-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DsoGE89PCi13cvc19kc2IdjqyPl7RxQevv71w4zYFezRDiW1b6QCX7aTpW/z7Ikk NPD65A66+iHLjUaIc9lu8w== 0001019687-08-003439.txt : 20080806 0001019687-08-003439.hdr.sgml : 20080806 20080806154016 ACCESSION NUMBER: 0001019687-08-003439 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080731 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080806 DATE AS OF CHANGE: 20080806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Alderox, Inc. CENTRAL INDEX KEY: 0001100091 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 840703717 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29881 FILM NUMBER: 08994800 BUSINESS ADDRESS: STREET 1: 940 CALLE AMANECER SUITE E CITY: SAN CLEMENTE STATE: CA ZIP: 92673 BUSINESS PHONE: 9496090590 MAIL ADDRESS: STREET 1: 940 CALLE AMANECER SUITE E CITY: SAN CLEMENTE STATE: CA ZIP: 92673 FORMER COMPANY: FORMER CONFORMED NAME: RECLAMATION CONSULTING & APPLICATIONS INC DATE OF NAME CHANGE: 20050627 FORMER COMPANY: FORMER CONFORMED NAME: RECLAIMATION CONSULTING & APPLICATIONS INC DATE OF NAME CHANGE: 20020529 FORMER COMPANY: FORMER CONFORMED NAME: RECYCLING CENTERS OF AMERICA INC DATE OF NAME CHANGE: 20000228 8-K 1 alderox_8k-073108.txt CURRENT REPORT ON FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 31, 2008 ALDEROX, INC. (Exact name of registrant as specified in its charter) Colorado 000-26017 58-2222646 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 940 Calle Amanecer Suite E San Clemente, California 92673 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (949) 542-7440 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Alderox, Inc. ("we", "us" or the "Company") files this report on Form 8-K to report the following: ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT OMNIBUS AMENDMENT On July 31, 2008 we entered into a Second Omnibus Amendment (the "Second Omnibus Amendment") with Pala Investments Holdings Limited ("Pala") that amended the terms of a Secured Convertible Debenture (the "Debenture") and related agreements entered into on December 12, 2007, as such agreements had been amended by the Omnibus Amendment entered into on March 28, 2008 (the "First Omnibus Amendment"). The Debenture and the First Omnibus Amendment were previously disclosed respectively on a Current Report on Form 8-K dated December 12, 2007 and a Current Report on Form 8-K dated March 27, 2008. As amended by the First Omnibus Amendment, the Debenture provided for us to receive $7,500,000 in three tranches: o a first tranche of $3,000,000 which funded in December 2007, o a second tranche of $2,000,000 which we are entitled to receive if we met certain performance benchmarks by December 31, 2008, or which may otherwise be provided at Pala's discretion, and o a third tranche of $2,500,00 which funded in March 2008. The Second Omnibus Amendment provides for two additional tranches: o a fourth tranche of $700,000 which funded on August 5, 2008, and o a fifth tranche of $300,000, subject to Pala's approval. The Debenture carries interest of 12% per annum, compounding quarterly, matures on December 11, 2010 (the "Maturity Date") and is secured by substantially all of our assets. In connection with the funding of the first and third tranches, Pala received warrants for the purchase of 5,500,000 shares of common stock. Pala is also entitled to warrants for the purchase of 2,000,000 shares of common stock on the funding of the second tranche. Pala and its affiliated companies together have over 1.7 billion dollars under management and focus on investing in the mining and natural resources sector. Pala is based in Jersey in the United Kingdom. Its exclusive advisor, Pala Investments AG, is based in Zug, Switzerland. 2 FOURTH TRANCHE Under the Second Omnibus Amendment, the maximum amount to which we may receive under the Debenture was raised to $8,500,000 and we immediately received the fourth tranche of $700,000 in funding pursuant to the Debenture. The principal and interest of the third tranche are convertible into shares of our common stock at a conversion price of $0.13 per share. As is the case with the first and second tranches, the conversion price is subject to proportional adjustment for any forward or reverse stock splits or for the distribution of any share dividends. Pala's conversion rights commence on the effective date of our planned Share Reorganization (as described below) and continue until the Maturity Date. In connection with the third tranche, Pala received warrants for the purchase of 700,000 shares of our common stock. These warrants have a term of three years and an exercise price of $0.42 per share. FIFTH TRANCHE As amended by the Second Omnibus Amendment, the Debenture allows for us to request a fifth tranche of $300,000 together with information regarding the Company's cash flows and the reasons for such request. The funding of the fifth tranche is subject to Pala's approval. The fifth tranche may be used only to finance the fulfillment of contracted sales and may not used to finance operating losses or general administrative expenditures. On the funding of the fifth tranche, Pala is to receive warrants for the purchase of 300,000 shares of our common stock. Such warrants are to have a term of three years and an exercise price of $0.42 per share. NEW CONVERSION PRICE Pursuant to the Second Omnibus Amendment, and in consideration of Pala providing us with the fourth tranche, all tranches under Debenture, are now convertible into shares of our common stock at a conversion price of $0.13 per share. Prior to our entry into the Second Omnibus Amendment, the first tranche had a conversion price of $0.28 per share and the second and third tranches had a conversion price of $0.14 per share. EBITDA AND DEBT RATIO REQUIREMENTS The Second Omnibus Amendment added EBITDA and debt ratio requirements to the Debenture. Our summary of these provisions is qualified by the full text of these provisions contained in the Exhibits accompanying this Current Report. Our consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) must be less than zero in the month ended January 31, 2009 and in the fiscal quarter ended March 31, 2009. 3 Additionally, commencing with the period listed below ending June 30, 2009 we must meet the following Leverage ratios of consolidated total debt to consolidated adjusted EBITDA: =============================================== ======================= PERIOD LEVERAGE RATIO ----------------------------------------------- ----------------------- Two Fiscal Quarters ended 6/30/09 20.00 :1.00 Three Fiscal Quarters ended 9/30/09 10.00 :1.00 Four Fiscal Quarters ended 12/31/09 5.00 :1.00 Four Fiscal Quarters ended 3/31/10 4.00 :1.00 Four Fiscal Quarters ended 6/30/10 4.00 :1.00 Four Fiscal Quarters ended 9/30/10 3.00 :1.00 =============================================== ======================= These requirements generally mean that we must: o achieve a positive EBITDA by January 2009, and o from January 2009 through September 2010, our ratio of debt to EBITDA must decrease sharply. We can offer no assurance that we will be able to meet these requirements. In the event we fail to meet these requirements, we will be in material breach of the Debenture and Pala would be able to accelerate the Debenture and foreclose on substantially all of our assets. OTHER PROVISIONS A promissory note was issued for the fourth tranche. The Registration Rights Agreement was amended to provide for all shares underlying the warrants received in connection with the fourth and fifth tranches or received on the conversion of the fourth or fifth tranche to have the registration rights provided by this agreement. The Security Agreement was amended to clarify that the fourth and fifth tranches are secured by all of our assets. USE OF PROCEEDS FROM FOURTH TRANCHE We plan to use the proceeds of the fourth tranche to fund or operating expenses. To the extent Pala does not convert the Debenture and we are unable to repay the Debenture from our revenues, we will need additional capital to make the interest and principal payments due under the Debenture. We can offer no assurance that we will be able to raise all or any portion of the funds necessary to repay Pala on terms favorable to us or at all. 4 SALE OF UNREGISTERED SECURITIES The securities receivable by Pala, pursuant to the Debenture have been offered and sold to Pala in reliance upon exemptions from registration pursuant to Regulation S and Regulation D promulgated under the Securities Act of 1933, as amended. Pala is a non-U.S. person as defined in Rule 502 of Regulation S and an accredited investor as defined by Rule 501 of Regulation D. EXHIBITS Copies of the Omnibus Amendment and its associated warrant certificate and promissory note are attached as Exhibits 4.1 through 4.3, respectively, to this Current Report. The foregoing summary of these documents is qualified in its entirety by the complete text of the documents. CONSULTING AGREEMENT Pursuant to the First Omnibus Amendment, we agreed to enter into a two-year consulting agreement with Melior AG, an indirect wholly-owned subsidiary of Pala, for the provision of certain management and consultancy services to be described in detail in the final consulting agreement. Melior AG's compensation for the first year of the agreement is to be $200,000, payable in shares of Company stock. For the second year of the agreement, Melior AG's compensation is to be $350,000, payable either in shares of Company stock or cash, at the option of the Company. Payments in stock would be made using a conversion price of $0.14 per share, as proportionately adjusted for any forward or reverse stock splits or share dividends. We have not entered into this consulting agreement yet but expect to enter into it in the near future with an effective date relating back to April 1, 2008. ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT. Our discussion under Item 1.01 of this Current Report is hereby incorporated by this reference. ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES. Our discussion under Item 1.01 of this Current Report is hereby incorporated by this reference. ITEM 8.01 OTHER EVENTS Our discussion under Item 1.01 of this Current Report is hereby incorporated by this reference. 5 ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS Exhibit No. Description - ----------- ----------- 4.1 Second Omnibus Amendment, dated July 31, 2008, between Reclamation Consulting and Applications, Inc. and Pala Investments Holdings Limited. 4.2 Warrant Certificate, dated July 31, 2008, issued to Pala Investments Holdings Limited. 4.3 Promissory Note, dated July 31, 2008, issued to Pala Investments Holdings Limited. SIGNATURES: Pursuant to the requirement of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Alderox, Inc. By: /s/ Michael Davies --------------------- Michael Davies, CEO Dated: August 6, 2008 6 EX-4.1 2 alderox_ex0401.txt SECOND OMNIBUS AMENDMENT EXHIBIT 4.1 SECOND OMNIBUS AMENDMENT THIS SECOND OMNIBUS AMENDMENT (this "Amendment"), dated as of July 31, 2008 (the "Amendment Date"), is made BY AND BETWEEN: PALA INVESTMENTS HOLDINGS LIMITED, of 12 Castle Street, St Helier, Jersey, JE2 3RT (the "Lender"); AND: ALDEROX, INC. (formerly known as Reclamation Consulting and Applications, Inc.), a company organized under the laws of the State of Colorado, of 940 Calle Amanecer, Suite E, San Clemente, CA 92673 (the "Borrower"). WHEREAS, the Lender and the Borrower are parties to a Secured Convertible Debenture, dated as of December 12, 2007 (the "Original Debenture"), pursuant to which the Lender loaned the Borrower Three Million Dollars ($3,000,000) and, under the terms and subject to the conditions set forth therein, provided for the potential further loan of Two Million Dollars ($2,000,000); WHEREAS, pursuant to an Omnibus Amendment, dated as of March 28, 2008 (the "First Omnibus Amendment"), the Lender loaned the Borrower an additional Two and One-half Million Dollars ($2,500,000) (the Original Debenture, as amended by such Omnibus Amendment, the "Debenture"); WHEREAS, in connection with the Debenture, the Lender and the Borrower entered into a Voting and Right of First Refusal Agreement, dated as of December 12, 2007 (the "Voting Agreement"), a Registration Rights Agreement, dated as of December 12, 2007 (as amended by the First Omnibus Amendment, the "Registration Rights Agreement"), and a Patent and Trademark Security Agreement, dated as of December 12, 2007 (as amended by the First Omnibus Amendment, the "Security Agreement"; the Debenture, the Voting Agreement, the Registration Rights Agreement and the Security Agreement are referred to collectively as the "Debenture Agreements"); and WHEREAS, the Lender is willing to lend to the Borrower an additional Seven Hundred Thousand Dollars ($700,000) (the "Fourth Tranche") which shall be extended to the Borrower on the Amendment Date following the mutual execution of this Amendment and an additional Three Hundred Thousand Dollars ($300,000) (the "Fifth Tranche") on a future date, in each case pursuant to the terms and subject to the conditions of the Debenture Agreements, in each case as amended by this Amendment. OMNIBUS AMENDMENT July 31, 2008 Page 1 of 12 NOW, THEREFORE, THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. DEFINITIONS Unless a definition is provided for a capitalized term in this Amendment, each such term shall have the meaning provided to it in the Debenture. 2. INTERPRETATION The provisions of Section 2 of the Debenture shall apply to this Amendment as if set forth herein, in each case with references to "this Agreement" being replaced with "this Amendment." 3. THE AMENDMENTS 3.1 AMENDMENTS TO THE DEBENTURE The follow amendments are hereby made to the Debenture: 3.1.1 For the avoidance of doubt, the term "Principal" in the Debenture shall include the principal amount of the Fourth Tranche and the Fifth Tranche, the indebtedness comprising the Fourth Tranche and the Fifth Tranche shall be included in the term "Loan" in the Debenture, each of the Fourth Tranche Note (as defined below) and the Fifth Tranche Note (as defined below) shall constitute a "Note" under the Debenture and each of the Fourth Tranche Warrant (as defined below) and Fifth Tranche Warrant (as defined below) shall constitute a "Warrant" under the Debenture. 3.1.2 The term "Conversion Price" is amended in its entirety to provide as follows: ""Conversion Price" means, with respect to the Principal amount of the First Tranche, Second Tranche, Third Tranche, Fourth Tranche and Fifth Tranche, $0.13 per share, provided that if Borrower, at any time while the Principal is outstanding, (i) pays a stock dividend on its common stock, (ii) subdivides outstanding shares of common stock into a larger number of shares, or (iii) combines outstanding shares of common stock into a smaller number of shares, then in each such case the applicable Conversion Price shall be adjusted by multiplying (a) such Conversion Price in effect immediately prior to such event, by (b) a fraction of which the numerator shall be the number of shares of common stock outstanding immediately before such event and of which the denominator shall be the number of shares of common stock outstanding immediately after such event;" OMNIBUS AMENDMENT July 31, 2008 Page 2 of 12 3.1.3 Each reference to "Conversion Price" shall refer to the Conversion Price applicable to the relevant Principal amount of the First Tranche, Second Tranche, Third Tranche, Fourth Tranche or Fifth Tranche, as the case may be. 3.1.4 A new Section 6.2.14 of the Debenture is added as follows: "6.1.23 Provide the Lender with a reasonably detailed calculation of the Borrower's compliance or non-compliance with the covenant set forth in Section 6.2.14(a) within 15 days of January 31, 2009, with the covenant set forth in Section 6.2.14(b) within 15 days of March 31, 2009, and with the covenant set forth in Section 6.2.14(c) at the end of each Period to which such covenant applies and such other information relating to such calculation as the Lender shall request. 3.1.5 A new Section 6.2.14 of the Debenture is added as follows: "6.2.14 (a) Permit the Borrower's Consolidated Adjusted EBITDA for the month ended January 31, 2009 to be less than zero; (b) permit the Borrower's Consolidated Adjusted EBITDA for the Fiscal Quarter ended March 31, 2009 to be less than zero; (c) permit the Leverage Ratio as of the last day of any Period, beginning with the Period ending June 30, 2009, to exceed the correlative ratio indicated: ======================================== ========================= PERIOD LEVERAGE RATIO ---------------------------------------- ------------------------- Two Fiscal Quarters ended 6/30/09 20.00 :1.00 Three Fiscal Quarters ended 9/30/09 10.00 :1.00 Four Fiscal Quarters ended 12/31/09 5.00 :1.00 Four Fiscal Quarters ended 3/31/10 4.00 :1.00 Four Fiscal Quarters ended 6/30/10 4.00 :1.00 Four Fiscal Quarters ended 9/30/10 3.00 :1.00 ======================================== ========================= ; or (d) change the Fiscal Year of the Borrower and its Subsidiaries. For purposes of this covenant, the following terms have the meanings indicated: OMNIBUS AMENDMENT July 31, 2008 Page 3 of 12 "Consolidated Adjusted EBITDA" means, for any period, an amount determined for the Borrower and its Subsidiaries on a consolidated basis equal to (i) Consolidated Net Income, plus, to the extent reducing Consolidated Net Income, the sum, without duplication, of amounts for (a) consolidated interest expense, (b) provisions for taxes based on income, (c) total depreciation expense, (d) total amortization expense, and (e) other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent that it represents an accrual or reserve for potential cash charge in any future period or amortization of a prepaid cash charge that was paid in a prior period), minus (ii) other non-cash gains increasing Consolidated Net Income for such period (excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash gain in any prior period). "Consolidated Net Income" means, for any period, (i) the net income (or loss) of the Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus (ii) (a) the income (or loss) of any entity (other than a Subsidiary of the Borrower) in which any other entity (other than the Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Subsidiaries by such entity during such period, (b) the income (or loss) of any entity accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries or that entity's assets are acquired by the Borrower or any of its Subsidiaries, (c) the income of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses attributable to asset sales, and (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses. "Consolidated Total Debt" means, as at any date of determination, the aggregate stated balance sheet amount of all indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. "Fiscal Quarter" means a fiscal quarter of any Fiscal Year. "Fiscal Year" means the fiscal year of the Borrower and its Subsidiaries ending on June 30 of each calendar year. "GAAP" means United States generally accepted accounting principles in effect as of the date of determination thereof. OMNIBUS AMENDMENT July 31, 2008 Page 4 of 12 "Leverage Ratio" means the ratio as of the last day of any Period of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the Period ending on such date. "Period" means the number of Fiscal Quarters ending on the date indicated. 3.2 AMENDMENTS TO THE REGISTRATION RIGHTS AGREEMENT The follow amendments are hereby made to the Registration Rights Agreement: 3.2.1 For the avoidance of doubt, the term "Registrable Securities" in the Registration Rights Agreement shall include the shares of Common Stock issuable upon conversion of the Fourth Tranche Note and Fifth Tranche Note and upon exercise of the Fourth Tranche Warrant and Fifth Tranche Warrant. 3.3 AMENDMENTS TO THE SECURITY AGREEMENT The follow amendments are hereby made to the Security Agreement: 3.3.1 For the avoidance of doubt, the term "Indebtedness" in the Security Agreement shall include indebtedness comprising the Fourth Tranche and Fifth Tranche. 3.4 LIMITED AMENDMENT Any future reference to any Debenture Agreement (including any reference to any particular Debenture Agreement in any other Debenture Agreement) and any document or instrument delivered in connection therewith shall, from and after the date of this Amendment, be deemed to be a reference to such Debenture Agreement as modified by this Amendment. Except as expressly modified by this Amendment, each of the Debenture Agreements shall continue to be and remain in full force and effect in accordance with their respective terms and the Borrower hereby reaffirms its obligations under each such agreement. 4. REPRESENTATIONS AND WARRANTIES 4.1 REPRESENTATIONS OF THE BORROWER The Borrower hereby represents and warrants to the Lender that, except as provided on Annex A hereto, each of the representations and warranties set forth in Section 5.1 of the Debenture are true and correct as of the Amendment Date, in each case with references to "this Agreement" referring to the Debenture as amended by this Amendment. OMNIBUS AMENDMENT July 31, 2008 Page 5 of 12 4.2 REPRESENTATIONS OF THE LENDER The Lender hereby represents and warrants to the Borrower that each of the representations and warranties set forth in Section 5.2 of the Debenture (as amended by this Amendment) are true and correct as of the Amendment Date, in each case with references to "this Agreement" referring to the Debenture as amended by this Amendment. 5. CONDITIONS PRECEDENT TO FOURTH TRANCHE The Lender's obligation to advance the Fourth Tranche and the amendments contemplated hereby shall be subject to the following conditions precedent: 5.1 DOCUMENTS The Lender shall have received each of the following, each properly executed by the Borrower and in form and substance satisfactory to the Lender: 5.1.1 This Amendment; 5.1.2 A Note substantially in the form of Schedule O attached to the First Omnibus Amendment (the "Fourth Tranche Note"); provided such Note shall be made by Borrower under the name "Alderox, Inc.," shall have a principal amount of Seven Hundred Thousand Dollars ($700,000) and shall be dated the date of issuance; and 5.1.3 A Warrant certificate, substantially in the form of Schedule P attached to the First Omnibus Amendment (the "Fourth Tranche Warrant"), evidencing Seven Hundred Thousand (700,000) warrants for the purchase of an aggregate of Seven Hundred Thousand (700,000) shares of Borrower's common stock, representing one (1) warrant for every One Dollar ($1.00) of Principal provided to Borrower pursuant to the Fourth Tranche. The Fourth Tranche Warrants shall be exercisable until 5:00 PM Pacific Time three (3) years from the Amendment Date. The Fourth Tranche Warrants shall have an exercise price of Forty Two Cents ($0.42) per share. 5.2 SECRETARY'S CERTIFICATE The Lender shall have received a certificate of the Secretary of the Borrower, dated as of the Amendment Date, (a) attesting to the corporate action taken by the Borrower with respect to this Amendment, including resolutions of the Board of Directors authorizing (i) the execution of this Amendment, (ii) the issuance of the Fourth Tranche Note and Fourth Trance Warrant, (iii) the execution of, delivery, and performance by the Borrower of all other agreements or matters contemplated hereby or executed in connection herewith, (b) certifying the names and true signatories of the officers of the Borrower authorized to sign this Agreement, the Fourth Tranche Note, the Fourth Tranche Warrant and other documents, instruments or certificates to be delivered pursuant hereto and thereto, together with the true signatures of such officers and (c) verifying that the Articles of Incorporation and the By-Laws of the Borrower attached thereto are true, correct and complete as of the Amendment Date. OMNIBUS AMENDMENT July 31, 2008 Page 6 of 12 5.3 OFFICER'S CERTIFICATE The Lender shall have received a certificate of the President of the Borrower, dated as of the Amendment Date, which shall certify that the representations and warranties contained in Section 4.1 of this Amendment are true and correct as of the Amendment Date and that all conditions required to be performed prior to the Amendment Date have been so performed. 5.4 GOOD STANDING CERTIFICATES The Lender shall have received a certificate dated as of a recent date of the appropriate public official in the jurisdiction of incorporation of the Borrower and each Subsidiary certifying the due incorporation and good standing of the Borrower and such Subsidiary together with, in the case of the Borrower, a certified copy of the Articles of Incorporation of the Borrower. 5.5 NO PROCEEDINGS OF LITIGATION No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Borrower or any Subsidiary, or any of the officers or directors of the Borrower or any Subsidiary seeking to restrain, prevent or change the transactions contemplated by the Debenture, as amended by this Amendment Agreement, or seeking damages in connection with such transactions. 5.6 NO EVENT OF DEFAULT No event shall have occurred and be continuing, or would result from the advance of the Fourth Tranche, as the case may be, which constitutes an Event of Default. 6. CONDITIONS PRECEDENT TO FIFTH TRANCHE Any time following the Amendment Date, the Borrower may request that the Lender advance the Loans represented by the Fifth Tranche by providing the Lender not less than [15 business days] prior written notice of the date requested for such advance (the "Drawdown Notice"). The Drawdown Notice shall set forth in sufficient detail; (a) the reasons for the requested Fifth Tranche, (b) the uses of the Fifth Tranche, (c) a cash flow statement from the Amendment Date, setting forth all cash flows until the requested Fifth Tranche, and (d), such other information that may be necessary for the Lender to consider the Fifth Tranche. The date on which the conditions set forth in this Section 6 are satisfied and the Fifth Tranche is funded is referred to as the "Fifth Tranche Funding Date". The Lender's obligation to advance the Fifth Tranche shall be subject to the following conditions precedent: OMNIBUS AMENDMENT July 31, 2008 Page 7 of 12 6.1 DOCUMENTS The Lender shall have received each of the following, each properly executed by the Borrower and in form and substance satisfactory to the Lender: 6.1.1 This Amendment; 6.1.2 A Note substantially in the form of Schedule O attached to the First Omnibus Amendment (the "Fifth Tranche Note"); provided such Note shall be made by Borrower under the name "Alderox, Inc.," shall have a principal amount of Three Hundred Thousand Dollars ($300,000) and shall be dated the date of issuance; 6.1.3 A Warrant certificate, substantially in the form of Schedule P attached to the First Omnibus Amendment (the "Fifth Tranche Warrant"), evidencing Three Hundred Thousand (300,000) warrants for the purchase of an aggregate of Three Hundred Thousand (300,000) shares of Borrower's common stock, representing one (1) warrant for every One Dollar ($1.00) of Principal provided to Borrower pursuant to the Fifth Tranche. The Fifth Tranche Warrants shall be exercisable until 5:00 PM Pacific Time three (3) years from the Fifth Tranche Funding Date. The Fifth Tranche Warrants shall have an exercise price of Forty Two Cents ($0.42) per share. 6.2 SECRETARY'S CERTIFICATE The Lender shall have received a certificate of the Secretary of the Borrower, dated as of the Fifth Tranche Funding Date, (a) attesting to the corporate action taken by the Borrower with respect to this Amendment, including resolutions of the Board of Directors authorizing (i) the execution of this Amendment, (ii) the issuance of the Fifth Tranche Note and Fifth Trance Warrant, (iii) the execution of, delivery, and performance by the Borrower of all other agreements or matters contemplated hereby or executed in connection herewith, (b) certifying the names and true signatories of the officers of the Borrower authorized to sign this Agreement, the Fifth Tranche Note, the Fifth Tranche Warrant and other documents, instruments or certificates to be delivered pursuant hereto and thereto, together with the true signatures of such officers and (c) verifying that the Articles of Incorporation and the By-Laws of the Borrower attached thereto are true, correct and complete as of the Fifth Tranche Funding Date. OMNIBUS AMENDMENT July 31, 2008 Page 8 of 12 6.3 OFFICER'S CERTIFICATE The Lender shall have received a certificate of the President of the Borrower, dated as of the Fifth Tranche Funding Date, which shall certify that the representations and warranties contained in Section 4.1 of this Amendment are true and correct as of the Fifth Tranche Funding Date and that all conditions required to be performed prior to the Fifth Tranche Funding Date have been so performed. 6.4 GOOD STANDING CERTIFICATES The Lender shall have received a certificate dated as of a recent date of the appropriate public official in the jurisdiction of incorporation of the Borrower and each Subsidiary certifying the due incorporation and good standing of the Borrower and such Subsidiary together with, in the case of the Borrower, a certified copy of the Articles of Incorporation of the Borrower. 6.5 NO PROCEEDINGS OF LITIGATION No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Borrower or any Subsidiary, or any of the officers or directors of the Borrower or any Subsidiary seeking to restrain, prevent or change the transactions contemplated by the Debenture, as amended by this Amendment Agreement, or seeking damages in connection with such transactions. 6.6 NO EVENT OF DEFAULT No event shall have occurred and be continuing, or would result from the advance of the Fifth Tranche, as the case may be, which constitutes an Event of Default. 6.7 LENDER APPROVAL The Fifth Tranche shall be used by the Borrower to finance the fulfillment of contracted sales, and shall not be used to finance the Borrower's operating losses or general administrative expenditure. The advance of the Fifth Tranche shall be subject to the Lender's approval based on the information contained in the Drawdown Notice, which approval shall be at the Lender's sole and absolute discretion. 7. GENERAL 7.1 COUNTERPART AND FAX EXECUTION This Amendment may be executed in two or more counterparts and by fax transmission, each of which will be deemed to be an original and all of which will constitute one agreement, effective as of the date given above. OMNIBUS AMENDMENT July 31, 2008 Page 9 of 12 SIGNATURES ON NEXT PAGE OMNIBUS AMENDMENT July 31, 2008 Page 10 of 12 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the Amendment Date. LENDER PALA INVESTMENTS HOLDINGS LIMITED /s/ Susan Garrod - ------------------------------- Susan Garrod BORROWER ALDEROX, INC., a Colorado corporation /s/ Michael Davies - ------------------------------ By: Michael C. Davies Its: Chief Executive Officer OMNIBUS AMENDMENT July 31, 2008 Page 11 of 12 ANNEX A SCHEDULE OF EXCEPTIONS SHARES OUTSTANDING Current Fully Diluted - ---------------------------------------------- --------------------------------- 65,627,796 167,851,520 - ---------------------------------------------- --------------------------------- EXISTING INDEBTEDNESS (PRINCIPAL AND INTEREST) Current ($) Post-Financing ($) - -------------------------------------------------------------------------------- Convertibles Notes 1,426,525 1,426,525 Secured Convertible Debentures(1) 5,834,684 6,534,684 Unsecured Convertible Debentures 1,029,987 1,029,987 Line of Credit 86,146 86,146 Other Loans 397,316 397,316 - -------------------------------------------------------------------------------- Total 8,774,658 9,474,658 (1) Includes the $700,000 Fourth Tranche At Maturity Convertible Notes At Maturity Current Post-Financing Convertible Notes 1,426,525 1,552,453 Secured Convertible Debentures 5,834,684 7,759,424 Unsecured Convertible Debentures 1,029,987 1,141,083 Shares Outstanding At Maturity Post-Financing 193,171,191 OMNIBUS AMENDMENT March 28, 2008 Page 12 of 12 EX-4.2 3 alderox_ex0402.txt WARRANT CERTIFICATE EXHIBIT 4.2 WARRANT CERTIFICATE No. _____________ 700,000 Warrants THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER. THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE ACT. WARRANTS FOR THE PURCHASE OF COMMON STOCK THIS CERTIFIES THAT, FOR VALUE RECEIVED, PALA INVESTMENTS HOLDINGS LIMITED, (the "Holder"), is the owner of warrants (the "Warrants") for the purchase of up to an aggregate of 700,000 shares of validly-issued, fully-paid and non-assessable Common Stock (as defined below) of ALDEROX, INC., a corporation organized and existing under the laws of the State of Colorado (the "Corporation"). Such purchase may be made at any time, and from time to time, prior to the Expiration Date (as defined below) upon the presentation and surrender of this Warrant Certificate with a written notice in the form of Attachment 1, attached hereto, signed by the Holder stating the number of shares of Common Stock with respect to which such exercise is being made, at the principal corporate address of the Corporation, accompanied by payment of the Exercise Price (as defined below) for each Warrant exercised in lawful money of the United States of America in cash or by official bank or certified check made payable to ALDEROX, INC. The Exercise Price is subject to modification or adjustment as set forth herein. The Warrants represented by this Warrant Certificate have been issued by the Corporation in connection with the Secured Convertible Debenture, dated as of December 12, 2007, by and between the Corporation and the Holder, as amended to date. SECTION 1. DEFINITIONS. As used herein, the following terms shall have the following meanings, unless the context shall otherwise require: (a) "Common Stock" shall mean the common stock of the Corporation, which has the right to participate in the distribution of earnings and assets of the Corporation without limit as to amount or percentage. (b) "Corporate Office" shall mean the office of the Corporation at which, at any particular time, its principal business shall be administered, which office is currently located at 940 Calle Amanecer, Suite E, San Clemente, CA 92673. (c) "Exercise Date" shall mean, as to any Warrant, the date on which the Corporation shall have received both (i) this Warrant Certificate, together with a written notice of exercise in accordance herewith, duly executed by the Holder hereof, or his attorney duly authorized in writing, and indicating that the Holder is thereby exercising such Warrant(s), and (ii) payment by wire transfer, or by official bank or certified check made payable to the Corporation, of an amount in lawful money of the United States of America equal to the applicable Exercise Price for such Warrant(s). (d) "Exercise Period" shall mean the period commencing as of July 31, 2008 and expiring on the Expiration Date. (e) "Exercise Price" shall mean, as to any Warrant, the price at which a Warrant may be exercised for the purchase of Warrant Shares, which shall be $0.42, subject to adjustment from time to time pursuant to the provisions of Section 5 hereof. (f) "Expiration Date" shall mean 5:00 P.M. (Pacific Time) on July 30, 2011. If such date shall be a holiday or a day on which banks are authorized to be closed in the State of California, then the Expiration Date shall mean 5:00 P.M. (Pacific Time) of the next consecutive day which does not fall on a holiday or a day on which banks are authorized to be closed in the State of California. (g) "Securities Act" shall mean the Securities Act of 1933, and any amendments or modifications, or successor legislation, thereto adopted, and all regulations, rules or other laws enacted or adopted pursuant thereto. (h) "Warrant Certificate" shall mean this certificate. (i) "Warrant Registry" means the official record maintained by the Corporation in which are recorded, with respect to the Warrant Certificate and any other certificate representing the Warrants issued by the Corporation, the date of issuance, the name and address of the Holder, the name and address of each subsequent transferee of the Holder, and the identifying number, of such certificate. (j) "Warrant Shares" shall have the meaning given to it in Section 2 of this Warrant Certificate. 2 SECTION 2. EXERCISE OF WARRANTS. (a) Each Warrant evidenced hereby may be exercised by the Holder upon the terms and subject to the conditions set forth herein prior the Expiration Date. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the Exercise Date and the person entitled to receive shares of Common Stock deliverable upon such exercise ("Warrant Shares") shall be treated for all purposes as the holder of a Warrant Share upon the exercise of the applicable Warrant as of the close of business on the Exercise Date. Promptly following, and in any event within ten (10) business days after, the date on which the Corporation first receives clearance of all funds received in payment of the Exercise Price pursuant to this Warrant Certificate, the Corporation shall cause to be issued and delivered to the person or persons entitled to receive the same, a certificate or certificates evidencing the issuance to the Holder of the applicable number of Warrant Shares (plus a Warrant Certificate for any remaining issued but unexercised Warrants of the Holder). Notwithstanding the foregoing sentence, in the event that any registration or qualification (or filing for exemption from any such requirements) is required prior to the issuance of such Warrant Shares by the Corporation in accordance with Section 3(b) below, then the obligation to deliver any such certificates shall arise only upon completion of such requirements and at such time as the Corporation may lawfully do so. (b) Upon the exercise of the Warrants represented hereby, if the Corporation so requests, the Holder shall certify to the Corporation that it is not exercising such Warrants with a view to distribute the Warrant Shares in violation of the Securities Act, and shall provide such other investor representations as the Corporation may require to confirm the ability of the Corporation to rely upon the exemption from registration under the Securities Act which applies to the distribution of Warrant Shares at the time of such distribution. SECTION 3. RESERVATION OF SHARES; TAXES; ETC. (a) The Corporation covenants that it will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issue upon the valid exercise of Warrants, such number of Warrant Shares as shall then be issuable upon the exercise of all Warrants then outstanding. The Corporation covenants that all shares of Common Stock which shall be issuable upon exercise of the Warrants shall, at the time of delivery, be duly and validly issued, fully-paid, non-assessable and free from all taxes, liens and charges with respect to the issuance thereof (other than those which the Corporation shall promptly pay or discharge, or any liens created thereon by the Holder and/or any predecessor of the Holder). (b) The Corporation shall not be obligated to deliver any Warrant Shares pursuant to the exercise of the Warrants represented hereby unless and until a registration statement under the Securities Act and/or under any applicable state securities laws and regulations, with respect to such securities is effective, or an exemption from such registration is available to the Corporation at the time of such exercise. The Corporation covenants that if any Warrant Shares reserved for the purpose of exercise of Warrants hereunder require registration with, or approval of, any governmental authority under any federal or state securities law before such securities may be validly issued or delivered upon such exercise, then the Corporation will in good faith and as expeditiously as reasonably possible, endeavor to secure such registration or approval. However, in the event that this Warrant Certificate represents Warrants which have been transferred by the Holder, the Warrants represented hereby may not be exercised by, nor shares of Common Stock issued to, the holder hereof in any state in which such exercise and issuance would be unlawful. 3 (c) The Corporation shall pay all documentary, stamp or similar taxes and other governmental charges that may be imposed with respect to the issuance of the Warrants, or the issuance or delivery of any shares of Common Stock upon exercise of the Warrants; provided, however, that if the shares of Common Stock are to be delivered in a name other than the name of the Holder, then no such delivery shall be made unless the person requesting the same has paid to the Corporation the amount of transfer taxes or charges incident thereto, if any. SECTION 4. LOSS OR MUTILATION. Upon receipt by the Corporation of evidence satisfactory to it of the ownership of, and loss, theft, destruction or mutilation of, this Warrant Certificate and (in case of loss, theft or destruction) of indemnity satisfactory to the Corporation, and (in the case of mutilation) upon surrender and cancellation thereof, the Corporation shall execute and deliver to the Holder in lieu thereof a new Warrant Certificate of like tenor representing an equal aggregate number of Warrants as was indicated to be outstanding on the prior lost or mutilated Warrant Certificate; provided, however, that to the extent that any discrepancy may exist between the number of Warrants purported to be outstanding in respect of the Holder as evidenced by a Warrant Certificate that has been lost or mutilated and the number attributable to the Holder in the Warrant Registry, then the Warrant Registry shall control for all purposes, absent a showing of manifest error. If the Holder requests a substitute Warrant Certificate due to loss, theft or destruction shall, prior to receiving such substitute certificate, the Holder shall provide an affidavit to the Corporation in the form prescribed thereby and signed by (and notarized on behalf of) the Holder. Applicants for a substitute Warrant Certificate shall comply with such other reasonable regulations and pay such other reasonable charges as the Corporation may prescribe. SECTION 5. ADJUSTMENT OF EXERCISE PRICE. Subject to the provisions of this Warrant Certificate and applicable law, in the event the Corporation, at any time or from time to time after the date hereof while the Warrants are outstanding, (i) pays a stock dividend on its common stock, (ii) subdivides outstanding shares of common stock into a larger number of shares, or (iii) combines outstanding shares of common stock into a smaller number of shares, then in each such case the Exercise Price shall be adjusted to be equal to $0.42 multiplied by a fraction of which the numerator shall be the number of shares of common stock outstanding immediately before such event and of which the denominator shall be the number of shares of common stock outstanding immediately after such event. SECTION 6. RESTRICTIVE LEGEND. (a) Except as otherwise provided in this Section 6, each Warrant Certificate and each certificate evidencing the issuance of Warrant Shares (whether issued in the name of the Holder of this Warrant Certificate or of any subsequent transferee thereof), shall be stamped or otherwise imprinted with a legend in substantially the following form: 4 "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER. THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE ACT." (b) Each certificate evidencing the issuance of Warrant Shares and each Warrant Certificate may also bear such other restrictive legends as may be necessary to comply with applicable law in the Corporation's reasonable discretion. The legend requirements of Section 6(a) above shall terminate as to any particular Warrant or Warrant Share: (i) if and so long as such security shall have been effectively registered under the Securities Act and is disposed of pursuant thereto; or (ii) when the Corporation shall have received an opinion of counsel reasonably satisfactory to it that such shares may be sold to the public without registration thereof under the Securities Act. Whenever the legend requirements imposed by this Section 6 shall terminate as to any Warrant Share, as hereinabove provided, the Holder hereof shall be entitled to receive from the Corporation, at the Corporation's expense, a new certificate representing such Warrant Shares and not bearing the restrictive legend set forth in Section 6(a). SECTION 7. RIGHTS OF ACTION. All rights of action with respect to the Warrants are vested in the Holder of the Warrants, and the Holder of the Warrant, without consent of the holder of any other warrants of the Corporation, may, in the Holder's own behalf and for his own benefit, enforce against the Corporation the Holder's right to exercise the Holder's Warrants for the purchase of Warrant Shares in the manner provided in this Warrant Certificate. SECTION 8. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by his or her acceptance thereof, consents and agrees with the Corporation and every other holder of a Warrant that: (a) the Warrant Registry shall be maintained by the Corporation's Secretary, and shall be the official register of all Warrants issued to any person in connection with the Convertible Debenture. The Warrant Registry shall be dispositive as to the issuance, ownership, transfer and other aspects of each Warrant issued by the Corporation which are recorded therein and, absent manifest error, such records shall control for all purposes; 5 (b) the Warrants are transferable only on the Warrant Registry by the Holder thereof in person or by his attorney duly authorized in writing and only if the Warrant Certificates representing such Warrants are surrendered at the Corporate Office of the Corporation, duly endorsed or accompanied by a proper instrument of transfer satisfactory to the Corporation in its sole discretion, together with payment of the amount of any applicable transfer taxes; and (c) the Corporation may deem and treat the person in whose name the Warrant Certificate is registered on the Warrant Registry as the Holder and as the absolute, true and lawful owner of the Warrants represented thereby for all purposes, and the Corporation shall not be affected by any notice or knowledge to the contrary, except as otherwise expressly provided in this Warrant Certificate. SECTION 9. MODIFICATION OF WARRANTS. Other than with respect to any adjustment made by the Corporation in accordance with the provisions of Section 5 hereof, this Warrant Certificate may only be modified, supplemented or altered by the Corporation, and only with the consent in writing of the Holder. SECTION 10. NOTICES. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been made when delivered or mailed first class registered or certified mail, postage prepaid as follows: if to the Holder of a Warrant Certificate, at the address of such Holder as shown on the Warrant Registry maintained by the Corporation; and if to the Corporation, addressed as set forth below, or at such other address as may be designated by the Corporation from time to time in accordance with this Section 10: If to the Corporation: Alderox, Inc. 940 Calle Amanecer, Suite E San Clemente, CA 92673 Attn: Mr. Gordon W. Davies President With a copy (which shall not constitute notice) to: August Law Group, P.C. 19200 Von Karman, Suite 900 Irvine, California 92614 Attn: Kenneth S. August, Esquire President SECTION 11. GOVERNING LAW; VENUE. This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of California applicable to the performance and enforcement of contracts made within such State, without giving effect to the law of conflicts of laws applied thereby. In the event that any dispute shall occur between the parties arising out of or resulting from the construction, interpretation, enforcement or any other aspect of this Warrant Certificate, the parties hereby agree to accept the exclusive jurisdiction of the Courts of the State of California sitting in and for the County of Orange. 6 SECTION 12. ENTIRE UNDERSTANDING. This Warrant Certificate contains the entire understanding among the Corporation and the Holder relating to the subject matter covered herein, and merges all prior discussions, negotiations and agreements, if any between them. Neither of the Holder nor the Corporation shall be bound by any representations, warranties, covenants, or other understandings relating to such subject matter, other than as expressly provided for or referred to herein. SECTION 13. CASHLESS EXERCISE. Notwithstanding the foregoing, in lieu of paying the Exercise Price in connection with the exercise of this Warrant, the Holder shall have the right to exercise this Warrant or any portion of this Warrant into Warrant Shares by a cashless exercise by executing and delivering to the Company at its principal office a written Notice of Exercise in the form attached to this Warrant marked "CASHLESS EXERCISE". The number of Warrant Shares to be issued to Holder upon such conversion shall be computed using the following formula: X = ((P)(Y)(A-B))/A where X = the number of Warrant Shares of Common Stock to be issued to the Holder for the portion of the Warrant being converted. P = the portion of the Warrant being converted expressed as a decimal fraction. Y = the total number of Warrant Shares issuable upon exercise of the Warrant in full. A = the market price of a share of Common Stock for the date of exercise (the market price determined, for any date, as the average of the closing prices of the Common Stock on the principal securities exchange or automated quotation system upon which the Common Stock may then be listed for public trading for the five immediately preceding trading days on such exchange). B = the then current Exercise Price (as adjusted to the date of such calculation). 7 IN WITNESS WHEREOF, the Corporation has caused this Warrant Certificate to be duly executed, manually or in facsimile, by an officer thereunto duly authorized, as of the date set forth below. Date: July 31, 2008 ALDEROX, INC., a Colorado corporation /s/ Michael Davies - -------------------------------- By: Michael C. Davies Its: Chief Executive Officer 8 EX-4.3 4 alderox_ex0403.txt PROMISSORY NOTE EXHIBIT 4.3 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER. THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE ACT. PROMISSORY NOTE $700,000 July 31, 2008 This Promissory Note is being issued pursuant to a Secured Convertible Debenture dated for reference as of December 12, 2007 between Pala Investments Holdings Limited and Alderox, Inc. (formerly known as Reclamation Consulting and Applications, Inc.), as amended to date (the "Convertible Debenture"). Capitalized terms used in this Promissory Note are defined in the Convertible Debenture shall have the same meanings as defined therein, unless otherwise defined herein. FOR VALUE RECEIVED, Alderox, Inc. (the "Borrower"), of 940 Calle Amanecer, Suite E, San Clemente, CA 92673, PROMISES TO PAY on December 11, 2010 or on demand in accordance with the terms of the Convertible Debenture, to the order of Pala Investments Holdings Limited (the "Lender"), at 12 Castle Street, St. Helier, Jersey, JE2 3RT, Channel Islands, the sum of Seven Hundred Thousand Dollars ($700,000), together with any accrued unpaid interest and costs and expenses outstanding as of such date (the "Indebtedness"). Interest on the Indebtedness at the rate of Twelve Percent (12%) per annum (or the highest interest rate permissible by applicable law, whichever is lower) (the "Interest Rate"), compounded on the last day of each fiscal quarter of the Borrower, will accrue until the earlier of (i) the Maturity Date, (ii) the date the Loan is repaid in full, or (iii) the date that the Indebtedness is converted to Borrower's common stock pursuant to the terms of the Convertible Debenture. Notwithstanding the foregoing, following the occurrence of an Event of Default and pursuant to Subsection 7.2.3. of the Convertible Debenture, the Interest Rate shall be Sixteen Percent (16%) per annum (or the highest interest rate permissible by applicable law, whichever is lower), until the earlier of (i) the date such Event of Default is cured, (ii) the date the Indebtedness is repaid in full, or (iii) the date that the Indebtedness is converted to Borrower's common stock pursuant to the terms of the Convertible Debenture. The obligations of the Borrower to pay the Indebtedness to the Lender will terminate if and to the extent that the Indebtedness is converted in accordance with Section 4 of the Convertible Debenture. The Borrower waives presentment or other demand for payment, notice of dishonor, protest and non-payment. The Borrower may prepay all or any portion of the Indebtedness at any time or from time to time without penalty, bonus or charges. The Borrower shall pay all costs of collection, including reasonable attorneys' fees and legal expenses if this Promissory Note is not paid when due, whether or not legal proceedings are commenced. Alderox, Inc., a Colorado corporation /s/ Michael Davies ------------------------------------ By: Michael C. Davies Its: Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----