Document:

chapeau8k032708ex4-2.htm

    
      

      

    

    
      Exhibit
4.2

       

      

       

      
        	
                THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
      ACT”).  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
      HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE 1933 ACT, OR AN OPINION OF COUNSEL
      SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE
      1933 ACT AND APPLICABLE STATE SECURITIES
LAW.

              

      

      

       

      Warrant
to Purchase Common Stock

       

      of

       

      Chapeau,
Inc.

       

      Void
after March 21, 2013

      

       

      This
Warrant is issued to TEFCO, LLC, a Virginia limited liability
company (the
“Holder”), by Chapeau, Inc., a Utah corporation (the “Company”), as of March 21,
2008 (the “Warrant Issue Date”).  This Warrant is issued pursuant to
that certain Turnkey Financing, Loan and Security Agreement dated as of March
20, 2008 (the “Agreement”).

       

       

      1.         Shares.  Subject to
the terms and conditions of this Warrant, the Holder is entitled, upon surrender
of this Warrant at the principal office of the Company (or at such other place
as the Company shall notify the Holder in writing), to purchase from the Company
Five Million (5,000,000) fully paid and non-assessable shares of Common Stock,
as constituted on the Warrant Issue Date. The number of shares of Common Stock
issuable pursuant to this Section 1 (the “Shares”) shall be subject to
adjustment pursuant to Section 10 below.

       

      2.         Exercise Price. The per share
purchase price for the Shares shall be equal to $1.99, which is 150% of the
average closing price per share of Common Stock on the over-the-counter bulletin
board during the 30 days prior to December 14, 2007 as adjusted from time to
time pursuant to Section 10 below (the “Exercise Price”).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      3.         Exercise
Period.  This Warrant shall be exercisable, in whole or in
part, during the term commencing on the Warrant Issue Date and ending at 5:00
p.m. Eastern on the five (5) year anniversary of the Warrant Issue Date;
provided that in the event (each a “Disposition Event”) of (i) the closing of
the Company’s sale or transfer of all or substantially all of its assets, or
(ii) the closing of the acquisition of the Company by another entity by means of
merger, consolidation or other transaction or series of related transactions,
resulting in the exchange of the outstanding shares of the Common Stock (unless
(A) the shareholders of the Company immediately prior to such transaction or
series of related transactions are holders of a majority of the voting equity
securities of the surviving or acquiring corporation immediately thereafter, and
(B) each of such shareholders immediately prior to such transaction or series of
related transactions holds the same pro rata share of such majority of the
voting equity securities of the surviving or acquiring corporation as each hold
of the Company immediately prior to such transaction or series of related
transactions), this Warrant shall, on the date of a Disposition Event, no longer
be exercisable and become null and void. The Company shall notify the Holder at
least 30 days prior to the consummation of any Disposition Event and, in all
circumstances, the Holder shall have at least 20 days prior to the consummation
of such Disposition Event to exercise this Warrant. The Company shall notify
Holder thirty (30) days prior to expiration of Warrant.  Failure to do
so shall extend the Warrant thirty (30) days from the receipt by Holder of such
expiration notice.

       

      4.         Method of
Exercise.  While this Warrant remains outstanding and
exercisable, the Holder may exercise this Warrant, in whole or in part, at one
time or from time to time, by:

       

      (a)        the
surrender of this Warrant, together with a duly executed copy of the form of
Notice of Election attached hereto, to the Secretary of the Company at its
principal offices; and

       

      (b)        the
payment to the Company of an amount equal to the aggregate Exercise Price for
the number of Shares being purchased.

       

      (c)        In
lieu of exercising this Warrant by paying the Exercise Price in cash, the Holder
may elect to receive shares equal to the value of this Holder (or the portion
thereof being exercised) by surrender of this Holder at the principal office of
the Company together with the Notice of Cashless Exercise annexed hereto as
Schedule B
duly completed and executed, in which event the Company shall issue to Holder
the number of shares of Common Stock computed using the following
formula:

       

      X= (Y)(A-B)

            A

       

      Where X =
   The number of shares of Common Stock to be issued to
Holder.

       

      
        	
                 
      

              	
                Y
      =

              	
                The
      number of shares of Common Stock purchasable under this
      Warrant.

              

      

       

      
        
           

        

        
          B-2

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                A
      =

              	
                The
      fair market value of one share of Common
Stock.

              

      

       

      
        	
                 
      

              	
                B
      =

              	
                The
      Exercise Price (as adjusted to the date of such
    calculations).

              

      

       

      (d)        For
purposes of this Section, the fair market value of one share of Common Stock
shall be equal to the volume weighted average closing price per share of Common
Stock on the over-the-counter bulletin board (or such other securities exchange
or Nasdaq market on which the Company’s securities are trading) over the 30 days
prior to exercise, or, if the Company’s Common Stock is not trading on the
over-the-counter bulletin board (or such other securities exchange or Nasdaq
market) the fair market value shall be determined by the Board of Directors in
good faith.

       

      In the
event of a partial exercise of this Warrant, the Company shall cause to be
issued to the Holder a Warrant of like tenor to this Warrant for the number of
Shares for which this Warrant has not yet been exercised.

       

      5.         Representations and Warranties of
Holder.  The Holder hereby represents and warrants
that:

       

      (a)        This
Warrant and the Shares to be received upon exercise of this Warrant
(collectively, the “Securities”) are being acquired for investment for the
Holder’s own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and the Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the Securities, in whole or in part.  The Holder does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to the Securities.

       

      (b)        The
Holder is able to fend for itself, can bear the economic risk of its investment,
has adequate means for providing for its current needs and contingencies and has
no need for liquidity with respect to its investment in the Company, and has
such knowledge and experience in financial or business matters such that it is
capable of evaluating the merits and risks of the investment in the
Securities.

       

      (c)        The
Holder is an “accredited investor” as that term is defined in Rule 501 of
Regulation D.

       

      (d)        At
no time was the Holder presented with or solicited by any publicly issued or
circulated newspaper, mail, radio, television or other form of general
advertising or solicitation in connection with the issuance of this
Warrant.

       

      (e)        The
Holder has received or has had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect to
the Securities. The Holder further has had an opportunity to ask questions of
and receive answers from the Company regarding the terms and conditions of the
issuance of the Securities and to obtain additional information (to the extent
the Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to the Holder
or to which the Holder had access.

       

      
        
           

        

        
          B-3

          
            

          

        

        
           

        

      

      (f)         The
Holder understands that the Securities that it is purchasing or otherwise taking
delivery of are or will be characterized as “restricted securities” as that term
is defined in Rule 144 promulgated under the Securities Act of 1933, as amended
(the “1933 Act”) inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under the 1933 Act and
applicable federal and state statutes and regulations such securities may be
resold without registration only in certain limited
circumstances.  The Holder represents that it is familiar with Rule
144, as presently in effect, and which permits limited resale of stock purchased
in a private placement subject to the satisfaction of certain conditions,
including among other things, the existence of a public market for the stock,
the availability of certain current public information about the issuer, the
resale occurring not less than one year after a party has purchased and paid for
the stock to be sold, the sale being effected through a “broker’s transaction”
or in transactions directly with a “market maker” and the number of shares of
stock being sold during any three-month period not exceeding specified
limitations.  The Holder understands and hereby acknowledges that the
Company may not be satisfying the current public information requirement of
Rule 144 at the time the Holder wishes to sell the Securities, and that, in
such event, the Holder may be precluded from selling such securities under
Rule 144, even if the other requirements of Rule 144 have been
satisfied.

       

      
        	
                 
      

              	
                6.

              	
                Transfer
      Restrictions.

              

      

       

      (a)        The
Holder may sell, assign or transfer this Warrant and the Shares issuable upon
exercise hereof so long as such transfer complies with all applicable federal
and state securities laws and the Company receives an opinion of counsel
reasonably satisfactory to the Company that such sale, assignment or transfer is
exempt from such from any registration requirements or permit requirements under
such laws.

       

      (b)        Certificates
evidencing the Securities shall bear one or all of the following
legends:

       

      (i)         “The
securities represented hereby have not been registered under the Securities Act
of 1933, as amended (the “Act”), or under applicable state securities
laws.  These securities are subject to restrictions on transferability
and resale and may not be offered, sold, pledged, hypothecated, assigned,
transferred or resold except as permitted under the Act and applicable state
securities laws pursuant to (i) a registration statement under the Act, which
has become effective and is current with respect to these securities, or (ii) an
exemption therefrom.”

       

      (ii)        Any
legend required by the laws of the State and any other applicable state of the
United States.

       

      

       

      
        
           

        

        
          B-4

          
            

          

        

        
           

        

      

      7.         Certificates for
Shares.  Upon the exercise of the purchase rights evidenced by
this Warrant, one or more certificates for the number of Shares so purchased
shall be issued as soon as practicable thereafter (with appropriate restrictive
legends, if applicable), and in any event within 15 days following compliance by
the Holder with the requirements of Section 4 above.  The Company
shall not be required to issue any fractional shares, and if any fraction of a
Share would be issuable on the exercise of this Warrant in full, the Company
shall pay an amount in cash equal to the then current fair market value of a
Share, as then determined in good faith by the Board of Directors of the
Company, times the applicable fraction.

       

      8.         Reservation of Shares. The
Company covenants that it will at all times keep available such number of
authorized shares of Common Stock, free from all preemptive rights with respect
thereto, which will be sufficient to permit the exercise of this Warrant for the
full number of Shares specified herein. The Company covenants that the Shares,
when issued pursuant to the exercise of this Warrant and in exchange for the
Exercise Price, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens, charges and encumbrances of any
kind.

       

      9.         Adjustment of Exercise Price and
Number of Shares.  The number of and kind of Shares purchasable
or receivable upon exercise of this Warrant and the Exercise Price shall be
subject to adjustment from time to time as follows:

       

      (a)        Subdivisions, Combinations and Other
Issuances. If the Company shall subdivide the Common Stock, by split-up
or otherwise, combine the Common Stock or issue additional shares of Common
Stock as a stock split, dividend or other distribution with respect to any of
its securities, the number of Shares issuable on the exercise of this Warrant
shall be proportionately increased in the case of a subdivision, stock split,
dividend or distribution and shall be proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the Exercise Price,
but the aggregate purchase price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 10(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of a stock split, dividend or other distribution, or in the
event that no record date is fixed, upon the making of such dividend or
distribution.

       

      (b)        Reclassification, Reorganization and
Consolidation. In the event of any reclassification, capital
reorganization or change in the Common Stock, or a merger or consolidation of
the Company with or into another corporation, other than as a result of an event
provided for in (a) above, then, as a condition of such transaction, the Holder
shall have the right at any time prior to the expiration of this Warrant to
purchase, at a total price equal to that payable upon the exercise of this
Warrant, the kind and amount of shares of stock and other securities and
property receivable in connection with the applicable transaction by a holder of
the same number of shares of Common Stock as were purchasable by the Holder
immediately prior to the transaction. In any such case appropriate provisions
shall be made with respect to the rights and interest of the Holder so that this
provision shall thereafter be applicable with respect to any securities
deliverable upon exercise of this Warrant, and appropriate adjustments shall be
made to the Exercise Price; provided that the aggregate purchase price shall
remain the same.

       

      

       

      
        
           

        

        
          B-5

          
            

          

        

        
           

        

      

      (c)        Other Anti-Dilution
Adjustments. In addition to the adjustments called for above, the number
of shares of Common Stock issuable on exercise of this Warrant shall subject to
adjustment pursuant to the terms of the Registration Rights Agreement, as
defined below.

       

      (d)        Notice of Adjustment. When
any adjustment is required to be made in the number or kind of securities
receivable upon exercise of this Warrant, or in the Exercise Price, the Company
shall promptly notify the Holder thereof and of the number of Shares or other
securities thereafter receivable upon exercise of this Warrant and the adjusted
Exercise Price per share.

       

      (e)        No Impairment.  The
Company and the Holder will not, by any 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 or the Holder, respectively, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 10
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Company and the Holder against
impairment.

       

      10.       No Shareholder
Rights.  Prior to exercise of this Warrant, the Holder shall
not be entitled to any rights of a shareholder with respect to this Warrant or
the Shares, including without limitation the right to vote, receive dividends or
other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and the Holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 11 shall limit the right of the Holder to be provided
the notices required under this Warrant.

       

      11.       Transfers.  Subject
to compliance with the requirements of Section 6 above, this Warrant and all
rights (but only with all related obligations) hereunder are transferable in
whole or in part by the Holder upon reasonable prior written notification to the
Company. The transfer shall be recorded on the books of the Company upon (i) the
surrender of this Warrant, properly endorsed, to the Company at its principal
offices; (ii) the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer; and (iii) the transferee’s
agreement in writing to be bound by and subject to the terms and conditions of
this Warrant.  In the event of a partial transfer, the Company shall
issue to the Holders one or more appropriate new Warrants of like tenor to this
Warrant.

       

      12.       Successors and Assigns. The
terms and provisions of this Warrant shall inure to the benefit of, and be
binding upon, the Company and the Holder and their respective successors.
transferees and assigns.

       

      

       

      
        
           

        

        
          B-6

          
            

          

        

        
           

        

      

      13.       Registration Rights. The
Shares are subject to registration under the 1933 Act pursuant to that certain
Registration Rights Agreement dated as of an even date herewith by and between
the Company and Holder (the “Registration Rights Agreement”).

       

      14.       Amendments and
Waivers.  Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the Holder.

       

      15.       Captions.  The
section and subsection headings of this Warrant are inserted for convenience
only and shall not constitute a part of this Warrant in construing or
interpreting any provision hereof.

       

      16.       Governing Law.  This
Warrant shall be governed by the laws of the State of California.

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      
        
           

        

        
          B-7

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, this
Warrant to be executed by the Company and acknowledged by the Holder as of March
21, 2008.

       

      

       

      
        	 
      	
                CHAPEAU,
      INC.

              
	 
      	
                By:
      /s/ Guy A.
      Archbold

              
	 
      	
                Name:
      Guy A. Archbold

              
	 
      	
                Its:       Chief
      Executive Officer

              

      

      

       

      

       

      

       

      ACCEPTED AND ACKNOWLEDGED BY
“HOLDER”:

       

      TEFCO,
LLC

       

      By: /s/
Mark
Mason

      
        	
                Name:

              	
                Mark
      Mason

              

      

      
        	
                Its:

              	
                Manager

              

      

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      
        
           

        

        
          B-8

          
            

          

        

        
           

        

      

      NOTICE
OF EXERCISE

       

      

       

      To:  Chapeau,
Inc.

       

      

       

      The
undersigned hereby elects to purchase _________ shares of the Common Stock of
Chapeau, Inc. (the “Company”) pursuant to the terms of the attached Warrant, and
payment of the Exercise Price per share required under the Warrant accompanies
this notice.

       

      The
undersigned hereby affirms each and every one of the representations and
warranties contained in Section 5 of the Warrant as of the date of this Notice
of Exercise.

       

      

       

      
        	 
      	
                WARRANT
      HOLDER:

              
	 
      	
                _________________________________________

              
	 	 
	 
      	
                By:

              
	 	 
	 
      	
                Date:

              

      

      

       

      

       

      Name in
which shares should be registered:

       

      _________________________________________

       

      

       

      

       

       

      
        
           

        

        
          B-9

          
            

          

        

        
           

        

      

       

       

      SCHEDULE
B

       

      NOTICE
OF CASHLESS EXERCISE

       

      To:

       

       

      (1)        The
undersigned hereby elects to acquire in a cashless exercise ______________
shares of Common Stock pursuant to the terms of Section 4 of the attached
Warrant.

       

      (2)        Please
issue a certificate or certificates representing said shares of stock in the
name of the undersigned or in such other name as is specified
below:

       

      
        	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      

      

      

      Name:
_________________________________

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

       

       

      

      B-10chapeau8k032708ex10-1.htm

    
      

      

    

    Exhibit
10.1

    

     

    

     

    TURNKEY
PROJECT ACQUISITION, LOAN

     

    AND

     

    SECURITY
AGREEMENT

     

    between

     

    CHAPEAU,
INC.

     

    and

     

    TEFCO,
LLC

     

    

     

    Dated
as of March 20, 2008

     

    

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    TABLE OF CONTENTS

     

    
      	 
      	 
      	 
      	 
      	
              Page

            
	 
      	 
      	 
      	 
      	 
      
	
              ARTICLE
      I

            	 
      	
              DEFINITIONS

            	 
      	
              2

            
	
              Section
      1.1

            	 
      	
              Certain
      Definitions

            	 
      	
              2

            
	
              Section
      1.2

            	 
      	
              Terms
      Defined in Other Sections

            	 
      	
              2

            
	
              Section
      1.3

            	 
      	
              Other
      Definitional Provisions

            	 
      	
              12

            
	 	 	 	 	 
	
              ARTICLE
      II

            	 
      	
              THE
      CLOSING

            	 
      	
              12

            
	
              Section
      2.1

            	 
      	
              Closing

            	 
      	
              12

            
	
              Section
      2.2

            	 
      	
              Deliveries
      at the Closing

            	 
      	
              12

            
	
              Section
      2.3

            	 
      	
              Option
      to Acquire Future Turnkey Projects

            	 
      	
              13

            
	
              Section
      2.4

            	 
      	
              The
      Loan

            	 
      	
              15

            
	 	 	 	 	 
	
              ARTICLE
      III

            	 
      	
              REPRESENTATIONS
      AND WARRANTIES OF INVESTOR GROUP

            	 
      	
              15

            
	
              Section
      3.1

            	 
      	
              Due
      Organization; Good Standing and Power

            	 
      	
              15

            
	
              Section
      3.2

            	 
      	
              Authorization;
      Noncontravention

            	 
      	
              15

            
	
              Section
      3.3

            	 
      	
              No
      Litigation or Regulatory Action

            	 
      	
              16

            
	
              Section
      3.4

            	 
      	
              Financing

            	 
      	
              16

            
	
              Section
      3.5

            	 
      	
              Prior
      Activities

            	 
      	
              16

            
	
              Section
      3.6

            	 
      	
              Brokers

            	 
      	
              16

            
	
              Section
      3.7

            	 
      	
              Securities
      Law Matters

            	 
      	
              17

            
	 	 	 	 	 
	
              ARTICLE
      IV

            	 
      	
              REPRESENTATIONS
      AND WARRANTIES OF CHAPEAU

            	 
      	
              17

            
	
              Section
      4.1

            	 
      	
              Due
      Organization; Good Standing and Power

            	 
      	
              17

            
	
              Section
      4.2

            	 
      	
              Authorization;
      Noncontravention

            	 
      	
              18

            
	
              Section
      4.3

            	 
      	
              Capitalization

            	 
      	
              18

            
	
              Section
      4.4

            	 
      	
              Authorization
      of Securities

            	 
      	
              18

            
	
              Section
      4.5

            	 
      	
              Financial
      Statements

            	 
      	
              19

            
	
              Section
      4.6

            	 
      	
              No
      Undisclosed Liabilities

            	 
      	
              19

            
	
              Section
      4.7

            	 
      	
              Governmental
      Approvals

            	 
      	
              19

            
	
              Section
      4.8

            	 
      	
              Title
      to Assets; Absence of Liens

            	 
      	
              19

            
	
              Section
      4.9

            	 
      	
              Compliance
      with laws

            	 
      	
              20

            
	
              Section
      4.10

            	 
      	
              Product
      Warranty; Product Liability

            	 
      	
              20

            

    

     

     

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    
       

      TABLE OF CONTENTS
(continued)

     

    
      	
              Section
      4.11

            	 
      	
              Brokers

            	 
      	
              20

            
	
              Section
      4.12

            	 
      	
              Full
      Disclosure

            	 
      	
              20

            
	
              Section
      4.13

            	 
      	
              Location
      of Collateral; and Books and Records

            	 
      	
              21

            
	
              Section
      4.14

            	 
      	
              Accounts

            	 
      	
              21

            
	
              Section
      4.15

            	 
      	
              Tax
      Matters

            	 
      	
              21

            
	
              Section
      4.16

            	 
      	
              Employee
      Benefits

            	 
      	
              22

            
	
              Section
      4.17

            	 
      	
              Absence
      of Certain Changes

            	 
      	
              22

            
	
              Section
      4.18

            	 
      	
              Contracts;
      No Defaults

            	 
      	
              23

            
	
              Section
      4.19

            	 
      	
              Insurance

            	 
      	
              24

            
	
              Section
      4.20

            	 
      	
              Environmental
      Compliance

            	 
      	
              24

            
	
              Section
      4.21

            	 
      	
              Intellectual
      Property

            	 
      	
              24

            
	 	 	 	 	 
	
              ARTICLE
      V

            	 
      	
              COLLATERAL

            	 
      	
              25

            
	
              Section
      5.1

            	 
      	
              Security
      Interest

            	 
      	
              25

            
	
              Section
      5.2

            	 
      	
              Perfection
      and Protection of the Company’s Security Interest

            	 
      	
              25

            
	
              Section
      5.3

            	 
      	
              First
      Priority

            	 
      	
              25

            
	
              Section
      5.4

            	 
      	
              Collateral
      Proceeds Management

            	 
      	
              25

            
	 	 	 	 	 
	
              ARTICLE
      VI

            	 
      	
              CONDITIONS

            	 
      	
              27

            
	
              Section
      6.1

            	 
      	
              Conditions
      Precedent to the Initial Acquisition and the Loan

            	 
      	
              27

            
	
              Section
      6.2

            	 
      	
              Conditions
      Precedent to All Future Acquisitions

            	 
      	
              29

            
	
              Section
      6.3

            	 
      	
              Conditions
      Precendent to Chapeau’s Obligations

            	 
      	
              29

            
	 	 	 	 	 
	
              ARTICLE
      VII

            	 
      	
              COVENANTS

            	 
      	
              30

            
	
              Section
      7.1

            	 
      	
              Existence
      and Good Standing

            	 
      	
              30

            
	
              Section
      7.2

            	 
      	
              Fundemental
      Changes

            	 
      	
              30

            
	
              Section
      7.3

            	 
      	
              Compliance
      with Laws

            	 
      	
              30

            
	
              Section
      7.4

            	 
      	
              Books
      and Records

            	 
      	
              30

            
	
              Section
      7.5

            	 
      	
              Financial
      Reporting

            	 
      	
              31

            
	
              Section
      7.6

            	 
      	
              Notification
      to Company

            	 
      	
              32

            
	
              Section
      7.7

            	 
      	
              Collateral
      Locations

            	 
      	
              32

            

    

     

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    
      
         

        TABLE OF CONTENTS
(continued)

       

    
      	
              Section
      7.8

            	 
      	
              Use
      of Proceeds

            	 
      	
              32

            
	
              Section
      7.9

            	 
      	
              Business

            	 
      	
              33

            
	
              Section
      7.10

            	 
      	
              Liens

            	 
      	
              33

            
	
              Section
      7.11

            	 
      	
              Accounts

            	 
      	
              33

            
	
              Section
      7.12

            	 
      	
              Inventory

            	 
      	
              33

            
	
              Section
      7.13

            	 
      	
              Equipment

            	 
      	
              33

            
	
              Section
      7.14

            	 
      	
              Insurance

            	 
      	
              33

            
	
              Section
      7.15

            	 
      	
              Disposition
      of Property

            	 
      	
              33

            
	
              Section
      7.16

            	 
      	
              Sale
      and Leasback

            	 
      	
              33

            
	
              Section
      7.17

            	 
      	
              Distributions

            	 
      	
              34

            
	
              Section
      7.18

            	 
      	
              Restricted
      Investments

            	 
      	
              34

            
	
              Section
      7.19

            	 
      	
              Guarantees

            	 
      	
              34

            
	
              Section
      7.20

            	 
      	
              Indebtedness

            	 
      	
              34

            
	
              Section
      7.21

            	 
      	
              Transactions
      with Affiliates

            	 
      	
              34

            
	
              Section
      7.22

            	 
      	
              New
      Subsidiaries

            	 
      	
              34

            
	
              Section
      7.23

            	 
      	
              Financial
      Covenants

            	 
      	
              34

            
	
              Section
      7.24

            	 
      	
              Subordinated
      Indebtedness

            	 
      	
              34

            
	
              Section
      7.25

            	 
      	
              Future
      Assurances

            	 
      	
              34

            
	 	 	 	 	 
	
              ARTICLE
      VIII

            	 
      	
              EVENTS
      OF DEFAULT

            	 
      	
              35

            
	
              Section
      8.1

            	 
      	
              Events
      of Default

            	 
      	
              35

            
	 	 	 	 	 
	
              ARTICLE
      IX

            	 
      	
              REMEDIES

            	 
      	
              36

            
	
              Section
      9.1

            	 
      	
              Obligations

            	 
      	
              36

            
	
              Section
      9.2

            	 
      	
              Collateral

            	 
      	
              37

            
	
              Section
      9.3

            	 
      	
              Injunctive
      Relief

            	 
      	
              37

            
	
              Section
      9.4

            	 
      	
              Setoff

            	 
      	
              38

            
	 	 	 	 	 
	
              ARTICLE
      X

            	 
      	
              INDEMNIFICATION

            	 
      	
              38

            
	
              Section
      10.1

            	 
      	
              Survival

            	 
      	
              38

            
	
              Section
      10.2

            	 
      	
              Indemnification

            	 
      	
              38

            
	
              Section
      10.3

            	 
      	
              Indemnification
      Procedures

            	 
      	
              39

            

    

     

     

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    
       

      TABLE OF CONTENTS
(continued)

     

     

    
      	
              Section
      10.4

            	 
      	
              Calculation
      of Losses; Tax Treatment of Payments

            	 
      	
              40

            
	 	 	 	 	 
	
              ARTICLE
      VIII

            	 
      	
              MISCELLANEOUS

            	 
      	
              40

            
	
              Section
      11.1

            	 
      	
              Notices

            	 
      	
              40

            
	
              Section
      11.2

            	 
      	
              Reserved

            	 
      	
              41

            
	
              Section
      11.3

            	 
      	
              Amendments;
      Waiver

            	 
      	
              41

            
	
              Section
      11.4

            	 
      	
              Assignment

            	 
      	
              41

            
	
              Section
      11.5

            	 
      	
              Binding
      Effect

            	 
      	
              42

            
	
              Section
      11.6

            	 
      	
              Entire
      Agreement

            	 
      	
              42

            
	
              Section
      11.7

            	 
      	
              No
      Third-Party Beneficiaries

            	 
      	
              42

            
	
              Section
      11.8

            	 
      	
              Specific
      Performance

            	 
      	
              42

            
	
              Section
      11.9

            	 
      	
              Severability

            	 
      	
              42

            
	
              Section
      11.10

            	 
      	
              Governing
      Law; Jurisdiction

            	 
      	
              43

            
	
              Section
      11.11

            	 
      	
              Arbitration

            	 
      	
              43

            
	
              Section
      11.12

            	 
      	
              Counterparts

            	 
      	
              43

            
	
              Section
      11.13

            	 
      	
              No
      Presumption

            	 
      	
              43

            

    

    

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
          iv

          
            

          

        

        
           

        

      

    

    

    TURNKEY
PROJECT ACQUISITION, LOAN AND SECURITY AGREEMENT

     

    This
Turnkey Project Acquisition, Loan and Security Agreement (this “Agreement”) is
entered into as of this 20th day of March, 2008, by and among Chapeau, Inc., a
Utah corporation (“Chapeau”), and TEFCO,
LLC, a Virginia limited liability company (the “Company”).

     

    RECITALS

     

    A. Chapeau and the Company
entered into a Joint Venture Agreement dated as of December 14, 2007 (the “Joint Venture
Agreement”), pursuant to which the parties agreed that the Company would
acquire from Chapeau various turnkey projects in combined heat and power and
combined cooling heat and power applications incorporating Chapeau’s EnviroGenTM
energy modules or similar products and related rights (collectively, the “Turnkey
Projects”).

     

    B. In connection with each
Turnkey Project, (i) the Company will enter into a discount energy service or
purchase agreement (a “DES Agreement”) with
each Turnkey Project customer (each a “Customer”) for the
tolling of energy by each such Turnkey Project for the benefit of such Customer,
and (ii) the Company and Chapeau will enter into a Service and Maintenance
Agreement (a “S&M
Agreement”) to provide essential services in respect of such Turnkey
Project.  The Company wishes to acquire Turnkey Projects identified by
Chapeau in the future (“Future Turnkey
Projects”) pursuant to agreements having terms mutually agreeable to the
Company and Chapeau in their reasonable discretion.

     

    C. The Company wishes to
purchase from Chapeau each Turnkey Project in operation on the date of this
Agreement (collectively, the “Existing Turnkey
Projects”), on the terms and subject to the conditions set forth below,
and Chapeau wishes to sell the Existing Turnkey Projects on such terms and
subject to such conditions.

     

    D. Chapeau has entered into a
DES Agreement with each Customer of each Existing Turnkey Project (the “Existing DES
Agreements”). Chapeau wishes to assign the Existing DES Agreements to the
Company on the terms and conditions set forth below, and the Company wishes to
accept and assume the Existing DES Agreements on such terms and conditions. In
that regard and in connection with the assignment and assumption of the Existing
DES Agreements, Chapeau agrees to service, operate and maintain each such
Turnkey Project, pursuant to the continuing service obligation of Chapeau set
forth below (the “Continuing Service
Obligation”).

     

    E.
Additionally, the Company has agreed to loan $10 million to Chapeau for
general working capital purposes on the terms and subject to the conditions set
forth below (the “Loan”), which Loan
will be secured by a first priority security interest on all of the assets and
properties of Chapeau.

     

    F. In consideration for the
transactions contemplated hereby (collectively, the “Transactions”),
Chapeau wishes to grant to the Company an option to acquire Future Turnkey
Projects (the “Future
Turnkey Project Option”), such option to be on the terms and subject to
the conditions set forth below, and the Company wishes to accept the Future
Turnkey Project Option on such terms and conditions, provided, that the Company
has made it a condition precedent to its entry into the Transactions that the
right of first refusal granted to Gordon V. Smith in Section 10 of those certain
Secured Promissory Notes, dated September 11, 2007, in the principal amounts of
$3,400,000 and $2,700,000, respectively, be terminated.

     

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    G.  Chapeau and the
Company wish to amend and restate the Joint Venture Agreement in its entirety.
Each of the Board of Directors of Chapeau and the Board of Managers of the
Company has determined that the transactions contemplated by the Joint Venture
Agreement, as amended and restated pursuant to the terms hereof, are in the best
interests of its shareholders and members, as the case may be.

     

    H.  In
connection with the transactions contemplated by the Joint Venture Agreement,
the Company was entitled to the payment of a facilities fee (the "Fee") and to
receive the Option and the Warrant. The Fee is due and payable, if at all, and
the Option and Warrant issuable, on completion by the Company of the funding of
the Note. Pursuant to the terms of this Agreement, the parties acknowledge and
agree that, on the Initial Closing Date, such transactions will be consummated
and the Fee will then be due, and the Option and Warrant issuable, to the
Company.

    

     

    AGREEMENT

     

    NOW,
THEREFORE, in consideration of the foregoing premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

     

    ARTICLE
I

     

    DEFINITIONS

     

    Section
1.1       Certain
Definitions.  For purposes of this Agreement, the following
terms shall have the following meanings.

     

    Section
1.2       Terms Defined in Other
Sections.

     

     “Account”
means any “account,” as such term is defined in Article 9 of the UCC, now owned
or hereafter acquired by Chapeau, or in which Chapeau now holds or hereafter
acquires any interest and, in any event, shall include, without limitation, all
accounts receivable, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper, Documents or Instruments) now owned
or hereafter received or acquired by or belonging or owing to Chapeau
(including, without limitation, under any trade name, style or division thereof)
whether arising out of goods sold or services rendered by Chapeau or from any
other transaction, whether or not the same involves the sale of goods or any
other transaction, whether or not the same involves the sale of goods or
services by Chapeau (including, without limitation, any such obligation which
may be characterized as an account or contract right under the UCC) and all of
Chapeau’s rights in, to and under all purchase orders or receipts now owned or
hereafter acquired by it for goods or services, and all of Chapeau’s rights to
any goods represented by any of the foregoing (including, without limitation,
unpaid seller’s rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), and all monies
due or to become due to Chapeau under all purchase orders and contracts for the
sale of goods or the performance of services or both by Chapeau (whether or not
yet earned by performance on the part of Chapeau or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    “Account
Debtor” means any “account debtor,” as such term is defined in Article 9
of the UCC.

    

    “Action”
means any action, litigation, claim, suit, mediation, arbitration, inquiry,
government or other investigation or proceeding of any nature, whether criminal,
civil, legislative, administrative, regulatory, prosecutorial or otherwise, by
or before any mediator, arbitrator or Governmental Body or similar
Person.

     

    “Affiliate”
means, as to any Person, any other Person (i) that, directly or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with, such Person; (ii) who is a director or officer (A) of such
Person, (B) of any subsidiary of such Person or (C) of any Person described in
the foregoing clause (i) with respect to such Person; or (iii) which, directly
or indirectly through one or more intermediaries, is the beneficial or record
owner (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, as the same is in effect on the date hereof) of ten percent or more of
any class of the outstanding voting stock, securities or other equity or
ownership interests of such Person, or of any option, warrant or other right to
acquire such equity or ownership interest.  For purposes of this
definition, the term “control” (and the correlative terms, “controlled by” and
“under common control with”) shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies,
whether through ownership of securities or other interests, by contract or
otherwise.  For purposes hereof, “Affiliate” includes any
subsidiary.

    

    “Bankruptcy
Code” means Title 11 of the U.S. Code.

     

    “Business”
means the installation of self-contained electrical generators in
combined heat and power and combined cooling heat and power applications
incorporating Chapeau’s EnviroGenTM Energy Modules or similar products and
related rights on a turnkey basis and the servicing and support of such
projects.

     

    “Business
Day” means a day on which national banks are open for business in Los
Angeles, California.

     

    “Change in
Control” means a merger, business combination, reorganization,
recapitalization or other transactions, which results in the stockholders of
Chapeau who own at least 50% of its shares of Common Stock then outstanding
immediately prior to such transaction owning less than 50% of the surviving
entity’s voting control immediately after the transaction, or a sale, transfer
or other disposition in any transaction or series of transaction of all or
substantially all of the assets of Chapeau.

    
 

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    “Chattel
Paper” means any “chattel paper,” as such term is defined in Article 9 of
the UCC, now owned or hereafter acquired by Chapeau or in which Chapeau now
holds or hereafter acquires any interest.

    

    “Collateral”
shall have the meaning assigned to such term in Article V of this
Agreement.

    

    “Commercial Tort
Claim” has the meaning prescribed for such term as defined by the UCC,
which definition is incorporated herein by reference, and includes, without
limitation, a claim arising in tort with respect to which (a) the claimant
is an organization or (b) the claimant is an individual and the claim (i) arose
in the course of the claimant’s business or profession and (ii) does not
include damages arising out of personal injury to or the death of an
individual.

     

    “Commission”
means the United States Securities and Exchange Commission.

    

    “Commissioning”
means the process of enabling an installed Turnkey Project for commercial
operation, which process is (i) performed in accordance with Chapeau’s then
current standard Commissioning procedures and (ii) evidenced by the commencement
of Services (as such term is defined in a DES Agreement) pursuant to a DES
Agreement.

    

    “Common
Stock” means the common stock, par value $0.001 per share, of
Chapeau.

    

    “Contracts”
means all contracts, undertakings, franchise agreements or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which Chapeau may now or hereafter have any right, title or interest,
including, without limitation, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance
thereof.

    

    “Copyrights”
means all of the following now owned or hereafter acquired by Chapeau or in
which Chapeau now holds or hereafter acquires any interest: (i) all copyrights,
whether registered or unregistered, held pursuant to the laws of the United
States, any state thereof or of any other country; (ii) registrations,
applications and recordings in the United States Copyright Office or in any
similar office or agency of the United States, any state thereof or any other
country; (iii) any continuations, renewals or extensions thereof; and (iv) any
registrations to be issued in any pending applications.

    

    “Copyright
License” means any written
agreement granting any right to use any Copyright or Copyright registration now
owned or hereafter acquired by Chapeau or in which Chapeau now holds or
hereafter acquires any interest.

    

    “Deposit
Account” has the meaning prescribed for such term as defined by the UCC,
which definition is incorporated herein by reference, and includes, without
limitation, a nonnegotiable certificate of deposit or a demand, time, savings,
passbook, or similar account maintained with a bank.

    

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    “Distribution”
means, with respect to a Person, any dividend or other distribution in respect
of its Equity Interests or any payment on account of the purchase, redemption or
other acquisition or retirement of its Equity Interests.

    

    “Documents”
means any “documents,” as such term is defined in Article 9 of the UCC, now
owned or hereafter acquired by Chapeau or in which Chapeau now holds or
hereafter acquires any interest.

    

    “Equipment”
means any “equipment,” as such term is defined in Article 9 of the UCC, now
owned or hereafter acquired by Chapeau or in which Chapeau now holds or
hereafter acquires any interest, other than any leasehold interest, and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.

    

    “Equity
Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
interest.

     

    “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.

     

    “Environment”
means soil, land surface or subsurface strata, surface waters (including
navigable waters, ocean waters, streams, ponds, drainage basins and wetlands),
groundwaters, drinking water supply, stream sediments, ambient air (including
indoor air) and any other environmental medium.

    

    “Environmental,
Health and Safety Liabilities” means any obligations or liabilities
(including any proceeding or other assertions of obligations or liabilities)
that are (i) related to environmental, health or safety issues (including
on-site or off-site contamination by Hazardous Substances of surface or
subsurface soil or water); or (ii) based upon or related to (A) any
Environmental Law or (B) any Order imposed by any Governmental Authority with
respect to any Environmental Law.

     

    “Environmental
Law” means any Law that addresses or is otherwise related to
environmental, human health or safety issues, including any Law relating to (i)
the protection, preservation or remediation of the Environment, (ii) any
emissions, Releases or discharges of Hazardous Substances into the Environment
or (iii) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, handling, clean-up or control of Hazardous
Substances.

    

    “Fixtures”
means any “fixtures,” as such term is defined in Article 9 of the UCC, now owned
or hereafter acquired by Chapeau or in which Chapeau now holds or hereafter
acquires any interest and, now or hereafter attached or affixed to or
constituting a part of, or located in or upon, real property wherever located,
together with all right, title and interest of Chapeau in and to all extensions,
improvements, betterments, renewals, substitutes, and replacements of, and all
additions and appurtenances to any of the foregoing property, and all
conversions of the security constituted thereby, immediately upon any
acquisition or release thereof or any such conversion, as the case may
be.

    

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    “GAAP”
means generally accepted accounting principles, as in effect in the United
States, applied on a consistent basis during the periods involved and consistent
with past practices.

    

    “General
Intangibles” means any “general intangibles,” as such term is defined in
Article 9 of the UCC, now owned or hereafter acquired by Chapeau or in which
Chapeau now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, all right, title and interest which Chapeau may now
or hereafter have in or under any Contract, all customer lists, interests in
partnerships, joint ventures and other business associations, permits, goodwill
(other than the goodwill associated with any Trademark, Trademark registration
or Trademark licensed under any Trademark License), claims in or under insurance
policies, including unearned premiums, uncertificated securities, cash and other
forms of money or currency, deposit accounts (including as defined in Article 9
of the UCC), rights to receive tax refunds and other payments and rights of
indemnification.

    

    “Governmental
Authority” means any United States federal, state, local or other
governmental department, commission, board, bureau, agency, central bank, court,
tribunal or other instrumentality or authority, domestic or foreign, exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

    

    “Hazardous
Substance” means chemicals, contaminants or industrial, toxic, hazardous
or radioactive substances, wastes or other pollutants (including petroleum or
petroleum distillates, asbestos or asbestos-containing material) regulated by
Environmental Law.

    

    “Indebtedness”
of any Person means, without duplication, (i) all indebtedness of such Person
for borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments or letters of credit (or
reimbursement obligations in respect thereof), (iii) all obligations of such
Person to pay the deferred purchase price of property or services, except for
current accounts payable and accrued expenses arising in the Ordinary Course of
Business, (iv) all indebtedness represented by obligations of such Person under
a lease that is required to be capitalized for financial reporting purposes by
such Person, (v) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (vi) all obligations,
contingent or otherwise, of such Person to guarantee any Indebtedness of any
other Person, (vii) all obligations under any forward contract, futures
contract, swap, option or other financing agreement or arrangement (including,
without limitation, caps, floors, collars and similar agreements), the value of
which is dependent upon interest rates, currency exchange rates, commodities or
other indices, and (viii) all Indebtedness of the types referred to in clauses
(i) through (vii) above of any other Person secured by any mortgage, lien,
pledge, charge or security interest on property owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness.

    

    “Initial Closing
Date” means the date of this Agreement.

    

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    “Initial
Term” shall have the meaning therefor, as set forth in each applicable
DES Agreement.

    

     “Instruments”
means any “instrument,” as such term is defined in Article 9 of the UCC, now
owned or hereafter acquired by Chapeau or in which Chapeau now holds or
hereafter acquires any interest.

    

    “Intellectual
Property” means all Copyrights, Trademarks, Patents, rights to
Intellectual Property, Licenses, trade secrets, source codes, customer lists,
proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, skill, expertise, experience, processes, models, drawings,
materials and records and goodwill.

    

    “Interest
Shares” means that number of shares of Common Stock determined by (a)
multiplying  the dollar amount of monies advanced to Chapeau in
accordance with Section 2.3(a) for a particular period pursuant to any provision
of this Agreement by (b) 0.17, then by multiplying such product by (c)(i) the
number of days in the period for which the principal balance in question was
outstanding divided by (ii) 365 and then by dividing such amount by (d) the
volume weighted average closing price of one share of Common Stock on the
over-the-counter bulletin board, or such other exchange, market or listing
service on which shares of Common Stock trade subsequent to the date of this
Note, over the period in which such interest amount has accrued, and expressing
that quotient as a whole number.

    

    “Inventory”
means any “inventory,” as such term is defined in Article 9 of the UCC, wherever
located, now owned or hereafter acquired by Chapeau or in which Chapeau now
holds or hereafter acquires any interest, and, in any event, shall include,
without limitation, all inventory, goods and other personal property which are
held by or on behalf of Chapeau for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in Chapeau’s
business, or the processing, packaging, promotion, delivery or shipping of the
same, and all furnished goods whether or not such inventory is listed on any
schedules, assignments or reports furnished to the Company from time to time and
whether or not the same is in transit or in the constructive, actual or
exclusive occupancy or possession of Chapeau or is held by Chapeau or by others
for Chapeau’s account, including, without limitation, all goods covered by
purchase orders and contracts with suppliers and all goods billed and held by
suppliers and all inventory which may be located on premises of Chapeau or of
any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents
or other persons.

    

    “Investment”
means, with respect to a Person, any investment, loan, guarantee, advance or
capital contribution by such Person in, to or with respect to its Affiliates
(other than the Company) or to any other Person, or any acquisition of property
in exchange for cash or other property, provided that the purchase of Equipment
in the Ordinary Course of Business shall not be included in the definition of
Investment.

     

    “Investment
Property” has the meaning prescribed for such term as defined by the UCC,
which definition is incorporated herein by reference, and includes, without
limitation, a security (whether certificated or uncertificated) security
entitlement, securities account, commodity contract, or commodity
account.

     

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    “Knowledge”
as it relates to Chapeau means, with respect to any matter in question, the
actual knowledge of Chapeau’s directors and executive officers following such
investigation as would be made by a reasonably prudent person similarly
situated.

     

    “Law”
means any and all laws, statutes, ordinances, codes, rules, regulations,
decrees and orders of any Governmental Authority.

    

     “Letter of Credit
Rights” has the meaning prescribed for such term as defined by the UCC,
which definition is incorporated herein by reference, and includes, without
limitation, a right to payment or performance under a letter of credit, whether
or not the beneficiary has demanded or is at the time entitled to demand payment
or performance.  The term does not include the right of a beneficiary
to demand payment or performance under a letter of credit.

    
 

    “License”
means any Copyright License, Patent License, Trademark License or other license
of rights or interests now held or hereafter acquired by Chapeau or in which
Chapeau now holds or hereafter acquires any interest and any renewals or
extensions thereof.

    

    “Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
any lease in the nature of a security interest, and the filing of any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

    

    “Loss”
means any losses, claims, damages, fines, penalties, assessments by public
agencies, settlement, cost or expenses (including actual costs of defense and
reasonable attorneys’ fees) and other liabilities, but excluding, any
consequential, incidental, indirect, special or punitive damages, but including
penalties and additions to Taxes.

     

     “Material
Adverse Effect” means a material adverse effect upon: (i) the business,
operations, properties, assets, or financial condition of Chapeau; (ii) the
ability of Chapeau to pay and perform the Secured Obligations in accordance with
the terms thereof; or (iii) the ability of any party to perform its obligations
under this Agreement and the Transaction Documents.

    

    “Minimum Annual
Electric Service and Billing Rate” shall have the meaning therefor, as
set forth in the applicable DES Agreement.

    

    “Note”
means a secured promissory note in the principal amount of $10 million, in the
form agreed to by the parties to this Agreement.

    

     “Option”
means an option to acquire 5,000,000 shares of Common Stock issuable by Chapeau
to the Company in connection with the Transactions, such Option to be
substantially in the form of Exhibit A attached hereto.

    

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    “Order”
means any judgment, order (consent or other), writ, stipulation, injunction,
ruling, decision or decree of any Governmental Body.

     

    “Ordinary Course
of Business” means the ordinary and usual course of day-to-day operations
of the business of Chapeau through the date hereof consistent with past
practice.

     

    “Patent
License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence now owned or hereafter acquired
by Chapeau or in which Chapeau now holds or hereafter acquires any
interest.

    

    “Patents”
means all of the following now owned or hereafter acquired by Chapeau or in
which Chapeau now holds or hereafter acquires any interest: (i) letters patents
of, or rights corresponding thereto in, the United States or any other country,
all registrations and recordings thereof, and all applications for letters
patent of, or rights corresponding thereto in the United States or any other
country, including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state thereof or any other country;
(ii) all reissues, continuations, continuations-in-part or extensions thereof;
(iii) all petty patents, divisionals, and patents of addition; and (iv) all
patents to issue in any such applications.

    

    “Patent Security
Agreement” means that certain Patent Security Agreement dated as of an
even date herewith, substantially in the form of Exhibit D hereto.

    

    “Permitted
Liens” means any and all of the following: (i) liens in favor of the
Company under this Agreement, (ii) liens securing the payment of taxes or other
governmental charges not yet delinquent or being contested in good faith by
appropriate proceeding, for which adequate reserves are maintained in accordance
with GAAP; (iii) liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons imposed without action
of such parties, provided that the payment thereof is not yet required or is
otherwise being contested in good faith; (iv) liens incurred or deposits made in
the Ordinary Course of Business in connection with worker’s compensation,
unemployment insurance, social security and other like laws; (v) purchase money
security interests in personal property acquired after the date of this
Agreement, provided such are limited to the personal property so acquired and
proceeds, thereof; (vi) any liens existing as of the date hereof and
specifically disclosed to the Company herein; (vii) leases, subleases, licenses
and sublicenses granted to others in the Ordinary Course of Business not
interfering in any material respect with the conduct of the business of Chapeau;
(viii) liens arising from judgments, decrees or attachments to the extent and
only so long as such judgment, decree or attachment has not caused or resulted
in an Event of Default (as defined herein); (ix) liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (x) liens which constitute
rights of set-off of a customary nature or bankers’ liens with respect to
amounts on deposit, whether arising by operation of law or by contract, in
connection with arrangements entered into with banks in the Ordinary Course of
Business; (xi) such Liens and other imperfections of title as do not materially
detract from the secured property; (xii) such Liens already disclosed in
Chapeau’s latest periodic report filed with the Commission prior to the Initial
Closing Date; and (xiii) liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by liens of the type
described in clause (vi) above, provided that any extension, renewal or
replacement lien shall be limited to the property encumbered by the existing
lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.

    

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    “Person”
means any individual, sole proprietorship, corporation (whether for profit,
not-for-profit, professional or any other form of corporation), trust (including
business trusts), estate, unincorporated association, employee organization,
firm, business, institution, association, partnership (general, limited, limited
liability or any other form of partnership), joint venture, limited liability
company, Governmental Authority and any other entity of any kind or
nature.

    

    “Proceeds”
means “proceeds,” as such term is defined in Article 9 of the UCC and, in any
event, shall include, without limitation, (i) any and all Accounts, Chattel
Paper, Instruments, cash or other forms of money or currency or other proceeds
payable to Chapeau from time to time in respect of the Collateral, (ii) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to
Chapeau from time to time with respect to any of the Collateral, (iii) any and
all payments (in any form whatsoever) made or due and payable to Chapeau from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental Authority), and (iv)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

    

    “Receivables”
shall mean and include all of Chapeau’s Accounts, Instruments, Documents,
Chattel Paper and General Intangibles whether secured or unsecured, whether now
existing or hereafter created or arising, and whether or not specifically sold
or assigned to the Company hereunder.

    

    “Registration
Rights Agreement” means that certain Registration Rights Agreement dated
as of an even date herewith, which agreement sets forth Chapeau’s obligations
with respect to the registration under the 1933 Act of all shares of Common
Stock issued or issuable to the Company pursuant to the terms hereof. The
Registration Rights Agreement is attached hereto as Exhibit C.

    

    “Release”
means any actual or threatened release, spill, emission, leaking, dumping,
injection, pouring, disposal, discharge, leaching or migration into or through
the Environment (including ambient air, surface water, groundwater, land surface
or subsurface strata).

     

    “Restricted
Investment” means, with respect to Chapeau, any Investment except (a)
purchases of Inventory in the Ordinary Course of Business, (b) acquisitions (not
otherwise prohibited by this Agreement) of Equipment for use in the Ordinary
Course of Business, (c) direct obligations of the United States of America or
any agency thereof, or obligations guaranteed by the United States of America,
that mature within one year from the date of acquisition thereof, certificates
of deposit, maturing within one year from the date of acquisition, and money
market or demand deposit accounts issued by a commercial bank that is a member
of the Federal Reserve System and has capital and surplus aggregating at least
$100,000,000, (d) advances on commissions due and payable in respect of Existing
Turnkey Projects and to be paid with respect to Future Turnkey Projects and (e)
travel and other advances to employees made in the Ordinary Course of
Business.

     

    

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    

    “Secured
Obligations” shall mean and include all principal, interest, fees, costs,
or other liabilities or obligations for monetary amounts owed by Chapeau to the
Company, whether due or to become due, matured or unmatured, liquidated or
unliquidated, contingent or non-contingent arising under the Note as the same
may from time to time be amended, modified, supplemented or
restated.

    

    “Subsequent
Closing Date” shall mean the first Business Day immediately following the
date upon which all of the necessary consents and assignments have been executed
to effectuate the sale and transfer of the Existing Turnkey Projects to the
Company.

     

    “Taxes”
means (A) all federal, state, local or foreign taxes or similar charges, fees,
imposts, levies and assessments, including all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties and similar fees, assessments and charges
imposed by any taxing authority, (B) all interest, penalties, fines, additions
to tax or additional amounts imposed by any taxing authority in connection with
any item described in clause (A), and (C) any liability for the foregoing
payable by reason of contract, assumption, operation of Law, Treasury Regulation
Section 1.1502-6 (or any predecessor or successor thereof of any analogous or
similar provision under Law), as a transferee or otherwise

     

    “Trademark
License” means any written agreement granting any right to use any
Trademark or Trademark registration now owned or hereafter acquired by Chapeau
or in which Chapeau now holds or hereafter acquires any interest.

    

    “Trademarks”
means any of the following now owned or hereafter acquired by Chapeau or in
which Chapeau now holds or hereafter acquires any interest: (i) any and all
trademarks, trade names, corporate names, business names, trade styles, service
marks, logos, other source or business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles of
like nature, now existing or hereafter adopted or acquired, all registrations
and recordings thereof, and any applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any sthereof or any other country or any political subdivision
thereof and (ii) any reissues, extensions or renewals thereof.

    

    “Trademark
Security Agreement” means that certain Trademark Security Agreement dated
as of an even date herewith, substantially in the form of Exhibit E
hereto.

     

    “Transaction
Documents” means this Agreement, the Note, Option, Warrant and any other
agreement entered into between Chapeau and the Company pursuant to the
Transactions.

    

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    “UCC”
shall mean the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of Virginia.  Unless otherwise defined herein,
terms that are defined in the UCC and used herein shall have the meanings given
to them in the UCC.

    

    “Warrant”
means a warrant to acquire 5,000,000 shares of Common Stock issuable by Chapeau
to the Company in connection with the Transactions, such Warrant to be
substantially in the form of Exhibit B attached hereto.

     

    Section
1.3       Other Definitional
Provisions.  The Section headings of this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.  Unless the context
otherwise requires, (i) all references to Sections contained in this Agreement
are references to sections of this Agreement, (ii) words in the singular include
the plural and vice versa and (iii) words of any gender include each other
gender.  As used in this Agreement, the following words or phrases
have the following meanings:  (i) “include”, “includes” or “including” shall be
deemed to be followed by the words “without limitation”; (ii) “hereby”, “herein”, “hereof”, “hereto”, “hereunder”, and words
of similar import refer to this Agreement as a whole and not to any particular
provision hereof; and (iii) “or” means
“and/or”.  References in this Agreement to any Persons shall include
such Persons and their successors and permitted assigns.

     

    ARTICLE
II

     

    PURCHASE OF EXISTING TURNKEY
PROJECTS; ASSIGNMENT AND ASSUMPTION

     

    Section
2.1       Purchase and Sale On
the Subsequent Closing Date, Chapeau agrees to sell all of its right, title and
interest in and to the Existing Turnkey Projects identified on Schedule 2.1(a) and
for the dollar amounts identified on Schedule 2.1(a) (the
“Purchase
Price”) and the Company agrees to purchase the Existing Turnkey Projects
for such Purchase Price (the “Initial
Acquisitions”). The parties acknowledge that payment of the Purchase
Price is intended to be: (a) generally in accordance with the Project Funding
Schedule set forth in Section 2.3(a)(iii) of this Agreement; and (b) on other
terms and conditions mutually agreed to by the parties.  The parties
further acknowledge and agree that the Purchase Price was calculated based on a
total sales price to the Company, inclusive of all installation, sales or use
tax, sales commissions, insurance and any other cost associated with the
installation, maintenance and provision of service over the Initial Term of the
Existing Turnkey Projects, as is necessary to provide the Company with a
projected internal rate of return (“IRR”) of 17% over
such Initial Term, with such return taking into effect the specified future cash
flows from the Minimum Annual Electric Service and Billing Rate as such terms
are defined in the respective DES Agreement for each Existing Turnkey
Project.

     

    Section
2.2       Assignment and
Assumption. In connection with such purchase and sale, Chapeau agrees to
transfer and assign all of its right, title and interest in and to the Existing
DES Agreements set forth on Schedule 2.2 and the
Company agrees to assume such agreements, subject to Chapeau’s Continuing
Service Obligation, as follows:

     

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    (a)        Chapeau
shall perform Chapeau’s Continuing Service Obligation with respect to each
Turnkey Project sold to the Company pursuant to the terms of a S&M Agreement
on terms to be mutually agreed, which S&M Agreement shall include the
monitoring, operation, service, maintenance and all other support activities to
be performed by Chapeau in connection with each such Turnkey Project
(collectively, “Chapeau’s
Support”).

     

    (b)        Chapeau
shall use its best efforts, and, to the extent relevant, the Company shall
provide reasonable assistance, to obtain the Customer’s consent to the
assignment of all of Chapeau’s rights and obligations under each DES Agreement
related to Existing Turnkey Projects.

     

    Section
2.3       Option to Acquire Future
Turnkey Projects. In consideration of the transactions contemplated by
this Agreement, Chapeau grants to the Company the Future Turnkey Project Option
and the Company hereby accepts the grant thereof.

     

    (a)        The
Future Turnkey Project Option shall be subject to the following terms and
conditions:

     

    (i)         Chapeau
agrees to present to the Company detailed information relating to each Future
Turnkey Project, including without limitation, the location of the project, the
state and county of permitting and installation, the terms of any DES Agreement
being negotiated with a potential Customer, the salient terms of the associated
S&M Agreement and all other information reasonably requested by the Company
(collectively, the “Turnkey Information
Package”). Chapeau will use commercially reasonably efforts to originate
and negotiate a DES Agreement for each Future Turnkey Project to be offered to
the Company that (A) are (i) forms of master agreements with key Customers
reasonably and mutually acceptable to the Company and Chapeau, which forms of
master agreement can be readily adapted to multiple Customer locations with
minimal modifications, solely for location specific data, or (ii) single
agreements with Customers reasonably and mutually acceptable to the Company and
Chapeau and (B) have a term of 10 years or more, and such other terms as are
reasonably and mutually acceptable to the Company and Chapeau.

     

    (ii)        The
Company shall have thirty (30) days from the date of receipt of the complete
Turnkey Information Package to determine whether to acquire such Future Turnkey
Project. If the Company elects not to acquire such Future Turnkey Project then
Chapeau may seek financing for that particular project from third party
financing sources, provided that the failure of the Company to acquire one or
more Future Turnkey Projects shall not alter Chapeau’s obligations under this
Section 2.3.

     

    (iii)       If
the Company does elect to acquire such Future Turnkey Project, the acquisition
thereof shall be on a project funding schedule (“Project Funding
Schedule”) based upon a project management plan for each Turnkey Project
presented to the Company by Chapeau, which schedule shall project the funding
requirements for each aspect of the project (i.e., permitting, engineering,
product development, construction, Commissioning, etc.) and, unless otherwise
agreed by the parties, shall provide the following purchase price installments
according to the following schedule:

     

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    

    (1)      35%
shall be paid to Chapeau upon execution of a DES Agreement in respect of such
Future Turnkey Project;

     

    (2)      25%
shall be paid to Chapeau upon delivery by its third party supplier of the
generator and its prime mover engine to Chapeau for assembly;

     

    (3)      20%
shall be paid to Chapeau upon successful completion of Chapeau’s factory
validation testing in accordance with Chapeau’s then current standard procedures
of the assembly of the EnviroGenTM Energy Module(s) or similar products required
for the corresponding Turnkey Project;

     

    (4)      10%
shall be paid to Chapeau upon delivery of the EnviroGenTM Energy Module(s) or
similar products required for such Future Turnkey Project to the Customer’s
site; and

     

    (5)      the
remaining 10% shall be paid to Chapeau upon Commissioning of such Future Turnkey
Project.

     

    (b)        The
Company shall be entitled to receive quarterly interest payments on the amounts
advanced to Chapeau in accordance with Section 2.3(a), payable in the form of
Interest Shares, provided that, interest on such advances shall cease to accrue
upon the commissioning of the Turnkey Project in question and the final payment
of Interest Shares shall be due within thirty (30) days following the date of
such commissioning.

     

    (c)        If
the Company experiences a default in or cancellation of a DES Agreement (A)
prior to the complete installation of the corresponding Turnkey Project, in the
Company’s reasonable  direction Chapeau shall (i) use all reasonable
efforts to obtain a new DES Agreement and Customer on terms and with a
counterparty reasonably acceptable to the Company or (ii) cancel the DES
Agreement or Existing Service Agreement, as applicable, and return to the
Company all funds received in connection therewith, net of any offsetting
amounts collected by the Company from the Customer pursuant to the terms of the
cancelled DES Agreement; or (B) after the Commissioning of the corresponding
Turnkey Project, Chapeau will use all reasonable efforts to relocate the
affected Turnkey Project and to obtain a new DES Agreement therefor on terms and
with a counterparty reasonably acceptable to the Company, provided that all
amounts expended by the Company in respect of such terminated Turnkey Project
under Section 2.3(a) shall continue to earn interest pursuant to Section 2.3(b)
until Chapeau has either fully reimbursed the Company in respect of such
expenditures or a replacement Turnkey Project has been selected and
Commissioned.

     

    (d)        The
Company and Chapeau will execute a Turnkey Project Purchase Agreement with
respect to each such Future Turnkey Project to be acquired by the Company, which
Agreement will set forth the Project Funding Schedule for such Future Turnkey
Project.  In respect of each such Future Turnkey Project, the Parties
acknowledge and agree that:

     

    (i)         the
sales price to the Company therefor will be an amount calculated to provide the
Company a projected IRR of 17% over the Initial Term of the relevant DES
Agreement including all installation, sales or use tax, sales commissions,
insurance and any other cost associated with the installation, maintenance and
provision of service over the Initial Term, taking into effect the specified
future cash flows from the Minimum Annual Electric Service and Billing
Rate;

     

    

     

    

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

    

    (ii)        Chapeau
will bear full responsibility with respect to the terms of Chapeau’s Continuing
Service Obligation relating to such Future Turnkey Project.

     

    (e)        The
Future Turnkey Project Option shall continue until the Company has acquired $300
million in Future Turnkey Projects (the “Funding Threshold”),
unless (i) the Company elects to discontinue such acquisitions prior to
fulfillment of the Funding Threshold (ii) this Agreement has been terminated..
If the Company and Chapeau have executed Turnkey Project Purchase Agreements
equal to or in excess of the Funding Threshold, then the Company shall have the
exclusive right to acquire an additional $300 million in Future Turnkey Projects
(the “Secondary
Funding Threshold”) on terms and conditions substantially similar to
those provided for in Section 2.3 of this Agreement except that the sales price
to the Company for such Future Turnkey Projects shall provide for a projected
IRR to the Company of 15%.  If the Company declines to acquire any
such additional Future Turnkey Projects then Chapeau may secure alternative
financing for the sale of any such Future Turnkey Projects.  If the
Company and Chapeau have executed Turnkey Project Purchase Agreements equal to
or in excess of the Secondary Funding Threshold, then the Company shall have the
exclusive right to acquire all Turnkey Projects generated by Chapeau for so long
as the Company has the financial capability to undertake said transactions,
which acquisitions shall be on terms and conditions to be mutually agreed upon
by Chapeau and the Company.  If the Company declines to acquire any
such additional Turnkey Projects or the parties are unable to reach mutual
agreement in respect of the terms of such acquisitions, then Chapeau may secure
alternative financing for the manufacture and sale of any such Turnkey
Projects.

     

    Section
2.4       The Loan. Subject to
the conditions set forth in this Agreement, on the Initial Closing Date, the
Company shall make the Loan to Chapeau. Except as otherwise set forth herein,
the terms and conditions of the Loan shall be governed by the Note.

     

    

    ARTICLE
III

     

    REPRESENTATIONS AND
WARRANTIES OF THE COMPANY

     

    The
Company represents and warrants to Chapeau that:

     

    Section
3.1       Due Organization; Good
Standing and Power.  The Company is a limited liability company
duly organized, validly existing and in good standing under the Laws of the
State of Virginia, and has all requisite limited liability company power and
authority necessary to own or lease all of its properties and assets and to
carry on its business as it is now being conducted.

    

    
      	
              Section
      3.2

            	
              Authorization;
      Noncontravention.  

            

    

    

    

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

    

    (a)        The
Company has all necessary limited liability company power and authority to
execute and deliver this Agreement and the Transaction Documents to which it is
a party and, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The
execution, delivery and performance by the Company of this Agreement and the
Transaction Documents to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary limited liability company action on the part of the
Company.  This Agreement has been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery hereof by
Chapeau, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar Laws of general
application affecting or relating to the enforcement of creditors’ rights
generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity (the “Bankruptcy and Equity
Exception”).  The Transaction Documents to which the Company is
a party will upon execution be duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof by the other
parties thereto, and will constitute the legal, valid and binding obligations of
the Company, enforceable against it in accordance with their respective terms,
subject to the Bankruptcy and Equity Exception.

     

    (b)        The
execution and delivery by the Company of this Agreement and the Transaction
Documents to which it is a party do not, and neither the consummation by the
Company of the transactions contemplated by this Agreement and the Transaction
Documents to which it is a party nor the compliance by the Company with any of
the terms or provisions hereof and thereof will, (i) conflict with or violate
any provision of the certificate of formation or limited liability company
agreement of the Company, or (ii) (x) violate any Law or Order applicable to the
Company or any of its properties or assets, or (y) violate or constitute a
default under any of the terms, conditions or provisions of any Contract to
which the Company is a party or by which any of its properties or assets is
bound.

     

    Section
3.3       No
Litigation.  There is no action, suit, proceeding, hearing or
investigation pending or, to the Company’s actual knowledge, threatened, against
the Company or any of its Affiliates that would reasonably be expected to
prevent, hinder or delay the consummation of any of the transactions
contemplated hereby or that questions the legality or propriety of the
transactions contemplated hereby.

    

    Section
3.4       Securities Law
Matters.  The Company acknowledges that shares of Common Stock
to be issued by Chapeau under this Agreement have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or
the securities laws of any state or foreign jurisdiction and, unless so
registered, may not be offered, sold, transferred, or otherwise disposed of
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any applicable securities
laws of any state or foreign jurisdiction.  The Company is acquiring
shares of Common Stock for investment and not with a present view to the sale or
distribution of them within the meaning of Section 2(11) of the Securities
Act.

     

    Section
3.5       No Prior
Activity.  The Company was recently formed, has no operations
to date and, except as otherwise contemplated by the Transaction Documents, has
not incurred any liability or obligation.

     

    

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

    

    Section
3.6       Full
Disclosure.  No representation or warranty of the Company
contained in this Agreement and no written statement made by or on behalf of the
Company to Chapeau pursuant to this Agreement or any of Transaction Documents
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.  There are no facts that the Company has not disclosed to
Chapeau which could, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the Company.

     

    Section
3.7       Investment
Representations.  The Company hereby makes the following
representations and warranties with respect to its ownership of the Note, the
Option, the Warrant, the Fee and any Interest Shares issuable pursuant to the
Note and Common Stock otherwise issueable pursuant to the Registration Rights
Agreement (collectively, the “Securities”):

     

    (a)              The
Company is familiar with Chapeau’s business affairs, operations and financial
condition and has sufficient information about Chapeau to reach an informed and
knowledgeable investment decision in the Securities.  The Company is
acquiring the Securities for investment for its own account only and not with a
view to, or for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act.

    

    (b)              The
Company understands that the Securities have not been registered under the
Securities Act by reason of a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of its investment intent
as expressed herein.

    

    (c)              The
Company acknowledges and understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available.  The Company
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer thereof unless registered or such
registration is not otherwise required in the opinion of legal counsel for the
Company, which counsel must be reasonably acceptable to Chapeau.

    

    (d)              The
Company is aware of Rule 144 promulgated under the Securities Act which permits
limited public resale of securities acquired in a non-public offering subject to
the satisfaction of certain conditions.

    

    (e)              The
Company is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.

    

     

     

    ARTICLE
IV

     

    REPRESENTATIONS AND
WARRANTIES OF CHAPEAU

     

    Chapeau
represents and warrants to the Company that, except as set forth in the Schedule
of Exceptions attached hereto:

     

    

    
      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

    

    Section
4.1       Due Organization; Good
Standing and Power.  Chapeau is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Utah, and has all requisite corporate power and authority necessary to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted.  Chapeau is duly authorized to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such qualification or authorization necessary, except where the
failure to be so qualified, authorized or in good standing would not reasonably
be expected to have a Material Adverse Effect.

     

    
      	
            	
              Section
      4.2

            	
              Authorization;
      Noncontravention. 

            

    

     

    (a)        Chapeau
has all necessary corporate power and authority to execute and deliver the
Transaction Documents to which it is a party, to perform its obligations
thereunder, and to consummate the transactions contemplated
thereby.  The execution, delivery and performance by Chapeau of the
Transaction Documents to which it is a party, and the consummation by Chapeau of
the transactions contemplated thereby, have been duly authorized and approved by
all necessary action on the part of Chapeau.  This Agreement has been
duly executed and delivered by Chapeau and, assuming due authorization,
execution and delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of Chapeau, enforceable against Chapeau in
accordance with its terms, subject to the Bankruptcy and Equity
Exception.  The Transaction Documents (other than this Agreement) to
which Chapeau is a party will upon execution be duly executed and delivered by
Chapeau and, assuming the due authorization, execution and delivery thereof by
the other parties thereto, will upon execution constitute the legal, valid and
binding obligations of Chapeau, enforceable against Chapeau in accordance with
their respective terms, subject to the Bankruptcy and Equity
Exception.

     

    (b)        None
of the execution and delivery of the Transaction Documents by Chapeau, the
consummation by Chapeau of the transactions contemplated thereby, or the
compliance by Chapeau with any of the terms or provisions thereof will, (i)
conflict with or violate any provision of the certificate of incorporation and
by-laws of Chapeau, or (ii) (x) violate any Law or Order applicable to Chapeau
or any of its properties or assets, (y) require the consent or approval of, or
any payment to, any third party or (z) violate, conflict with, or constitute a
breach of or default under, any of the terms, conditions or provisions of any
Contract to which Chapeau is a party or by which any of its properties or assets
is bound, except, in the case of clause (ii), for such violations, consents,
approvals, payments, conflicts, breaches or defaults as would not reasonably be
expected to have a Material Adverse Effect.

     

    Section
4.3       Capitalization.  The
authorized capital stock of Chapeau consists of 325,000,000 shares of common
stock, $0.001 par value per share (the “Common
Stock”).  As of the date of this Agreement, there are (a)
63,461,089 shares of Common Stock presently issued and outstanding, (b) options,
warrants and other contingent securities (collectively, the “Contingent
Securities”) to acquire 35,652,773 shares of Common Stock presently issued and
outstanding, (c) no shares of Common Stock are reserved for future issuance
pursuant to any stock option or stock issuance plan and (d) no shares of Common
Stock are held by Chapeau as treasury stock.  All of the issued and
outstanding (x) shares of Common Stock and (y) Contingent Securities were duly
authorized for issuance and are validly issued, fully paid and non-assessable
and were not issued in violation of any purchase or call option, right of first
refusal, subscription right, preemptive right or any similar rights.

     

    

    
      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    

    

    Section
4.4       Authorization of
Securities.  When issued in accordance with the terms of this
Agreement, (a) the Option, (b) the Warrant, (c) the shares of Common Stock
issuable as interest on the Note and (d) the shares of Common Stock issuable
pursuant to Section 6.1(d) will be duly authorized, validly issued, fully paid
and nonassessable, free and clear of all Liens, other than Liens created by the
Company.  All such shares of Common Stock have been duly and validly
reserved for issuance. 

     

    Section
4.5       Financial
Statements. Chapeau’s audited balance sheet and statements of income
and cash flows as of and for the fiscal years ended June 30, 2004, June 30, 2005
and June 30, 2006 and the unaudited balance sheet and statements of income and
cash flows of Chapeau as of and for the six month period ended December 31, 2007
(collectively, the “Financial
Statements”) have been prepared from the books and records of account of
Chapeau in accordance with GAAP throughout the periods covered thereby, and
present fairly and accurately, in all material respects, the financial condition
of the Company as of such dates and the results of operations of the Company for
such periods. Except for obligations and liabilities reflected in the Financial
Statements, Chapeau has no off-balance sheet obligation or liability of any
nature (matured or unmatured, fixed or contingent) to, or any financial interest
in, any third party or other Person the purpose or effect of which is to defer,
postpone, reduce or otherwise avoid or adjust the recording of debt expenses
incurred by Chapeau.

     

    Section
4.6       No Undisclosed
Liabilities.  Except as set forth in Schedule 4.6, Chapeau
does not have any Indebtedness or Liabilities (whether or not required under
GAAP to be reflected on a balance sheet or the notes thereto) other than those
(i) specifically reflected on and fully reserved against in the Financial
Statements, (ii) incurred in the Ordinary Course of Business since the December
31, 2007 (the “Balance
Sheet Date”) or (iii) that are immaterial to Chapeau or that would not
reasonably be expected to have a Material Adverse Effect.

     

    Section
4.7       Governmental
Approvals.  No consents or approvals of, or filings,
declarations or registrations with, any Governmental Body are necessary for the
execution and delivery of the Transaction Documents by Chapeau, and the
consummation by Chapeau of the transactions contemplated thereby, other than
such consents, approvals, filings, declarations or registrations that, if not
obtained, made or given, would not reasonably be expected to impair the ability
of Chapeau to perform its obligations under the Transaction Documents, or
prevent or materially impede, interfere with, hinder or delay the consummation
of the Closing.

     

    Section
4.8       Title to Assets; Absence of
Liens.  Chapeau has good and valid title to each of the
Existing Turnkey Projects, free and clear of all Liens, except Permitted
Liens.  Chapeau has the full right to contribute, transfer and assign
each of the Existing DES Agreements, free and clear of all Liens, except
Permitted Liens. Prior to the acquisition of any Future Turnkey Project by the
Company, Chapeau will have good and valid title thereto, free and clear of all
Liens, except Permitted Liens.

     

    Section
4.9       Compliance with
Laws. 

     

    

     

    

    
      
        
           

        

        
          19

          
            

          

        

        
           

        

      

    

    

    (a)        Chapeau
is in compliance with all Laws and Orders as in effect as of the date hereof
applicable to the Existing Turnkey Projects and the Existing DES Agreements,
including without limitation, and the manufacturing, sale and installation
thereof, except where the failure to be in compliance would not have a Material
Adverse Effect on Chapeau.  Chapeau has in full force and effect all
permits, licenses and authorizations, the absence of which would not reasonably
be expected to have a Material Adverse Effect on Chapeau, to perform its
obligations under the Existing DES Agreements.

     

    (b)        No
Order is in effect, that names Chapeau and is related to any Existing Turnkey
Project, that imposes a material obligation on Chapeau and the ongoing ownership
and operation of the Existing Turnkey Projects and performance by Chapeau under
the Exiting Service Agreements.  Except as set forth on Schedule 4.9(b),
there are no Actions pending (to the Knowledge of Chapeau with respect to
investigations of Chapeau by any Governmental Bodies) or, to the Knowledge of
Chapeau, threatened, against or affecting Chapeau, or to the Knowledge of
Chapeau, any of its officers, directors, employees, agents or stockholders in
their capacity as such, in each case with respect to the Existing Turnkey
Projects and the Existing DES Agreements and, to the Knowledge of Chapeau, there
are no facts or circumstances which may give rise to any of the
foregoing.

     

    (c)        There
are no Actions pending (to the Knowledge of Chapeau with respect to
investigations of Chapeau or any other Affiliate of Chapeau by any Governmental
Bodies) or, to the Knowledge of Chapeau, threatened, by or against Chapeau with
respect to the Transaction Documents, or in connection with any of the
Transactions, and Chapeau has no reason to believe there is a valid basis for
any such Action.

     

    Section
4.10     Product Warranty; Product
Liability.

     

    (a)        The
Existing Turnkey Projects conform in all material respects with and to all
manufacturer and product specifications, all express and implied warranties and
all applicable Laws.  To the Knowledge of Chapeau, Chapeau does not
have any material liability for replacement or repair of any such products or
other damages in connection therewith or any other customer or product
obligations not reserved against on the Financial Statements.  Chapeau
has not sold any products or delivered any services that included a warranty for
a period of longer than one year.

     

    (b)        To
the Knowledge of Chapeau, Chapeau does not have any material liability arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of any of the Existing Turnkey Projects.  To the
Knowledge of Chapeau, Chapeau has not committed any act or failed to commit any
act, which would result in, and there has been no occurrence which would give
rise to or form the basis of, any product liability or liability for breach of
warranty (whether covered by insurance or not) on the part of Chapeau with
respect to the Existing Turnkey Projects.

     

    Section
4.11     Brokers.  Except
for Elisabeth R. Schreiber, whose fees shall be paid by Chapeau at the Closing,
no Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Chapeau in connection with the Transactions, and no Person is
entitled to any fee or commission or like payment in respect
thereof.

     

    

    
      
        
           

        

        
          20

          
            

          

        

        
           

        

      

    

    

    Section
4.12     Full
Disclosure.  No representation or warranty of Chapeau contained
in this Agreement and no written statement made by or on behalf of Chapeau to
the Company pursuant to this Agreement or any of Transaction Documents contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading.  There are no facts which Chapeau has not disclosed to the
Company which could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

     

    Section
4.13     Location of Collateral and
Books and Records.  Schedule 4.13 is a
complete list of the locations of the Collateral (other than Inventory
in-transit to one of such locations) and of Chapeau’s books and records on and
as of the Initial Closing Date.  Schedule 4.13
includes the name and mailing address of the owner thereof.

     

    Section
4.14     Accounts.  Each
Account represents a bona fide sale or lease and delivery of goods by Chapeau,
or rendition of services by Chapeau in the Ordinary Course of
Business.  Each Account is for an amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor, without any offset,
deduction, defense or counterclaim except as set forth on Schedule
4.14.  No payment has been received, and no material credit,
discount or extension or agreement has been granted, on any Account except as
set forth on Schedule
4.14.  All goods described in any invoice representing a sale
of goods have been delivered to the Account Debtor named therein and all
services of Chapeau described in each invoice representing services have been or
will be performed.

     

    Section
4.15     Tax
Matters.  Except as set forth on Schedule
4.15:

     

    (a)             
(i) All Tax Returns required to be filed by Chapeau have been timely filed; (ii)
all such Tax Returns are true and complete in all material respects; (iii) all
Taxes (whether or not reflected on such Tax Returns) due by or with respect to
Chapeau, chargeable as an Lien upon the assets of Chapeau, claimed to be due by
any Tax Authority or that may become due by Chapeau with respect to any period
(or portion thereof) ending on or before the Initial Closing Date have been paid
or have been adequately reserved for in the books and records of Chapeau in
accordance with GAAP; and (iv) Chapeau has duly and timely withheld all Taxes
required to be withheld and such withheld Taxes have been either duly and timely
paid to the proper Tax Authority or properly set aside in accounts for such
purpose.

    

    (b)            
 No Taxes on or in respect of Chapeau are currently under audit,
examination or investigation by any Tax Authority.  No Tax Authority
is now asserting, or to Chapeau’s Knowledge, threatening to assert against
Chapeau, any deficiency or claim for Taxes or any adjustment to Taxes, and no
circumstances exist to form the basis for asserting or raising such a claim or
deficiency.

    

    (c)            
 No written claim against or in respect of Chapeau (other than a claim that
has been finally settled) has been made in the last three years by any Tax
Authority in a jurisdiction where Chapeau does not file Tax Returns or pay or
collect Taxes in respect of a particular type of Tax imposed by such
jurisdiction that Chapeau is or may be subject to an obligation to file Tax
Returns or pay or collect Taxes in respect of such Tax in such
jurisdiction.

    

    

    
      
        
           

        

        
          21

          
            

          

        

        
           

        

      

    

    

    (d)       
      Chapeau (i) is not a party to or bound by,
and does not have any obligation under, any Tax allocation, sharing, indemnity
or similar Contract or arrangement, (ii) is not and has never been a member of
any consolidated, combined or unitary group for purposes of filing Tax Returns
or paying Taxes, (iii) is not otherwise liable for the Taxes of any other Person
as a transferee, successor or otherwise and (iv) has not received or applied for
a Tax ruling or entered into a closing agreement pursuant to Section 7121 of the
IRC, or any predecessor provision or any similar provision of state or local
law.

    

    (e)            
 There are no Liens with respect to Taxes upon any of the properties or
assets, real or personal, tangible or intangible of Chapeau, except for
Permitted Liens.

     

    Section
4.16     Employee
Benefits.  Schedule 4.16
contains a list of each of Chapeau’s Benefit Plans.  There is no
“Multiemployer Plan,” as defined in ERISA, under which any employee of the
Business has any present or future right to benefits or under which Chapeau has
any present or future liability.  Any and all contributions, including
salary deferrals, required to be made under the terms of Chapeau Benefit Plans
as of the date of this Agreement have been made in a timely fashion. No such
Benefit Plan provides for, and no written or oral agreements have been entered
into promising or guaranteeing, the continuation of medical, dental, vision,
life or disability insurance coverage for any employees of Chapeau or their
beneficiaries for any period of time beyond the earlier of (i) the end of the
current plan year or (ii) the termination of employment (except to the extent of
coverage required under Title I, Part 6 of ERISA. For purposes of this Section
4.16, the term “Benefit Plans” includes “qualified” retirement plans under Code
Section 401(a), non-qualified deferred compensation plans, supplemental
executive retirement plans and welfare benefit plans, as defined in
ERISA.

     

    

    Section
4.17     Absence of Certain
Changes.  Except as set forth on Schedule 4.17 or as
otherwise contemplated by this Agreement, since the Balance Sheet Date, there
has not been:

     

    (a)   
          any material damage,
destruction, casualty or other similar occurrence or event (whether or not
insured against) to the assets of Chapeau;

    

    (b)      
       any Liens attached to any of the
assets of Chapeau not in the Ordinary Course of Business;

    

    (c)         
    any incurrence or creation of any liability, obligation
or other Contract in excess of $150,000 by Chapeau, except unsecured trade
payables incurred in the Ordinary Course of Business;

    

    (d)            
 any purchase, sale, transfer, assignment or other disposition by Chapeau
of any assets in excess of $150,000 not in the Ordinary Course of
Business;

    

    (e)           
  any entry into, termination of or receipt of notice of termination
of any Contract with any supplier, vendor, dealer, distributor or sales
representative by Chapeau (other than purchase orders entered into or terminated
in the Ordinary Course of Business;

    

    

    
      
        
           

        

        
          22

          
            

          

        

        
           

        

      

    

    

    (f)         
     any change by Chapeau of its accounting methods,
practices, policies or procedures which were not or consented to by Chapeau’s
accountants, or otherwise made in accordance with generally accepted accounting
principles in the United States;

    

    (g)      
       any amendment or change to the
organizational documents of Chapeau;

    

    (h)    
         with the exception of any
transaction contemplated by this Agreement or the Transaction Documents, any
transaction by Chapeau with any officer, manager, member or Affiliate of Chapeau
other than the payment of compensation in the Ordinary Course of
Business;

    

    (i)          
    any Contract entered into by Chapeau otherwise
obligating it to do any of the foregoing.

    

    
      	
            	
              Section
      4.18

            	
              Contracts; No
      Defaults.

            

    

     

    (a)             
Schedule
4.18(a) contains a true and complete list of each Material
Contract.  For purposes of this Agreement, a “Material
Contract” shall mean any Contract to which Chapeau is a party, including
each Existing Service Agreement, other than a Contract that (i) pursuant to its
terms, has expired, has been terminated or has been fully performed by the
parties thereto, and Chapeau has no liability (contingent or otherwise)
thereunder, (ii) is cancelable by Chapeau upon 30 days’ or less notice, without
any penalty or other financial obligation, and that involves payments to or from
Chapeau of less than $100,000 in such 30-day period, or (iii) involves annual
aggregate payments to or from Chapeau of $200,000 or less.  True and
complete copies (or, if oral, full written descriptions) of all Material
Contracts, including all amendments thereto, have been delivered to the
Company.

    

    (b)          
   Except as set forth on Schedule
4.18(b):

    

    (i)         each
Material Contract is a valid and binding obligation of Chapeau and, to Chapeau’s
Knowledge, is a valid and binding obligation of the other party
thereto;

    

    (ii)        neither
Chapeau nor, to Chapeau’s Knowledge, any other party thereto is in material
violation of or in material default in respect of, nor has there occurred an
event or condition by or on behalf of Chapeau or, to Chapeau’s Knowledge, by or
on behalf of any other party that, with the passage of time or giving of notice
or otherwise, could constitute a material default under or permit the
termination of any Material Contract;

    

    (iii)        no
event or condition has occurred or is alleged to have occurred regarding the
actions of Chapeau or, to Chapeau’s Knowledge, any other Person that constitutes
or (with the passage of time or giving of notice or otherwise) could constitute
a basis of force
majeure or other claim of excusable delay, nonperformance or accelerated
or increased rights by Chapeau or any other Person under any Material
Contract;

    

    (iv)        Chapeau
has not given to or received from any other Person any written notice or other
communication (whether oral or written) regarding any actual, alleged, possible
or potential material violation or breach of, or material default under, any
Material Contract; and

    

    

    
      
        
           

        

        
          23

          
            

          

        

        
           

        

      

    

    

    (v)        the
enforceability of any Material Contract will not be affected in any manner by
the execution, delivery and performance of this Agreement, and no Material
Contract contains any change in control or other terms and conditions that will
(with or without obtaining consent or waiver) become applicable or inapplicable
as a result of the consummation of the Contemplated Transactions.

    

    
      	
            	
              Section
      4.19

            	
              Insurance.

            

    

     

    (a)            
 Schedule
4.19(a) sets forth (i) a true and complete list of all insurance
currently in force that covers or purports to cover risks or losses to or
associated with the Business (collectively, the “Policies”);
and (ii) with respect to each Policy, the names of the insured and all
additional insureds thereunder, a description of the insured loss coverage, the
expiration date and time of coverage, the dollar limitations of coverage and a
general description of each deductible feature thereof.

    

    (b)             Except
as set forth on Schedule 4.19(b), (i)
Chapeau is, and has been continuously since January 1, 2006, insured with
financially responsible insurers or under other financially responsible
arrangements in such amounts and against such risks and losses as are customary
for companies engaged in a similar business and acting in accordance with
reasonably prudent business practice; (ii) the Policies are in full force and
effect in accordance with their respective terms, no notice of cancellation has
been received by Chapeau; and (iii) all premiums due under the Policies have
been paid (without regard to grace periods).

    

    
      	
            	
              Section
      4.20

            	
              Environmental
      Compliance.  Except as set forth on Schedule
      4.20:

            

    

     

    (a)     
        The Business of Chapeau is being
conducted in compliance in all material respects with, and Chapeau is not
subject to any actual or potential liability pursuant to, any Environmental
Laws. There are no conditions or circumstances that would either prevent the
continued and uninterrupted operation of the Business in compliance in all
material respects with Environmental Laws after the Closing or require
additional material capital expenditures in order to maintain the continued and
uninterrupted operation of the Business in compliance in all material respects
with Environmental Laws after the Closing.

    

    (b)          
   Chapeau has not received any form of notice or inquiry from
any Governmental Body relating to any actual or potential Environmental, Health
and Safety Liability at any Existing Turnkey Project location.

    

    (c)         
    The use and operation of an Existing Turnkey Project by
a Customer (i) will not expose any Person to any Hazardous Substance in
violation of, and (ii) will be in material compliance with, all applicable
Environmental Laws.

    

    Section
4.21     Intellectual
Property. Schedule 4.21 sets
forth all Intellectual Property owned or used by Chapeau and which are necessary
to conduct the Business as currently conducted.  To Chapeau's
Knowledge, (i) no infringement exists by on the intellectual property rights of
any other Person that results in any way from the operations of the Business,
and (ii) there is no infringing use of any of the Intellectual Property owned by
Chapeau by any other Person.  No Orders or proceedings are pending, or
to Chapeau's Knowledge, threatened, against Chapeau that challenge the validity
of, or Chapeau’s ownership of or right to use, any of the Intellectual
Property.

     

    

    
      
        
           

        

        
          24

          
            

          

        

        
           

        

      

    

    

    ARTICLE
V

     

    COLLATERAL

     

    Section
5.1       Security
Interest.  As security for the payment and performance of the
Secured Obligations, Chapeau hereby grants to the Company a continuing security
interest, lien and collateral assignment in and to all of Chapeau’s personal
property, including without limitation all of Chapeau’s right, title and
interest in and to all of the following, in each case both now owned and
hereafter acquired: all Accounts, Inventory (including, without limitation,
Inventory in transit), Equipment, General Intangibles, Chattel Paper, Letter of
Credit Rights, Intellectual Property, Instruments, Documents and documents of
title, Investment Property, Deposit Accounts, Commercial Tort Claims (including,
without limitation, those listed on Schedule 5.1), money,
cash, cash equivalents, securities and other property of any kind (to the extent
such other property is at any time held directly or indirectly by the Company or
any Affiliate), all books and records, whether in tangible or intangible form,
and all accessions to, substitutions for and replacements, products and proceeds
of any of the foregoing (collectively, the “Collateral”).  The
Company’s Liens shall continue in full force and effect in all Collateral until
the Secured Obligations have been fully paid, at which time the Company will use
all commercially reasonable efforts to terminate as promptly as reasonable the
security interest, lien and collateral assignment granted pursuant to this
Agreement.

     

    Section
5.2       Perfection and Protection of
the Company’s Security Interest.  Chapeau shall perform, at its
expense, all action reasonably requested by the Company at any time to perfect,
maintain, protect and enforce the Company’s Liens.  If at any time any
Collateral is located on any leased premises not owned by Chapeau, then Chapeau
shall, at the request of the Company, obtain written landlord lien waivers or
subordinations with respect to such Collateral, in form and substance
satisfactory to the Company.  If any Collateral is at any time in the
possession or control of any warehouseman, bailee, processor or any other Person
other than Chapeau, then Chapeau shall notify the Company thereof and shall, at
the request of the Company, notify such Person (in form and substance reasonably
satisfactory to the Company) of the Company’s Liens in such Collateral and
instruct such Person to hold all such Collateral for the Company’s account
subject to the Company’s instructions.

     

    Section
5.3       First
Priority.  Chapeau agrees that the Company’s Liens shall at all
times be and remain first, prior and senior to any other interests in the
Collateral, except as may be expressly agreed otherwise by the Company in
writing.

     

    Section
5.4       Collateral Proceeds
Management.  Following an Event of Default and the acceleration
by the Company of the payment of the Secured Obligations, all collections and
proceeds of Collateral shall be subject to an express trust for the benefit of
the Company, and shall be delivered to the Company for application to the
Obligations as follows:

     

    

     

    

    
      
        
           

        

        
          25

          
            

          

        

        
           

        

      

    

    

    (a)        Chapeau
shall establish a lock-box service for collections of Accounts at a commercial
bank acceptable to the Company and subject to a collection account agreement by
such bank providing, among other things, that (i) all items of payment received
in such lock-box are received by such bank for the Company, (ii) such bank has
no rights of setoff or recoupment or any other claim against such items (other
than for payment of its service fees and other charges directly related to the
administration of such lock-box), and (iii) such bank will immediately deposit
all such collections to an account of the Company.  Chapeau shall
instruct all Account Debtors in writing to cause, and otherwise take reasonable
steps to cause, all payments to be delivered directly to the address established
for such lock-box service.

     

    (b)        Chapeau
will not use, dispose, withhold or otherwise exercise dominion over any proceeds
of Collateral.  If Chapeau at any time receives any proceeds of
Collateral, it shall receive such proceeds as the Company’s trustee and shall
immediately deliver such proceeds to the Company in their original form duly
endorsed in blank or to the order of the Company.

     

    Section
5.5       Examinations; Inspections;
Verifications.  The Company shall have the right at any time
upon 2 Business Days prior notice to Chapeau to conduct field examinations to
inspect the Collateral and to inspect, audit and copy Chapeau’s books and
records relating to the Collateral or the Business.  Following an
Event of Default and acceleration of the Secured Obligations and during the
continuation thereof or following the reasonable request of the Company, the
Company is authorized to discuss Chapeau’s affairs with any Person (other than a
direct competitor of Chapeau), including without limitation employees of
Chapeau, as the Company may deem necessary in relation to the Collateral,
Chapeau’s business or financial condition or the Company’s rights under this
Agreement.  Chapeau agrees to pay the Company’s then customary charge
for field examinations and audits and the preparation of reports thereof
performed or prepared at any time following the occurrence of an Event of
Default and during the continuance thereof. 

     

    Section
5.6       Right to
Cure.  The Company may, in its sole and absolute discretion,
pay any amount or do any act required of Chapeau hereunder or under any other
Loan Document in order to preserve, protect, maintain or enforce the Collateral
or the Company’s Liens, and which Chapeau fails to pay or do, including payment
of any judgment lien, insurance premium, charge, landlord’s or bailee’s claim on
or with respect to the Collateral.  All payments that the Company
makes under this Section 5.6 and all
out-of-pocket costs and expenses that the Company pays or incurs in connection
therewith shall be paid or reimbursed to the Company on demand upon receipt of
reasonable proof thereof.  Any action taken by the Company under this
Section 5.6
shall not waive any Default or Event of Default or any rights of the Company
with respect thereto.

     

    

     

    

    
      
        
           

        

        
          26

          
            

          

        

        
           

        

      

    

    

    Section
5.7       Power of
Attorney.  Following an Event of Default and during the
continuation thereof, Chapeau hereby irrevocably appoints the Company as
Chapeau’s agent and attorney-in-fact to take any action necessary to preserve
and protect the Collateral and the Company’s interests under the Loan Documents
or to sign and file any document necessary to perfect the Company’s
Liens.  Without limiting the foregoing, the Company shall have the
right at any time to take any of the following action, in its own name or in the
name of Chapeau: (i) make written or verbal requests for verification of the
validity, amount or any other matter relating to any Collateral from any Person,
(ii) endorse Chapeau’s name on checks, instruments or other evidences of payment
on Collateral, (iii) sign and file, in Chapeau’s name or in the Company’s name
as secured party, any proof of claim or other document in any bankruptcy
proceedings of any Account Debtor or obligor on Collateral, (iv) access, copy or
utilize any information recorded or contained in any computer or data processing
equipment or system maintained by Chapeau in respect of the Collateral, (v) open
mail addressed to Chapeau and take possession of checks or other proceeds of
Collateral for application in accordance with this Agreement, (vi) notify any or
all Persons which the Company believes may be Account Debtors or obligors on
Collateral to make payment directly to the Company, for the account of Chapeau,
(vii) redirect the deposit and disposition of collections and proceeds of
Collateral, provided, that such
proceeds shall be applied to the Secured Obligations as provided by this
Agreement, (viii) settle, adjust, compromise or discharge Accounts or extend
time of payment upon such terms as the Company may reasonably determine, (ix)
notify post office authorities, in the name of Chapeau or in the name of the
Company, as secured party, to change the address for delivery of Chapeau’s mail
to an address designated by the Company, (x) sign Chapeau’s name on any invoice,
bill of lading, warehouse receipt or other document of title relating to any
Collateral and (xi) clear Inventory through customs in Chapeau’s name, in the
Company’s name as secured party or in the name of the Company’s designee, and to
sign and deliver to customs officials powers of attorney in Chapeau’s name for
such purpose. The powers granted under this Section 5.7 are
coupled with an interest and are irrevocable until all Secured Obligations have
been paid in full.  Costs and expenses incurred by the Company in
connection with any of such actions by the Company, including reasonable
attorneys’ fees and reasonable out-of-pocket expenses, shall be reimbursed to
the Company on demand.

     

    Section
5.8       Preservation of the
Company’s Rights.  To the extent allowed by law, and unless the
Collateral is in the possession of the Company, neither the Company nor any of
its officers, directors, employees or agents shall be liable or responsible in
any way for the safekeeping of any Collateral or for any act or failure to act
with respect to the Collateral, or for any loss or damage thereto or any
diminution in the value thereof, or for any act by any other
Person.  In the case of any instruments and chattel paper included
within the Collateral, the Company shall have no duty or obligation to preserve
rights against prior parties.  The Secured Obligations shall not be
affected by any failure of the Company to take any steps to perfect its security
interests or to collect or realize upon the Collateral, nor shall loss of or
damage to the Collateral release Chapeau from any of the Secured
Obligations.

     

    ARTICLE
VI

    

    CONDITIONS

    

    Section
6.1       Conditions Precedent to the
Initial Acquisitions and the Loan.  The obligation of the
Company to make the Initial Acquisitions and the Loan under this Agreement is
subject to the fulfillment, to the Company’s reasonable satisfaction, of each of
the following conditions precedent:

     

    

    
      
        
           

        

        
          27

          
            

          

        

        
           

        

      

    

    

    (a)        The
Company shall have received each of the following, in each case in form and
substance reasonably satisfactory to the Company:

     

    (i)
        A copy of the organizational
documents of Chapeau, and all amendments thereto, accompanied by the certificate
of the appropriate Governmental Authority of Chapeau’s jurisdiction of
incorporation bearing a current date acceptable to the Company, to the effect
that such copy is correct and complete and that Chapeau is duly organized and
validly existing in such jurisdiction;

     

    (ii)         Certification
by the appropriate Governmental Authority, bearing a current date acceptable to
the Company, to the effect that Chapeau is in good standing and qualified to
transact business in Chapeau’s jurisdiction of incorporation and in each other
jurisdiction where Chapeau is qualified to do business;

     

    (iii)        (A)
a copy of the bylaws or similar governing document of Chapeau, and all
amendments thereto, (B) certification of the name, signature and incumbency of
all officers of Chapeau who are authorized to execute any Transaction Document
on behalf of Chapeau and (C) a copy of authorizing resolutions approving this
Agreement and the other Transaction Documents to be executed and delivered by
Chapeau, authorizing the transactions contemplated thereby, and authorizing and
directing a named officer or officers of Chapeau to sign and deliver all
Transaction Documents to be executed by Chapeau, duly adopted by Chapeau’s board
of directors, all accompanied by a certificate from the Chief Executive Officer
of Chapeau dated as of the Initial Closing Date to the effect that each such
item is true and complete and in full force and effect as of the Initial Closing
Date;

     

    (iv)        This
Agreement, duly executed by Chapeau;

     

    (v) 
       The Note, the Option, the Warrant and
the Registration Rights Agreement, each duly executed Chapeau;

     

    (vi)        Evidence
of insurance in compliance with the requirements of this Agreement together with
loss payable and additional insured endorsements in favor of the
Company;

     

    (vii)       A
closing certificate, certifying to the satisfaction of conditions precedent
specified by this Section 6.1, duly
executed by the Chief Executive Officer;

     

    (viii)      UCC-3
termination statements, partial releases or such other releases may be required
by the Company with respect to the Collateral;

     

    (ix)       Copies
of the Financial Statements duly certified by the Chief Financial Officer
thereof;

     

    (x)        A
Trademark Security Agreement, duly executed;

     

    (xi)       A
Patent Security Agreement, duly executed. 

     

    

     

    

    
      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    

    

    (b)        An
opinion of counsel for Chapeau, in form and substance reasonably satisfactory to
the Company, and an opinion of special Utah counsel for Chapeau, in form and
substance reasonably satisfactory to the Company; and

     

    (c)        Chapeau
shall have paid all expenses of the Company incurred in connection with the
Transaction.

     

    Section
6.2       Conditions Precedent to all
Future Acquisitions.  In addition to the conditions precedent
specified by Section
6.1, the obligation of the Company to acquire any Future Turnkey Project
shall be subject to the following conditions precedent:

     

    (a)        All
representations and warranties in this Agreement shall be true and correct in
all material respects on and as of the date of the  acquisition of
such Future Turnkey Project, as though made on and as of such date (except to
the extent any such representations and warranties relate solely to an earlier
date);

     

    (b)        No
Default or Event of Default shall have occurred and be continuing on the date of
such acquisition; and

     

    (c)        No
Material Adverse Effect shall have occurred. Conditions Precedent to
Chapeau.

     

    Section
6.3       Conditions Precedent to
Chapeau.   The obligations of Chapeau to consummate the
transactions contemplated by this Agreement is subject to the fulfillment, to
Chapeau’s reasonable satisfaction, of each of the following conditions
precedent.  Chapeau shall have received each of the following, in each
case in form and substance reasonably satisfactory to Chapeau:

     

    (a)        A
copy of the organizational documents of the Company, and all amendments thereto,
accompanied by the certificate of the appropriate Governmental Authority of the
Company’s jurisdiction of organization bearing a current date acceptable to
Chapeau, to the effect that such copy is correct and complete and that the
Company is duly organized and validly existing in such
jurisdiction;

     

    (b)        Certification
by the appropriate Governmental Authority, bearing a current date acceptable to
the Chapeau, to the effect that the Company is in good standing and qualified to
transact business in Company’s jurisdiction of organization and in each other
jurisdiction where the Company is qualified to do business;

     

    (c)        (A)
a copy of the governing documents of Company, and all amendments thereto, (B)
certification of the name, signature and incumbency of all representatives of
the Company who are authorized to execute any Transaction Document on behalf of
the Company, and (C) a copy of authorizing resolutions approving this Agreement
and the other Transaction Documents to be executed and delivered by the Company,
authorizing the transactions contemplated thereby, and authorizing and directing
a named manager or managers of the Company to sign and deliver all Transaction
Documents to be executed by the Company, duly adopted by the Company’s governing
body, all accompanied by a certificate from a Manager of the Company dated as of
the Initial Closing Date to the effect that each such item is true and complete
and in full force and effect as of the Initial Closing Date;

     

    

     

    

    
      
        
           

        

        
          29

          
            

          

        

        
           

        

      

    

    

    (d)        This
Agreement, duly executed by the Company; and

     

    (e)        The
Option, the Warrant, the Registration Rights Agreement, each duly executed by
the Company.

     

    

    ARTICLE
VII

    

    COVENANTS

    

    Through
and until the payment and performance in full of the Secured Obligations, unless
otherwise consented to by the Company, which consent shall not be unreasonably
withheld, Chapeau agrees as follows:

     

    Section
7.1       Existence and Good
Standing.  Each of Chapeau and its Subsidiary shall maintain
its existence and its qualification and good standing in all jurisdictions in
which the failure to maintain such qualification or good standing would
reasonably be expected to have a Material Adverse Effect.

     

    Section
7.2       Fundamental
Changes.  Neither Chapeau nor any Subsidiary shall enter into
any Change of Control or wind-up, liquidate or dissolve.  Chapeau will
not change its name, its jurisdiction of organization, organizational type or
location of its chief executive office unless it gives the Company at least
thirty (30) days’ prior written notice thereof and executes all documents that
the Company reasonably requests in connection therewith.

     

    Section
7.3       Compliance with
Laws.  Each of Chapeau and its Subsidiary shall comply in all
material respects with all applicable requirements of Law.  Without
limiting the foregoing, Chapeau will timely file all tax returns, timely pay all
taxes due and payable by Chapeau (except such taxes as may be contested in good
faith by appropriate proceedings, provided that adequate reserves shall be
maintained as are appropriate according to GAAP and no Lien (other than a
Permitted Lien) results from any non-payment, make all required withholding and
other tax deposits, and establish adequate reserves for payment of all such
items.

     

    Section
7.4       Books and
Records.  Chapeau shall maintain at all times correct and
complete books and records in which complete, correct and timely entries are
made of its transactions in accordance with GAAP applied consistently with the
audited financial statements required to be delivered pursuant to Section
7.5.

     

    Section
7.5       Financial
Reporting.  Chapeau will furnish to the Company the following
information, all of which shall be kept confidential by the
Company:

     

    

    
      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    

    

    (a)        As
soon as available, but in any event not later than date on which annual
financial statements must be filed by Chapeau with the Commission, consolidated
audited and consolidating audited balance sheets, and statements of income and
expense, cash flow and of stockholders’ equity for Chapeau and its Subsidiary
for such fiscal year, and the accompanying notes thereto, prepared in accordance
with GAAP, which
present fairly the financial position and results of operations of Chapeau and
its consolidated Subsidiary as of the date thereof and for the fiscal year then
ended.  Such statements shall be examined in accordance with generally
accepted auditing standards by independent certified public accountants selected
by Chapeau.  Upon the occurrence of an Event of Default, Chapeau
hereby authorizes the Company to communicate directly with its certified public
accountants and, by this provision, authorizes such accountants to disclose to
the Company any and all financial statements and other supporting financial
documents and schedules relating to Chapeau and to discuss directly with the
Company the finances and affairs of Chapeau.

     

    (b)        As
soon as available, but in any event not later than date on which quarterly
financial statements must be filed by Chapeau with the Commission consolidated
and consolidating unaudited balance sheets and statements of income and expense,
cash flow and of stockholders’ equity for Chapeau and its consolidated
Subsidiary as of the end of such quarter and the accompanying notes thereto, if
any, , which present fairly the financial position and results of operations of
Chapeau and its consolidated Subsidiary as of the date thereof and for the
quarter then ended;

     

    (c)        As
soon as available, but in any event not later than thirty (30) days after the
end of each calendar month, consolidated and consolidating unaudited balance
sheets of Chapeau and its consolidated Subsidiary as of the end of such month,
and consolidated and consolidating unaudited statements of income and expense
for Chapeau and its consolidated Subsidiary for such month and for the period
from the beginning of the fiscal year to the end of such month, all in
reasonable detail, fairly presenting the financial position and results of
operations of Chapeau and its consolidated Subsidiary as of the date thereof and
for such periods.

     

    (d)        With
each of the annual audited financial statements delivered pursuant to Section 7.5(a), and
with each of the quarterly and monthly unaudited financial statements delivered
pursuant to Sections
7.5(b) and (c), a Compliance Certificate duly executed by the chief
financial officer of Chapeau (i) setting forth in reasonable detail the
calculations required to establish that Chapeau was in compliance with the
covenants, if any, set forth in Section 7.23 during
the period covered in such financial statements and as of the end thereof and
(ii) stating that, except as explained in reasonable detail in such certificate
(A) all of the representations and warranties of Chapeau contained in this
Agreement and the other Transaction Documents are correct and complete in all
material respects as at the date of such certificate as if made at such time,
except for those that speak as of a particular date, (B) Chapeau is, at the date
of such certificate, in compliance in all material respects with all of its
respective covenants and agreements in this Agreement and the other Transaction
Documents and (C) no Default or Event of Default then exists or existed during
the period covered by such financial statements.  If such certificate
discloses that a representation or warranty is not correct or complete, or that
a covenant has not been complied with, or that a Default or Event of Default
existed or exists, such certificate shall set forth what action Chapeau has
taken or proposes to take with respect thereto.

     

    

    
      
        
           

        

        
          31

          
            

          

        

        
           

        

      

    

    

    (e)        As
soon a practicable after approval by Chapeau’s Board of Directors, but in no
event later than ninety days after the beginning of each fiscal year, annual
forecasts (to include forecasted consolidated and consolidating balance sheets,
statements of income and expenses and statements of cash flow) for Chapeau and
its Subsidiary as of the end of and for each month of such fiscal
year.

     

    (f)         As
soon as available, but in any event not later than five (5) Business Days after
Chapeau’s receipt thereof, a copy of all management reports and management
letters prepared for Chapeau by any independent certified public accountants of
Chapeau.

     

    (g)        Promptly
after filing, a copy of each federal and state income tax return filed by
Chapeau.

     

    (h)        Such
additional information as the Company may from time to time reasonably request
regarding the financial and business affairs of Chapeau or any of its
Subsidiary.

     

    Section
7.6       Notification to the
Company.  Chapeau shall notify the Company in writing
immediately (a) after becoming aware of any Default or Event of Default, or if
Chapeau reasonably expects that any Default or Event of Default will occur, (b)
after becoming aware of any event or circumstance, including without limitation
any pending or threatened action, suit or claim by any Person, any pending or
threatened investigation by a Governmental Authority or any violation of any
requirement of Law, that would be treated as a contingent liability of Chapeau
under GAAP and is in an amount in excess of $250,000 or would be reasonably
expected to result in a Material Adverse Effect and (c) immediately if its board
of directors or other governing body authorizes the filing by Chapeau of a
petition in bankruptcy.  Each notice given shall describe the subject
matter thereof in reasonable detail and specify the action that Chapeau or its
Subsidiary, as applicable, has taken or proposes to take with respect
thereto.

     

    Section
7.7       Collateral
Locations.  Except for Inventory in transit to Chapeau in the
Ordinary Course of Business, Chapeau will not maintain any Collateral at any
location other than those locations listed on Schedule 7.7 unless
it gives the Company at least thirty (30) days’ prior written notice thereof
(with the delivery of each Turnkey Information Package constituting prior
written notice with respect to any Collateral to be installed and maintained at
such Future Turnkey Project site) and delivers or causes to be delivered to the
Company all documents that the Company reasonably requests in connection
therewith, including without limitation, in the case of any leased location, an
access and waiver agreement, signed by the owner of such location, in form and
substance reasonably satisfactory to the Company.

     

    Section
7.8       Use of
Proceeds.  Chapeau will not use any proceeds of the Loan,
directly or indirectly, for any purpose other than (a) on the Agreement Date, to
pay transactional fees, costs and expenses incurred in connection with the
Transaction Documents, (b) on the Agreement Date and thereafter, for working
capital in connection with the growth and expansion of the Business and (c)
those items listed on Schedule
7.8.  Chapeau will not use any proceeds of the Loan, directly
or indirectly, to purchase or carry margin stock, repay or otherwise refinance
indebtedness incurred to purchase or carry margin stock or to extend credit for
the purpose of purchasing or carrying any margin stock.

     

    

    
      
        
           

        

        
          32

          
            

          

        

        
           

        

      

    

    

    Section
7.9       Business.  Chapeau
will not engage, directly or indirectly, in any line of business other than the
energy and energy management business.

     

    Section
7.10     Liens.  Neither
Chapeau nor its Subsidiary shall create, incur, assume, or permit to exist any
Lien on any property now owned or hereafter acquired by any of them, except
Permitted Liens.

     

    Section
7.11     Accounts.  If
Chapeau becomes aware of any matter adversely affecting the collectability of
any Account involving an amount greater than $250,000, including information
regarding the Account Debtor’s creditworthiness, Chapeau will promptly so advise
the Company.  Chapeau will promptly notify the Company of all disputes
and claims in excess of $250,000 with respect to any Account
Debtor.  No material discount, credit or allowance shall be granted to
any such Account Debtor without the Company’s prior written consent.

     

    Section
7.12     Inventory.  Inventory
shall be held for sale in the Ordinary Course of Business, and is and will be
fit for such purpose.  Chapeau will keep the Inventory in good and
marketable condition, at its own expense.

     

    Section
7.13     Equipment.   All
Equipment will be used or held for use in the Ordinary Course of Business and
shall be maintained in good operating condition and repair, ordinary wear and
tear excepted.  Current maintenance records will be maintained on all
Equipment and made available to the Company upon request.  Chapeau
will not alter or remove any identifying symbol or number on any
Equipment.

     

    Section
7.14     Insurance.  Chapeau
shall keep and maintain adequate insurance with respect to the Business and all
Collateral, written by insurers reasonably acceptable to the
Company.  Such insurance shall be with respect to loss, damages, and
liability of amounts acceptable to the Company and shall include, at minimum,
business interruption, workers compensation, general premises liability, fire,
theft, casualty and all risk.  Chapeau will make timely payment of all
premiums required to maintain such insurance in force.  Chapeau shall
cause the Company to be an additional insured and loss payee under all policies
of insurance covering any of the Collateral, to the extent of the Company’s
interest, in form reasonably satisfactory to the Company.  All
insurance proceeds received from any casualty to any of the Collateral shall
either be (a) used to replace such damaged Collateral or (b) paid to the Company
and shall be applied in reduction of the Secured Obligations unless otherwise
agreed by the Company.  Chapeau shall deliver copies of each insurance
policy to the Company upon request.

     

    Section
7.15     Disposition of
Property.  Neither Chapeau nor its Subsidiary will transfer,
sell, assign, lease or otherwise dispose of any of its property, or agree to do
any of the foregoing, except (a) the use of money or cash equivalents, not
constituting proceeds of Collateral, in the Ordinary Course of Business and in a
manner that is not prohibited by this Agreement, (b) sale of Inventory in the
Ordinary Course of Business and (c) sale or other disposition of Equipment in
the Ordinary Course of Business that is obsolete or no longer useable in the
Business.

     

    

     

    

    
      
        
           

        

        
          33

          
            

          

        

        
           

        

      

    

    

    Section
7.16     Sale and Leaseback.
Neither Chapeau nor its Subsidiary shall directly or indirectly enter into any
arrangement with any Person providing for Chapeau or such Subsidiary to lease or
rent property that Chapeau or such Subsidiary has sold or will sell or otherwise
transfer to such Person.

     

    Section
7.17     Distributions.
Neither Chapeau nor its Subsidiary shall directly or indirectly declare or make,
or incur any liability to make, any Distribution, except Distributions to
Chapeau by its Subsidiary.

     

    Section
7.18     Restricted
Investments.  Neither Chapeau nor its Subsidiary shall make any
Restricted Investment.

     

    Section
7.19     Guaranties.  Neither
Chapeau nor its Subsidiary shall make, issue or be or become liable on any
Guaranty, except in favor of the Company.

     

    Section
7.20     Indebtedness.  Neither
Chapeau nor its Subsidiary shall incur or maintain any Indebtedness, other than
(a) the Note, (b) trade payables and contractual obligations to suppliers and
customers arising in the Ordinary Course of Business, (c) Indebtedness described
on Schedule
7.20 and (d) Indebtedness arising in respect of any Turnkey Project not
purchased by the Company, so long as the terms of such Indebtedness are
reasonably acceptable to the Company and do not include any Liens on any of the
existing Collateral.

     

    Section
7.21     Transactions with
Affiliates.    Except as otherwise contemplated by
this Agreement, Chapeau will not engage in any transaction with any Affiliate
except in the Ordinary Course of Business and in amounts and upon terms no less
favorable to Chapeau than would be obtained in a comparable arm’s-length
transaction with a Person who is not an Affiliate.

     

    Section
7.22     New
Subsidiaries.  Chapeau shall not, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary other than those
listed on Schedule
7.22.

     

    Section
7.23     Financial
Covenants.  At such time as Chapeau has positive operating cash
flow, the Parties shall negotiate in good faith standard and customary financial
covenants for inclusion in this Article 7, such covenants to include without
limitation, debt service and tangible net worth tests.

     

    Section
7.24     Subordinated
Indebtedness.  Chapeau will not make any payment on account of
subordinated Indebtedness unless and except (a) to the extent such payment is
expressly permitted by the terms of a subordination agreement reasonably
acceptable to the Company applicable to such Indebtedness or (b) such
subordinated indebtedness is outstanding as of the Initial Closing Date and is
otherwise disclosed on Schedule
7.19.

     

    Section
7.25     Further
Assurances.  Chapeau shall execute and deliver, or cause to be
executed and delivered, to the Company such documents and agreements, and shall
take or cause to be taken such actions, as the Company may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents.

     

    

    

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

    

    ARTICLE
VIII

    

    EVENTS OF
DEFAULT

     

    Section
8.1       Events of
Default.  Each of the following shall constitute an “Event of
Default” under this Agreement:

     

    (a)        any
failure by Chapeau to timely pay any amount due under the Note within five (5)
Business Days of its due date;

     

    (b)        any
representation or warranty made by Chapeau in this Agreement or any other
Transaction Document or any financial statement furnished by Chapeau to the
Company shall prove to be untrue in any material respect as of the date on which
made or furnished, provided that, Chapeau shall have thirty (30) days from the
date of its actual knowledge of the breach of such representation or warranty to
cure such breach if such breach is capable of a cure;

     

    (c)        any
material noncompliance or material breach of any requirement contained
in;

     

    (i)        Article
VII, and such failure continues for a period of ten (10) days after the earlier
of Chapeau’s actual knowledge thereof or written notice thereof by the Company
to Chapeau;

     

    (ii)       any
other provision of this Agreement, and such failure continues for a period of
thirty (30) days after the earlier of Chapeau’s actual knowledge thereof or
written notice thereof by the Company to Chapeau;

     

    (d)        Chapeau
or its Subsidiary shall (i) file a voluntary petition in bankruptcy or otherwise
commence any action or proceeding seeking reorganization, arrangement or
readjustment of its debts, or consent to or acquiesce in any such petition,
action or proceeding; (ii) apply for or acquiesce in the appointment of a
receiver, assignee, liquidator, custodian, trustee or similar officer for it or
for all or any part of its property; (iii) make an assignment for the benefit of
creditors; or (iv) be unable generally to pay its debts as they become
due;

     

    (e)        an
involuntary petition shall be filed or an action or proceeding otherwise
commenced seeking relief under the Bankruptcy Code or seeking any
reorganization, arrangement, consolidation or readjustment of the debts of
Chapeau or its Subsidiary under any other bankruptcy or insolvency
law;

     

    (f)         a
receiver, assignee, liquidator, custodian, trustee or similar officer shall be
appointed for Chapeau or its Subsidiary;

     

    (g)        Chapeau
or its Subsidiary shall file a certificate of dissolution or shall be
liquidated, dissolved or wound-up or shall commence or have commenced against it
any action or proceeding for dissolution, winding-up or liquidation, or shall
take any action in furtherance thereof;

     

    

     

    

    
      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    

    

    (h)        Default
shall occur with respect to any indebtedness for borrowed money (other than the
Secured Obligations) of Chapeau or its Subsidiary in an outstanding principal
amount which exceeds $500,000 and which indebtedness Chapeau does not reasonably
dispute in good faith, and such default shall continue for more than the period
of grace, if any, therein with respect thereto, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to accelerate,
or to permit the holder of any such Indebtedness to accelerate, the maturity of
any such Indebtedness, or any such Indebtedness shall be declared due and
payable or be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;

     

    (i)         one
or more final, non-appealable judgments, orders, decrees or arbitration awards
is entered against Chapeau involving in the aggregate liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) of $500,000 or more and such liability has not been
satisfied within fifteen (15) days of such final, non-appealable
event;

     

    (j)         the
filing or commencement of any attachment, sequestration, garnishment, execution
or other Lien (other than Permitted Liens) or action against or with respect to
any Collateral that would be reasonably expected to have a Material Adverse
Effect;

     

    (k)        any
Loan Document ceases to be in full force and effect or any Lien with respect to
any material portion of the Collateral intended to be secured thereby ceases to
be, or is not, valid, perfected (for any reason other than the failure of the
Company to file a financing statement or continuation thereof to maintain
perfection) and prior to all other Liens (other than Permitted Liens) or is
terminated, revoked or declared void, or any Loan Document shall terminate
(other than in accordance with its terms with the written consent of the
Company) or become void or unenforceable, or the validity or enforceability of
this Agreement or any Transaction Document shall be contested by Chapeau, its
Subsidiary or any Affiliate of either Person;

     

    (l)         the
occurrence of any event or circumstance that results in a Material Adverse
Effect.

     

    

    ARTICLE
IX

    

    REMEDIES

    

    
      	
            	
              Section
      9.1

            	
              Obligations.

            

    

     

    (a)        Upon
the occurrence of any Event of Default described in Sections 8.1(d),
8.1(e), 8.1(f) or 8.1(g), this
Agreement shall automatically and immediately terminate and the Note and all
other obligations owed by Chapeau shall automatically become immediately due and
payable without notice or demand of any kind.

     

    

    
      
        
           

        

        
          36

          
            

          

        

        
           

        

      

    

    

    (b)        If
any other Event of Default exists, the Company may do any one or more of the
following, at any time or times and in any order, without notice to or demand on
Chapeau: (i) terminate the Agreement as they relate to the Loan, (ii) declare
the Note and any or all other obligations to be immediately due and payable and
(iii) pursue its other rights and remedies hereunder, under the Note or
otherwise under applicable Law.

     

    Section
9.2       Collateral.  If
an Event of Default has occurred and is continuing, the Company shall have, in
addition to all other rights of the Company, the rights and remedies of a
secured party under the UCC.  At any time when an Event of Default is
in existence: (i) the Company may notify Account Debtors to make payment
directly to the Company, or to such address as the Company may specify, and
enforce, settle or adjust Accounts General Intangibles or Chattel Paper with
Account Debtors or obligors thereon for amounts and upon terms which the Company
considers appropriate, and in such case, the Company will credit the Secured
Obligations with only the net amounts received by the Company in payment thereof
after deducting all the Company Expenses incurred or expended in connection
therewith; (ii) the Company may take possession of the Collateral and keep it on
Chapeau’s premises or remove all or any part of it to another location selected
by the Company; (iii) on request by the Company, Chapeau will, at Chapeau’s
cost, assemble the Collateral and make it available to the Company at a place
reasonably convenient to the Company; and (iv) the Company may sell or otherwise
dispose of any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Company deems appropriate
in its sole and absolute discretion.  Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the Company will give Chapeau reasonable notice of
the time and place of any public sale thereof or of the time after which any
private sale or any other intended disposition thereof is to be
made.  For this purpose, it is agreed that at least five (5) Business
Days notice of the time of sale or other intended disposition of the Collateral
delivered in accordance with Section 11.1 shall be
deemed to be reasonable notice in conformity with the UCC.  The
Company may adjourn or otherwise reschedule any public sale by announcement at
the time and place specified in the notice of such public sale, and such sale
may be made at the time and place as so announced without necessity of further
notice.  The Company shall not be obligated to sell or dispose of any
Collateral, notwithstanding any prior notice of intended
disposition.  If any Collateral is sold on terms other than payment in
full at the time of sale, no credit shall be given in reduction of the Secured
Obligations until the Company receives payment in cash, and if any such buyer
defaults in payment, the Company may resell the Collateral without further
notice to Chapeau.  If the Company seeks to take possession of all or
any portion of the Collateral by judicial process, Chapeau waives the posting of
any bond, surety or security with respect thereto that might otherwise be
required. Chapeau agrees that the Company has no obligation to preserve rights
to the Collateral or to marshal any Collateral for the benefit of any Person.
The Company is hereby granted a license or other right to use, without charge,
Chapeau’s labels, patents, copyrights, name, trade secrets, trade names,
trademarks in completing production of, advertising or selling any Collateral,
and Chapeau’s rights under all licenses shall inure to the Company’s benefit for
such purpose.  The proceeds of any sale or disposition of Collateral
shall be applied first to all expenses of sale, including reasonable attorneys’
fees, and then to the Secured Obligations.  Chapeau shall remain
liable for any deficiency.

     

    

     

    

    
      
        
           

        

        
          37

          
            

          

        

        
           

        

      

    

    

    Section
9.3       Injunctive
Relief.  Following an Event of Default and during the
continuance thereof, all cash proceeds of Collateral from time to time existing,
including without limitation collections and payments of Accounts, whether
consisting of cash, checks or other similar items, at all times shall be subject
to an express trust for the benefit of the Company.  All such proceeds
shall be subject to the Company’s Liens.  Except as may be
specifically allowed otherwise by this Agreement, Chapeau is expressly
prohibited from using, spending, retaining or otherwise exercising any dominion
over such proceeds following an Event of Default and during the continuance
thereof.  Chapeau acknowledges and agrees that an action for damages
against Chapeau for any breach of such prohibitions shall not be an adequate
remedy at law.  In the event of any such breach, Chapeau agrees to the
fullest extent allowed by law that the Company shall be entitled to injunctive
relief to restrain such breach and require compliance with the requirements of
this Agreement.

     

    Section
9.4       Setoff.  Chapeau
irrevocably authorizes the Company to charge any account of Chapeau maintained
with the Company with such amount as may be necessary from time to time to pay
any of the Secured Obligations when due.  Chapeau agrees that the
Company shall have a contractual right to setoff any and all deposits or other
sums at any time credited by or due from the Company to Chapeau against any part
of the Secured Obligations.

     

    ARTICLE
X

    

    INDEMNIFICATION

    

    Section
10.1     Survival.  The
representations and warranties set forth in this Agreement shall survive the
Closing through and including the date that the Secured Obligations have been
paid in full.  

     

    Section
10.2     Indemnification. 

     

    (a)        Subject
to the other provisions of this Article X, Chapeau hereby agrees, to the fullest
extent permitted by applicable Law, to indemnify, defend and hold harmless the
Company, as appropriate, from, against and in respect of any Losses incurred or
suffered by the Company arising out of, in connection with or relating
to:

     

    (i)       Any
failure of the representations and warranties of Chapeau in this Agreement to be
true and correct in all material respects as of the Initial Closing Date;
and

     

    (ii)      Any
failure of Chapeau to perform in all material respects any of its covenants or
obligations contained in this Agreement.

     

    (b)        Chapeau
shall not be required to indemnify the Company to the extent of any Loss that a
court of competent jurisdiction shall have determined by final judgment to have
resulted from the bad faith or willful misconduct of the Company.

     

    (c)        Notwithstanding
anything to the contrary elsewhere in this Agreement, no party shall, in any
event, be liable to any other Person for any consequential, incidental,
indirect, special or punitive damages of such other Person, including any loss
of revenue, income or profits, diminution of value or loss of business
reputation or opportunity arising out of or relating to the breach or alleged
breach hereof, except to the extent any such damages are required to be paid
pursuant to a third party claim determined by final judgment by a court of
competent jurisdiction.

     

    

    
      
        
           

        

        
          38

          
            

          

        

        
           

        

      

    

    

    Section
10.3     Indemnification
Procedures. 

     

    (a)        Any
Person against whom indemnification is sought pursuant to the provisions of
Section 10.2 shall be referred to as an “Indemnifying Party”,
and any Person seeking to be indemnified pursuant to the provisions of Section
10.2 shall be referred to as an “Indemnified Party”.

     

    (b)        If
an Indemnified Party determines that it has a claim for Losses against an
Indemnifying Party under Section 10.2 (other than as a result of a Third Party
Claim), the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, which notice shall describe in reasonable detail the nature
of the claim, an estimate of the amount of Losses attributable to such claim to
the extent feasible and the basis of the Indemnified Party’s request for
indemnification under Section 10.2.  If the Indemnifying Party
disputes such claim or the amount of Losses attributable to such claim and such
dispute is not resolved by the parties, such dispute shall be resolved in
accordance with Section 10.3(c) below.

     

    (c)        If
an Indemnified Party is notified of a claim of a third party (each such claim, a
“Third Party
Claim”) which may give rise to a claim for indemnification against an
Indemnifying Party under Section 10.2, then the Indemnified Party shall promptly
notify such Indemnifying Party thereof in writing (including copies of all
papers served with respect to such Third Party Claim), which notice shall
describe in reasonable detail the nature of the Third Party Claim, an estimate
of the amount of Losses attributable to the Third Party Claim to the extent
feasible and the basis of the Indemnified Party’s request for indemnification
under Section 10.2; provided however, that the failure to notify an Indemnifying
Party shall not relieve the Indemnifying Party of its obligations hereunder
unless and to the extent the Indemnifying Party shall be actually and materially
prejudiced by such failure to so notify.  Any Indemnifying Party shall
be entitled to participate in the defense of such Third Party Claim giving rise
to an Indemnified Party’s claim for indemnification at such Indemnifying Party’s
expense, and at its option (subject to the limitations set forth below) shall be
entitled to assume the defense thereof by appointing a reputable counsel
reasonably acceptable to the Indemnified Party to be the lead counsel in
connection with such defense; provided further, that, as a condition precedent
to Indemnifying Party assuming the defense of such claim, Indemnifying Party
must first agree in writing to be responsible for all Losses arising therefrom
(subject to the limitations in Section 10.2, as applicable) without any
reservations of rights, defenses or similar claims to provide full
indemnification for such Losses and demonstrate that, after giving effect to the
application of the limitations in Section 10.2, as applicable, Indemnifying
Party is reasonably likely to be responsible for a greater portion of the Losses
than Indemnified Party; provided, further,
that:

     

    (i)       the
Indemnified Party shall be entitled to participate at its own expense in the
defense of such claim and to employ counsel of its choice for such
purpose;

     

    (ii)      the
Indemnified Party shall cooperate in good faith with the Indemnifying Party and
its counsel in the defense or compromise of any claims;

     

    

    
      
        
           

        

        
          39

          
            

          

        

        
           

        

      

    

    

    (iii)      the
Indemnified Party (and not the Indemnifying Party) shall be entitled to assume
control of such defense and the Indemnifying Party shall pay the fees and
expenses of counsel retained by the Indemnified Party if (i) the claim for
indemnification relates to or arises in connection with any criminal proceeding,
action, indictment, allegation or investigation; (ii) the claim seeks an
injunction or equitable relief against the Indemnified Party; (iii) a conflict
of interest exists between the Indemnifying Party and the Indemnified Party;
(iv) an adverse outcome of the claim could reasonably be expected to have a
Material Adverse Effect on the Indemnified Party or its business; or (v) the
Indemnifying Party failed or is failing to vigorously prosecute or defend such
claim; and

     

    (iv)     if
the Indemnifying Party shall control the defense of any such claim, the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (not to be unreasonably withheld) before entering into any settlement of a
Proceeding.

     

    (d)        For
the avoidance of doubt, the defense of any claim includes the obligation to post
all appeal bonds, securities, guaranties or similar obligations in connection
with such claim or Third Party Claim related thereto.

     

    (e)        After
any final decision, judgment or award shall have been rendered by a Governmental
Body of competent jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the Indemnified Party
and the Indemnifying Party shall have arrived at a mutually binding agreement,
in each case with respect to any Third Party Claim hereunder, the Indemnified
Party shall forward to the Indemnifying Party notice of any sums due and owing
by the Indemnifying Party pursuant to this Agreement with respect to such matter
and the Indemnifying Party shall pay all of such remaining sums so due and owing
to the Indemnified Party by wire transfer of immediately available funds within
five Business Days after the date of such notice.

     

    Section
10.4    Calculation of Losses; Tax
Treatment of Payments.  The amount of any Losses for which
indemnification is provided under this Article X shall be net of any amounts
actually recovered or recoverable by the Indemnified Party under insurance
policies or otherwise with respect to such Losses, including under implied or
express warranties, financial guarantees or other assurances, under contractual
indemnification rights with respect to third parties or as a result of tax
benefits (net of expenses incurred in connection with such
recovery).  The Indemnified Party shall use its commercially
reasonable efforts to recover under insurance policies for any Losses prior to
seeking indemnification under this Agreement.

     

    ARTICLE
XI

     

    MISCELLANEOUS

     

    Section
11.1     Notices.  Any
notice, demand or other communication required or permitted to be given or made
hereunder shall be in writing and shall be delivered personally or by courier
during normal business hours on a Business Day at the relevant address set forth
below, or sent by facsimile or other means of recorded electronic communication
(provided such transmission is confirmed), in the case of:

     

    

    
      
        
           

        

        
          40

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              (a)

            	
              Chapeau,
      addressed as follows:

            

    

    

    1190
Suncast Lane, Suite 2

    El Dorado
Hills, California 95762

    Attention:
Guy A. Archbold

    Facsimile:
(916) 939-8705

    

    with a
copy to:

    Manatt,
Phelps & Phillips, LLP

    11355
West Olympic Boulevard

    Los
Angeles, California 90064

    Attention:  T.
Hale Boggs, Esq.

    Facsimile:  (650)
213-0288

    

    
      	
               
      

            	
              (b)

            	
              the
      Company, addressed as follows:

            

    

    

    TEFCO,
LLC

    c/o Mark
K. Mason

    2260
Huntley Circle

    San
Marino, CA 91108

    

    with
copies to:

    

    Gordon V.
Smith

    8401
Greensboro Drive, Suite 300

    McLean,
VA 22102-3598

    

    and

    

    Timothy
F. Silvestre

    Strategic
Law Partners, LLP

    500 South
Grand Ave., Suite 2050

    Los
Angeles, CA 90071

    Fax—(213)
213-7301

    

    Any
notice, demand or other communication so given shall be deemed to have been
given or made and received on the day of hand delivery, and on the next day
following its being sent by facsimile or other means of recorded electronic
communication, with confirmation of delivery received (provided such day is a
Business Day and, if not, on the first Business Day thereafter).  Each
party may from time to time change its address for notice by giving notice to
the other given in the manner aforesaid.

     

    
      	
            	
              Section
      11.2

            	
              Reserved.
      

            

    

     

    

    
      
        
           

        

        
          41

          
            

          

        

        
           

        

      

    

    

    Section
11.3     Amendments;
Waiver.  This Agreement may be amended, modified, or
supplemented only pursuant to a written instrument making specific reference to
this Agreement and signed by each of the parties hereto.  No waiver of
any provision hereof, or consent required hereunder, or any consent or departure
from this Agreement, shall be valid or binding unless expressly and
affirmatively made in writing and duly executed by the party to be charged with
such waiver.  No waiver shall constitute or be construed as a
continuing waiver or a waiver in respect of any subsequent default, either of
similar or different nature, unless expressly so stated in such
writing.

     

    Section
11.4     Assignment.  No
assignment of this Agreement or of any rights or obligations hereunder may be
made by any party hereto, directly or indirectly (by operation of law or
otherwise), without the prior written consent of the other parties
hereto.  Any assignment by any party hereto in violation of this
Section 11.4 shall be null and void ab initio.

     

    Section
11.5     Binding
Effect.  This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors, and permitted assigns.

     

    Section
11.6     Entire
Agreement.  This Agreement, including the Schedules and Annexes
hereto, and the other Transaction Documents constitute the entire agreement of
the parties with respect to the subject matter hereof, and upon execution
hereof, the Original Agreement shall be amended and restated in its entirety to
read as set forth herein.

     

    Section
11.7     No Third-Party
Beneficiaries.  Nothing express or implied in this Agreement is
intended or shall be construed to confer upon or give any person other than the
parties hereto and their respective heirs, successors, and permitted assigns any
right, benefits, or remedy under or by reason of this Agreement.

     

    Section
11.8     Specific
Performance.  The parties recognize the unique nature of the
obligations of each party hereunder and therefore agree that each party shall be
entitled to specific performance of the obligations of the other parties set
forth in this Agreement.

     

    Section
11.9     Severability.  If
any provision of this Agreement or the application of such provision to any
person or circumstance shall be held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable under the applicable Law of any jurisdiction,
(i) the remainder of this Agreement or the application of such provisions to
other persons or circumstances or in other jurisdictions shall not be affected
thereby, (ii) such invalid, illegal, or unenforceable provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such Law, and (iii) such invalid, illegal, or
unenforceable provision shall not affect the validity or enforceability of any
other provision of this Agreement.

     

    Section
11.10   Governing Law;
Jurisdiction.  This Agreement, and all claims or causes of
action) (whether in contract or tort) that may be based upon, arise out of or
relate to this Agreement or the negotiation, execution or performance of this
Agreement shall be governed by, and construed under and in accordance with, the
internal Laws of the State of Virginia (without regard to conflict of laws
principles thereof).  Each party to this Agreement hereby irrevocably
and unconditionally (i) agrees that any suit, action or proceeding against it by
any other party to this Agreement with respect to this Agreement shall be
instituted only in Fairfax County, Virginia; (ii) consents and submits, for
itself and its property, to the jurisdiction of such courts for the purpose of
any such suit, action or proceeding instituted against it by the other parties
prior to the Closing; (iii) agrees that a final judgment in any such suit,
action or proceeding instituted against it by the other parties shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law; and (iv) waives the right to a jury trial
in any such suit, action or proceeding instituted against it by the other
parties.

     

    

    
      
        
           

        

        
          42

          
            

          

        

        
           

        

      

    

    

    Section
11.11   Arbitration. Except as otherwise
mutually agreed to by the parties thereto, any claim, dispute, or controversy of
whatever nature arising out of or relating to this
Agreement,  including, without limitation, any action or claim based
on tort, contract, or statute or concerning the interpretation, effect,
termination, validity, performance, and/or breach of this Agreement (“Claim”),
shall be resolved by final and binding arbitration before one (1) arbitrator
(the “Arbitrators”)
selected from and administered by JAMS in accordance with its then existing
arbitration rules or procedures regarding commercial or business
disputes.  The arbitration shall be held in Los Angeles County,
California.

     

    (a)        Depositions
may be taken and full discovery may be obtained in any arbitration commenced
under this provision.

     

    (b)        The
Arbitrator shall, within fifteen (15) calendar days after the conclusion of the
arbitration hearing, issue a written award and statement of decision describing
the essential findings and conclusions on which the award is based, including
the calculation of any damages awarded.  The Arbitrator shall be
authorized to award compensatory damages, but shall not be authorized (i) to
award non-economic damages, such as for emotional distress, pain and suffering,
or loss of consortium, (ii) to award punitive damages, or (iii) to reform,
modify, or materially change this Agreement or any other agreements contemplated
hereunder, provided that the damage
limitations described in parts (i) and (ii) of this sentence will not apply if
such damages are statutorily authorized.  The Arbitrator also shall be
authorized to grant any temporary, preliminary, or permanent equitable remedy or
relief he or she deems just and equitable and within the scope of this
Agreement, including, without limitation, an injunction or order for specific
performance.

     

    (c)        Each
party shall bear its own attorney’s fees, costs, and disbursements arising out
of the arbitration and shall pay an equal share of the fees and costs of the
Arbitrator, provided that the Arbitrator shall be
authorized to determine whether a party is the prevailing party, and if so, to
award to that prevailing party reimbursement for its reasonable attorneys’ fees,
costs and disbursements (including, for example, expert witness fees and
expenses, photocopy charges, travel expenses, etc.), and/or the fees and costs
of the Arbitrator.  Each party shall fully perform and satisfy the
arbitration award within 15 days of the service thereof.

     

    (d)        By
agreeing to this binding arbitration provision, the parties understand that they
are waiving certain rights and protections which may otherwise be available if a
Claim between the parties were determined by litigation in court, including,
without limitation, the right to seek or obtain certain types of damages
precluded by this paragraph 15.6, the right to a jury trial, certain rights of
appeal, and a right to invoke formal rules of procedure and
evidence.

     

    

     

    

    
      
        
           

        

        
          43

          
            

          

        

        
           

        

      

    

    

    Section
11.12   Counterparts.  This
Agreement may be executed in multiple counterparts, each of which when so
executed and delivered shall be an original, and all of which when taken
together shall constitute one and the same instrument.

     

    Section
11.13   No
Presumption.  This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the
party drafting or causing any instrument to be drafted.

     

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        
           

        

        
          44

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have
duly executed this Agreement as of the date first written above.

     

    CHAPEAU,
INC.

     

     

    
      	
              By:

            	
              /s/ Guy
      A. Archbold

            

    

    
      	
            	
              Name:

            	
              Guy
      A. Archbold

            

    

    
      	
               
      

            	
              Title:

            	
              Chief
      Executive Officer

            

    

     

    

     

    
      TEFCO,
LLC

    

     

    

     

    
      	
              By:

            	
              /s/ Mark
      Mason

            

    

    
      	
            	
              Name:

            	
              Mark
      Mason

            

    

    
      	
               
      

            	
              Title:

            	
              Manager

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]