EX-10 2 ex101.txt INFINITY CAPITAL GROUP, INC. -------------------------------- Private Equity Investments - M&A 80 Broad Street 5th Floor New York, New York 10004 ================================================================================ Phone (212) 962-4400 Fax (212) 962-4422 SPA & MERGER & INVESTMENT TERM SHEET THIS TERM SHEET DATED JULY 19, 2007 ("TERM SHEET") SUMMARIZES THE BASIC TERMS AND CONDITIONS ON WHICH INFINITY CAPITAL GROUP, INC. ("INFINITY" OR COLLECTIVELY "LENDERS" OR "INVESTORS"), PROPOSES TO MERGE SATELLITE ORGANIZING SOLUTIONS, INC. (PINK SHEETS: SOZG), A PORTFOLIO COMPANY OF INFINITY WITH REGS, LLC AND TACTICAL CLEANING COMPANY, LLC (COLLECTIVELY "REGS" OR "COMPANY"), SUBJECT TO THE CONTINGENCIES DESCRIBED BELOW. THIS TERM SHEET IS CONTINGENT ON ALL THESE TERMS BEING SATISFIED SHALL EXPIRE ON TUESDAY, JULY 24, 2007 AT 3:00 P.M. INFINITY SPA FOR SOZG CONVERTIBLE: Infinity shall acquire newly issued Convertible (Debenture or Preferred Stock to be determined) from SOZG in accordance with the Price Formula or Share Calculation, as applicable, for cash consideration, secured by a lien and pledge agreement on all of the unencumbered assets of the Company (Infinity to be reasonable in granting security waiver for additional senior debt). The pledge agreement shall be assignable to both the parent and all subsidiaries. At any time after Closing, Infinity shall have the right, subject to certain Beneficial Ownership Restrictions, to convert such Convertible into 3,288,048 Common Shares (subject to adjustment under the debenture terms). The coupon rate on the Debenture or Preferred shall be 7.5% per annum. The Company shall have the right to force mandatory conversion of the Convertible upon an effective Registration including the underlying shares in the Convertible. SOZG USE OF PROCEEDS: Infinity shall provide an initial $750,000 of Capital Funding to SOZG. SOZG will employ these Funds and initial funding from Strategic Investor toward the following: 1) Expansion of the railcar clearing business/ GE contract 2) Rescission of Redrock merger 3) Working capital REGS & SOZG SUBSIDIARY MERGER: Structured between a wholly owned subsidiary of SOZG and REGS ("REGS" or "Company") with SOZG, as the surviving parent company, obtaining at Closing 100% of REGS's issued and outstanding equity, pursuant to a Plan and Agreement of Reorganization. SOZG PRE-CLOSING CAP FLOAT /old shareholders 1,753,626 TABLE: TOTAL 1,753,626 {100.00%} * * After 1 for 2 reverse split Note: "{}" signifies the percentage of the TOTAL SOZG SHARE PRICE: $0.14 as of 6/14/07 *Adjusted for the 1 for 2 reverse split AT CLOSING ALLOCATION SOZG 1,753,626 { 8.42%} OF SOZG SHARES CALCULATION ("SHARE CALCULATION"): Newly Issued Common Shares* to REGS shareholders: 15,782,630 { 75.79%} Newly Issued Convertible: (underlying shares) INFINITY 3,288,048 {15.79%} --------------------- TOTAL 20,824,304 {100.00%} Convertible with a fixed conversion price of ($.2281)("Conversion Price" or "CP"). AT CLOSING ALLOCATION SOZG 1,753,626 { 7.98%} OF SOZG SHARES CALCULATION ("FULLY DILUTED"): Newly Issued Common Shares* to REGS shareholders: 15,782,630 {71.79%} Newly Issued Convertible: (underlying shares) INFINITY 3,288,048 {14.96%} Newly Issued Common Shares* Reserved for Strategic Investor 500,000 { 2.27%} Newly Issued Common Shares** Reserved for Debt Settlement 659,515 { 3.00%} ---------------------- TOTAL 21,983,819 {100.00%} *For Strategic Investor initial $500,000 funding. **Company to use best efforts to settle Red Rock debt for stock in an amount up to the shares indicated. WARRANTS: At Closing the Company will issue to Infinity warrants to purchase 3,787,877 shares as follows; Warrant A - Warrants to purchase 520,833 shares at $.36 per share for a total of $187,500 that shall expire three months after closing. Warrant B - Warrants to purchase 173,611 shares at $.36 per share for a total of $62,500 that shall expire six months after closing. Warrant C - Warrants to purchase 781,249 shares at $1.00 per share for a total of $781,249 that shall expire nine months after closing. Warrant D - Warrants to purchase 607,639 shares at $1.00 per share for a total of $607,639 that shall expire one year after closing. Warrant E - A two (2) year warrant to purchase 1,704,545 shares at $.44 per share for a total of $750,000. The company shall have the right to retire these warrants at any time prior to expiration by paying 33% of the difference between the company's trailing ten trading days average stock price and the exercise price subject to a minimum of 50 cents per warrant. Company shall give 15 days notice of intent to retire the warrants. AFTER A, B, C & D SOZG 1,753,626 { 7.28%} WARRANTS REGS shareholders: 15,782,630 {65.58%} Convertible 3,288,048 {13.66%} Strategic Investor 500,000 {2.08%} Debt Settlement 659,515 {2.74%} A, B, C, & D Warrants 2,083,332 {8.66%} ---------------------- TOTAL 24,067,151 {100.00%} VALUATION: *Investment at a $4,264,505 (pre-money) valuation. EMPLOYEE OPTION PLAN Employee stock options plan to be created at close. Employee share allocation to be determined by REGS senior management at the time of execution of definitive merger agreements. MERGER CLOSING DATE: The parties shall use their best efforts to close the Merger on or before August 15, 2007, and shall have the right to extend the closing for up to 45 days, if necessary to complete the conditions of closing (the "Closing Date"). CONTINGENCIES & FINAL DOCUMENTS: The completion of the merger shall be subject to (a) satisfactory completion of due diligence by Infinity and SOZG; REGS to submit due diligence material pursuant to a checklist submitted after signing of this term sheet, to be returned no later than seven (7) business days from the date of due diligence submission request. The Company shall grant Infinity and SOZG complete access to its books and records, including access to customers, suppliers, and key employees. (b) Execution of definitive merger agreements signed by the parties, containing customary representations and warranties and other terms as the parties may agree. (c) The divestiture or abandonment of SOZG's current business operations. (d) The resignation of all SOZG's officers and directors, (e) Execution of a Merger Recession Agreement between REGS and Redrock Oil Sands on terms comparable to discussed terms (f) No significant adverse changes in relationships as described with customers, suppliers, and management. Infinity warrants that there will be minimal assets and liabilities of less than $5,000 (direct or contingent) in SOZG at the closing, nor will there be any warrants, options or other interests in SOZG other than the 1,753,626 common shares identified as part of this agreement. SOZG's officers and Directors will indemnify REGS for any breach of the representations made by SOZG in the merger agreement. (g) Opinion letters from accountants and lawyers stating no liabilities or potential claims or contingencies. (h) Delivery of the REGS Reviewed financials by a PCAOB Auditor. MOST FAVORED NATIONS: If the Company enters into a subsequent financing with another individual or entity (the "Third Party") on terms that are more favorable to the Third Party, then the agreements between the Company and the Investors shall be amended to include such better terms within Five (5) years from date hereof. REGISTRATION RIGHTS: The Company will file, at its sole expense, a registration statement for the benefit of the holders of the convertible and warrants, for the underlying shares, to permit the public resale of the common shares underlying the convertible conversion feature and warrants, within 90 days of the date of the closing and funding of the definitive agreements and cause the registration statement to be declared effective within 180 days of the date of the closing and funding of definitive agreements. The Company will pay to the investors liquidated damages in cash equal to 1% times the face value of the Convertible Debentures, per month (pro-rated for partial calendar months) for any failure to timely file or obtain an effective registration statement, subject to a limit to be agreed among the parties. The holders will agree to waive this penalty so long as the Company is using its best efforts to timely respond to SEC comment letters, and the amended Registration Statement required by the comment letters is refilled within 20 days of receipt of any such comment letter. Other shares may be registered in the registration statement with agreement of all parties. All parties will use best efforts to limit any undesirable profit and loss effects in connection with the conversion of shares underlying the Convertible. SECURITY INTEREST: Convertible will be secured by a lien and pledge agreement on all of the unencumbered assets of Company. The pledge agreement shall be assignable to both the parent and all subsidiaries. Infinity will be reasonable in granting security waiver for additional senior debt. ANTI DILUTION: The conversion price of the convertible and the exercise price of the warrants will be subject to full ratchet anti-dilution adjustment in the event that the Company issues additional equity or equity-linked securities, referred to herein as "derivatives" (other than for specific "carve out" issuances) at a purchase or conversion price that is less than the applicable conversion price of the debentures or strike price of the warrants. This adjustment shall not apply to (i) outstanding derivatives as of the date hereof (provided no amendments to the conversion or exercise prices thereof are made); or (ii) options granted by the Company to employees and directors under current incentive stock options plans (whether qualified or not) if such future options are granted with exercise prices at least equal to the Company's stock price on the grant dates. ADJUSTMENT FOR ISSUANCE OF SHARES AT LESS THAN THE CONVERSION PRICE: If and whenever any additional Common Stock shall be issued by Company for a consideration per share less than the Conversion Price, then in each such case the initial Conversion Price shall be reduced to a new Conversion Price in an amount equal to the price per share for the additional Common Stock then issued, if issued in connection with a sale of shares, or the value of the additional Common Stock then issued, as determined in accordance with generally accepted accounting principles, if issued other than for cash, and the number of shares issuable to Holder upon conversion shall be proportionately increased. RESTRICTION ON NEW DEBT: During the convertible term, until conversion or redemption, the Company is prohibited from issuing any long term debt without prior approval of a majority of the convertible holders, except that this shall not apply to equipment purchase/finance or equipment leasing. ADDITIONAL COVENANTS: The definitive agreements will contain provisions prohibiting the Company from issuing variable priced equity; variable priced equity linked securities or equity lines of credit for so long as the Investors hold any securities of the Company. FEES AND EXPENSES: Upon Convertible Closing, Company shall pay to Infinity, a Due Diligence Fee equal to 1.0% of the proceeds, a Commitment Fee equal to 1.0% of the proceeds, and a Closing Fee equal to 1.0% of the proceeds. Additionally, the Investors legal expenses shall be paid out of the proceeds. NAME: The name of the company post merger will be changed to REGS, Inc. or Resource Environmental Group Services, Inc. The merger details shall be determined by the Attorneys in the Definitive Merger Agreement to maximize both tax and legal structure. VOTING RIGHTS: The holders of convertible shall have one vote for each share, underlying the conertible conversion feature. BOARD REPRESENTATION: Infinity, shall have the irrevocable right to designate a Board member who will be appointed to SOZG's Board which will have a total of no more than five members at least one of whom shall be an independent director as defined by the AMEX listing requirements. RELEASE OF INFORMATION: Upon mutual agreement of Infinity, REGS and their respective legal counsel, SOZG shall issue Press Releases associated with this pending transaction. LIABILITIES OF SOZG: SOZG shall fully disclose on a schedule, all payables, liabilities, Convertible Debentures , mortgages, leases, contingent liabilities and options for any equity securities, and such list will be certified by the Board and personally guaranteed by the Officers and Directors of SOZG, to be accurate. Such total of liabilities and payables shall not exceed $0 which shall be paid from proceeds. EXCLUSIVITY : The signing of this term sheet by both parties shall constitute a legally binding Letter of Intent, subject to completion of satisfactory due diligence by the parties at their sole discretion, and shall be in effect for a period of 60 days ("Exclusivity Period"). During this Exclusivity Period REGS shall not negotiate with any other parties regarding any going public transaction or similar business combination transactions that results in REGS becoming a public entity. Any alternative investment that REGS shall seek during this Exclusivity Period will be complimentary to the transactions contemplated herein and REGS shall notify Infinity of all such activity. INFINITY CAPITAL GROUP, INC. REGS, LLC By:/s/Gregory H. Laborde By:/s/J. John Combs, III Title: President Title: Vice President SOZG By:/s/Gregory H. Laborde Title: President