
                  outstanding, (i) pays a stock dividend on its common stock,
                  (ii) subdivides outstanding shares of common stock into a
                  larger number of shares, or (iii) combines outstanding shares
                  of common stock into a smaller number of shares, then in each
                  such case the applicable Conversion Price shall be adjusted by
                  multiplying (a) such Conversion Price in effect immediately
                  prior to such event, by (b) a fraction of which the numerator
                  shall be the number of shares of common stock outstanding
                  immediately before such event and of which the denominator
                  shall be the number of shares of common stock outstanding
                  immediately after such event;"

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 2 of 12
<PAGE>

            3.1.3 Each reference to "Conversion Price" shall refer to the
                  Conversion Price applicable to the relevant Principal amount
                  of the First Tranche, Second Tranche, Third Tranche, Fourth
                  Tranche or Fifth Tranche, as the case may be.

            3.1.4 A new Section 6.2.14 of the Debenture is added as follows:

            "6.1.23 Provide the Lender with a reasonably detailed calculation of
            the Borrower's compliance or non-compliance with the covenant set
            forth in Section 6.2.14(a) within 15 days of January 31, 2009, with
            the covenant set forth in Section 6.2.14(b) within 15 days of March
            31, 2009, and with the covenant set forth in Section 6.2.14(c) at
            the end of each Period to which such covenant applies and such other
            information relating to such calculation as the Lender shall
            request.

            3.1.5 A new Section 6.2.14 of the Debenture is added as follows:

            "6.2.14 (a) Permit the Borrower's Consolidated Adjusted EBITDA for
            the month ended January 31, 2009 to be less than zero; (b) permit
            the Borrower's Consolidated Adjusted EBITDA for the Fiscal Quarter
            ended March 31, 2009 to be less than zero; (c) permit the Leverage
            Ratio as of the last day of any Period, beginning with the Period
            ending June 30, 2009, to exceed the correlative ratio indicated:

            ========================================   =========================
                         PERIOD                               LEVERAGE RATIO
            ----------------------------------------   -------------------------
              Two Fiscal Quarters ended 6/30/09                20.00 :1.00
              Three Fiscal Quarters ended 9/30/09              10.00 :1.00
              Four Fiscal Quarters ended 12/31/09               5.00 :1.00
              Four Fiscal Quarters ended 3/31/10                4.00 :1.00
              Four Fiscal Quarters ended 6/30/10                4.00 :1.00
              Four Fiscal Quarters ended 9/30/10                3.00 :1.00
            ========================================   =========================

            ; or (d) change the Fiscal Year of the Borrower and its
            Subsidiaries.

            For purposes of this covenant, the following terms have the meanings
            indicated:

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 3 of 12
<PAGE>

            "Consolidated Adjusted EBITDA" means, for any period, an amount
            determined for the Borrower and its Subsidiaries on a consolidated
            basis equal to (i) Consolidated Net Income, plus, to the extent
            reducing Consolidated Net Income, the sum, without duplication, of
            amounts for (a) consolidated interest expense, (b) provisions for
            taxes based on income, (c) total depreciation expense, (d) total
            amortization expense, and (e) other non-cash charges reducing
            Consolidated Net Income (excluding any such non-cash charge to the
            extent that it represents an accrual or reserve for potential cash
            charge in any future period or amortization of a prepaid cash charge
            that was paid in a prior period), minus (ii) other non-cash gains
            increasing Consolidated Net Income for such period (excluding any
            such non-cash gain to the extent it represents the reversal of an
            accrual or reserve for potential cash gain in any prior period).

            "Consolidated Net Income" means, for any period, (i) the net income
            (or loss) of the Borrower and its Subsidiaries on a consolidated
            basis for such period taken as a single accounting period determined
            in conformity with GAAP, minus (ii) (a) the income (or loss) of any
            entity (other than a Subsidiary of the Borrower) in which any other
            entity (other than the Borrower or any of its Subsidiaries) has a
            joint interest, except to the extent of the amount of dividends or
            other distributions actually paid to the Borrower or any of its
            Subsidiaries by such entity during such period, (b) the income (or
            loss) of any entity accrued prior to the date it becomes a
            Subsidiary of the Borrower or is merged into or consolidated with
            the Borrower or any of its Subsidiaries or that entity's assets are
            acquired by the Borrower or any of its Subsidiaries, (c) the income
            of any Subsidiary of the Borrower to the extent that the declaration
            or payment of dividends or similar distributions by that Subsidiary
            of that income is not at the time permitted by operation of the
            terms of its charter or any agreement, instrument, judgment, decree,
            order, statute, rule or governmental regulation applicable to that
            Subsidiary, (d) any after-tax gains or losses attributable to asset
            sales, and (e) (to the extent not included in clauses (a) through
            (d) above) any net extraordinary gains or net extraordinary losses.

            "Consolidated Total Debt" means, as at any date of determination,
            the aggregate stated balance sheet amount of all indebtedness of the
            Borrower and its Subsidiaries determined on a consolidated basis in
            accordance with GAAP.

            "Fiscal Quarter" means a fiscal quarter of any Fiscal Year.

            "Fiscal Year" means the fiscal year of the Borrower and its
            Subsidiaries ending on June 30 of each calendar year.

            "GAAP" means United States generally accepted accounting principles
            in effect as of the date of determination thereof.

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 4 of 12
<PAGE>

            "Leverage Ratio" means the ratio as of the last day of any Period of
            (i) Consolidated Total Debt as of such day to (ii) Consolidated
            Adjusted EBITDA for the Period ending on such date.

            "Period" means the number of Fiscal Quarters ending on the date
            indicated.

      3.2 AMENDMENTS TO THE REGISTRATION RIGHTS AGREEMENT

The follow amendments are hereby made to the Registration Rights Agreement:

            3.2.1 For the avoidance of doubt, the term "Registrable Securities"
                  in the Registration Rights Agreement shall include the shares
                  of Common Stock issuable upon conversion of the Fourth Tranche
                  Note and Fifth Tranche Note and upon exercise of the Fourth
                  Tranche Warrant and Fifth Tranche Warrant.

      3.3 AMENDMENTS TO THE SECURITY AGREEMENT

The follow amendments are hereby made to the Security Agreement:

            3.3.1 For the avoidance of doubt, the term "Indebtedness" in the
                  Security Agreement shall include indebtedness comprising the
                  Fourth Tranche and Fifth Tranche.

      3.4 LIMITED AMENDMENT

Any future reference to any Debenture Agreement (including any reference to any
particular Debenture Agreement in any other Debenture Agreement) and any
document or instrument delivered in connection therewith shall, from and after
the date of this Amendment, be deemed to be a reference to such Debenture
Agreement as modified by this Amendment. Except as expressly modified by this
Amendment, each of the Debenture Agreements shall continue to be and remain in
full force and effect in accordance with their respective terms and the Borrower
hereby reaffirms its obligations under each such agreement.

4. REPRESENTATIONS AND WARRANTIES

      4.1 REPRESENTATIONS OF THE BORROWER

The Borrower hereby represents and warrants to the Lender that, except as
provided on Annex A hereto, each of the representations and warranties set forth
in Section 5.1 of the Debenture are true and correct as of the Amendment Date,
in each case with references to "this Agreement" referring to the Debenture as
amended by this Amendment.

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 5 of 12
<PAGE>

      4.2 REPRESENTATIONS OF THE LENDER

The Lender hereby represents and warrants to the Borrower that each of the
representations and warranties set forth in Section 5.2 of the Debenture (as
amended by this Amendment) are true and correct as of the Amendment Date, in
each case with references to "this Agreement" referring to the Debenture as
amended by this Amendment.

5. CONDITIONS PRECEDENT TO FOURTH TRANCHE

The Lender's obligation to advance the Fourth Tranche and the amendments
contemplated hereby shall be subject to the following conditions precedent:

      5.1 DOCUMENTS

The Lender shall have received each of the following, each properly executed by
the Borrower and in form and substance satisfactory to the Lender:

            5.1.1 This Amendment;

            5.1.2 A Note substantially in the form of Schedule O attached to the
                  First Omnibus Amendment (the "Fourth Tranche Note"); provided
                  such Note shall be made by Borrower under the name "Alderox,
                  Inc.," shall have a principal amount of Seven Hundred Thousand
                  Dollars ($700,000) and shall be dated the date of issuance;
                  and

            5.1.3 A Warrant certificate, substantially in the form of Schedule P
                  attached to the First Omnibus Amendment (the "Fourth Tranche
                  Warrant"), evidencing Seven Hundred Thousand (700,000)
                  warrants for the purchase of an aggregate of Seven Hundred
                  Thousand (700,000) shares of Borrower's common stock,
                  representing one (1) warrant for every One Dollar ($1.00) of
                  Principal provided to Borrower pursuant to the Fourth Tranche.
                  The Fourth Tranche Warrants shall be exercisable until 5:00 PM
                  Pacific Time three (3) years from the Amendment Date. The
                  Fourth Tranche Warrants shall have an exercise price of Forty
                  Two Cents ($0.42) per share.

      5.2 SECRETARY'S CERTIFICATE

The Lender shall have received a certificate of the Secretary of the Borrower,
dated as of the Amendment Date, (a) attesting to the corporate action taken by
the Borrower with respect to this Amendment, including resolutions of the Board
of Directors authorizing (i) the execution of this Amendment, (ii) the issuance
of the Fourth Tranche Note and Fourth Trance Warrant, (iii) the execution of,
delivery, and performance by the Borrower of all other agreements or matters
contemplated hereby or executed in connection herewith, (b) certifying the names
and true signatories of the officers of the Borrower authorized to sign this
Agreement, the Fourth Tranche Note, the Fourth Tranche Warrant and other
documents, instruments or certificates to be delivered pursuant hereto and
thereto, together with the true signatures of such officers and (c) verifying
that the Articles of Incorporation and the By-Laws of the Borrower attached
thereto are true, correct and complete as of the Amendment Date.

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 6 of 12
<PAGE>

      5.3 OFFICER'S CERTIFICATE

The Lender shall have received a certificate of the President of the Borrower,
dated as of the Amendment Date, which shall certify that the representations and
warranties contained in Section 4.1 of this Amendment are true and correct as of
the Amendment Date and that all conditions required to be performed prior to the
Amendment Date have been so performed.

      5.4 GOOD STANDING CERTIFICATES

The Lender shall have received a certificate dated as of a recent date of the
appropriate public official in the jurisdiction of incorporation of the Borrower
and each Subsidiary certifying the due incorporation and good standing of the
Borrower and such Subsidiary together with, in the case of the Borrower, a
certified copy of the Articles of Incorporation of the Borrower.

      5.5 NO PROCEEDINGS OF LITIGATION

No action, suit or proceeding before any arbitrator or any governmental
authority shall have been commenced, and no investigation by any governmental
authority shall have been threatened, against the Borrower or any Subsidiary, or
any of the officers or directors of the Borrower or any Subsidiary seeking to
restrain, prevent or change the transactions contemplated by the Debenture, as
amended by this Amendment Agreement, or seeking damages in connection with such
transactions.

      5.6 NO EVENT OF DEFAULT

No event shall have occurred and be continuing, or would result from the advance
of the Fourth Tranche, as the case may be, which constitutes an Event of
Default.

6. CONDITIONS PRECEDENT TO FIFTH TRANCHE

Any time following the Amendment Date, the Borrower may request that the Lender
advance the Loans represented by the Fifth Tranche by providing the Lender not
less than [15 business days] prior written notice of the date requested for such
advance (the "Drawdown Notice"). The Drawdown Notice shall set forth in
sufficient detail; (a) the reasons for the requested Fifth Tranche, (b) the uses
of the Fifth Tranche, (c) a cash flow statement from the Amendment Date, setting
forth all cash flows until the requested Fifth Tranche, and (d), such other
information that may be necessary for the Lender to consider the Fifth Tranche.
The date on which the conditions set forth in this Section 6 are satisfied and
the Fifth Tranche is funded is referred to as the "Fifth Tranche Funding Date".
The Lender's obligation to advance the Fifth Tranche shall be subject to the
following conditions precedent:

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 7 of 12
<PAGE>

      6.1 DOCUMENTS

The Lender shall have received each of the following, each properly executed by
the Borrower and in form and substance satisfactory to the Lender:

            6.1.1 This Amendment;

            6.1.2 A Note substantially in the form of Schedule O attached to the
                  First Omnibus Amendment (the "Fifth Tranche Note"); provided
                  such Note shall be made by Borrower under the name "Alderox,
                  Inc.," shall have a principal amount of Three Hundred Thousand
                  Dollars ($300,000) and shall be dated the date of issuance;

            6.1.3 A Warrant certificate, substantially in the form of Schedule P
                  attached to the First Omnibus Amendment (the "Fifth Tranche
                  Warrant"), evidencing Three Hundred Thousand (300,000)
                  warrants for the purchase of an aggregate of Three Hundred
                  Thousand (300,000) shares of Borrower's common stock,
                  representing one (1) warrant for every One Dollar ($1.00) of
                  Principal provided to Borrower pursuant to the Fifth Tranche.
                  The Fifth Tranche Warrants shall be exercisable until 5:00 PM
                  Pacific Time three (3) years from the Fifth Tranche Funding
                  Date. The Fifth Tranche Warrants shall have an exercise price
                  of Forty Two Cents ($0.42) per share.

      6.2 SECRETARY'S CERTIFICATE

The Lender shall have received a certificate of the Secretary of the Borrower,
dated as of the Fifth Tranche Funding Date, (a) attesting to the corporate
action taken by the Borrower with respect to this Amendment, including
resolutions of the Board of Directors authorizing (i) the execution of this
Amendment, (ii) the issuance of the Fifth Tranche Note and Fifth Trance Warrant,
(iii) the execution of, delivery, and performance by the Borrower of all other
agreements or matters contemplated hereby or executed in connection herewith,
(b) certifying the names and true signatories of the officers of the Borrower
authorized to sign this Agreement, the Fifth Tranche Note, the Fifth Tranche
Warrant and other documents, instruments or certificates to be delivered
pursuant hereto and thereto, together with the true signatures of such officers
and (c) verifying that the Articles of Incorporation and the By-Laws of the
Borrower attached thereto are true, correct and complete as of the Fifth Tranche
Funding Date.

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 8 of 12
<PAGE>

      6.3 OFFICER'S CERTIFICATE

The Lender shall have received a certificate of the President of the Borrower,
dated as of the Fifth Tranche Funding Date, which shall certify that the
representations and warranties contained in Section 4.1 of this Amendment are
true and correct as of the Fifth Tranche Funding Date and that all conditions
required to be performed prior to the Fifth Tranche Funding Date have been so
performed.

      6.4 GOOD STANDING CERTIFICATES

The Lender shall have received a certificate dated as of a recent date of the
appropriate public official in the jurisdiction of incorporation of the Borrower
and each Subsidiary certifying the due incorporation and good standing of the
Borrower and such Subsidiary together with, in the case of the Borrower, a
certified copy of the Articles of Incorporation of the Borrower.

      6.5 NO PROCEEDINGS OF LITIGATION

No action, suit or proceeding before any arbitrator or any governmental
authority shall have been commenced, and no investigation by any governmental
authority shall have been threatened, against the Borrower or any Subsidiary, or
any of the officers or directors of the Borrower or any Subsidiary seeking to
restrain, prevent or change the transactions contemplated by the Debenture, as
amended by this Amendment Agreement, or seeking damages in connection with such
transactions.

      6.6 NO EVENT OF DEFAULT

No event shall have occurred and be continuing, or would result from the advance
of the Fifth Tranche, as the case may be, which constitutes an Event of Default.

      6.7 LENDER APPROVAL

The Fifth Tranche shall be used by the Borrower to finance the fulfillment of
contracted sales, and shall not be used to finance the Borrower's operating
losses or general administrative expenditure. The advance of the Fifth Tranche
shall be subject to the Lender's approval based on the information contained in
the Drawdown Notice, which approval shall be at the Lender's sole and absolute
discretion.

7. GENERAL

      7.1 COUNTERPART AND FAX EXECUTION

This Amendment may be executed in two or more counterparts and by fax
transmission, each of which will be deemed to be an original and all of which
will constitute one agreement, effective as of the date given above.

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                    Page 9 of 12
<PAGE>

                             SIGNATURES ON NEXT PAGE

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                   Page 10 of 12
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
Amendment Date.

LENDER

PALA INVESTMENTS HOLDINGS LIMITED

/s/ Susan Garrod
-------------------------------
Susan Garrod

BORROWER

ALDEROX, INC.,
a Colorado corporation

/s/ Michael Davies
------------------------------
By: Michael C. Davies
Its: Chief Executive Officer

                                                               OMNIBUS AMENDMENT
                                                                   July 31, 2008
                                                                   Page 11 of 12
<PAGE>

                                     ANNEX A

                             SCHEDULE OF EXCEPTIONS

SHARES OUTSTANDING

                                       Current                     Fully Diluted
---------------------------------------------- ---------------------------------
                                    65,627,796                       167,851,520
---------------------------------------------- ---------------------------------

EXISTING INDEBTEDNESS (PRINCIPAL AND INTEREST)

                                            Current ($)       Post-Financing ($)
--------------------------------------------------------------------------------
Convertibles Notes                            1,426,525                1,426,525
Secured Convertible Debentures(1)             5,834,684                6,534,684
Unsecured Convertible Debentures              1,029,987                1,029,987
Line of Credit                                   86,146                   86,146
Other Loans                                     397,316                  397,316
--------------------------------------------------------------------------------
Total                                         8,774,658                9,474,658

(1) Includes the $700,000 Fourth Tranche

                                                               At Maturity
Convertible Notes At Maturity                Current         Post-Financing

Convertible Notes                          1,426,525            1,552,453

Secured Convertible Debentures             5,834,684            7,759,424

Unsecured Convertible Debentures           1,029,987            1,141,083

Shares Outstanding At Maturity
  Post-Financing                                              193,171,191

                                                               OMNIBUS AMENDMENT
                                                                  March 28, 2008
                                                                   Page 12 of 12

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