CASTLERIGG MASTER INVESTMENTS, LTD.
c/o Sandell Asset Management
40 West 57th Street, 26th Floor
New York, New York 10019
March 20, 2009
Perf-Go Green Holdings, Inc.
645 Fifth Avenue
New York, New York 10022
Re: Waiver
Ladies and Gentlemen:
Reference is hereby made to (i)
those certain 10% Senior Secured Convertible Debentures, dated June
10, 2008 (the “ Notes ”) of Perf-Go Green
Holdings, Inc., a Delaware corporation (the “ Company
”) in favor of Castlerigg Master Investments Ltd (the “
Investor ”) and each of the other investors who are
holders of Notes (the “ Other Investors ” and
together with the Investor, the “ Investors ”),
(ii) that certain Subscription Agreement, dated June 10, 2008, by
and among the Company and the Investor (the “ Subscription
Agreement ”) (iii) that certain Security Agreement, dated
June 10, 2008, by and among the Company and the Investors (the
“ Security Agreement ”), and (iv) those certain
Warrants to Purchase Common Stock of the Company, dated June 10,
2008, for the benefit of each of the Investors (the “
Warrants ” and together with the Notes and
Subscription Agreements, the “ Transaction Documents
”). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to them in the
Notes.
As of the Effective Date (defined
below), the Investor hereby agrees that, notwithstanding anything
contained in Sections 6(a) and 6(b) of its Note and the Transaction
Documents, the Company shall be permitted to enter into the
Factoring Agreement and Supply Agreement dated as of March 20, 2009
as attached hereto as Exhibit A (“ Inventory and
Receivables Line of Credit ”) and the transactions
contemplated therein. This waiver (the “ Waiver
”) shall be limited to the Company entering into the
Inventory and Receivables Line of Credit and, except as
specifically set forth in this Waiver, no other terms of the Note
or Security Agreement shall be construed waived or modified by the
terms hereof.
As of the Effective Date, the
Company shall issue a warrant (the “ New Warrant
”) to the Investor for 5,000,000 shares of the
Company’s Common Stock at an exercise price of $0.50 per
share and with a maturity date of five years from the Effective
Date. The New Warrant shall, other than as specifically set forth
in the previous sentence, be on substantially the same terms as set
forth in the Warrant.
Issuance of the New Warrant triggers
anti-dilution rights set forth in the Warrants and the terms of the
Warrant held by the Investor shall be modified such that the (i)
Exercise Price (as defined in the Warrant) shall be adjusted to
$0.50 per share and (ii) number of shares of Common Stock (as
defined in the Warrant) which may be purchased by the Investor
under the Warrant shall be 6,666,666. The Company agrees to take
such actions as are necessary to comply with Section (b) of the
Warrant to ensure that a sufficient number of shares of its Common
Stock shall be reserved for exercise of the Warrant by the Investor
(including amending the Company’s Certificate of
Incorporation within the next twelve months in order to increase
the number of shares the Company is authorized to issue). All other
terms of the Warrant shall remain in full force and effect and the
Company agrees to comply with all of the terms of the Warrant
including, without limitation, those set forth in Section
(g).
The Company further acknowledges
that the issuance of the New Warrant triggers anti-dilution rights
as set forth in Section 5(b) of the Note. As a result of such
anti-dilution rights, the Conversion Price (as defined in the Note)
shall be adjusted to $0.50 in the Note. The Company agrees to take
such actions as are necessary to comply with Section 4(c)(v) of the
Note to ensure that a sufficient number of shares of its Common
Stock shall be reserved for exercise of the Note by the Investor
(including amending the Company’s Certificate of
Incorporation within the next twelve months in order to increase
the number of shares the Company is authorized to issue). All other
terms of the Note shall remain in full force and effect and the
Company agrees to comply with all of its terms and
conditions.
The Company represent and warrants
to the Investor that the Transaction Documents are in full force
and effect and no default has occurred thereunder.
This Waiver shall become effective
upon the execution and delivery of this Waiver by the parties
hereto and the execution and delivery of waivers (in form
substantially and materially similar to the terms of this Waiver)
from the Company and each Other Investor (such date, the “
Effective Date ”). The Company represents and warrants
that there is no contract or agreement to contract with any party
(other than with the Investors who will each be waiving such rights
in connection with the transactions contemplated by this Waiver)
granting anti-dilution rights or preemptive rights which will be
triggered by the signing of this Waiver, except with respect to
those certain warrants to purchase common stock of the Company
previously issued to other investors as set forth on Exhibit B
hereto.
