-----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, PEWwx7+b4Y3CwdlalGKqPeBL7Evrv95SzxV74d+RvGdVW2biHoYdzr1d2bJSbzzf bmwT+vZ3VlzAR2TtLSI86g== 0001354488-10-001393.txt : 20100505 0001354488-10-001393.hdr.sgml : 20100505 20100505110730 ACCESSION NUMBER: 0001354488-10-001393 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20100505 DATE AS OF CHANGE: 20100505 GROUP MEMBERS: DAVID STEFANSKY GROUP MEMBERS: HARBORVIEW ADVISORS, LLC GROUP MEMBERS: HARBORVIEW CAPITAL MANAGEMENT, LLC GROUP MEMBERS: HARBORVIEW MASTER FUND, L.P. GROUP MEMBERS: RICHARD ROSENBLUM SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AXION INTERNATIONAL HOLDINGS, INC. CENTRAL INDEX KEY: 0000753048 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS FOAM PRODUCTS [3086] IRS NUMBER: 840846389 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-40392 FILM NUMBER: 10800064 BUSINESS ADDRESS: STREET 1: 665 MARTINSVILLE ROAD, SUITE 219 STREET 2: . CITY: BASKING RIDGE STATE: NJ ZIP: 07920-4700 BUSINESS PHONE: 908-542-0888 MAIL ADDRESS: STREET 1: 665 MARTINSVILLE ROAD, SUITE 219 STREET 2: . CITY: BASKING RIDGE STATE: NJ ZIP: 07920-4700 FORMER COMPANY: FORMER CONFORMED NAME: ANALYTICAL SURVEYS INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HARBORVIEW MASTER FUND LP CENTRAL INDEX KEY: 0001400704 IRS NUMBER: 000000000 STATE OF INCORPORATION: D8 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: HARBOUR HOUSE WATERFORD DRIVE STREET 2: PO BOX 972 CITY: TORTOLA STATE: D8 ZIP: 00000 BUSINESS PHONE: 294 694 4770 MAIL ADDRESS: STREET 1: HARBOUR HOUSE WATERFORD DRIVE STREET 2: PO BOX 972 CITY: TORTOLA STATE: D8 ZIP: 00000 SC 13D 1 hmf_sc13d.htm SC 13D hmf_sc13d.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934*
(Amendment No.)
 
 
Axion International Holdings, Inc.
  
 
(Name of Issuer)
  
     
 
Common Stock
  
 
(Title of Class of Securities)
  
     
 
05462D101
  
 
(CUSIP Number)
  
     
     
 
Richard Rosenblum
c/o Harborview Advisors LLC
850 Third Avenue, Suite 1801
New York, NY  10022
(646) 218-1400
  
 
(Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications)
  
     
 
May 3, 2010
  
 
(Date of Event which Requires Filing of this Statement)
  
     
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), (f) or (g), check the following box.  þ
 
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See §240.13d-7(b) for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 
 
1
 
 
SCHEDULE 13D

 
CUSIP No. - 05462D101
    

1
NAME OF REPORTING PERSON
 
 
Harborview Master Fund, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP 
    (a) ¨
    (b) þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
WC
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)  
 
 o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
British Virgin Islands
 
 NUMBER OF
SHARES
 
BENEFICIALLY
OWNED BY
 
EACH
REPORTING
 
PERSON
WITH
7
SOLE VOTING POWER 
 
2,057,6881
8
SHARED VOTING POWER
 
0
9
SOLE DISPOSITIVE POWER 
 
2,057,6881
10
SHARED DISPOSITIVE POWER
 
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  
 
2,057,6881
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES   
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
9.5%
14
TYPE OF REPORTING PERSON
 
PN  

1 Comprised of: (i) 1,569,688 shares of outstanding Common Stock; (ii) 150,000 shares that may be acquired pursuant to a 10% Convertible Promissory Note, issued on February 1, 2010 and amended and restated on February 22, 2010 (the “10% Note”); (iii) 100,000 shares that may be acquired pursuant to an Amended and Restated Purchase Warrant, issued on February 1, 2010 and amended and restated on February 22, 2010 (the “2010 Warrant”); (iv) 100,000 shares that may be acquired pursuant to a Purchase Warrant, issued on July 21, 2009 (the “2009 Warrant”) and (v) 138,000 shares that may be acquired pursuant to an Amended and Restated 8.75% Convertible Debenture Due December 31, 2010, issued on September 26, 2008 and amended and re stated on March 31, 2009, as amended (the “8.75% Debenture”).
 
 
2
 
 
SCHEDULE 13D

 
CUSIP No. - 05462D101
    
 

1
NAME OF REPORTING PERSON
 
Harborview Advisors, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP 
    (a) ¨
    (b) þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)  
 
o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
New Jersey
 
 NUMBER OF
SHARES
 
BENEFICIALLY
OWNED BY
 
EACH
REPORTING
 
PERSON
WITH
7
SOLE VOTING POWER 
 
2,057,6882
8
SHARED VOTING POWER
 
0
9
SOLE DISPOSITIVE POWER 
 
2,057,6882
10
SHARED DISPOSITIVE POWER
 
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
2,057,6882
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES   
 
 o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
9.5%
14
TYPE OF REPORTING PERSON
 
CO
 
2 Comprised of: (i) 1,569,688 shares of outstanding Common Stock; (ii) 150,000 shares that may be acquired pursuant the 10% Note; (iii) 100,000 shares that may be acquired pursuant to the 2010 Warrant; (iv) 100,000 shares that may be acquired pursuant to the 2009 Warrant and (v) 138,000 shares that may be acquired pursuant to the 8.75% Debenture.
 
 
3
 
 
SCHEDULE 13D

 
CUSIP No. - 05462D101
    
 
1
NAME OF REPORTING PERSON
 
Harborview Capital Management, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP 
    (a) ¨
    (b) þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
00
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)  
 
o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
New York
 
 NUMBER OF
SHARES
 
BENEFICIALLY
OWNED BY
 
EACH
REPORTING
 
PERSON
WITH
7
SOLE VOTING POWER 
 
586,9503
8
SHARED VOTING POWER
 
0
9
SOLE DISPOSITIVE POWER 
 
586,9503
10
SHARED DISPOSITIVE POWER
 
0
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
586,9503
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES   
 
 o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
2.8%
14
TYPE OF REPORTING PERSON
 
CO
 
3 Comprised of shares of outstanding Common Stock.
 
 
4
 
 
SCHEDULE 13D

 
CUSIP No. - 05462D101
    
 
1
NAME OF REPORTING PERSON
 
Richard Rosenblum
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP 
    (a) ¨
    (b) þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)  
 
o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
New Jersey
 
 NUMBER OF
SHARES
 
BENEFICIALLY
OWNED BY
 
EACH
REPORTING
 
PERSON
WITH
7
SOLE VOTING POWER 
 
0
8
SHARED VOTING POWER
 
2,644,6384
9
SOLE DISPOSITIVE POWER 
 
0
10
SHARED DISPOSITIVE POWER
 
2,644,6384
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
2,644,6384
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES   
 
 o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
12.2%
14
TYPE OF REPORTING PERSON
 
IN
 
4 Comprised of: (i) 2,156,638 shares of outstanding Common Stock; (ii) 150,000 shares that may be acquired pursuant the 10% Note; (iii) 100,000 shares that may be acquired pursuant to the 2010 Warrant; (iv) 100,000 shares that may be acquired pursuant to the 2009 Warrant and (v) 138,000 shares that may be acquired pursuant to the 8.75% Debenture.
 
 
5
 

SCHEDULE 13D

 
CUSIP No. - 05462D101
    
 
1
NAME OF REPORTING PERSON
 
David Stefansky
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP 
    (a) ¨
    (b) þ
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)  
 
o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
New York
 
 NUMBER OF
SHARES
 
BENEFICIALLY
OWNED BY
 
EACH
REPORTING
 
PERSON
WITH
7
SOLE VOTING POWER 
 
0
8
SHARED VOTING POWER
 
2,644,6385
9
SOLE DISPOSITIVE POWER 
 
0
10
SHARED DISPOSITIVE POWER
 
2,644,6385
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
2,644,6385
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES   
 
 o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
12.2%
14
TYPE OF REPORTING PERSON
 
IN
 
5 Comprised of: (i) 2,156,638 shares of outstanding Common Stock; (ii) 150,000 shares that may be acquired pursuant the 10% Note; (iii) 100,000 shares that may be acquired pursuant to the 2010 Warrant; (iv) 100,000 shares that may be acquired pursuant to the 2009 Warrant and (v) 138,000 shares that may be acquired pursuant to the 8.75% Debenture.
 
 
6
 
 
ITEM 1.  SECURITY AND ISSUER.
 
        This Schedule 13D relates to the common stock, par value $0.01 per share (the “Common Stock”) of Axion International Holdings, Inc., a Colorado corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 180 South St., Suite 104, New Providence, New Jersey 07974.

ITEM 2.  IDENTITY AND BACKGROUND.

(a) This statement is being filed jointly by and on behalf of each of Harborview Master Fund, L.P. (“Harborview Master Fund”), Harborview Advisors, LLC (“Harborview Advisors”), Harborview Capital Management, LLC (“Harborview Capital Management”), Richard Rosenblum and David Stefansky (the “Reporting Persons”).

(b) The principal business address of each of the Reporting Persons is c/o Harborview Advisors LLC, 850 Third Avenue, Suite 1801, New York, New York 10022.

 (c) Harborview Master Fund is a limited partnership organized under the laws of the British Virgin Islands and is a private investment partnership.

Harborview Advisors is a limited liability company organized under the laws of the State of New Jersey and its principal business is to serve as the general partner of Harborview Master Fund.

Harborview Capital Management is a limited liability company organized under the laws of the State of New York and its principal business is providing business advisory services.

Messrs. Rosenblum and Stefansky are the managing members of Harborview Advisors and Harborview Capital Management, and have voting and investment power with respect to shares of Common Stock held by Harborview Master Fund, Harborview Advisors and Harborview Capital Management.

The filing of this statement shall not be construed as an admission that any Reporting Person is, for purposes of Sections 13(d) or 13(g) of the Exchange Act or otherwise, the beneficial owner of any Common Stock covered by this statement.

(d) None of the Reporting Persons have, during the past five years, been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors).

(e) None of the Reporting Persons have, during the past five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, were, or are subject to, a judgment, decree or final order enjoining future violations of, or prohibiting or maintaining activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Messrs. Rosenblum and Stefansky are United States citizens.

ITEM 3.  SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

The source of funds used for the purchase of 1,569,688 shares of outstanding Common Stock reported for Harborview Master Fund in this Schedule 13D was the available working capital funds of Harborview Master Fund. The aggregate funds used by Harborview Master Fund to make these purchases was $1,275,857.33, including commissions.  Of the remaining shares reported for Harborview Master Fund, (i) 150,000 are shares that may be acquired pursuant to a 10% Convertible Promissory Note, issued on February 1, 2010 and amended and restated on February 22, 2010 (the “10% Note”); (ii) 100,000 are shares that may be acquired pursuant to an Amended and Restated Purchase Warrant, issued on February 1, 2010 and amended and restated on February 22, 2010 (the “2010 Warrant”); (iii) 100,000 are shares that may be a cquired pursuant to a Purchase Warrant, issued on July 21, 2009 (the “2009 Warrant”) and (iv) 138,000 are shares that may be acquired pursuant to an Amended and Restated 8.75% Convertible Debenture Due December 31, 2010, issued on September 26, 2008 and amended and restated on March 31, 2009, as amended by the First Amendment to the 8.75% Convertible Debenture, dated July 22, 1009 (the “8.75% Debenture”).  The 10% Note was issued in exchange for $300,000.  The 2010 Warrant was issued for no extra payment in connection with the 10% Note.  The 2009 Warrant was issued for no extra payment in connection with a prior financing.  The 8.75% Debenture was purchased from its initial holder for $172,500  The source of funds used for the purchase of all these instruments was the available working capital funds of Harborview Master Fund.
 
 
7
 

 
The shares of Common Stock reported for Harborview Capital Management in this Schedule 13D were issued as compensation for certain consulting services provided by Harborview Capital Management to the Issuer.

ITEM 4.  PURPOSE OF TRANSACTION.

The Reporting Persons acquired the shares of the Issuer’s Common Stock reported in this Schedule 13D for investment purposes.  The Reporting Persons previously reported their beneficial ownership of the Common Stock of the Issuer on Schedule 13G, initially filed on February 17, 2009 and amended on February 5, 2010.

The Reporting Persons have engaged in discussions with management of the Issuer from time to time regarding their investment in the Issuer.  In early February 2010, the Issuer’s management approached the Reporting Persons to solicit their opinion of a potential transaction with Lincoln Park Capital Fund, LLC (“LPC”).  Despite the Reporting Persons’ negative opinion of such transaction, on February 26, 2010, the Issuer filed a Form 8-K disclosing that it had entered into a purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC (“LPC”).  Since the Form 8-K was filed, the Reporting Persons have engaged in discussions with the Issuer from time to time in which they have expressed serious concerns about the transaction.  On Ap ril 28, 2010, they submitted a term sheet for a proposed alternative financing transaction (the “Proposed Transaction”) that they believe is superior to, and offers significantly more value to all shareholders of the Issuer than, the transaction with LPC.  The term sheet is furnished herewith as Exhibit 99.1 hereto and incorporated herein by reference.  To date, the Reporting Persons have not received a meaningful response to the proposed term sheet.

The Reporting Persons plan to review their investment in the Issuer on a continuing basis. Depending upon the actions taken by the board of directors and/or management of the Issuer in connection with the transaction with LPC and the Proposed Transaction as well as other factors that are or may become relevant, the Reporting Persons may consider (i) making proposals which relate to or may result in changes in the board of directors and/or management of the Issuer; (ii) making an additional proposal or proposals relating to alternative financing transactions; (iii) selling all or part of the securities of the Issuer owned by such Reporting Persons in open market or privately negotiated transactions; (iv) acquiring additional securities of the Issuer in open market or privately negotiated transactions; (v) making a propos al or proposals to acquire more (or potentially all) of the equity interests in the Issuer, including, without limitation, directly from certain (or potentially all) of the security holders of the Issuer; (vi) making a proposal or proposals relating to the acquisition of certain (or potentially all) of the assets of the Issuer; (vii) making a shareholder proposal or proposals to request that the Issuer consider one or more extraordinary transactions, such as a merger; and (viii) one or more combinations of the foregoing.

Any proposals related to the board and/or management of the Issuer, potential financing transactions, open market or privately negotiated purchases or sales, acquisition recommendations or proposals or other transactions or matters may be made at any time without prior notice. Any alternative may depend upon a variety of factors, including, without limitation, current and anticipated future trading prices of the securities of the Issuer, the financial condition, results of operations and prospects of the Issuer and general industry conditions, the availability, form and terms of financing, other investment and business opportunities, general stock market and economic conditions, tax considerations and other factors. Although the foregoing reflects plans and proposals presently contemplated by the Reporting Persons with respect to the Issuer, the foregoing is subject to change at any time and dependent upon contingencies and assumed and speculative conditions, and there can be no assurance that any of the actions set forth above will be taken.
 
 
8
 
 
ITEM 5.  INTEREST IN SECURITIES OF THE ISSUER.

(a) (b) Harborview Master Fund is the beneficial owner of the number and percentage of shares of Common Stock of the Issuer stated in Items 11 and 13 on the corresponding cover page hereto (the “Harborview Master Fund Shares”). The Harborview Master Fund Shares are also reported as beneficially owned by Harborview Advisors, as the general partner of Harborview Master Fund, and by Messrs. Rosenblum and Stefansky, as the managing members of Harborview Advisors. By reason of these relationships, each of Harborview Master Fund and Harborview Advisors are reported as having sole power to vote, or to direct the vote, and sole power to dispose, or direct the disposition of, the Harborview Master Fund Shares, and each of Messrs. Rosenblum and Stefansky are reported as having shared power to vote, or to direct the vo te, and shared power to dispose, or direct the disposition of, the Harborview Master Fund Shares.

 Harborview Capital Management is the beneficial owner of the number and percentage of shares of Common Stock of the Issuer stated in Items 11 and 13 on the corresponding cover page hereto (the “Harborview Capital Management Shares”). The Harborview Capital Management Shares are also reported as beneficially owned by Messrs. Rosenblum and Stefansky, as the managing members of Harborview Capital Management. By reason of these relationships, Harborview Capital Management is reported as having sole power to vote, or to direct the vote, and sole power to dispose, or direct the disposition of, the Harborview Capital Management Shares, and each of Messrs. Rosenblum and Stefansky are reported as having shared power to vote, or to direct the vote, and shared power to dispose, or direct the disposition of, the H arborview Capital Management Shares.

All percentages set forth in this statement are based on 21,186,838 shares of Common Stock reported as outstanding as of April 28, 2010 in the Issuer’s Form S-1/A filed on April 29, 2010.

(c) The Reporting Persons have not engaged in any transactions in the Common Stock of the Issuer during the past 60 days.

(d) Not applicable.

(e) Not applicable.

ITEM 6.  CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.

Harborview Master Fund holds the 10% Note.  The 10% Note has a principal amount of $300,000 and bears interest at an annual rate of 10%.  All principal and interest is payable on the earlier of August 1, 2010 or the date on which the Issuer consummates a debt or equity financing transaction greater than or equal to $1,000,000.  The principal under the 10% Note is convertible, at Harborview Master Fund’s option, at a conversion price of $2.00 per share, subject to customary anti-dilution provisions for stock splits, combinations and the like.

Harborview Master Fund also holds the 2010 Warrant.  The 2010 Warrant permits Harborview Master Fund to purchase 100,000 shares of Common Stock at a purchase price of $2.50 per share. The 2010 Warrant is exercisable by Harborview Master Fund, in whole or in part, on or before February 1, 2015. The 2010 Warrant contains customary anti-dilution provisions for stock splits, combinations and the like, as well as a net cashless exercise provision.

Harborview Master Fund also holds the 2009 Warrant.  The 2009 Warrant permits Harborview Master Fund to purchase 100,000 shares of Common Stock at a purchase price of $0.90 per share. The 2009 Warrant is exercisable by Harborview Master Fund, in whole or in part, on or before July 21, 2014. The 2009 Warrant contains customary anti-dilution provisions for stock splits, combinations and the like, as well as a net cashless exercise provision.
 
 
9
 
 
Harborview Master Fund also holds the 8.75% Debenture.  The 8.75% Debenture has a principal amount of $172,500 and bears interest at an annual rate of 8.75%.  All principal is payable on December 31, 2010.  Interest is payable quarterly, and at the Issuer’s option may be paid in cash or Common Stock.  To date, all payments have been made in cash.  The principal under the 8.75% Debenture is convertible, at Harborview Master Fund’s option, at a conversion price of $1.25 per share, subject to customary anti-dilution provisions for stock splits, combinations and the like.  Subject to certain conditions, the Issuer is permitted to redeem some or all of the outstanding principal under the 8.75% Debenture for an amount in cash or Common Stock equal to the sum of (i) 120% of the principal amount then outstanding, (ii) accrued but unpaid interest and (iii) all liquidated damages and other amounts due.  If the value of the Common Stock exceeds $0.80 for more than 30 consecutive trading days (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and similar transactions), the Issuer also has the right to force Harborview Master Fund to convert some or all of the principal amount plus accrued but unpaid interest and liquidated damages and other amounts due.

Harborview Capital Management is a party to a Financial Advisor and Consulting Agreement for Axion International Holdings, dated February 1, 2010, by and between Harborview Capital Management and the Issuer (the “Advisor Agreement”).  Pursuant to the Advisor Agreement, Harborview Capital Management is engaged to act as financial advisor and consultant to the Issuer in connection with: (i) any potential recapitalization of the Issuer and (ii) the license or sale of some or all of the Issuer’s technology to a technology partner (as defined in the Advisor Agreement).  Harborview Capital Management was issued 200,000 shares of Issuer Common Stock as compensation under the Advisor Agreement.  Upon the successf ul closing of a transaction with a technology partner, fees to Harborview Capital Management would include a warrant to purchase shares of Issuer Common Stock based upon a percentage of the transaction value.

The foregoing descriptions of the 10% Note, the 2010 Warrant, the 2009 Warrant, the 8.75% Debenture and the Advisor Agreement do not purport to be complete and are qualified in their entirety by reference to the 10% Note, the 2010 Warrant, the 2009 Warrant, the 8.75% Debenture (including the First Amendment to the 8.75% Convertible Debenture, dated July 22, 1009) and the Advisor Agreement, which are filed as Exhibits 99.2 through 99.7 hereto and incorporated by reference herein.

ITEM 7.  MATERIAL TO BE FILED AS EXHIBITS.

The following are filed as exhibits hereto:

Exhibit
  
Description of Exhibit
99.1
  
Proposed Term Sheet submitted on April 28, 2010.
99.2
  
10% Convertible Promissory Note, issued on February 1, 2010 and amended and restated on February 22, 2010.
99.3
  
Amended and Restated Purchase Warrant, issued on February 1, 2010 and amended and restated on February 22, 2010.
99.4
  
Purchase Warrant, issued on July 21, 2009.
99.5
  
Amended and Restated 8.75% Convertible Debenture Due December 31, 2010, issued on September 26, 2008 and amended and restated on March 31, 2009.
99.6
  
First Amendment to the 8.75% Convertible Debenture, dated July 22, 1009.
99.7
  
Financial Advisor and Consulting Agreement for Axion International Holdings, dated February 1, 2010, by and between Harborview Capital Management, LLC and Axion International Holdings, Inc.
99.8
  
Joint Filing Agreement.
 
 
10
 

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this Schedule 13D is true, complete and correct.

Date: May 4, 2010
 
 
Harborview Master Fund, L.P.
 
By: Harborview Advisors, LLC
  
       
 
By:
/s/ Richard Rosenblum  
    Name: Richard Rosenblum  
    Title: Managing Member   
       
       
  Harborview Advisors, LLC  
       
  By: /s/ Richard Rosenblum  
    Name: Richard Rosenblum  
    Title: Managing Member   
       
       
  Harborview Capital Management, LLC  
       
  By: /s/ Richard Rosenblum  
    Name: Richard Rosenblum  
    Title: Managing Member   
       
       
  Richard Rosenblum  
       
   /s/ Richard Rosenblum  
       
       
  David Stefansky  
       
  /s/ David Stefansky  
 
 
11
 
EXHIBITS

Exhibit
  
Description of Exhibit
99.1
  
Proposed Term Sheet submitted on April 28, 2010.
99.2
  
10% Convertible Promissory Note, issued on February 1, 2010 and amended and restated on February 22, 2010.
99.3
  
Amended and Restated Purchase Warrant, issued on February 1, 2010 and amended and restated on February 22, 2010.
99.4
  
Purchase Warrant, issued on July 21, 2009.
99.5
  
Amended and Restated 8.75% Convertible Debenture Due December 31, 2010, issued on September 26, 2008 and amended and restated on March 31, 2009.
99.6
  
First Amendment to the 8.75% Convertible Debenture, dated July 22, 1009.
99.7
  
Financial Advisor and Consulting Agreement for Axion International Holdings, dated February 1, 2010, by and between Harborview Capital Management, LLC and Axion International Holdings, Inc.
99.8
  
Joint Filing Agreement.
 
 
12
 
 
 
 EX-99.1 2 hmf_ex991.htm TERM SHEET hmf_ex991.htm
EXHIBIT 99.1
 
PROPRIETARY AND CONFIDENTIAL
 
The purpose of this letter is to set forth the indicative terms pursuant to which, subject to certain conditions set forth herein, Harborview (the “Investor”) would purchase certain securities of Axion International, Inc. (the “Company”), and the Company would sell such securities to the Investor (a “Transaction”). The terms and conditions set forth herein are subject to change and this letter does not constitute an offer. The issuance and sale of such securities is subject to completion of due diligence to the Investor’s satisfaction, the preparation of definitive documentation to effect the Transaction that is mutually satisfactory to each party and, in the case of the Investor, that the Investor shall have determined that subsequent to the date hereof and prior to the clo sing of the Transaction, there shall have been no material adverse developments relating to the business, assets, operations, properties, condition (financial or otherwise) or prospects of the Company and its subsidiaries, taken as a whole.
 
Issuer:
Axion International, Inc.  (“AXIH” or the “Company”)
Investors:
Harborview Master Fund, L.P. and its affiliates (“Harborview”) and other investors acceptable to Harborview (collectively, the “Investors”).  Harborview will invest up to $250,000 in the transaction.
Investment:
Up to $1.0 million of face value Senior Secured Convertible Debentures (the “Debentures”) convertible into AXIH common stock at $1.00 per share (the “Conversion Price”). The Debentures will mature six (6) months after the closing unless extended by Investors holding a majority of the Debentures for up to an additional six (6) months.
Interest:
Interest rate will be 10% per annum. The Company will prepay 6 months of interest which will be held back from the funding at closing.
Rank and Security:
The Debentures will be senior secured obligations of the Company and will be secured by a first priority perfected security interest in all of Company’s assets, including those of its subsidiaries.
The Company will not be permitted to incur additional indebtedness without the Investors’ prior written consent.
Warrants:
Investor will receive 100% warrant coverage to purchase AXIH common stock.  The warrants will expire five (5) years after the issue date.  The Warrants will have the strike price of $1.20.
Prior Financings:
Upon acceptance of this Term Sheet, the Company must immediately terminate that certain Purchase Agreement, dated February 23, 2010, between the Company and Lincoln Park Capital Fund, LLC and withdraw that certain Registration Statement on Form S-1 (Registration No. 333-165616) originally filed with the SEC on March 22, 2010.
Company Call Option:
At anytime, provided no Event of Default then exists under any of the transaction documents, the Company may redeem up to 100% of the Debentures in full at 120% of par plus accrued and unpaid interest.
Change of Control:
Upon a Change of Control of the Company involving the acquisition of voting control or direction over 50% or more of the Company’s outstanding common stock, Investors will have the right to cause the Company to repurchase the Debentures in cash or shares for the greater of A) 150% of the equity value or B) 150% of the issue price plus accrued but unpaid interest.
 
 
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PROPRIETARY AND CONFIDENTIAL
 
Anti-Dilution:
Both Debentures and Warrants will be subject to full-ratchet anti-dilution protection.
Other Transactions:
The Company will not file additional registration statements for six months following the closing without the written consent of the Investors.  The Investors shall be granted a right of first refusal in all financings for a period of 24 months following the closing.
Due Diligence/ Legal Fees:
The Company will pay all of Harborview’s legal and due diligence expenses regardless of whether the transaction is consummated. The Company will advance $40,000 to Harborview as a condition to commence documentation with the balance due upon funding or termination of the transaction.
Harborview Warrrants
As consideration for serving as the lead investor, the Company shall issue Harborview a five year warrant to purchase 10% of the number of shares initially underlying the Debentures at closing at an exercise price of $1.20 per share.
Miscellaneous:
Harborview will have the right to appoint two (2) directors to the Board of Directors concurrently with this transaction.
 
The parties hereby acknowledge, by their signatures below, their mutual agreement to the above terms and conditions.  The parties agree to negotiate in good faith the contemplated transaction in an expeditious manner.  This term sheet is a non-binding letter of intent and the final agreement between the parties remains subject to the mutual agreement upon definitive documentation.  This document is not intended to create, and it does not create, any legal rights, obligations or consequences other than the obligations of the Company under the paragraph entitled "Due Diligence/Legal Fees".

 
Agreed to and Accepted by:
 
Axion International Holdings, Inc.  Harborview Master Fund, L.P.
   
   
Name:     _____________________________ _____________________________
   
Date:      _____________________________  _____________________________
 

 
 
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EX-99.2 3 hmf_ex992.htm PROMISSORY NOTE hmf_ex992.htm
EXHIBIT 99.2
 
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
 
 
Issue Date: February 1, 2010
as amended and restated on February 22,2010
 $300,000.00

 
AXION INTERNATIONAL HOLDINGS, INC.

10% CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, Axion International Holdings, Inc., a Colorado corporation, having its principal place of business at 180 South Street, Suite F,  New Providence, NJ 07974    (the “Company”) promises to pay to Harborview Master Fund, LP, or his registered assigns (the “Holder”) the principal sum of $300,000 on the Maturity Date (as defined below) or such earlier date as this Note is required or permitted to be repaid as provided hereunder in accordance with the provisions hereof.  This Note is subject to the following additional pr ovisions:

Section 1.   Definitions.  For the purposes hereof, in addition to the terms defined elsewhere in this Note, the following terms shall have the following meanings:

“Bankruptcy Event” means any of the following events: (a) the Company commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company; (b) there is commenced against the Company any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment; (e) the Company makes a general assignment for the benefit of creditors; (f) the Company calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (g) the Company, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
 
 
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“Common Stock” means the common stock of the Company, no par value per share, and any securities into which such common stock may hereafter be reclassified.

“Conversion Date” means either (i) the date a Conversion Notice is delivered to the Company together with the Conversion Schedule pursuant to Section 3.
 
“Conversion Notice” means a written notice in the form attached hereto as Schedule 1.
 
“Conversion Price” means $2.00 subject to adjustment from time to time pursuant to Section 6.

“Event of Default” shall have the meaning set forth in Section 5.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Mandatory Default Amount” shall mean 120% of the outstanding principal amount of this Note plus all accrued and unpaid interest thereon.

“Maturity Date” shall mean the earlier of August 1, 2010 or the date on which the Company   consummates a debt or equity financing transaction greater than or equal to $1,000,000 (one million dollars).

“New York Courts” shall have the meaning set forth in Section 7(d).

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Securities Act” the Securities Act of 1933, as amended.

“Trading Days” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market, or (b) if the Common Stock is not then listed or quoted and traded on any Trading Market, then any Business Day.

“Trading Market” means OTC Bulletin Board or any national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted.
 
“Underlying Shares” means the shares of Common Stock issuable (i) upon conversion of, or as payment of interest or principal on, the Notes.
 
 
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Section 2.   Interest.
 
(a)   Payment of Interest.  The outstanding principal amount of this Note shall bear an annual interest rate of ten (10) percent payable on the Maturity Date in cash or other readily available funds; if any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date hereof until the date of actual payment (and before as well as after judgment) at the per annum rate of eighteen percent (18%).

(b)   Interest Calculation. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods and shall accrue daily commencing on the date of issuance and continuing until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder has been made.
 
Section 3.   Conversion.
 
(a)           At the Option of the Holder.  All or any portion of this Note shall be convertible into shares of Common Stock at the option of the Holder, at any time and from time to time from and after the Issue Date.  The number of Underlying Shares issuable upon any conversion hereunder shall equal the outstanding principal amount of this Note to be converted, plus the amount of any accrued but unpaid interest on this Note through the Conversion Date, divided by the Conversion Price on the Conversion Date.  The Holder shall effect conversions under this Section 3(a) by delivering to the Company a Conversion Notice together with a schedule in the form of Schedule 2 attached hereto (the “Conversion Schedule”).  If the Holder is converting less than all of the principal amount of this Note the Company shall honor such conversion and shall promptly deliver to the Holder a Conversion Schedule indicating the principal amount (and accrued interest) which has not been converted.  In the event of a partial conversion of this Note pursuant to the terms hereof, the principal amount converted shall be deducted from the aggregate principal amount of this Note as set forth in the Conversion Notice.
 
(b)           Mechanics of Conversion.
 
(i)   Upon conversion of this Note, the Company shall promptly (but in no event later than three Trading Days after the Conversion Date) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate a certificate for the Underlying Shares issuable upon such conversion, free of restrictive legends unless a registration statement covering the resale of the Underlying Shares and naming the Holder as a selling stockholder thereunder is not then effective under the Securities Act and such Underlying Shares are not then freely transferable without volume restrictions pursuant to Rule 144 under the Securities Act.  The Company has no obligation under this Agreement to file a registration statement to register the sale of the Underlying Shares by the Holder.  The Holder, or any Person so designated by the Holder to receive Underlying Shares, shall be deemed to have become holder of record of such Underlying Shares as of the Conversion Date.  The Company shall, upon request of the Holder, if the Underlying shares are issued free of restrictive legend, use its best efforts to deliver Underlying Shares hereunder electronically through the DTC or another established clearing corporation performing similar functions.
 
 
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(ii)           The Holder shall not be required to deliver the original Note in order to effect a conversion hereunder.  Execution and delivery of the Conversion Notice shall have the same effect as cancellation of the original Note and issuance of a new Note representing the remaining outstanding principal amount.  Upon surrender of this Note following one or more partial conversions, the Company shall promptly deliver to the Holder a new Note representing the remaining outstanding principal amount.
 
(iii)           The Company’s obligations to issue and deliver Underlying Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any set-off, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the is suance of such Underlying Shares.
 
(iv)           If by the third Trading Day after a Conversion Date the Company fails to deliver to the Holder such Underlying Shares in such amounts and in the manner required pursuant to Section 3 then the Holder will have the right to rescind such conversion.
 
(v)           In the event that the Underlying Shares can be delivered free of restrictive legends pursuant to subsection 3(b)(i) of this Agreement, if by the third Trading Day after a Conversion Date the Company fails to deliver to the Holder such Underlying Shares in such amounts and in the manner required pursuant to Section 3 and if after such third Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Underlying Shares which the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Company shall either (x) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions, if any) for the shares o f Common Stock so purchased (the “Buy-In Price”), at which point the Company's obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (y) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Price on the date of the event giving rise to the Company's obligation to deliver such certificate.
 
 
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(c)           Reservation of Shares.  The Company shall at all times reserve and keep available out of its authorized but unissued shares of common stock, solely for the purpose of issuance upon conversion hereunder, such number of shares of Company common stock issuable upon conversion. All shares of such capital stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges.  The Company shall take all such actions as may be necessary to assure that all such shares of capital stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which such shares of capital stock.

Section 4.   Prepayments.  The Company may not prepay any portion of the principal amount of this Note without the prior written consent of the Holder.

Section 5.   Events of Default.

(a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

i. any default in the payment of (A) the principal amount of this Note or other debt obligation of the Company to the Holder; or (B) interest, liquidated damages and other amount owning under this Note or other debt obligation of the Company to the Holder, as and when the same shall become due and payable (whether on the Maturity Date or by acceleration or otherwise), which default is not cured within ten (10) days of the Company’s receipt of written notice from the Holder of such default;

ii. the Company shall fail to observe or perform any other covenant or agreement contained in this Note or any other agreement between the Company and the Holder (other than a default in payment of principal or interest, which breach is addressed in clause (i) above), which failure is not cured within ten (10) days of the Company’s receipt of written notice from the Holder of such failure;

iii. the Company shall be subject to a Bankruptcy Event;

iv. the Company shall default in any of its obligations under any mortgage, credit agreement or other facility or financing instrument that involves an obligation of the Company of greater than $100,000 whether such indebtedness now exists or shall hereafter be created;

v. the Company has entered against it any monetary judgment, writ or similar final process for an amount greater than $100,000.

(b)   Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages or other amounts owing, in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount.  Upon an Event of Default this Note shall accrue interest at the rate of 18% per annum from the date of Default.  The Company hereby waives any presentment, demand, protest or other notice of any kind, and Holder may immediately and without expiration of any grace period enforce any and all of its r ights and remedies hereunder and all other remedies available to it under the applicable laws.
 
 
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Section 6.   Certain Adjustments.  The Conversion Price is subject to adjustment from time to time as set forth in this Section 6.

(a)           Stock Dividends and Splits.  If the Company, at any time while this Note is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of 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 Conversion Price shall be 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 aft er such event.  Any adjustment made pursuant to clause (i) of this Section 6(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this Section 6(a) shall become effective immediately after the effective date of such subdivision or combination.
 
(b)           Pro Rata Distributions.  If the Company, at any time while this Note is outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, “Distributed Property”), then in each such case the Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution shall be adjusted (effective on such record date) to equal the product of such Conversion Price times a fraction of which the d enominator shall be the average of the Closing Prices for the five Trading Days immediately prior to (but not including) such record date and of which the numerator shall be such average less the then fair market value of the Distributed Property distributed in respect of  one outstanding share of Common Stock, as determined by the Company's independent certified public accountants that regularly examine the financial statements of the Company, (an “Appraiser”).  In such event, the Holder, after receipt of the determination by the Appraiser, shall have the right to select an additional appraiser (which shall be a nationally recognized accounting firm), in which case such fair market value shall be deemed to equal the average of the values determined by each of the Appraiser and such appraiser.  As an alternative to the foregoing adjustment to the Conversion Price, at the request of the Holder delivered before the 90th day after such record date, the Company will deli ver to such Holder, within five Trading Days after such request (or, if later, on the effective date of such distribution), the Distributed Property that such Holder would have been entitled to receive in respect of the Underlying Shares for which this Note could have been exercised immediately prior to such record date.  If such Distributed Property is not delivered to a Holder pursuant to the preceding sentence, then upon conversion of this Note that occurs after such record date, such Holder shall remain entitled to receive, in addition to the Underlying Shares otherwise issuable upon such conversion (if applicable), such Distributed Property.
 
 
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(c)           Fundamental Changes.  If, at any time while this Note is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or more transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, c ash or property (other than as a result of a subdivision or combination of shares of Common Stock described in Section 6(a)) (in any such case, a “Fundamental Change”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Underlying Share that would have been issuable upon such conversion absent such Fundamental Change, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Change if it had been, immediately prior to such Fundamental Change, the holder of one share of Common Stock (the “Alternate Consideration”).  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Change, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Change.  In the event of a Fundamental Change , the Company or the successor or purchasing Person, as the case may be, shall execute with the Holder a written agreement providing that:
 
(i)           this Note shall thereafter entitle the Holder to purchase the Alternate Consideration,

(ii)           in the case of any such successor or purchasing Person, upon such consolidation, merger, statutory exchange, combination, sale or conveyance such successor or purchasing Person shall be jointly and severally liable with the Company for the performance of all of the Company's obligations under this Note, and

(iii)          if registration or qualification is required under the Exchange Act or applicable state law for the public resale by the Holder of shares of stock and other securities so issuable upon exercise of this Note, such registration or qualification shall be completed prior to such reclassification, change, consolidation, merger, statutory exchange, combination or sale.
 
If, in the case of any Fundamental Change, the Alternate Consideration includes shares of stock, other securities, other property or assets of a Person other than the Company or any such successor or purchasing Person, as the case may be, in such Fundamental Change, then such written agreement shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing.  At the Holder’s request, any successor to the Company or surviving Person in such Fundamental Change shall issue to the Holder a new Note consistent with the foregoing provisions and evidencing the Holder’s right to convert such Note into Alternate Consideration. The terms of any agreement pursu ant to which a Fundamental Change is effected shall include terms requiring any such successor or surviving Person to comply with the provisions of this Section 6(c) and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Change.
 
 
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(d)           [INTENTIONALLY LEFT BLANK]
 
(e)           Calculations.  All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
 
(f)           Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 6, the Company at its expense will promptly compute such adjustment in accordance with the terms hereof and prepare and deliver to the Holder a certificate describing in reasonable detail such adjustment and the transactions giving rise thereto, including all facts upon which such adjustment is based.
 
(g)           Notice of Corporate Events.  If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Change or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least 20 Trading  Days prio r to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to convert this Note prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.
 
 (h)           No Fractional Shares.  The Company shall not issue or cause to be issued fractional Underlying Shares on conversion of this Note.  If any fraction of an Underlying Share would, except for the provisions of this Section 6, be issuable upon conversion of this Note, the number of Underlying Shares to be issued will be rounded up to the nearest whole share.
 
Section 7.   Miscellaneous.
 
(a)   Notices.  Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number (908) 542-0999, Attention: President, or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance with this Section 7(a).  Any and all notices or other communica tions or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to the Holder at 850 Third Avenue, Suite 1801, New York, New York  10022, facsimile number 616-218-1401.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 7(a) prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 7(a) between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual rec eipt by the party to whom such notice is required to be given.

 
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(b)   Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed.  This Note is a direct debt obligation of the Company.

(c)   Lost or Mutilated Note.  If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, and indemnify, if requested, all reasonably satisfactory to the Company.

(d)   Governing Law; Judicial Proceedings.  All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions hereunder (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient s ervice of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby.

(e)   Waiver.  Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver by the Company or the Holder must be in writing.

(f)   Severability.  If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

(g)   Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(h)   Headings.  The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
 
 
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the first day written above.
 
 
 
AXION INTERNATIONAL HOLDINGS, INC.
  
       
 
By:
/s/ James Kerstein  
    Name: James Kerstein  
    Title: CEO  
       


 
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Schedule 1
 
FORM OF CONVERSION NOTICE
 
(To be executed by the registered Holder
in order to convert Note)
 
The undersigned hereby elects to convert the specified principal amount of Convertible Notes (the “Notes”) into shares of common stock, no par value (the “Common Stock”), of Axion International Holdings, Inc., a Colorado corporation, according to the conditions hereof, as of the date written below.
 
   
  ___________________________________________________________________ 
 
Date to Effect Conversion
   
  ___________________________________________________________________ 
 
Principal amount of Notes owned prior to conversion
   
  ___________________________________________________________________ 
 
Principal amount of Notes to be converted
(including accrued but unpaid interest thereon)
   
  ___________________________________________________________________ 
 
Number of shares of Common Stock to be Issued
   
  ___________________________________________________________________ 
 
Applicable Conversion Price
   
  ___________________________________________________________________ 
 
Principal amount of Notes owned subsequent to Conversion
   
   
  ___________________________________________________________________ 
 
Name of Holder
   
 
By   ________________________________________________________________                                                                               
 
Name:
 
Title:

 
 
11
 
 
Schedule 2
 
 
CONVERSION SCHEDULE
 
This Conversion Schedule reflects conversions of the Convertible Notes issued by Axion International Holdings, Inc.
 
Date of Conversion
Amount of Conversion
Aggregate Principal Amount Remaining Subsequent to Conversion
     
     
 
    
     
     
     
     
     
     
     
     
     
     
     
     



 
12
 
EX-99.3 4 hmf_ex993.htm PURCHASE WARRANT hmf_ex993.htm
EXHIBIT 99.3
 
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
 
Issuance Date: February 1, 2010, as amended and restated on February 22, 2010
 
AXION INTERNATIONAL HOLDINGS, INC..
 
AMENDED AND RESTATED PURCHASE WARRANT
 
WARRANT (“WARRANT”) TO PURCHASE SHARES OF
COMMON STOCK, NO PAR VALUE PER SHARE
 
This is to certify that, FOR VALUE RECEIVED, Harborview Master Fund LP (“Warrantholder”), is entitled to purchase, subject to the provisions of this Warrant, from Axion International Holdings, Inc., a Colorado corporation, having its principal place of business at 180 South Street, Suite F, New Providence, NJ 07974    (the “Company”), at any time and from time to time commencing from February 1, 2010 (“Exercise Date”), but not later than 5:00 P.M., Eastern time, on the fifth (5th) anniversary of the Exercise Date (“Expir ation Date”), a total of One hundred thousand (100,000) shares (“Warrant Shares”) of Common Stock, no par value (“Common Stock”) of the Company, at an initial exercise price per share of $2.50.  The exercise price in effect from time to time is hereafter called the “Warrant Price”.  The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.  This Warrant amends, restates and supersedes the Warrant for 100,000 shares of Company Common Stock from the Company to the Warrantholder issued on February 1, 2010.
 
Section 1. Registration.  The Company shall maintain books for the transfer and registration of the Warrant.  Upon the initial issuance of the Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder.
 
Section 2. Transfers.  As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act or an exemption from registration thereunder.  Subject to such restrictions, the Company shall transfer this Warrant from time to time, upon the books to be maintained by the Company for that purpose, upon surrender hereof for transfer properly endorsed or accompanied by appropriate instructions for transfer upon any such transfer, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.
 
 
1
 
 
Section 3.  Exercise of Warrant.  (a) Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time and from time to time on and after the Exercise Date and ending on the Expiration Date, upon surrender of the original of this Warrant, together with delivery of the duly executed Warrant exercise form attached hereto (the “Exercise Agreement”), to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), and upon payment to the Company in cash, by certified or official bank check or by wire transfer for the account of the Company of the Warrant Price for the Warrant Shares specified in the Exercise Agreement.  The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder’s designee, as the record owner of such shares, as of the close of business on the date on which the completed Exercise Agreement and original of this Warrant, together with the applicable Warrant Price for the Warrant Shares, shall have been delivered to the Company (or such later date as may be specified in the Exercise Agreement).  Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof promptly, after this Warrant shall have been so exercised.  The certificates so delivered shall be in such denominations as may be requested by the h older hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder.  If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised.
 
                      (b)   The Warrantholder may, at its election exercised in its sole discretion, exercise this Warrant and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Warrant Price for the Warrant Shares specified in the Exercise Agreement, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):
 
Net Number = (A x B) - (A x C)
                          --------------------
                                     B
 
For purposes of the foregoing formula:
 
A= the total number of shares with respect to which this Warrant is then being exercised.
 
B= the Closing Sale Price of the Common Stock on the trading day immediately preceding the date of the Exercise Agreement.
 
C= the Warrant Price then in effect at the time of such exercise.
 
 
2
 
 
Section 4. Compliance with the Securities Act of 1933.  Neither this Warrant nor the Common Stock issued upon exercise hereof nor any other security issued or issuable upon exercise of this Warrant may be offered or sold except as provided in this Warrant and in conformity with the Securities Act, as amended, and then only against receipt of an agreement of such person to whom such offer of sale is made to comply with the provisions of this Section 4 with respect to any resale or other disposition of such security.  The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any se curity issued or issuable upon exercise of this Warrant unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary.
 
Section 5. Payment of Taxes.  The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued.  The holder shall be responsible for income taxes due under federal or state law, if any such tax is due.
 
Section 6. Mutilated or Missing Warrants.  In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if reasonably requested by the Company.
 
Section 7. Reservation of Common Stock.  The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved, out of the authorized and unissued Common Stock, a number of shares sufficient to provide for the exercise of the rights of purchase represented by the Warrant in full (without regard to any restrictions on beneficial ownership contained herein).  The Company agrees that all Warrant Shares issued upon exercise of the Warrant in accordance with its terms shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company.
 
Section 8. Warrant Price.  The Warrant Price, subject to adjustment as provided in Section 9, shall be payable in lawful money of the United States of America.
 
Section 9. Adjustments of Warrant Price and Number of Warrant Shares. The number of and kind of securities purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as set forth in this Section 9.
 
 
3
 
 
(a)           Subdivisions, Combinations, Stock Dividends and other Issuances.   If the Company shall, at any time while this Warrant is outstanding, (A) pay a stock dividend or otherwise make a distribution or distributions on any equity securities (including instruments or securities convertible into or exchangeable for such equity securities) in shares of Common Stock, (B) subdivide outstanding shares of Common Stock into a larger number of shares, or (C) combine outstanding Common Stock into a smaller number of shares, then the Warrant Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outsta nding before such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section 9(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.  The number of shares which may be purchased hereunder shall be increased proportionately to any reduction in Warrant Price pursuant to this paragraph 9(a), so that after such adjustments the aggregate Warrant Price payable hereunder for the increased number of shares shall be the same as the aggregate Warrant Price in effect just prior to such adjustments.
 
(b)           Other Distributions. If at any time after the date hereof the Company distributes to holders of its Common Stock, other than as part of its dissolution, liquidation or the winding up of its affairs, any shares of its capital stock, any evidence of indebtedness or any of its assets (other than Common Stock), then the number of Warrant Shares for which this Warrant is exercisable shall be increased to equal: (i) the number of Warrant Shares for which this Warrant is exercisable immediately prior to such event, (ii) multiplied by a fraction, (A) the numerator of which shall be the Fair Market Value (as defined below) per share of Common Stock on the record d ate for the dividend or distribution, and (B) the denominator of which shall be the Fair Market Value price per share of Common Stock on the record date for the dividend or distribution minus the amount allocable to one share of Common Stock of the value (as jointly determined in good faith by the Board of Directors of the Company and the Holder) of any and all such evidences of indebtedness, shares of capital stock, other securities or property, so distributed.  For purposes of this Warrant, “Fair Market Value” shall equal the  average closing trading price of the Common Stock on the Principal Market for the five (5) Trading Days preceding the date of determination or, if the Common Stock is not listed or admitted to trading on any Principal Market, and the average price cannot be determined as contemplated above, the Fair Market Value of the Common Stock shall be as reasonably determined in good faith by the Company’s Board of Directors and the Holder.  If the Fair Market Value of the Common Stock cannot be determined by the Company’s Board of Directors and the Holder after five (5) business days, such determination shall be made by a third party appraisal firm mutually agreeable by the Board of Directors and the Holder, at the expense of the Company (the “Independent Appraiser”).  The fair market value as determined by the Independent Appraiser shall be final.  The Warrant Price shall be reduced to equal: (i) the Warrant Price in effect immediately before the occurrence of any event (ii) multiplied by a fraction, (A) the numerator of which is the number of Warrant Shares for which this Warrant is exercisable immediately before the adjustment, and (B) the denominator of which is the number of Warrant Shares for which this Warrant is exercisable im mediately after the adjustment.
 
 
4
 
 
(c)           Merger, etc. If at any time after the date hereof there shall be a merger or consolidation of the Company with or into or a transfer of all or substantially all of the assets of the Company to another entity, then the Holder shall be entitled to receive upon or after such transfer, merger or consolidation becoming effective, and upon payment of the Warrant Price then in effect, the number of shares or other securities or property of the Company or of the successor corporation resulting from such merger or consolidation, which would have been received by the Holder for the shares of stock subject to this Warrant had this Warrant been exercised just prior t o such transfer, merger or consolidation becoming effective or to the applicable record date thereof, as the case may be.  The Company will not merge or consolidate with or into any other corporation, or sell or otherwise transfer its property, assets and business substantially as an entirety to another corporation, unless the corporation resulting from such merger or consolidation (if not the Company), or such transferee corporation, as the case may be, shall expressly assume in writing the due and punctual performance and observance of each and every covenant and condition of this Warrant to be performed and observed by the Company.
 
(d)           Reclassification, etc.  If at any time after the date hereof there shall be a reorganization or reclassification of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, then the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Warrant Price then in effect, the number of shares or other securities or property resulting from such reorganization or reclassification, which would have been received by the Holder for the shares of stock subject to this Warrant had this W arrant at such time been exercised.
 
(e)           [INTENTIONALLY LEFT BLANK.]

Section 10.  Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of the Warrant.   If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon the exercise of the Warrant (or specified portions thereof), the Company shall round such calculation to the nearest whole number and disregard the fraction.
 
Section 11.  Benefits.  Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder.
 
Section 12.  Notices to Warrantholder.  Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall forthwith give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.  In the event of a dispute with respect to any such calculation, the certificate of the Company’s independent certified public accountants shall be conclusive evidence of the correctness of any computation made, absent manifest error.  Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment.  At the Warrantholder’s request, the Company shall deliver to the Warrantholder as of a requested date a notice specifying the Warrant Price and the number of Warrant Shares into which this Warrant is exercisable as of such date.
 
 
5
 
 
Section 13.  Notices.  Any and all notices or other communications or deliveries to be provided by the Warrantholder hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number (908) 542-0999, Attention: President, or such other facsimile number or address as the Company may specify for such purpose by notice to the Warrantholder delivered in accordance with this Section 13.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be i n writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to the Warrantholder at 850 Third Avenue, Suite 1801, New York,New York 10022 facsimile number 646-218-1401.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 13 prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 13 between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
 
Section 14.  Successors.  All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.
 
Section 15.  Governing Law; Judicial Proceedings.  All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.  The Company and the Warrantholder agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions hereunder (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).  The Company and the Warrantholder hereby irrevocably submit to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  The Company and the Warrantholder hereby irrevocably waive personal service of process and consent to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process an d notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. The Company and the Warantholder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby.
 
 
6
 
 
Section 16.  Definitions.  The following words and terms as used in this Warrant shall have the following meanings:
 
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

“Closing Sale Price” means, for any security, the closing sale price per such security as reported by the Principal Market on the trading day immediately preceding the date on which such value is being determined.

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
 
“Principal Market” means, OTC Bulletin Board or any national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted
 
“Securities Act” means the Securities Act of 1933, as amended.
 
 
7
 

 
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first written above.
 
 
AXION INTERNATIONAL HOLDINGS, INC.
  
       
 
By:
/s/ James Kerstein  
    Name: James Kerstein  
    Title: CEO  
       
 
 
 
8
 
 
SUBSCRIPTION FORM
 
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
 
AXION INTERNATIONAL HOLDINGS, INC.
 
The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Axion International Holdings, Inc., a Colorado corporation (the “Company”), evidenced by the attached Warrant (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 
1.
The undersigned holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.
 
 
2.
The holder intends that payment of the Exercise Price shall be made as (check one):
 
____   “Cash Exercise”
____   “Cashless Exercise” (if permitted)

 
3.
If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.
 
 
4.
Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.
 


Date: _______________ __, ______



   Name of Registered Holder


By:          _______________________ 
Name:
Title:

 
9
 
EX-99.4 5 hmf_ex994.htm PURCHASE WARRANT hmf_ex994.htm
EXHIBIT 99.4
 
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
 
Issuance Date: July 21, 2009
 
AXION INTERNATIONAL HOLDINGS, INC..
 
PURCHASE WARRANT
 
WARRANT (“WARRANT”) TO PURCHASE SHARES OF
 
COMMON STOCK, NO PAR VALUE PER SHARE
 
This is to certify that, FOR VALUE RECEIVED, Harborview Master Fund LP (“Warrantholder”), is entitled to purchase, subject to the provisions of this Warrant, from Axion International Holdings, Inc., a Colorado corporation, having its principal place of business at 665 Martinsville Road, Basking Ridge, New Jersey 07920 (the “Company”), at any time and from time to time commencing from the July 21, 2009 (“Exercise Date”), but not later than 5:00 P.M., Eastern time, on the fifth (5th) anniversary of the Exercise Date (“Expiration Date&# 8221;), a total of One hundred thousand (100,000) shares (“Warrant Shares”) of Common Stock, no par value (“Common Stock”) of the Company, at an initial exercise price per share of $.90.  The exercise price in effect from time to time is hereafter called the “Warrant Price”.  The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.
 
Section 1. Registration.  The Company shall maintain books for the transfer and registration of the Warrant.  Upon the initial issuance of the Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder.
 
Section 2. Transfers.  As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act or an exemption from registration thereunder.  Subject to such restrictions, the Company shall transfer this Warrant from time to time, upon the books to be maintained by the Company for that purpose, upon surrender hereof for transfer properly endorsed or accompanied by appropriate instructions for transfer upon any such transfer, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.
 
 
1
 
 
Section 3.  Exercise of Warrant.  (a) Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time and from time to time on and after the Exercise Date and ending on the Expiration Date, upon surrender of the original of this Warrant, together with delivery of the duly executed Warrant exercise form attached hereto (the “Exercise Agreement”), to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), and upon payment to the Company in cash, by certified or official bank check or by wire transfer for the account of the Company of the Warrant Price for the Warrant Shares specified in the Exercise Agreement.  The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder’s designee, as the record owner of such shares, as of the close of business on the date on which the completed Exercise Agreement and original of this Warrant, together with the applicable Warrant Price for the Warrant Shares, shall have been delivered to the Company (or such later date as may be specified in the Exercise Agreement).  Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the holder hereof promptly, after this Warrant shall have been so exercised.  The certificates so delivered shall be in such denominations as may be requested by the h older hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder.  If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised.
 
                      (b)   The Warrantholder may, at its election exercised in its sole discretion, exercise this Warrant and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Warrant Price for the Warrant Shares specified in the Exercise Agreement, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):
 
Net Number = (A x B) - (A x C)
                          --------------------
                                     B
 
For purposes of the foregoing formula:
 
A= the total number of shares with respect to which this Warrant is then being exercised.
 
B= the Closing Sale Price of the Common Stock on the trading day immediately preceding the date of the Exercise Agreement.
 
C= the Warrant Price then in effect at the time of such exercise.
 
 
2
 
 
Section 4. Compliance with the Securities Act of 1933.  Neither this Warrant nor the Common Stock issued upon exercise hereof nor any other security issued or issuable upon exercise of this Warrant may be offered or sold except as provided in this Warrant and in conformity with the Securities Act, as amended, and then only against receipt of an agreement of such person to whom such offer of sale is made to comply with the provisions of this Section 4 with respect to any resale or other disposition of such security.  The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any se curity issued or issuable upon exercise of this Warrant unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary.
 
Section 5. Payment of Taxes.  The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued.  The holder shall be responsible for income taxes due under federal or state law, if any such tax is due.
 
Section 6. Mutilated or Missing Warrants.  In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if reasonably requested by the Company.
 
Section 7. Reservation of Common Stock.  The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved, out of the authorized and unissued Common Stock, a number of shares sufficient to provide for the exercise of the rights of purchase represented by the Warrant in full (without regard to any restrictions on beneficial ownership contained herein).  The Company agrees that all Warrant Shares issued upon exercise of the Warrant in accordance with its terms shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company.
 
Section 8. Warrant Price.  The Warrant Price, subject to adjustment as provided in Section 9, shall be payable in lawful money of the United States of America.
 
Section 9. Adjustment of Warrant Exercise Price and Number Of Shares.  The Warrant Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows:
 
 
3
 
 
(a) If the Company or any of its subsidiaries shall at any time or from time to time while the Warrant is outstanding, pay a dividend or make a distribution on its capital stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the number of Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in effect immediately prior to the date upon which such change shall become effective, shall be adjusted by the Company so that the Warrantholder thereafter exercising the Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Warrantholder would have received if the Warrant had been exercised immediately prior to such event.  Such adjustment shall be made successively whenever any event listed above shall occur.
 
(b) If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or a ssets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitations, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise hereof.  The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the Company, the obligation to deliver to the holder of the Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase and the other obligations under this Warrant.  The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.
 
(c) In the event that, as a result of an adjustment made pursuant to this Section 9, the holder of this Warrant shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant.
 
 
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(e) In the event of any adjustment pursuant to this Section 9 in the number of Warrant Shares issuable hereunder upon exercise, the Warrant Price shall be inversely proportionately increased or decreased, as the case may be, such that the aggregate purchase price for Warrant Shares upon full exercise of this Warrant shall remain the same.  Similarly, in the event of any adjustment in the Warrant Price, the number of Warrant Shares issuable hereunder upon exercise shall be inversely proportionately increased or decreased, as the case may be, such that the aggregate purchase price for Warrant Shares upon full exercise of this Warrant shall remain the same.

Section 10.   Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of the Warrant.   If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon the exercise of the Warrant (or specified portions thereof), the Company shall round such calculation to the nearest whole number and disregard the fraction.
 
Section 11.    Benefits.  Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder.
 
Section 12.  Notices to Warrantholder.  Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall forthwith give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.  In the event of a dispute with respect to any such calculation, the certificate of the Company’s independent certified public accountants shall be conclusive evidence of the correctness of any computation made, absent manifest error.  Failure to give such notice to th e Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment.  At the Warrantholder’s request, the Company shall deliver to the Warrantholder as of a requested date a notice specifying the Warrant Price and the number of Warrant Shares into which this Warrant is exercisable as of such date.
 
Section 13.   Notices.  Any and all notices or other communications or deliveries to be provided by the Warrantholder hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number (908) 542-0999, Attention: President, or such other facsimile number or address as the Company may specify for such purpose by notice to the Warrantholder delivered in accordance with this Section 13.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to the Warrantholder at the facsimile number or address of the Warrantholder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place of business of the Warrantholder.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 13 prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 13 between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight cour ier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
 
 
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Section 14.  Successors.  All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.
 
Section 15.  Governing Law; Judicial Proceedings.  All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.  The Company and the Warrantholder agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions hereunder (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).  The Company and the Warrantholder hereby irrevocably submit to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  The Company and the Warrantholder hereby irrevocably waive personal service of process and consent to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and not ice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. The Company and the Warantholder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby.

Section 16.   Definitions.  The following words and terms as used in this Warrant shall have the following meanings:
 
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

“Closing Sale Price” means, for any security, the closing sale price per such security as reported by the Principal Market on the trading day immediately preceding the date on which such value is being determined.

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
 
“Principal Market” means, with respect to any security, the principal securities exchange or trading market on which such security is traded
 
“Securities Act” means the Securities Act of 1933, as amended.
 
*********************
 
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first written above.
 
 
AXION INTERNATIONAL HOLDINGS, INC.
  
       
 
By:
/s/ Marc Green  
    Name: Marc Green  
    Title: President  
       
 

 
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SUBSCRIPTION FORM
 
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
 
AXION INTERNATIONAL HOLDINGS, INC.
 
The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Axion International Holdings, Inc., a Colorado corporation (the “Company”), evidenced by the attached Warrant (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 
1.
The undersigned holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.
 
 
2.
The holder intends that payment of the Exercise Price shall be made as (check one):
 
____   “Cash Exercise”
____   “Cashless Exercise” (if permitted)

 
3.
If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.
 
 
4.
Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.
 


Date: _______________ __, ______



   Name of Registered Holder


By:          ________________________ 
Name:
Title:

 
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EX-99.5 6 hmf_ex995.htm DEBENTURE hmf_ex995.htm
EXHIBIT 99.5

 
9/25/08

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION O F THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: September 26, 2008
Original Conversion Price (subject to adjustment herein): $1.50

$172,500

AMENDED AND RESTATED March 31, 2009
8.75% CONVERTIBLE DEBENTURE
DUE  DECEMBER 31, 2010

 
 
FOR VALUE RECEIVED, Axion International Holdings, Inc., a Colorado corporation, having its principal place of business at 665 Martinsville Road, Basking Ridge, New Jersey 07920 (the “Company”) promises to pay to Harborview Master Fund LP or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $172,500 on the Maturity Date (as defined below) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outst anding principal amount of this Debenture in accordance with the provisions hereof.  This Debenture is subject to the following additional provisions:

Section 1.    Definitions.  For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, the following terms shall have the following meanings:

“Alternate Consideration” shall have the meaning set forth in Section 5(e).

 
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        “Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof; (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company or any Significant Subsidiary thereof suffers any appointme nt of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment; (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors; (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(c).

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Buy-In” shall have the meaning set forth in Section 4(d)(v).

“Change of Control Transaction” means the occurrence after the date hereof of any of (i) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 40% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and the Securities issued together with the Debentures), or (ii) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to su ch transaction, the stockholders of the Company immediately prior to such transaction own less than 60% of the aggregate voting power of the Company or the successor entity of such transaction, or (iii) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 60% of the aggregate voting power of the acquiring entity immediately after the transaction, or (iv) a replacement at one time or within a three year period of more than one-half of the members of the Company’s board of directors which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), or (v) the execution by the Company of an agreement to which the Company  is a party or by which it is bound, providing for any of the events set forth in clauses (i) through (iv) above.  Any transaction between the Company and Axion International Inc., whether contemporaneous with the issuance of this amended and restated debenture, or otherwise, shall not be deemed to be a change of control.

 
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“Closing Price” means, on any particular date, (a) the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there is no such price on such date, the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (c) if the Common Stock is not then listed or quoted for the Trading Market and if prices for the Common Stock are then reported in the “pink sheets” published by Pink Sheets LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) if the shares of Common Stock are not publicly traded, the fair market value of  a share of Common Stock as determined by a qualified, independent appraiser selected in good faith by the Purchasers holding at least 50.1% in principal amount of the outstanding Debentures and reasonably acceptable to the Company.

“Common Stock” means the common stock, no par value per share, of the Company and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

“Conversion Date” shall have the meaning set forth in Section 4(a).

“Conversion Price” shall have the meaning set forth in Section 4(b).

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.

“Debenture Register” shall have the meaning set forth in Section 2(b).

“Equity Conditions” means, during the period in question, (i) the Company shall have duly honored all conversions and redemptions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the Holder, if any, (ii) the Company shall have paid all liquidated damages and other amounts owing to the Holder in respect of this Debenture, (iii) all of the Conversion Shares may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the Holder, (iv) the Common Stock is trading on a Trading Market and all of the shares issuable hereunder are listed or quoted for trading on such Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (v) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares issuable hereunder, (vi) there is no existing Event of Default or no existing event which, with the passage of time or the giving of notice, would constitute an Event of Default, (vii) the issuance of the shares in question (or, in the case of an Optional Redemption, the shares issuable upon conversion in full of the Optional Redemption) to the Holder would not violate the limitations set forth in Section 4(c) herein, (viii) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (ix) the Holder is not in possession of a ny information provided by the Company that constitutes, or may constitute, material non-public information and (x) for a period of 20 consecutive Trading Days prior to the applicable date in question, the daily trading volume for the Common Stock on the principal Trading Market exceeds 25,000 shares (subject to adjustment for forward and reverse stock splits and the like) per Trading Day.
 
 
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“Event of Default” shall have the meaning set forth in Section 8.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fundamental Transaction” shall have the meaning set forth in Section 5(e).

“Interest Conversion Rate” means the Conversion Price.

“Interest Conversion Shares” shall have the meaning set forth in Section 2(a).

“Interest Notice Period” shall have the meaning set forth in Section 2(b).

“Interest Payment Date” shall have the meaning set forth in Section 2(a).

“Interest Share Amount” shall have the meaning set forth in Section 2(a).

“Late Fees” shall have the meaning set forth in Section 2(c).

“Mandatory Default Amount”  means the sum of (i) the greater of (A) 120% of the outstanding principal amount of this Debenture, plus all accrued and unpaid interest thereon, or (B) the outstanding principal amount of this Debenture, plus all accrued and unpaid interest hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either (a) demanded (if demand or notice is required to create an Event of Default) or otherwise due or (b) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP, and (ii) all other amounts, costs, expens es and liquidated damages due in respect of this Debenture; provided, however, that solely in connection with Section 8(a)(viii), Mandatory Default Amount shall equal 100% of the outstanding principal amount of this Debenture, all accrued and unpaid interest thereon and all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.

“Maturity Date” shall mean  DECEMBER 31, 2010.

“New York Courts” shall have the meaning set forth in Section 9(d).

“Notice of Conversion” shall have the meaning set forth in Section 4(a).

“Optional Redemption” shall have the meaning set forth in Section 6(a).

“Optional Redemption Amount” means the sum of (i) 120% of the principal amount of this Debenture then outstanding, (ii) accrued but unpaid interest and (iii) all liquidated damages and other amounts due in respect of the Debenture.

“Optional Redemption Date” shall have the meaning set forth in Section 6(a).

 
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“Optional Redemption Notice” shall have the meaning set forth in Section 6(a).

“Optional Redemption Notice Date” shall have the meaning set forth in Section 6(a).

“Original Issue Date” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debentures.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Share Delivery Date” shall have the meaning set forth in Section 4(d).

“Threshold Period” shall have the meaning set forth in Section 6(c).

“Trading Day” means a day on which the principal Trading Market is open for business, and, if the Common Stock is not then listed or quoted for trading on a Trading Market, Trading Day shall mean a Business Day.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the NASD over-the-Counter Bulletin Board.
 
 
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b)  if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted fo r trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company.

 
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Section 2.    Interest.

(a) Payment of Interest in Cash or Kind. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture at the rate of 8.75% per annum, payable quarterly on January 1, April 1, July 1 and October 1 during the terms hereof, on each Conversion Date (as to that principal amount then being converted) and on the Maturity Date (each such date, an “Interest Payment Date”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day), in cash or, at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock (the “Interest Conversion Shares”) at the Interest Conversion Rate (the dollar amount to be paid in shares, the “Interest Share Amount”) or a combination thereof; provided, however, that payment in shares of Common Stock may only occur if the Company shall have given the Holder notice in accordance with the notice requirements set forth below.

(b) Company’s Election to Pay Interest in Cash or Shares of Common Stock.  Subject to the terms and conditions herein, the decision whether to pay interest hereunder in cash, shares of Common Stock or a combination thereof shall be at the sole discretion of the Company.  At least 20 Trading Days immediately prior to the applicable Interest Payment Date (such 20 Trading Day period being “Interest Notice Period”), the Company shall deliver to the Holder a written notice of its election to pay interest hereunder on the applicable Interest Payment Date either in cash, shar es of Common Stock or a combination thereof and the Interest Share Amount as to the applicable Interest Payment Date, provided that the Company may indicate in such notice that the election contained in such notice shall apply to future Interest Payment Dates until revised by a subsequent notice.  During any Interest Notice Period, the Company’s election (whether specific to an Interest Payment Date or continuous) shall be irrevocable as to such Interest Payment Date.  Subject to the aforementioned conditions, failure to timely deliver such written notice to the Holder shall be deemed an election by the Company to pay the interest on such Interest Payment Date in cash.  At any time the Company delivers a notice to the Holder of its election to pay the interest in shares of Common Stock, if a Registration Statement is effective as to such Interest Conversion Shares, the Company shall timely file a prospectus supplement pursuant to Rule 424 disclosing such election.

(c) Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made.  Payment of interest in shares of Common Stock (other than the Interest Conversion Shares issued prior to an Interest Notice Period) shall otherwise occur pursuant to Section 4(d)(ii) herein and, solely for purposes of the payment of interest in shares, the Interest Payment Date shall be d eemed the Conversion Date.  Interest shall cease to accrue with respect to any principal amount converted, provided that, the Company actually delivers the Conversion Shares within the time period required by Section 4(d)(ii) herein.  Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of this Debenture (the “Debenture Register”).

 
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(d) Late Fee.  All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.

(e) Prepayment.  Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture without the prior written consent of the Holder.

Section 3.    Registration of Transfers and Exchanges.
 
(a) Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same.  No service charge will be payable for such registration of transfer or exchange.

(b) [INTENTIONALLY DELETED]

(c) Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

Section 4.    Conversion.
 
(a) Voluntary Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(c) hereof).  The Holder shall effect conversions by delivering to the Company a notice of conversion, the form of which is attached hereto as Annex A (a “Notice of Conversion”), specifying therei n the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”).  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder.  To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion.  The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s), which records shall be reconciled by the Company and the Holder in writing (by facsimile, e-mail or other written form) af ter each such conversion.  The Company may deliver an objection to any Notice of Conversion within 1 Business Day of delivery of such Notice of Conversion. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.

 
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(b) Conversion Price.  The conversion price in effect on any Conversion Date shall be equal to $1.50 subject to adjustment herein (the “Conversion Price”).

(c) Holder’s Restriction on Conversion. The Company shall not effect any conversion of this Debenture, and a Holder shall not have the right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any other person or entity acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Hold er and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company  subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Debentures or the Warrants) beneficially owned by such Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 4(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act.  To the extent that the limitation contained in this Section 4(c) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of which principal amount of this Debenture is convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether this Debenture may be converted (in relation to other securities owned by such Holder together with any Affiliates) and which principal amount of this Debenture is convertible, in each case subject to such aggregate percentage limitations. To ensure compliance with this restriction, each Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination.  In addition, a determination as to any group status as contemplated above shall be deter mined in accordance with Section 13(d) of the Exchange Act.   For purposes of this Section 4(c), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be; (B) a more recent public announcement by the Company; or (C) a more recent notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by such Holder or its Affiliates since the date as of whic h such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture held by the Holder.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(c) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Debenture.

 
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(d) Mechanics of Conversion.
 
i. Conversion Shares Issuable Upon Conversion of Principal Amount.  The number of shares of Common Stock issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price.

ii. Delivery of Certificate Upon Conversion. Not later than three Trading Days after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing the Conversion Shares which representing the number of shares of Common Stock being acquired upon the conversion of this Debenture and (B) a bank check in the amount of accrued and unpaid interest.

iii. Failure to Deliver Certificates.  If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the fifth Trading Day after the Conversion Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such notice and Conversion, in which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return the Common Stock certificates representing the principal amount of this Debenture tendered for conversion t o the Company.

iv. Obligation Absolute; Partial Liquidated Damages.  The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder.  In the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety bond for the benef it of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment.  In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion.  
 
 
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If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the fifth Trading Day after the Conversion Date, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $1000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the tenth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such fifth Trading Day until such certificates are delivered.    Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(d)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to the principal amount of the attempted conversion or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(d)(ii).  60;For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debent ure as required pursuant to the terms hereof.

 
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vi. Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures), not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of this Debenture.  The Com pany covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

vii. Fractional Shares. Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the VWAP at such time.  If the Company elects not, or is unable, to make such a cash payment, the Holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.

viii. Transfer Taxes.  The issuance of certificates for shares of the Common Stock on conversion of this Debenture shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesti ng the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

Section 5.    Certain Adjustments.
 
(a) Stock Dividends and Stock Splits.  If the Company, at any time while this Debenture is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of the Debentures); (B) subdivides outstanding shares of Common Stock into a larger number of shares; (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (D) issues, in the event of a reclassification of shares of the Common Stock, any sh ares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 
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(b) [INTENTIONALLY DELETED]

(c) [INTENTIONALLY DELETED]

(d) [INTENTIONALLY DELETED]

(e) Fundamental Transaction. If, at any time while this Debenture is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effe ctively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”).  For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideratio n issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new debenture consistent with the foregoing provisions and evidencing the Holder’s right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall i nclude terms requiring any such successor or surviving entity to comply with the provisions of this Section 5(e) and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 
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(f) Calculations.  All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

(g) Notice to the Holder.

i. Adjustment to Conversion Price.  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly mail to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Conversion by Holder.  If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of a ll or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Debenture Register, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice.
 
 
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Section 6.    Redemption and Forced Conversion.

(a) Optional Redemption at Election of Company.  Subject to the provisions of this Section 6, the Company may deliver a notice to the Holder (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem some or all of the then outstanding principal amount of this Debenture for cash in an amount equal to the Optional Redemption Amount on the 20th Trading Day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date” and such redemption, the “Optional Redemption”).  The Optional Redemption Amount is payable in full on the Optional Redemption Date.  The Company may only effect an Optional Redemption if each of the Equity Conditions shall have been met on each Trading Day during the period commencing on the Optional Redemption Notice Date through to the Optional Redemption Date and through and including the date payment of the Optional Redemption Amount is actually made.  If any of the Equity Conditions shall cease to be satisfied at any time during the 20 Trading Day period, then the Holder may elect to nullify the Optional Redemption Notice by notice to the Company within 3 Trading Days after the first day on which any such Equity Condition has not been met in which case the Optional Redemption Notice shall be null and void, ab initio.

(b) Redemption Procedure.  The payment of cash or issuance of Common Stock, as applicable, pursuant to an Optional Redemption shall be payable on the Optional Redemption Date.  If any portion of the payment pursuant to an Optional Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is paid in full.  Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount remains unpaid after such date, the Holder may elect, by written n otice to the Company given at any time thereafter, to invalidate such Optional Redemption, ab initio, and the Company shall have no further right to exercise such Optional Redemption.  The Holder may elect to convert the outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Company.  The Company covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the Optional Redemption Notice through the date all amounts owing thereon are due and paid in full.

(c) Forced Conversion. Notwithstanding anything herein to the contrary, if the VWAP for each of any 30 consecutive Trading Days (such period the “Threshold Period”), exceeds $0.80 (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the Original Issue Date), the Company may, within 1 Trading Day after the end of any such Threshold Period, deliver a written notice to the Holder (a “Forced Conversion Notice” an d the date such notice is delivered to the Holder, the “Forced Conversion Notice Date”) to cause the Holder to convert all or part of the then outstanding principal amount of this Debenture plus, if so specified in the Forced Conversion Notice, accrued but unpaid interest, liquidated damages and other amounts owing to the Holder under this Debenture, it being agreed that the “Conversion Date” for purposes of Section 4 shall be deemed to occur on the third Trading Day following the Forced Conversion Notice Date (such third Trading Day, the “Forced Conversion Date”).  The Company may not deliver a Forced Conversion Notice, and any Forced Conversion Notice delivered by the Company shall not be effective, unless all of the Equity Conditions are met on each Trading Day occurring during the applicable Threshold Period through and including t he later of the Forced Conversion Date and the Trading Day after the date such Conversion Shares pursuant to such conversion are delivered to the Holder.  For purposes of clarification, a Forced Conversion shall be subject to all of the provisions of Section 4, including, without limitation, the provision requiring payment of liquidated damages and limitations on conversions.

 
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Section 7.    Negative Covenants. As long as any portion of this Debenture remains outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

(a) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to (a) the Conversion Shares or Warrant Shares and (b) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors during the term of this Debenture);

(b) pay cash dividends or distributions on any equity securities of the Company;

(c) enter into any transaction with any Affiliate of the Company (other than reasonable fees and compensation paid to and indemnity provided on behalf of officers, directors, employees or consultants of the Company or any of its Subsidiaries and transactions exclusively between or among the Company and any of its Subsidiaries) which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval);

(d) issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share that is lower than the VWAP on the record date referenced below;

(e) distribute to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security; or

(f) enter into any agreement with respect to any of the foregoing.

Section 8.    Events of Default.

(a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 
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i. any default in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within 3 Trading Days;

ii. the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (xi) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other Holder and (B) 10 Trading Days after the Company has become or should have become aware of such failure;

iii. the Company or any Significant Subsidiary shall be subject to a Bankruptcy Event;

iv. the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $500,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

v. the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or in excess of 40% of its and it Subsidiaries’ assets on a consolidated basis in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);

vi. the Company shall fail for any reason to deliver certificates to a Holder prior to the tenth Trading Day after a Conversion Date pursuant to Section 4(d) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Debentures in accordance with the terms hereof;

vii. any monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days.

 
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(b) Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount.  Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law.  Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company.  In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b).  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

Section 9.    Miscellaneous.
 
(a) Notices.  Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number (908) 542-0999, Attention: President or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance with this Sect ion 9.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place of business of the Holder.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 9 prior to 5:30 p.m. (New York City time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 9 between 5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date, (iii ) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

(b) Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed.  This Debenture is a direct debt obligation of the Company.  This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein.

(c) Lost or Mutilated Debenture.  If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, and indemnify, if requested, all reasonably satisfactory to the Company.

 
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(d) Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions hereunder (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan ( the “New York Courts”).  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

(e) Waiver.  Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture.  The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture.  Any waiver by the Company or the Holder must be in writing.

(f) Severability.  If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 
18
 
 
(g) Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(h) Headings.  The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.

(i) Assumption.  Any successor to the Company or any surviving entity in a Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Debenture pursuant to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed) and (ii) issue to the Holder a new debenture of such successor entity evidenced by a written instrument substantially similar in form and substance to this Debenture, including, without limitation, having a principal amount and interest rate equal to the principal amount and the interest rate of this Debenture and hav ing similar ranking to this Debenture, which shall be satisfactory to the Holder (any such approval not to be unreasonably withheld or delayed).  The provisions of this Section 9(i) shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations of this Debenture.


*********************

 
 
19
 

IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the 31st day of  March, 2009
 

 
  AXION INTERNATIONAL HOLDINGS, INC.  
       
 
By:
/s/ Marc Green  
    Name: Marc Green  
    Title: President  
       

 


 
 
20
 

ANNEX A

NOTICE OF CONVERSION


The undersigned hereby elects to convert principal under the 8.75% Secured Convertible Debenture due  December 31, 2010 of Axion International Holdings, Inc., a Colorado corporation (the “Company”), into shares of common stock, no par value per share (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below.  If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in a ccordance therewith.  No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d) of the Exchange Act.

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:                                                    Date to Effect Conversion:

 Principal Amount of Debenture to be Converted:

 Number of shares of Common Stock to be issued:


 Signature:

 Name:

 Address:


 
1
 

Schedule 1

CONVERSION SCHEDULE

The 8.75% Secured Convertible Debentures due on  DECEMBER 31, 2010 in the aggregate principal amount of $____________ are issued by Axion International Holdings, Inc., a Colorado corporation.  This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.

Dated:


 
Date of Conversion
(or for first entry, Original Issue Date)
 
Amount of Conversion
 
Aggregate Principal Amount Remaining Subsequent to Conversion
(or original Principal Amount)
 
Company Attest
       
       
 
      
       
       
       
       

 
2
 


 
EX-99.6 7 hmf_ex996.htm DEBENTURE hmf_ex996.htm
EXHIBIT 99.6
 
First Amendment to the 8.75% Convertible Debenture

This First Amendment to the 8.75% Convertible Debenture (this “Amendment”) is made and entered into as of July 22, 2009, by and among Axion International Holdings, Inc., a Colorado corporation (the “Company”), and Harborview Master Fund LP, (the “Holder”).
 
WHEREAS, the Company and the Holder entered into an 8.75% Convertible Debenture, due December 31, 2010 in the principal amount of $172,500 (the “Debenture”);
 
WHEREAS, the the Company and the Holder wish to amend certain provisions in the Debenture, as set forth herein; and
 
WHEREAS, the Debenture may be amended with an instrument in writing signed by the Company and the Holder.
 
NOW, THEREFORE, in consideration of the premises and of the mutual promises, covenants, representations and warranties made herein, the Company and the Holder intending to be legally bound, hereby agree as follows:
 
1.  Definitions.  Unless otherwise defined herein, capitalized terms used in this Amendment shall have the meanings ascribed to them under the Debenture.
 
2.  Amendment.  Section 4(b) of the Debenture shall be amended in its entirety to read as follows:
 
“Conversion Price.  The conversion price in effect on any Conversion Date shall be equal to $1.25 subject to adjustment herein (the “Conversion Price”).”
 
3.  Survival of Provisions.  Except as specifically amended above, the Debenture is hereby ratified, confirmed, and acknowledged and shall remain in full force and effect.
 
4.  Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original instrument and all of which together shall constitute a single agreement.  The exchange of a fully executed Amendment (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the Company and the Holder to the terms and conditions of this Amendment, as an original.
 
*                           *                           *
 
 
 
 
 
IN WITNESS WHEREOF, the Company and the Holder, intending to be legally bound, have executed this First Amendment to the 8.75% Convertible Debenture as of the date first written above.
 
 
 
Axion International Holdings, Inc.
  
     
 
 /s/ James Kerstein  
  By: James Kerstein  
  Title: Chief Executive Officer  
                                                                                                                                    
 
  Harborview Master Fund LP  
     
 
 /s/ Terri McGregor  
  By: Terri McGregor  
  Title: Navigator Management Ltd. - Authorized Signatory  
                                                                                                                                    
 
 
 /s/ Peter Cooper  
  By: Peter Cooper  
  Title: Navigator Management Ltd. - Authorized Signatory  
                                                                                                                                   

 
 
 

EX-99.7 8 hmf_ex997.htm CONSULTING AGREEMENT hmf_ex997.htm
EXHIBIT 99.7
 
HARBORVIEW CAPITAL MANAGEMENT, LLC
850 Third Avenue, Suite 1801
New York, NY  10022
Tel: (646) 218-1400


February 1, 2010

Mr. James Kerstein
Chief Executive Officer
Axion International Holdings, Inc.
180 South Street, Suite F  
New Providence, NJ 07974   

RE:          Financial Advisor and Consulting Agreement for
Axion International Holdings, Inc.


Dear Mr.  Kerstein:

This letter confirms our understanding that Harborview Capital Management, LLC (“HCM”) has been engaged to act as the financial advisor and consultant in connection with: (i) any potential recapitalization of Axion International Holdings, Inc.. (“the Company”), (ii) the license or sale of some or all of the Company’s technology (“Technology Partner”) and (iii) a capital raise (“Private Placement”). HCM in this capacity will work with management and review and advise the company on strategic issue s as reasonably requested by the Company and help identify both potential Technology Partners and funding opportunities for a period of twelve months (the “Term”) from the date of this Agreement. Upon the Company’s acceptance, this letter agreement (“Agreement”) will confirm the terms of the engagement agreed to between HCM and the Company on the terms set forth herein.  The terms of HCM’s engagement are as follows:

1.  Relationship of Parties.  Nothing contained in this Agreement shall be construed to place HCM and the Company in the relationship of partners or joint ventures.  Neither HCM nor the Company shall represent itself as the representative or legal representative of the other for any purpose whatsoever nor shall either have the power to obligate or bind the other in any manner whatsoever.  The Company’s engagement of HCM is not intended to confer rights upon any person not a party hereto (including shareholders, directors, officers, employees or creditors of the Company) as a gainst HCM or its affiliates, or their respective directors, officers, employees or representatives, successors or assigns.  HCM, in performing its services hereunder, shall at all times be an independent contractor.  No promises or representations have been made, except as expressly set forth in this Agreement, and the parties have not relied on any promises or representations except as expressly set forth in this Agreement.  Nothing contained herein should be construed as creating any fiduciary duties between the parties, or between HCM and the Company.
 
2. Terms of the Transaction(s).  It is the sole discretion of the Company to accept or reject the terms of any proposed transaction.
 
3. Compensation.  As compensation for services rendered and to be rendered hereunder by HCM, the Company agrees to pay HCM as follows:
 
(a) 200,000 shares of common stock of Axion International Holdings, Inc.
 
(b) The Company will reimburse HCM in a timely manner for all out-of-pocket expenses relating to activities under this Agreement, including without limitation, travel and other related expenses as well as the legal fees incurred by HCM and its members.  HCM will not incur any single expense in excess of $1,500 without the Company’s prior approval. Such reimbursements shall be made promptly upon submission by HCM.
 
(c) In addition, HCM shall be entitled to receive additional compensation upon successful completion of a transaction with a Technology Partner (the “Additional Compensation”).  For purposes hereof, if as a result of HCM’s efforts pursuant to this engagement, the Company is sold to or acquires another party (or its assets) or sells or licenses technology to another party, then the term “Technology Partner” shall mean such other party. The Additional Compensation shall be as follows:
 
Upon the successful closing of a transaction with any Technology Partner either during the term of this agreement or within one (1) year following the naming of a Technology Partner identified by HCM, HCM shall be paid a cash fee (the "Cash Fee") of the greater of (i) US $250,000 or (ii) a percentage of the Transaction Value (as defined below) of each transaction based upon the following scale: $250,000 plus 5% of the amount between $5,000,001 and $10,000,000 in total consideration; plus 4% of the amount between $10,000,001 and $20,000,000 in total consideration; plus 3% of any amount of total consideration paid in excess of $20,000,000. In addition, upon the successful closing of a transaction in which the Company is the acquiring or surviving entity, HCM shall receive a warr ant (the "Transaction Warrant") to purchase shares of the Company's common stock. The number of shares that may be purchased pursuant to such Transaction Warrant shall equal a percentage of the Transaction Value based upon two and one-half percent (2.5%) for the first $10,000,000; plus one and one-half percent (1.5%) for the next $10,000,000; plus an additional one percent (1%) for any Transaction Value above $20,000,000, divided by the applicable exercise price.  The Transaction Warrant shall have the same exercise price per share as the exercise price of warrants issued by the Company to a Technology Partner in an applicable transaction; or, if warrants are not issued to any Technology Partner by the Company in the applicable transaction, the Transaction Warrant shall have an exercise price equal to one hundred twenty five percent (125%) of the closing price of the Company’s common stock on the OTCBB (or such other exchange that is the primary exchange for its common stock) on the date the transaction closes. All Transaction Warrants received by HCM pursuant to this Agreement shall have a term of five (5) years (beginning on the date of issuance), and be exercisable at any time in whole or in part.
 
 
 
 
 
The Cash Fee shall be due and payable to HCM by wire transfer immediately following the closing with a Technology Partner.

 
With respect to any part of the Transaction Value to be delivered to the Company by a Technology Partner after the closing of a transaction, such consideration shall constitute Transaction Value only upon the Company's actual receipt of such consideration. The Company shall pay to HCM any applicable Additional Compensation with respect to Transaction Value delivered after the closing of the applicable transaction only if and when the Company actually receives such Transaction Value.

 
For purposes hereof, "Transaction Value" shall mean (x) in the case of a merger, where the Company is the surviving entity, the post-transaction Enterprise Value (hereinafter defined) of the consolidated entity, (y) in the case of a sale, merger or other transaction where the Company is not the surviving entity, the pre-transaction Enterprise Value of the Company, (z) in the case of an acquisition by the Company of assets or equity of a Technology Partner, the market value of such assets or equity, less any debt assumed by the Company or encumbering the assets acquired and (zz) in the case of a sale or licensing of assets, products or technology by the Company to a Technology Partner, the aggregate consideration or fees received by the Company pursuant to such transaction (net of direct expenses agreed to be paid by the Company pursuant to such transaction).
 
For purposes hereof, “Enterprise Value” shall mean the sum of (a) common equity at market value, plus (b) debt, plus (c) preferred equity at market value.

 
4. Private Placement Fee. As compensation for its services in connection with the Private Placement, the Company shall pay to HCM or its designee a cash placement fee equal to ten percent (8%) of the aggregate purchase price paid by each purchaser of securities that were placed in an offering (the “Placement Agent’s Fee”) at each closing (“Placement Closing”).  The Placement Agent’s Fee will be deducted from the gross proceeds of the securities sold at each Placement Closing. The Company shall also pay to HCM or its designee a cash fee equal to eight percent (8%) of all amounts received by the Company in connection with the exercise of any Warrants by investors introduced by HCM or its designee.
 
Warrants. In addition to the Placement Agent’s Fee, upon the closing of the sale of securities in connection with the offering, the Company shall issue to HCM or its designee warrants to purchase a number of shares of the Company’s common stock equal to eight percent (8%) of the gross proceeds of the sale of securities (the “PA Warrants”).  The PA Warrants shall be exercisable at 100% of the offering price of the securities sold.  The PA Warrants shall expire five (5) years from the date of issuance.  The PA Warrants shall be in the same form, including, without limitation, the same registration rights and anti-dilution provisions, as the securities sold in the offering ; provided, however, the PA Warrants shall include a “net issuance” cashless exercise feature.
 
Fee Tail.  HCM or its designee shall be entitled to a Placement Agent’s Fee, calculated in the manner provided in this Paragraph 4, with respect to any securities purchased in any subsequent offering (“Subsequent Offering”) by investors whom HCM or its designee had introduced to the Company during the Term if such Subsequent Offering is consummated at any time within (i) the 12-month period following the consummation of the offering and (ii) if no offering shall have been consummated during the Term, the 12-month period following the expiration or termination of this Agreement.  All investors introduced by HCM or its designee during the Term shall be set forth on Schedule A annexed her eto and made a part hereof.  Subsequent to the date of this Agreement and immediately upon the introduction of an Investor to the Company, HCM shall amend Schedule A to include each additional Investor and deliver such amended Schedule A to the Company within ten (10) days of such introduction.
 
5. Compliance With Applicable Law.  In the execution of this Agreement, both the Company and HCM each agrees to comply in all material respects with applicable provisions of the Securities Act of 1933 (“Act”) and any regulations thereunder and any applicable state laws and requirements.
 
 
The Company acknowledges and agrees that HCM has been retained solely to provide the advice or services set forth in this Agreement. HCM is not licensed as a broker-dealer or investment advisor under applicable federal or state securities laws, and both HCM and the Company acknowledges and agree that the advisory services to be performed hereunder shall not include any activity for which HCM would be required to be licensed as a broker-dealer or investment advisor. The Company further acknowledges that HCM is not being retained to provide or render any formal opinion to the Company or its shareholders on the appropriateness or fairness of any transaction.
 
 
 
 
 
6. Indemnification.  The Company agrees to indemnify HCM in accordance with the indemnification and other provisions attached to this Agreement as Exhibit A (the “Indemnification Provisions”), which provisions are incorporated herein by reference and shall survive the termination or expiration of this Agreement.  Notwithstanding any provision of this engagement letter to the contrary, the Company agrees that neither HCM  nor its affiliates, and the respec tive officers, directors, employees, representatives and each other person, if any, controlling HCM  or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein except for liability imposed by applicable law in connection with their actions/omissions as representative for the transaction(s).
 
7. Termination; Survival of Provisions.  This Agreement may be terminated by HCM, or the Company at any time upon ninety (90) days prior written notice to the other party (the “Termination Date”); provided, however, that: (a) any termination or completion of HCM ’s engagement hereunder shall not affect the Company’s obligation to indemnify HCM  as provided in the Indemnification Provisions and (b) any termination by HCM and the Company’s engagement hereun der shall not affect the Company’s obligation to pay fees as provided for in Section 3 herein; and (c) any termination by the Company of HCM’s engagement hereunder shall not affect the Company’s obligation to pay fees and reimburse the expenses accruing prior to such termination to the extent provided for herein.  All such fees and reimbursements due shall be paid to HCM on or before the Termination Date (in the event such fees and reimbursements are earned or owed as of the Termination Date) or upon the closing of the Transaction(s) or any applicable portion thereof (in the event such fees are due pursuant to the terms of Section 3 hereof).  The provisions of Sections 1,3,4,6 and 10 shall survive any termination of this Agreement.
 
8. Information.  In connection with HCM’s activities hereunder, the Company will furnish or use its best efforts to cause the Company to furnish HCM with all materials and information regarding the business and financial condition of the Company necessary to provide the services described herein (the “Information”). The Company acknowledges and agrees that HCM shall rely upon such Information in providing the services and advice required hereunder, and that such services and advice are nessarily limited by the accuracy and completen ess of the Information provided to HCM.
 
9. Entire Agreement; Amendments; Headings.  This Agreement, including the exhibits hereto, constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior oral or written agreements or understandings of the parties.  This Agreement may not be modified or amended except in writing duly executed by the parties hereto.  The section headings in this Agreement have been inserted as a matter of convenience of reference and are not part of this Agreement.
 
10. Nondisclosure of Confidential Information.  HCM and the Company mutually agree that they will not disclose any confidential information received from the other party to others except with the written permission of the other party or as such disclosure may be required by law.  HCM has been retained under this Agreement as an independent contractor with duties owed solely to the Company.  The advice, written or oral, rendered by HCM pursuant to this Agreement is intended solely for the benefit and use of the Company in considering the matters to which this Agreement relates, and the Company agrees that such advice may not be relied upon by any other person, used for any other purpose, reproduced, disseminated, or referred to at any time, in any manner or for any purpose, nor shall any public references to HCM be made by the Company, without the prior written consent of HCM, which consent shall not be unreasonably withheld.
 
11. Successors and Assigns.  The benefits of this Agreement shall inure to the parities hereto, their respective successors and assigns and to the indemnified parties hereunder and their respective successors and assigns, and the obligations and liabilities assumed in this Agreement shall be binding upon the parties hereto and their respective successors and assigns. Notwithstanding anything contained herein to the contrary, neither HCM nor the Company shall assign to an unaffiliated third party any of its obligations hereunder.
 
12. Press Announcements.  The Company agrees that HCM shall, upon a successful transaction, have the right to place advertisements in financial and other newspapers and journals at its own expense describing its services to the Company hereunder, provided that HCM shall submit a copy of any such advertisement to the Company for its approval, such approval not to be unreasonably withheld.
 
13. Counterparts.  For the convenience of the parties, this Agreement may be executed in any number of counterparts, each of which shall be, and shall be deemed to be, an original instrument, but all of which taken together shall constitute one and the same Agreement.  Such counterparts may be delivered by one party to the other by facsimile or other electronic transmission, and such counterparts shall be valid for all purposes.
 
If the terms of our engagement as set forth in this letter are satisfactory to you, please sign and date the enclosed copy of this letter and submit it back to us. The Company’s signature below shall constitute its agreement to the terms hereof.
 
 
    Very truly yours,
 
 
  Harborview Capital Management, LLC  
       
 
By:
/s/ Richard Rosenblum  
    Richard Rosenblum  
    Principal  
       
 
 
ACCEPTED AND AGREED TO: as of the date first written above:
           
 
  Axion International Holdings, Inc.  
       
 
By:
/s/ James Kerstein  
    James Kerstein  
    Chief Executive Officer  
       
         
 
 
 

Exhibit A

INDEMNIFICATION PROVISIONS

Capitalized terms used in this Exhibit shall have the meanings ascribed to such terms in the Agreement to which this Exhibit is attached.
 
The Company agrees to indemnify and hold harmless HCM  and each of the other Indemnified Parties (as hereinafter defined) from and against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, and any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing, pursing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which any Indemnified Party is a party) (collectively, “Losses”), directly or indirectly, caused by, relating to, based upon, arising out of, or in connection with, HCM’s acceptance of or the performance or non-performance of its obligations under the Agreement between the Company and HCM  (including without limitation HCM or its designees as the Company’s observer on the board of directors of the Company) to which these indemnification provisions are attached and form a part, any breach by the Company of any representation, warranty, covenant or agreement contained in the Agreement (or in any instrument, document or agreement relating thereto, including any agency agreement), or the enforcement by HCM of its rights under the Agreement or these indemnification provisions, except to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross negligence or willful misconduct of the Indemnif ied Party seeking indemnification hereunder. The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement of HCM by the Company or for any other reason, except to the extent that any such liability is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct.
 
These Indemnification Provisions shall extend to the following persons (collectively, the “Indemnified Parties”):  HCM, its present and former affiliated entities, managers, members, officers, employees, legal counsel, representatives and controlling persons (within the meaning of the federal securities laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, representatives and controlling persons of any of them.  These indemnification provisions shall be in addition to any liability which the Company may otherwise have to any Indemnified Party.
 
If any action, suit, proceeding or investigation is commenced, as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable promptness; provided, however, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from its obligations hereunder, except insofar as the Company shall have been materially prejudiced by such delay.  Indemnified Party shall have the right to retain counsel of its own choice to represent it, and the fees, expenses and disbursements of such counsel shall be borne by the Company.  Any such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and the Company counsel.  The Indemnified Par ties shall cooperate with the Company in any defense, except such matters in respect of which the Indemnified Parties counsel shall advise the Indemnified Parties that such cooperation would impair a defense available to the Indemnified Parties that is unavailable to the Company.  The Company shall be liable for any settlement of any claim against any Indemnified Party made with the Company’s written consent.  The Company shall not, without the prior written consent of HCM, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent: (i) includes, as an unconditional term thereof, the giving by the claimant to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (ii) does not contain any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character, professionalism, exper tise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.
 
In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to which any Indemnified Party may be subject: (i) in accordance with the relative benefits received by the Company and its stockholders, subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (ii) if (and only if) the allocation provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative benef its, but also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in such Losses as well as any relevant equitable considerations.  No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation.  The relative benefits received (or anticipated to be received) by the Company and it stockholders, subsidiaries and affiliates shall be deemed to be equal to the aggregate consideration payable or receivable by such parties in connection with the transaction or transactions to which the Agreement relates relative to the amount of fees actually received by HCM in connection with such transaction or transactions.  Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of fees previously received by HCM pursuan t to the Agreement.
 
Neither termination nor completion of the Agreement shall affect these Indemnification Provisions which shall remain operative and in full force and effect.  The Indemnification Provisions shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Indemnified Parties and their respective successors, assigns, heirs and personal representatives.
 EX-99.8 9 hmf_ex998.htm JOINT FILING AGREEMENT hmf_ex998.htm
EXHIBIT 99.8

JOINT FILING AGREEMENT

Pursuant to and in accordance with the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, each party hereto hereby agrees to the joint filing, on behalf of each of them, of any filing required by such party under Section 13 or Section 16 of the Exchange Act, or any rule or regulation thereunder (including any amendment, restatement, supplement, and/or exhibit thereto), with the Securities and Exchange Commission (and, if such security is registered on a national securities exchange, also with the exchange), and further agrees to the filing, furnishing, and/or incorporation by reference of this agreement as an exhibit thereto.  This agreement shall remain in full force and effect until revoked by any party hereto in a signed writing provided to each other party hereto, and then only with respect to such revoking party.

IN WITNESS WHEREOF, each party hereto, being duly authorized, has caused this agreement to be executed and effective as of the date below.

Date: May 4, 2010
 
 
Harborview Master Fund, L.P.
 
By: Harborview Advisors, LLC
  
       
 
By:
/s/ Richard Rosenblum  
    Name: Richard Rosenblum  
    Title: Managing Member   
       
       
  Harborview Advisors, LLC  
       
  By: /s/ Richard Rosenblum  
    Name: Richard Rosenblum  
    Title: Managing Member   
       
       
  Harborview Capital Management, LLC  
       
  By: /s/ Richard Rosenblum  
    Name: Richard Rosenblum  
    Title: Managing Member   
       
       
  Richard Rosenblum  
       
   /s/ Richard Rosenblum  
       
       
  David Stefansky  
       
  /s/ David Stefansky  
 

 
 
 
 
 

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